-----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, DAZYZH8cRfkBEuLL7KjFxi78GAuH1usVpUCY8LLq501Z5u7Njss53/0ZT5iMcZTi DxQM3zpt3Ol+HOfacHpUkQ== 0000950152-96-004192.txt : 19960904 0000950152-96-004192.hdr.sgml : 19960904 ACCESSION NUMBER: 0000950152-96-004192 CONFORMED SUBMISSION TYPE: S-3D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19960814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTERIOR ENERGY CORP CENTRAL INDEX KEY: 0000774197 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 341479083 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3D SEC ACT: 1933 Act SEC FILE NUMBER: 333-10169 FILM NUMBER: 96615001 BUSINESS ADDRESS: STREET 1: 6200 OAK TREE BLVD CITY: INDEPENDENCE STATE: OH ZIP: 44131 BUSINESS PHONE: 2164473100 MAIL ADDRESS: STREET 1: PO BOX 94661 CITY: CLEVELAND STATE: OH ZIP: 44101-4661 FORMER COMPANY: FORMER CONFORMED NAME: NORTH HOLDING CO /OH/ DATE OF NAME CHANGE: 19851002 S-3 1 CENTERIOR ENERGY 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 14, 1996 FILE NO. - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ------------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------ DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN CENTERIOR ENERGY CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) OHIO (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) 34-1479083 (I.R.S. EMPLOYER IDENTIFICATION NO.) 6200 Oak Tree Boulevard, Independence, Ohio 44131 (216) 447-3100 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) JANIS T. PERCIO, Secretary Centerior Energy Corporation P. O. Box 94661 Cleveland, Ohio 44101-4661 (216) 447-3100 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: August 15, 1996 ------------------ If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. /X/. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. / / CALCULATION OF REGISTRATION FEE =================================================================================================
TITLE OF EACH CLASS OF PROPOSED PROPOSED SECURITIES TO BE AMOUNT TO MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF REGISTERED BE REGISTERED PRICE PER UNIT OFFERING PRICE REGISTRATION FEE - - ------------------------------------------------------------------------------------------------- Common Stock, 3,500,000 without par value shares $7.375* $25,812,500* $8,900.93 =================================================================================================
*Estimated solely for the purpose of determining the registration fee, and based on the average of the highest and the lowest sale prices on August 7, 1996. ALSO APPLIES TO REGISTRATION STATEMENT, FILE NO. 33-58935 PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933. 2 P R O S P E C T U S CENTERIOR ENERGY LOGO DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN CENTERIOR ENERGY CORPORATION ("COMPANY") OFFERS: 1. TO ITS COMMON STOCK SHARE OWNERS AND THE PREFERENCE AND PREFERRED SHARE OWNERS OF THE CLEVELAND ELECTRIC ILLUMINATING COMPANY ("CEI") AND THE TOLEDO EDISON COMPANY ("TOLEDO EDISON"), SUBSIDIARIES OF THE COMPANY, A SIMPLE AND CONVENIENT METHOD OF AUTOMATICALLY REINVESTING DIVIDENDS ON EITHER ALL OR A PORTION OF THEIR SHARES AND INVESTING CASH IN COMPANY COMMON STOCK ("COMMON STOCK"). 2. TO THE CUSTOMERS OF CEI AND TOLEDO EDISON, EVEN IF THEY DO NOT ALREADY OWN COMMON STOCK OF THE COMPANY, OR PREFERENCE OR PREFERRED STOCK OF ANY OF ITS SUBSIDIARIES, THE OPPORTUNITY TO INVEST CASH IN COMMON STOCK. 3. TO ANY SUCH SHARE OWNER OR CUSTOMER WHO IS NOT AN EMPLOYEE OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, THE OPPORTUNITY TO INVEST CASH CONTRIBUTIONS IN COMMON STOCK THROUGH AN INDIVIDUAL RETIREMENT ACCOUNT ("CX-IRA"). AN AMOUNT WILL BE CHARGED TO PARTICIPANTS TO COVER BROKERAGE COMMISSIONS, SERVICE CHARGES AND OTHER COSTS OF SALES AND PURCHASES OF COMMON STOCK. FEES WILL ALSO BE CHARGED FOR ESTABLISHING CX-IRA ACCOUNTS, TRANSFER CONTRIBUTIONS INTO AND TRANSFER, LUMP SUM, ANNUAL, IRREGULAR, QUARTERLY OR MONTHLY DISTRIBUTIONS OUT OF A CX-IRA. SHARES OF COMMON STOCK WILL BE PURCHASED BY THE AGENT FOR THE PLAN, ON BEHALF OF PARTICIPANTS IN THE PLAN, AT THE OPTION OF THE COMPANY, EITHER ON THE OPEN MARKET (WHETHER ON AN EXCHANGE, OVER THE COUNTER OR IN A NEGOTIATED TRANSACTION) OR DIRECTLY FROM THE COMPANY. IF COMMON STOCK IS PURCHASED ON THE OPEN MARKET, THE PURCHASE PRICE TO PARTICIPANTS OF THOSE SHARES WILL BE THE AVERAGE COST OF ALL THE SHARES PURCHASED BY THE AGENT OR HIS AUTHORIZED FIDUCIARY BEGINNING NO LATER THAN FIVE DAYS PRIOR TO THE INVESTMENT DATE AND ENDING NO LATER THAN 15 BUSINESS DAYS AFTER THE INVESTMENT DATE, PLUS AN AMOUNT TO COVER THE BROKERAGE COMMISSION AND SERVICE CHARGE. IF COMMON STOCK IS PURCHASED DIRECTLY FROM THE COMPANY, THE PURCHASE PRICE TO PARTICIPANTS OF THOSE SHARES WILL BE THE AVERAGE OF THE MOST RECENT FIVE DAILY HIGH AND LOW SALE PRICES OF THE COMMON STOCK, ENDING WITH THE INVESTMENT DATE, AS REPORTED IN THE WALL STREET JOURNAL REPORT OF NYSE -- COMPOSITE TRANSACTIONS, PLUS AN AMOUNT TO COVER ANY SERVICE CHARGE. ON AUGUST 12, 1996, THE CLOSING PRICE OF THE COMMON STOCK (AS PUBLISHED IN SAID REPORT OF NYSE -- COMPOSITE TRANSACTIONS) WAS $7.625. A COMPLETE STATEMENT OF THE PLAN IS CONTAINED IN THIS PROSPECTUS UNDER THE CAPTION "DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN". A DESCRIPTION OF A CX-IRA AND HOW IT PARTICIPATES IN THE PLAN IS CONTAINED IN THE INDIVIDUAL RETIREMENT ACCOUNT APPENDIX ("IRA APPENDIX") TO THIS PROSPECTUS. THE IRA APPENDIX IS AVAILABLE FROM THE COMPANY UPON REQUEST. ------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------ SAVE THIS PROSPECTUS. IT SETS FORTH THE TERMS OF THE PLAN AND HOW IT OPERATES. - - -------------------------------------------------------------------------------- DATED AUGUST 14, 1996 3 THE COMPANY Centerior Energy Corporation ("Company") is a public utility holding company and the parent company of The Cleveland Electric Illuminating Company ("CEI"), The Toledo Edison Company ("Toledo Edison") and Centerior Service Company ("Service Company"). The Company was incorporated under the laws of the State of Ohio for the purpose of enabling CEI and Toledo Edison to affiliate by becoming wholly owned subsidiaries of the Company. The affiliation of CEI and Toledo Edison became effective in April 1986. Nearly all of the consolidated operating revenues of the Company are derived from the sale of electric energy by CEI and Toledo Edison. The principal executive offices of the Company are at 6200 Oak Tree Boulevard, Independence, Ohio. Its mailing address is P.O. Box 94661, Cleveland, Ohio 44101-4661. CEI was incorporated under the laws of Ohio in 1892 and is a public utility furnishing electric service in an area of approximately 1,700 square miles in northeastern Ohio, including the City of Cleveland. CEI derives approximately 77% of its total electric retail revenue from customers outside the City of Cleveland. Nearly all of CEI's operating revenues are derived from the sale of electric energy. Toledo Edison was incorporated under the laws of Ohio in 1901 and is a public utility furnishing electric service in an area of approximately 2,500 square miles in northwestern Ohio, including the City of Toledo. Toledo Edison derives approximately 54% of its total electric retail revenue from customers outside the City of Toledo. Nearly all of Toledo Edison's revenues are derived from the sale of electric energy. The Service Company was incorporated under the laws of Ohio in 1986 and provides management, financial, administrative, engineering, legal, governmental and public relations and other services to the Company, CEI and Toledo Edison. PROPOSED MERGER OF CEI AND TOLEDO EDISON Since the affiliation of CEI and Toledo Edison in 1986, efforts have been made to consolidate operations and administration as much as possible to achieve maximum cost savings. In March 1994, the Company announced a plan to merge Toledo Edison into CEI. In May 1994, CEI and Toledo Edison filed a joint application with the Federal Energy Regulatory Commission ("FERC") for authorization and approval of the merger. In July 1994 the Pennsylvania Public Utility Commission approved the merger, and in December 1994 The Public Utilities Commission of Ohio approved the merger. CEI and Toledo Edison are awaiting the FERC's approval of the merger and believe they have complied with the certain conditions that the FERC has established in order to consider the merger. The share owner approvals required to carry out the merger were received in June 1995. At that time, the merger was approved by Share Owners (as defined below) of Toledo Edison's Preferred Stock (as defined below) and Share Owners of CEI's Preferred Stock approved the authorization of additional shares of CEI Preferred Stock. When the merger becomes effective, the outstanding shares of Toledo Edison Preferred Stock will be exchanged for shares of CEI Preferred Stock having substantially the same terms. The merger is expected to be effective in late 1996. 2 4 DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN PURPOSE 1. What are the purposes of the Plan? The purposes of the Dividend Reinvestment and Stock Purchase Plan of the Company ("Plan") are to provide a simple and convenient method: (a) for holders of record ("Share Owners") of Common Stock of the Company and Preference and Preferred Stock of CEI and Toledo Edison ("Common Stock", "Preference Stock" and "Preferred Stock", respectively, and, collectively "Stock") to reinvest dividends on all or part of their shares and to invest cash in Common Stock; (b) for customers of CEI and Toledo Edison ("Customers"), even if they do not already own any Stock, to invest cash in Common Stock; and (c) for any Share Owner or Customer who is not an employee of the Company or any of its subsidiaries to purchase Common Stock by investing cash in Common Stock through a tax-deferred Individual Retirement Account ("CX-IRA"). Another purpose of the Plan is to provide the Company with additional funds needed for the construction programs and general corporate purposes of the Company and its subsidiaries when the Common Stock sold to participants is purchased directly from the Company. ADVANTAGES 2. What are the advantages of the Plan? You may: (a) automatically reinvest dividends on all or any part of your Stock and invest cash in Common Stock; (b) continue to receive your dividend checks and invest only cash; (c) make purchases of Common Stock and realize the benefit of modest brokerage commissions and service charges; (d) have the Company sell all or any portion of the shares held in your Plan account and realize the benefit of modest brokerage commissions and service charges; (e) deposit Common Stock certificates registered in your name with the Company for safekeeping under the Plan; (f) establish one or more CX-IRAs through which you may invest cash contributions up to the limits specified by law. Your cash contributions may be deductible from your taxable income depending upon whether you are covered by an employer-sponsored pension or profit sharing plan, whether you file a single or joint return and how much adjusted gross income you earned; (g) defer Federal income tax on all reinvested dividends on Common Stock held in your CX-IRA; 3 5 (h) receive distributions out of your CX-IRA as part of your retirement program, subject to distribution rules; and (i) realize the benefit of minimal brokerage commissions and low service charges for purchases and sales made under the CX-IRA and reasonable fees for account establishment, transfer contributions into and distributions out of your CX-IRA. See "Federal Income Tax Treatment" regarding the Federal income tax aspects of reinvested dividends and sales of Common Stock. ADMINISTRATION 3. Who administers the Plan? The Company, as agent for participants in the Plan ("Agent"), administers the Plan, maintains records, sends statements of account and performs other duties relating to the Plan. Interpretations of the Plan by the Company are binding upon you. Shares purchased or deposited for safekeeping under the Plan will be registered in the name of the Company, as Agent for the participants. FOR ALL COMMUNICATIONS ABOUT THE PLAN CALL THE COMPANY'S SHARE OWNER SERVICES UNIT TOLL FREE In the continental United States 1-800-433-7794 In the Cleveland local area (216) 447-2400 or WRITE TO Share Owner Services Centerior Energy Corporation P.O. Box 94661 Cleveland, Ohio 44101-4661 4. Who administers a CX-IRA? KeyBank National Association, Corporate Trust Division, P.O. Box 6477, Cleveland, Ohio 44101, administers all CX-IRAs as Custodian. 4 6 PARTICIPATION 5. Who may participate in the Plan? (a) Any Share Owner may participate in the Plan by reinvesting dividends and/or investing cash in Common Stock. IF STOCK IN WHICH YOU HAVE AN INTEREST (AS AN OWNER OR OTHERWISE) IS REGISTERED IN A NAME OTHER THAN YOUR OWN (THAT IS, IN THE NAME OF A FIDUCIARY, BROKER, BANK OR OTHER AGENT OR NOMINEE), YOU SHOULD ASK THE RECORD HOLDER TO PARTICIPATE ON YOUR BEHALF THROUGH APPROPRIATE ARRANGEMENTS WITH THE COMPANY, OR YOU SHOULD BECOME A SHARE OWNER OF RECORD BY HAVING ALL OR SOME OF YOUR SHARES TRANSFERRED INTO YOUR NAME. (b) Any Customer, even if he is not a Share Owner, may participate in the Plan by investing cash in Common Stock. (c) Any Share Owner or Customer who is not an employee of the Company or any of its subsidiaries who receives compensation from employment may establish a CX-IRA. A MINOR MAY NOT PARTICIPATE IN THE PLAN. HOWEVER, A CUSTODIAN HOLDING STOCK FOR A MINOR IS ELIGIBLE TO PARTICIPATE IN THE PLAN ON BEHALF OF THE MINOR. ENROLLMENT IN THE PLAN 6. When may I enroll in the Plan? You may enroll in the Plan any time. Your enrollment will become effective as described in Questions 11 and 12. 7. How do I enroll in the Plan? To enroll, you must fill out, sign and return to the Company an Authorization Form. If you reinvest dividends on more than one class or series of Stock, you must furnish a separate Authorization Form for each. Authorization Forms and other Plan forms may be obtained by contacting the Company (see Question 3). 8. How do I establish a CX-IRA? Contact the Company (see Question 3). The IRA Appendix to this Prospectus and related documents which set forth the terms of a CX-IRA will be sent to you. They describe a CX-IRA. how to establish one and how it participates in the Plan. If you wish to participate in the Plan through a CX-IRA only, it is not necessary to read the rest of the material under the heading "Dividend Reinvestment and Stock Purchase Plan" in this Prospectus because it does not contain the provisions of the Plan applicable to a CX-IRA. 5 7 COMPLETING THE AUTHORIZATION FORMS NOTE: QUESTIONS 9 THROUGH 12 APPLY ONLY TO SHARE OWNERS WHO ALREADY HOLD STOCK CERTIFICATES IN THEIR NAME. CUSTOMERS WHO DO NOT HOLD STOCK CERTIFICATES IN THEIR OWN NAME SHOULD REFER TO QUESTIONS 13 THROUGH 15. 9. What does the Share Owner Authorization Form provide? The Share Owner Authorization Form provides for three alternative forms of enrollment: FULL DIVIDEND REINVESTMENT -- BOX 1 provides that (a) dividends payable on all your Stock, presently owned and that which is added to your account of record while you are participating in the Plan, and (b) cash investments made by you will be used to purchase Common Stock. PARTIAL DIVIDEND REINVESTMENT -- BOX 2 provides that (a) dividends payable on the shares of the Stock registered in your name which you specify, (b) all dividends paid on shares held for you by the Company and (c) cash investments made by you will be used to purchase Common Stock. CASH INVESTMENTS ONLY -- BOX 3 provides that (a) your cash investments and (b) all dividends paid on shares held for you by the Company will be used to purchase Common Stock. Dividends payable on any Stock registered in your name will continue to be paid to you in the usual manner. SEE QUESTIONS 50 AND 51 REGARDING REINVESTMENT OF DIVIDENDS BY SHARE OWNERS WHO ARE SUBJECT TO TAX WITHHOLDING. 10. How do I complete the Share Owner Authorization Form? (a) Mark either Box 1, 2 or 3, depending on which you desire. (b) Furnish the other requested information in accordance with the instructions and return it to the Company. (c) If Box 1 or 2 is marked, you may invest cash when you enroll if you wish. If Box 3 is marked, you must make an initial cash investment with your Share Owner Authorization Form for your enrollment to become effective. All cash investments must be at least $10 per payment but can not total more than $40,000 per calendar year. THE MINIMUM CASH INVESTMENT OF $10 MIGHT NOT PURCHASE A WHOLE SHARE OF COMMON STOCK. IF NO BOX IS MARKED, BOX 1 WILL AUTOMATICALLY APPLY AS THOUGH YOU HAD MARKED IT. 6 8 11. When must my Share Owner Authorization Form be received by the Company to begin reinvesting dividends? If you are a Share Owner and wish to reinvest dividends (Box 1 or 2), your Share Owner Authorization Form must be received by the Company on or before the record date for a dividend payment in order to have that dividend reinvested. The record dates for Common Stock and various Series of Preferred Stock and Preference Stock occur about 15 to 30 calendar days before the respective dividend is paid. 12. When must my Share Owner Authorization Form be received by the Company to invest only cash? Your Share Owner Authorization Form, Cash Investment Form and check must be dated and received by the Company before the investment date (even though after the record date) on which you wish to purchase Common Stock. See Question 24. NOTE: QUESTIONS 13 THROUGH 15 APPLY ONLY TO CUSTOMERS WHO DO NOT HOLD STOCK CERTIFICATES IN THEIR OWN NAME. SHARE OWNERS WHO ALREADY HOLD STOCK CERTIFICATES IN THEIR NAME SHOULD REFER TO QUESTIONS 9 THROUGH 12. 13. What does the Customer Authorization Form provide? The Customer Authorization Form provides only one form of enrollment -- your cash investments will be used to purchase Common Stock. 14. How do I complete the Customer Authorization Form? (a) Furnish the requested information in accordance with the instructions printed on the Customer Authorization Form and return it to the Company. (b) You must send an initial cash investment of at least $10 when you return your Customer Authorization Form in order for your enrollment to become effective. You may, however, invest any amount up to $40,000 per calendar year. THE MINIMUM CASH INVESTMENT OF $10 MIGHT NOT PURCHASE A WHOLE SHARE OF COMMON STOCK. DO NOT SEND YOUR CASH INVESTMENT WITH YOUR PAYMENT FOR ELECTRIC SERVICE. SEE QUESTION 22. 15. When must my Customer Authorization Form be received by the Company to begin participation? Your Customer Authorization Form and the check for your cash investment must be dated and received by the Company before the investment date on which you wish to purchase Common Stock. See Question 24. 7 9 16. How long will my Authorization Form be effective? Your Authorization Form will be effective until you change the investment instructions on it, withdraw from the Plan or the Plan is terminated. 17. How may I change the investment instructions on my Authorization Form? You may change your investment instructions any time (except between the ex-dividend date and the payment date for that dividend) by advising the Company in writing sent to the address stated in Question 3 or by submitting a new Authorization Form. DIVIDEND REINVESTMENT 18. When will my dividends be reinvested? The amount of dividends on Common, Preference and Preferred Stock registered in your name which you instruct the Company to reinvest will be applied to purchase Common Stock on the dividend payment date of the particular dividend being reinvested. All the dividends on Common Stock held for you by the Company under the Plan will be automatically reinvested on the Common Stock dividend payment dates. CASH INVESTMENT 19. In what amounts may my cash investments be made? Your cash investments may be in any amount not less than $10 per payment or more than a total of $40,000 per calendar year. Any cash investment of less than $10 might be returned to you to avoid the administrative burden of accumulating smaller cash investments until the minimum amount is attained. THE MINIMUM CASH INVESTMENT OF $10 MIGHT NOT PURCHASE A WHOLE SHARE OF COMMON STOCK. 20. How often may I send cash? You may send cash when and as often as you wish. The same amount of money need not be sent each time and there is no obligation to send cash each month or quarter. Each cash investment you make should be accompanied by a Cash Investment Form furnished to you by the Company. 21. May I make cash investments either in cash or by check? Yes. You may make cash investments in cash or by check drawn on a United States bank payable to the Company in United States Dollars. IT IS RECOMMENDED THAT YOU NOT SEND CASH THROUGH THE MAIL OR BY ANY MEANS OTHER THAN PERSONAL DELIVERY TO THE COMPANY, SHARE OWNER SERVICES, 6200 OAK TREE BOULEVARD, INDEPENDENCE, OHIO. 8 10 22. If I am a Customer of CEI or Toledo Edison, may I include my cash investment with my payment for electric service? No. You must send your cash investment in a separate envelope to the address shown in Question 3. If you include a cash investment with a payment for electric service, even if by a separate check, it will be credited to your account for electric service. 23. May I change my mind and get my cash investment back before it is invested? Yes, if the Company receives your request to do so on or before the date on which the cash otherwise would have been invested. 24. When will my cash be invested? Cash will be invested on the first of each month, except that in months when a quarterly dividend on Common Stock is paid (February, May, August and November) cash will be invested with the dividends on the 15th of the month. No interest will be paid on cash while it is being held for investment. Dividend payment dates and monthly cash investment dates are sometimes called "investment dates" in this Prospectus. Cash received prior to any investment date will be invested on that investment date. Cash received on or after any investment date will be held by the Company and invested on the next investment date. Checks must be dated before the date on which the funds are to be invested. The Company will acknowledge receipt of your cash investment on your statement of account. IT MAY TAKE ABOUT FIVE WEEKS FROM THE INVESTMENT DATE BEFORE YOU RECEIVE YOUR STATEMENT OF ACCOUNT. SEE QUESTION 38. Your cancelled check will also serve as a receipt. PURCHASES 25. How many shares of Common Stock will be purchased for me? The number of shares you purchase on an investment date (including any fraction of a Share computed to three decimal places) will be equal to the total funds to be invested on that date divided by the purchase price per share (including brokerage commissions and service charges) for that date. 26. May I purchase a specific or limited number of shares? No, but you may control approximately how many shares you purchase by designating for reinvestment the dividends on all or a part of the shares registered in your name and by sending in a cash investment in an amount you estimate will buy the added number of shares you desire based on what you believe is likely to be the purchase price. You may fix the number of shares you keep when you withdraw from the Plan by requesting that a portion of your Plan shares be sold. See Questions 33, 34 and 35 regarding how your withdrawal request will be carried out. 9 11 27. What will be the price of Common Stock purchased for me under the Plan? If Common Stock is purchased on the open market (whether on an exchange, over the counter or in a negotiated transaction), the purchase price to the participant of those shares will be the average cost of all the shares purchased by the Agent or his authorized fiduciary beginning no later than five business days prior to the investment date and ending no later than 15 business days after the investment date, plus an amount to cover the brokerage commission and service charge. However, purchases on the open market may begin at an earlier date or end at a later date when necessary or advisable under applicable Federal regulatory and securities laws. If Common Stock is purchased directly from the Company, the purchase price to the participant of those shares will be the average of the most recent five daily high and low sales prices of the Common Stock, ending with the investment date, as reported in The Wall Street Journal report of NYSE -- Composite Transactions, plus an amount to cover any service charge. If The Wall Street Journal's report of share transactions is not published for one or more of the most recent five trading days or if any such report contains reporting errors, the purchase price shall be determined by the Company on the basis of such market quotations as the Company deems appropriate. 28. Will there be any cost to me for purchases under the Plan? Yes. An amount to cover any brokerage commission and service charge will be added to the price of the Common Stock purchased. See Question 37 regarding the cost of selling Common Stock. STOCK CERTIFICATES FOR SHARES 29. Will stock certificates be issued to me for shares purchased? No. The shares you purchase will be issued to the Company to hold as your Agent. The number of shares held for you by the Company under the Plan will be recorded in your Plan account. This convenience protects you against the loss, theft or destruction of stock certificates and helps keep the Company's administrative costs down. However, the Company will send you a certificate for any number of whole shares held in your account upon your written request and you may continue to participate in the Plan. This request must be mailed to the Company at the address stated in Question 3. Any remaining whole shares and fraction of a share will continue to be held for you. A written request must be made each time you wish a certificate to be issued. An institution which is participating in the Plan and which is required by law to maintain physical possession of certificates may request in writing a special arrangement regarding the issuance of certificates for shares purchased under the Plan. You should allow about one week for the U.S. Post Office to deliver your request to the Company. It takes the Company about two weeks to process requests for certificates. In addition, you should allow at least a week for the U.S. Post Office to deliver the certificates to you. Therefore, if you wish to sell shares held in your Plan account through a broker, YOU 10 12 SHOULD ALLOW ABOUT FOUR WEEKS TO RECEIVE THE CERTIFICATE so you can deliver it to your broker within the required three days after the sale. Shares held in your Plan account may not be pledged as security for a loan. If you wish to pledge such shares, you must request that a certificate be issued to you. A certificate for a fraction of a share will not be issued under any circumstances. Any fraction of a share will remain in your Plan account until you withdraw. At that time, the cash value of the fractional share will be sent to you. See Question 35. 30. In whose name will certificates be registered and checks be made payable when issued? If you are a Share Owner of record, your Plan account is in the name(s) in which your Stock is registered. Otherwise, your Plan account is in the name(s) you specified when you enrolled in the Plan. Consequently, all checks and certificates will be made out in the same name(s) as the name(s) on your account. If you or, in the event of your death, your administrator, executor or joint tenant survivors want a certificate and checks to be issued in some other name or names, the requirements for transfer of Stock must be satisfied. DIVIDENDS 31. Will dividends be paid on a fraction of a share held for me under the Plan? Yes, your Plan account will be credited with dividends paid on your fraction of a share. See Question 40 regarding when shares purchased under the Plan become eligible to receive dividends. 32. What happens to dividends paid on shares held for me under the Plan? All dividends paid on shares in your Plan account will always be automatically reinvested in Common Stock. If you do not wish such dividends to be reinvested, you must request in writing that the Company issue a certificate for the number of shares in your Plan account on which you do not wish to have dividends reinvested, and change your investment instructions by the record date for the next dividend, if necessary. WITHDRAWAL FROM THE PLAN 33. How do I withdraw from the Plan? To withdraw from the Plan, you must notify the Company in writing at the address stated in Question 3. Withdrawals cannot be made by telephone. 34. When will my withdrawal from the Plan be effective? If your written request to withdraw is received by the Company before noon on the business day prior to the ex-dividend date (two business days prior to the record date) for a dividend payment, no purchase of shares will be made for you on the following dividend payment date. Instead, your dividend will be paid to you on that dividend payment date. Cash which is being 11 13 held by the Company for investment will not be invested and will be returned to you within three weeks after receipt of your withdrawal request. All subsequent dividends will be paid to you unless you reenroll in the Plan. If your written request to withdraw is received by the Company after noon on the day prior to the ex-dividend date for a dividend being reinvested, but before the investment is completed, that dividend will not be reinvested and any cash in your account will not be invested unless you specify otherwise in your withdrawal request. Instead, a check for the amount of the dividend and any other cash in your account will be sent to you within two weeks after the applicable dividend payment date. All subsequent dividends will be paid to you unless you reenroll in the Plan. 35. What happens when I request a complete withdrawal? The Company will send you one certificate for the number of whole shares held in your Plan account, cash for the value of any fraction of a share and any uninvested cash in your account. However, if you have requested the Company to sell any shares held in your Plan account, the Company will sell them and send to you a check for the proceeds, less any brokerage commission, service charge and transfer costs chargeable to you (see Questions 37 and 38), together with a check for the value of any fraction of a share, a certificate for any unsold shares and, unless you specify otherwise, a check for any uninvested cash in your account. See Questions 29, 30 and 37 regarding certificates, checks and sales of shares. 36. What happens in the event of death? In the event of death, your account will continue to participate in the Plan until the Company receives instructions accompanied by the appropriate legal documents. In the event of an instruction to withdraw, such instruction will be carried out in the manner described in Question 35. SALES OF SHARES HELD BY THE COMPANY 37. Will the Company sell shares it holds for me? Yes. If you so request in writing, the Agent will sell all or any portion of the Common Stock held for you under the Plan. The request must be signed by all the persons in whose names your account is kept. IN THE EVENT THAT YOUR REQUEST COVERS THE SALE OF MORE THAN 500 SHARES, ALL SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION PARTICIPATING IN A SECURITIES TRANSFER ASSOCIATION RECOGNIZED MEDALLION SIGNATURE GUARANTEE PROGRAM. Such requests may be made any time, including upon withdrawal. Within 10 business days after receipt of your request, the number of shares you specified will be sold by a brokerage firm selected by the Company. If you wish to sell shares held in your Plan account yourself, you should request the Company to issue them to you (see Question 29). Your shares may be sold together with other shares being sold at that time. All shares will be sold at prevailing market prices. The sale price of the shares sold for you will be the average of the prices at which all the shares are sold. Similarly, the costs of sale, that is, brokerage commissions, service charges and transfer costs, of the shares sold for you will be the average of 12 14 the costs of sale of all the shares sold. A check representing the proceeds of the sale, less any costs of sale, will be sent to you about two weeks after your shares are sold. ALLOW A MINIMUM OF FOUR WEEKS FROM THE TIME YOU MAIL YOUR REQUEST UNTIL YOU RECEIVE YOUR CHECK. 38. Will I receive any reports of my participation in the Plan? You will receive a statement of account as soon as practicable after each purchase, sale, deposit or withdrawal of Common Stock in your account. NORMALLY YOU SHOULD ALLOW UP TO FIVE WEEKS FROM THE INVESTMENT DATE BEFORE YOU RECEIVE A STATEMENT OF ACCOUNT because all the purchases necessary to complete the investment will not be completed until as late as the 15th business day following the investment date. Your statement of account will serve as a continuing record of the activity in your account. In addition, you will receive a Prospectus for the Plan and copies of the same communications sent to every other Share Owner, including the Company's Quarterly Review, Annual Report, Notice of Annual Meeting and Proxy Statement and information for reporting to the Internal Revenue Service dividends paid and taxes withheld, if any. You must advise the Company within 90 days after you receive a statement of account of any errors in the statement. If you do not, the statement will be considered to be accepted by you as correct. REENROLLING IN THE PLAN 39. When may I reenroll in the Plan if I withdraw? You may reenroll any time. To reenroll, you must comply with the initial participation requirements (see Questions 5, 9, 10, 13 and 14). OTHER INFORMATION 40. When will I acquire Share Owner rights to shares purchased for me under the Plan? You acquire Share Owner rights, including the right to vote, with respect to shares purchased under the Plan on the later of the investment date or the date on which the purchase of shares for that investment date is completed. In any event, shares purchased on a Common Stock dividend payment date do not receive the dividend paid on that date because you did not own those shares on the record date for the payment of that dividend. You will become eligible to receive dividends on those shares starting on the next Common Stock dividend payment date. 41. What happens if I am reinvesting under the Plan dividends on all or part of the shares registered in my name and I sell or transfer a portion of those shares? If you are reinvesting under the Plan dividends on all or part of the shares registered in your name and you dispose of a portion of the shares registered in your name, then unless you change your investment instructions, the Company will continue to reinvest under the Plan the dividends on the remaining shares up to the number of shares you originally designated for reinvestment. 13 15 42. May I deposit Common Stock registered in my name into my Plan account for safekeeping? Yes, but you should remember that dividends on all shares held in your Plan account will always be reinvested. You may deposit some or all of your Common Stock with the Company by sending a written request to the Company and enclosing your stock certificates signed by all record owners on the reverse side (or on a separate stock assignment) and filled in to show a transfer to the Company as Agent under the Plan. 43. What happens if I sell or transfer all of the shares registered in my name? If you transfer all shares registered in your name (other than a transfer to the Company for the purpose of depositing them in your Plan account as described in Question 42), you should instruct the Company at the time of transfer, or promptly thereafter, whether you wish to withdraw from the Plan. 44. If the Company has a rights offering, how will my entitlement be computed? Common Stock Share Owners do not have pre-emptive rights. However, if the Company offers them the right to purchase securities, your entitlement to such rights will be based upon the total number of shares of Common Stock registered in your name and held in your Plan account. Rights certificates will be issued for the resulting whole number of shares. Rights based on a fraction of a share held in your Plan account will be sold for your account and the proceeds will be invested for you as a cash investment on the next Common Stock investment date. 45. What happens if the Company declares a stock dividend? Any stock dividends distributed by the Company on shares held in your account under the Plan will be added to your account. On the other hand, stock dividends distributed on shares registered in your name will be mailed directly to you. 46. What happens if the Company declares a stock split? Any stock split shares distributed by the Company on shares held in your account under the Plan will be added to your account. Stock split shares distributed on shares registered in your name will be mailed directly to you. 47. How will my shares be voted at meetings of Share Owners? If you vote shares registered in your name in person or by proxy on any matter submitted to a meeting of Share Owners, the number of shares held in your Plan account, including any fraction of a share, will be voted for you in the same manner by the Company. If no shares are registered in your name, shares held in your Plan account will be voted by the Company in accordance with instructions given by you on a proxy which will be furnished to you. If the proxy is not received by the Company or if it is received unsigned or improperly executed, none of your shares will be voted, unless you vote in person at the meeting. 14 16 48. What is the responsibility of the Company under the Plan? The Company, in administering the Plan, will not be liable for any act done in good faith or for any good faith omission to act, including, without limitation, any claim of liability arising out of any act or omission to act by the Company after your death and before receipt of proof of death. YOU SHOULD RECOGNIZE THAT YOU ARE ENTITLED TO A DIVIDEND ONLY IF THE BOARD OF DIRECTORS DECLARES ONE. YOU ALSO SHOULD RECOGNIZE THAT THE COMPANY CANNOT ASSURE YOU OF A PROFIT OR PROTECT YOU AGAINST A LOSS ON THE SHARES YOU PURCHASE UNDER THE PLAN. 49. May the Plan be changed or terminated? Yes. The Company reserves the right to suspend, change or terminate the Plan at any time. You will receive notice of any such suspension, change or termination. INCOME TAX WITHHOLDING 50. Are reinvested dividends subject to tax withholding? No, unless (a) you or your broker have failed to give your Social Security or Tax Identification Number to the Company, (b) you are a non-resident alien or a foreign partnership or corporation not exempt from withholding or (c) the Internal Revenue Service notifies the Company that you are subject to tax withholding. 51. What provision has been made for a Share Owner whose dividends are subject to tax withholding? If you are a Share Owner whose dividends are subject to tax withholding, the Company will apply toward the purchase of Common Stock an amount equal to the dividends being reinvested less the amount of tax required to be withheld. Your statement of account will indicate the amount of the tax withheld. FEDERAL INCOME TAX TREATMENT The following is a general summary of certain Federal income tax aspects of dividends on Stock and the sale of Common Stock. However, the Company cannot give tax or other legal advice. So, you should consult your attorney or qualified tax advisor for definitive advice regarding the tax treatment of reinvested dividends and sales of Common Stock. Dividends on Stock registered in your name and on Common Stock held in your Plan account are taxable under Federal income tax law as in effect on the date of this Prospectus, as follows: 1. Non-Taxable Return of Capital Portion of Dividends. The portion of a dividend, if any, which is determined to be a non-taxable return of capital is excluded from taxable income and is applied to reduce the cost basis of the Stock on which such dividend is paid, whether or not the dividend is reinvested. 15 17 2. Taxable Portion of Dividends. The portion of a dividend which is determined to be a taxable dividend is includable in taxable income in the year paid whether it is paid in cash or reinvested under the Plan. For the purpose of determining gain or loss when shares are sold, the cost basis per share purchased under the Plan is equal to the purchase price plus any brokerage commission and service charge reduced by the return of capital portion, if any, of dividends paid. The holding period of shares purchased under the Plan will begin on the later of the day following the investment date or the day following the date on which the purchase of shares for that investment date is completed. Accordingly, in the case of purchases for February, May, August and November, the holding period for all shares purchased that month might not begin until the day following the 15th business day after that month's investment date. See the heading "Federal Income Tax Treatment of a CX-IRA" in the IRA Appendix for a general summary of the Federal tax treatment of cash contributions, rollovers and transfers, dividends reinvested within a CX-IRA and the tax treatment of distributions from a CX-IRA. USE OF PROCEEDS The Company does not know the number of original issue shares that ultimately will be sold to the Plan, the prices at which they will be sold or the timing of such sales, this last being at the sole discretion of the Company. The net proceeds from any sale of the Common Stock offered hereby will be added to the general funds of the Company and most of the net proceeds ultimately will be invested by the Company in CEI and Toledo Edison for use by them to assist in financing their construction programs and for their general corporate purposes. Any remaining amount will be invested in the Service Company or will be used by the Company, in either case, for its general corporate purposes. DESCRIPTION OF COMMON STOCK The following is a summary of certain terms of the Common Stock. For a complete statement of the terms of the Common Stock, reference is made to the Amended Articles of Incorporation of the Company and the General Corporation Law of Ohio. DIVIDEND RIGHTS Holders of the Common Stock are entitled to dividends as, when and in the amount declared by the Board of Directors, but if and so long as there is any arrearage in the payment of any dividend on, or any required sinking fund redemption of, any outstanding Centerior Serial Preferred Stock ("Serial Preferred Stock"), only dividends payable in stock junior to the stock on which the dividends or sinking fund redemption are in arrears may be paid on the Common Stock. There currently is no Serial Preferred Stock outstanding. VOTING RIGHTS Each share of Common Stock is entitled to one vote. Share Owners have the right to cumulate votes for the election of directors if notice is given as provided by law. If the Company should default in the payment of six full quarterly dividends on any series of Serial Preferred 16 18 Stock, the holders of all the Serial Preferred Stock would be entitled to elect two directors of the Company until all Serial Preferred Stock dividends in arrears are paid. The consent of the holders of at least two-thirds of the Serial Preferred Stock is necessary (1) to change the Amended Articles of Incorporation or the Regulations of the Company in a manner adversely affecting the preferences or voting or other rights of the Serial Preferred Stock, (2) to authorize any shares of a class ranking prior to the Serial Preferred Stock or (3) to purchase or redeem less than all the outstanding Serial Preferred Stock, except pursuant to an offer to purchase all outstanding Serial Preferred Stock, when dividends on any Serial Preferred Stock are in arrears. The consent of the holders of at least a majority of the Serial Preferred Stock is necessary for (1) the sale of substantially all the assets of the Company or its consolidation with or merger into another corporation, unless the resulting or surviving corporation will have no shares ranking prior to or on a parity with the Serial Preferred Stock in addition to those outstanding prior to the consolidation or merger or (2) the authorization of any shares ranking on a parity with the Serial Preferred Stock or an increase in the authorized shares of Serial Preferred Stock. LIQUIDATION RIGHTS In the event of liquidation of the Company, holders of the Common Stock are entitled to the assets of the Company, pro rata, which remain after satisfaction of all liabilities and the liquidation rights of any outstanding Serial Preferred Stock. ISSUANCE OF ADDITIONAL STOCK The balance of the shares of authorized Common Stock which are not outstanding (other than the shares which have been reserved for issue under the Plan and employee stock plans) may be issued, from time to time, for such amount of consideration as may be fixed by the Board of Directors. MISCELLANEOUS The Common Stock does not have any pre-emptive or subscription rights, conversion rights or redemption or sinking fund provisions. The Common Stock offered by this Prospectus will be, when issued, fully paid and non-assessable. TRANSFER AGENTS AND REGISTRARS The Company is the transfer agent and KeyBank National Association and the Company are co-registrars for the Common Stock in Ohio. Society Trust Company of New York, 5 Hanover Square, 10th Floor, New York, New York 10004, is authorized to receive and transmit to the Company requests for transfer of Common Stock. COMMON STOCK DIVIDENDS Future dividends on the Common Stock depend upon the earnings and financial condition of the Company, business and economic conditions and other relevent factors. 17 19 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934 ("Exchange Act") and in accordance therewith files reports and other information with the Securities and Exchange Commission ("SEC"). Such reports and other information can be inspected and copied at the public reference facilities maintained by the SEC at its principal office located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549-1004 and at its regional offices located at 500 West Madison, 14th Floor, Chicago, IL 60661-2511 and 7 World Trade Center, 13th Floor, New York, NY 10048. Copies of such material also can be obtained at prescribed rates from the Public Reference Section of the SEC at its principal office. Such material can also be inspected at the New York Stock Exchange. The Company has filed with the SEC a Registration Statement on Form S-3 (together with any amendments thereto, the "Registration Statement") under the Securities Act of 1933 ("Securities Act") with respect to the securities offered hereby. This Prospectus, which constitutes a part of the Registration Statement, omits certain information set forth in the Registration Statement as permitted by the rules and regulations of the SEC. For further information, reference is made to such Registration Statement, including the exhibits filed therewith. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Company hereby incorporates in this Prospectus by reference the following documents heretofore filed with the SEC, pursuant to the Exchange Act, to which reference hereby is made: 1. The Company's Annual Report on Form 10-K for the year ended December 31, 1995 ("Form 10-K"). The report of Arthur Andersen LLP on the consolidated financial statements and schedule of the Company as of December 31, 1995 and for the three years then ended, included in the Form 10-K and incorporated by reference in this Prospectus, includes an explanatory paragraph that describes a change made in the method of accounting for postretirement benefits other than pensions in 1993, as discussed in Note 9 to the financial statements. 2. The Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996 and June 30, 1996. 3. The Company's Current Reports on Form 8-K dated April 11, 1996 and June 25, 1996. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of this offering shall be deemed to be incorporated in this Prospectus by reference and to be a part hereof from the date of filing of such documents. THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED BY REFERENCE IN THIS PROSPECTUS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO THE INFORMATION THAT 18 20 THIS PROSPECTUS INCORPORATES. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO JANIS T. PERCIO, SECRETARY, CENTERIOR ENERGY CORPORATION, P.O. BOX 94661, CLEVELAND, OHIO 44101-4661, OR TELEPHONE (216) 447-3100. LEGAL OPINIONS The legality of the Common Stock and legal matters in connection with the Plan have been passed upon for the Plan by Terrence G. Linnert or Mary E. O'Reilly, counsel for the Company. EXPERTS The statements as to matters of law and legal conclusions under the headings "General Regulation", "Environmental Regulation", "Electric Rates", "Title to Property" and "Legal Proceedings" in the Form 10-K, under the heading "Description of Common Stock" in this Prospectus and under the heading "Indemnification of Directors and Officers" in both the Prospectus and Part II of the Registration Statement are made on the authority of Terrence G. Linnert or Mary E. O'Reilly, as an expert. Mr. Linnert is Senior Vice President, Chief Financial Officer and General Counsel of the Company and Senior Vice President - Corporate Administrative Group, Chief Financial Officer and General Counsel of the Service Company and Mrs. O'Reilly is Managing Attorney of the Service Company. The consolidated financial statements and schedule of the Company as of December 31, 1995 and 1994 and for each of the three years in the period ended December 31, 1995, included in the Form 10-K and incorporated by reference in this Prospectus, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said report. Reference is made to said report which includes an explanatory paragraph that describes a change made in the method of accounting for postretirement benefits other than pensions in 1993, as discussed in Note 9 to the financial statements. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Regulations of the Company provide that each person who is or has been a director or officer of the Company shall be indemnified by the Company against judgments, penalties, reasonable settlements, legal fees and expenses arising out of any threatened, pending or completed proceedings of a criminal, administrative or investigative nature in which he or she may become involved by reason of his or her relationship to the Company (other than a proceeding by or on behalf of the Company), but only if he or she is found, by the disinterested members of the Board of Directors, by independent legal counsel or by the share owners (1) to have acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Company and (2) in the case of a criminal matter, to have had no reasonable cause to believe his or her conduct was unlawful. In the case of actions brought by or on behalf of the Company against a director or officer, indemnification is provided only for reasonable legal fees and expenses and only if it is determined that he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Company; but if he or she is adjudged to be 19 21 liable due to negligence or misconduct, indemnification is provided only if an appropriate court determines that indemnification is fair and reasonable under the circumstances. Similar indemnification also may be made available by the Company to its directors and officers, and to a limited extent may be available as a matter of right to such persons, under Section 1701.13 of the Revised Code of Ohio. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions or otherwise, the Company is advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by a director, officer or controlling person, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The Company maintains and pays the premium on contracts insuring the Company (with certain exclusions) against any liability to directors and officers it may incur under the above indemnity provisions and insuring each director and officer of the Company (with certain exclusions) against liability and expense, including legal fees, which he or she may incur by reason of his or her relationship to the Company, even if the Company does not have the obligation or right to indemnify him or her against such liability or expense. 20 22 - - ------------------------------------------------------ - - ------------------------------------------------------ THIS PROSPECTUS CONTAINS INFORMATION CONCERNING THE COMPANY AND ITS COMMON STOCK, BUT DOES NOT CONTAIN ALL OF THE INFORMATION SET FORTH IN THE REGISTRATION STATEMENT, AND THE EXHIBITS, SCHEDULES, REPORTS AND PROXY STATEMENT RELATING THERETO, WHICH THE COMPANY HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C., UNDER THE SECURITIES EXCHANGE ACT OF 1934, AND TO WHICH REFERENCE IS HEREBY MADE. TABLE OF CONTENTS
Page ---- The Company...................................... 2 Dividend Reinvestment and Stock Purchase Plan.................................. 3 Purpose...................................... 3 Advantages................................... 3 Administration............................... 4 Participation................................ 5 Enrollment in the Plan....................... 5 Completing the Authorization Forms........... 6 Dividend Reinvestment........................ 8 Cash Investment.............................. 8 Purchases.................................... 9 Stock Certificates for Shares................ 10 Dividends.................................... 11 Withdrawal from the Plan..................... 11 Sales of Shares Held by the Company.......... 12 Reenrolling in the Plan...................... 13 Other Information............................ 13 Income Tax Withholding....................... 15 Federal Income Tax Treatment..................... 15 Use of Proceeds.................................. 16 Description of Common Stock...................... 16 Common Stock Dividends........................... 17 Available Information............................ 18 Incorporation of Certain Documents by Reference................................... 18 Legal Opinions................................... 19 Experts.......................................... 19 Indemnification of Directors and Officers........ 19
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. - - ------------------------------------------------------ - - ------------------------------------------------------ - - ------------------------------------------------------ - - ------------------------------------------------------ CENTERIOR ENERGY LOGO DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN --------------------- PROSPECTUS --------------------- AUGUST 14, 1996 - - ------------------------------------------------------ - - ------------------------------------------------------ 23 INDIVIDUAL RETIREMENT ACCOUNT APPENDIX TO CENTERIOR ENERGY LOGO DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN PROSPECTUS DATED AUGUST 14, 1996 This Individual Retirement Account Appendix ("IRA Appendix") describes an individual retirement account ("CX-IRA") established under Section 408 of the Internal Revenue Code which participates in the Dividend Reinvestment and Stock Purchase Plan ("DRP Plan") of Centerior Energy Corporation ("Company"). It also describes how a CX-IRA participates in the DRP Plan. Any Share Owner of the Company or Customer of The Cleveland Electric Illuminating Company ("CEI") or The Toledo Edison Company ("Toledo Edison") may establish a CX-IRA which will invest in Common Stock of the Company through the DRP Plan. HOWEVER, AN EMPLOYEE OF THE COMPANY, CEI, TOLEDO EDISON OR THEIR SUBSIDIARIES MAY NOT HAVE A CX-IRA. To establish a CX-IRA, you must enter into a custody agreement with KeyBank National Association, as Custodian ("Custodian"), pay the account establishment fee and (if applicable) the transfer contribution fee and make an initial cash, rollover or transfer contribution. The Custodian will then enroll in the DRP Plan on behalf of your CX-IRA. Delivered to you with this IRA Appendix are the following documents necessary to establish a CX-IRA: 1. An Individual Retirement Account Agreement ("IRA Agreement"); 2. The Individual Retirement Account Custody Terms which are part of the IRA Agreement; and 3. A Disclosure Statement required by the Internal Revenue Service relating to the IRA Agreement (attached to the Custody Terms). Your CX-IRA will be established when the Custodian receives your IRA Agreement, account establishment fee, transfer contribution fee (if applicable) and initial contribution and accepts them. YOU MAY REVOKE YOUR CX-IRA AND HAVE YOUR INITIAL CONTRIBUTION RETURNED TO YOU BY MAILING OR DELIVERING A WRITTEN NOTICE OF REVOCATION TO THE CUSTODIAN WITHIN SEVEN DAYS AFTER THE CX-IRA IS ESTABLISHED. If you have any questions about the operation of a CX-IRA, contact the Custodian. If you have any questions about the DRP Plan, contact the Company. SAVE THIS APPENDIX AND THE DOCUMENTS LISTED IN ITEMS 1, 2 AND 3, ABOVE. THEY DESCRIBE THE TERMS OF YOUR CX-IRA AND HOW IT OPERATES. The date of this Appendix is August 14, 1996. A-1 24 GLOSSARY OF TERMS Agent -- Centerior Energy Corporation which acts on behalf of participants in the DRP Plan CEI -- The Cleveland Electric Illuminating Company Code -- The Internal Revenue Code of 1986 and the Regulations and Revenue Rulings issued pursuant to said Code, all as in effect from time to time Common Stock or Company Common Stock -- Common Stock (without par value) of the Company Company -- Centerior Energy Corporation Custodian -- KeyBank National Association whose address is set forth after Question 25 Custody Terms -- The document incorporated by reference into your IRA Agreement and containing all the terms applicable to your CX-IRA CX-IRA -- An individual retirement account created under Section 408 of the Code by agreement with the Custodian and which participates in the DRP Plan DRP Plan -- The Dividend Reinvestment and Stock Purchase Plan of the Com- pany IRA -- An individual retirement account created under Section 408 of the Code which does not participate in the DRP Plan IRA Agreement -- The form of Individual Retirement Account Agreement you enter into with the Custodian to establish your CX-IRA IRS -- The United States Secretary of the Treasury, the Commissioner of Internal Revenue or the Internal Revenue Service, whichever applies Option A -- A single total distribution on your Required Beginning Date of all the assets in your CX-IRA Option B -- Installment distributions of all the assets in your CX-IRA starting with respect to the calendar year in which you attain age 70 1/2 and extending over a specific period of time not longer than your life expectancy Option C -- Installment distributions of all the assets in your CX-IRA starting with respect to the calendar year in which you attain age 70 1/2 and extending over a period of time which is not longer than the joint and last survivor life expectancy of you and a designated beneficiary Qualified Retirement Plan -- A tax-exempt stock bonus, pension, profit sharing, Keogh or annuity plan established by an employer for its employees and their beneficiaries Required Beginning Date -- The April 1 following the calendar year in which you reach age 70 1/2 Stock -- Company Common Stock and Preference and Preferred Stock of CEI and Toledo Edison Toledo Edison -- The Toledo Edison Company
A-2 25 DESCRIPTION AND OPERATION OF AN INDIVIDUAL RETIREMENT ACCOUNT WHICH PARTICIPATES IN THE DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN OF CENTERIOR ENERGY CORPORATION 1. What is a CX-IRA? A CX-IRA is an individual retirement account into which you make cash contributions or rollover or transfer contributions in cash or Common Stock from another IRA or a Qualified Retirement Plan. Cash contributions are invested solely in Common Stock by participating in the DRP Plan. The Common Stock is held by the Custodian for your CX-IRA. Dividends paid on shares in your CX-IRA are automatically reinvested in additional Common Stock. Cash contributions may be made into your CX-IRA up to the amounts described in Questions 13 through 16 and are deductible from your taxable income to the extent described in Question 2. Rollover and transfer contributions in any amount can be made into your CX-IRA from a Qualified Retirement Plan or another IRA in the form of cash or Common Stock. Reinvested dividends are not subject to tax while they are held in your CX-IRA. Distributions from your CX-IRA ordinarily are made to you by the Custodian during your retirement years and, after your death, to your beneficiaries. When distributions are made they are taxed at the ordinary income tax rates in effect at the time of the distribution. Distributions are subject to a 10% Federal withholding tax, unless you elect not to have the tax withheld. Rollovers and transfers from your CX-IRA into another IRA or a Qualified Retirement Plan are not taxed at the time of the rollover or transfer. 2. Who may deduct their CX-IRA contributions from taxable income? Your ability to deduct your CX-IRA contributions depends upon whether you or your spouse are covered by a Qualified Retirement Plan, whether you file a single return, joint return or are a married person filing separately and how much adjusted gross income you earn, all as set forth in the table below.
- - ------------------------------------------------------------------------------------- ARE YOU OR YOUR SPOUSE COVERED BY A QUALIFIED IF YOUR ADJUSTED GROSS YOUR MAXIMUM IRA RETIREMENT PLAN? INCOME IS: DEDUCTION IS: - - ------------------------------------------------------------------------------------- NO Any amount $2,000 + $250 for your nonworking spouse - - ------------------------------------------------------------------------------------- Less than $40,000 $2,000 + $250 for (on a joint return) your nonworking spouse YES ------------------------------------------------------ Less than $25,000 $2,000 (on a single return) - - ------------------------------------------------------------------------------------- $40,000 to $55,000 The maximum deduction is (on joint return) reduced by 10 percent for ------------------------------ each $1,000 increase of ad- YES* $25,000 to $35,000 justed gross income above (on a single return) $40,000 for a joint return, ------------------------------ $25,000 for a single return $1 to $10,000 (on a separate and $1 for a separate return return by a married person) filed by a married person** - - ------------------------------------------------------------------------------------- Over $50,000 (on a joint return ------------------------------ Over $35,000 YES* (on a single return) --0-- ------------------------------ Over $10,000 (on a separate return by a married person - - -------------------------------------------------------------------------------------
A-3 26 *If you are a married person filing a separate return, the maximum deduction applies only if your spouse is an active participant in a Qualified Retirement Plan. However, if you and your spouse live apart at all times during the year and file separate returns, your deduction is determined as if you were single. **The reduction is in proportion to the adjusted gross income in excess of the applicable limit, divided by $10,000. A reduced maximum deduction may not be less than $200. A reduced maximum deduction is rounded up to the next highest number which is evenly divisible by 10. PARTICIPATION 3. Who may establish a CX-IRA? If you are a Share Owner or Customer of CEI or Toledo Edison who receives compensation from employment, you may establish a CX-IRA. Your spouse also may establish a CX-IRA as described in Questions 14 and 15. A minor may not establish a CX-IRA. However, a CX-IRA may be established in the name of a custodian for a minor. The maximum contribution for such a CX-IRA is based on the compensation of the minor. AN EMPLOYEE OF THE COMPANY, CEI, TOLEDO EDISON OR THEIR SUBSIDIARIES MAY NOT ESTABLISH A CX-IRA. However, the spouse of an employee, any former employee and any retired employee may establish a CX-IRA. A participant who becomes an employee may no longer make contributions into his CX-IRA and he must either withdraw his CX-IRA assets (which he can then roll over) or transfer them into another IRA or a Qualified Retirement Plan as described in Question 58 or all his CX-IRA assets will be distributed in a single total distribution as described in Questions 40 through 46. See "Federal Income Tax Treatment of a CX-IRA -- Penalty Tax on Distributions before Age 59 1/2". 4. What is considered compensation? Compensation includes salary or wages earned as an employee (including bonuses, overtime, commissions and tips) and income earned from self-employment. It does not include deferred compensation, social security or pension payments, capital gains, dividends or interest. Compensation shall include any amount includible in your gross income under Section 71 of the Code with respect to a decree of divorce or a separation instrument described in subparagraph (A) of Section 71(b)(2) of the Code. 5. May I have more than one CX-IRA You may have only one CX-IRA, except as described in Question 23. (You may establish other IRAs.) 6. May my spouse and I have a joint CX-IRA? No, but you and your spouse may each establish a separate CX-IRA within the limits described in Questions 14 and 15. A-4 27 7. May I participate in the DRP Plan both with and without a CX-IRA? Yes. 8. What may I contribute into my CX-IRA? You may contribute: (a) Cash as described in Questions 17 and 18; and (b) Rollovers and transfers from Qualified Retirement Plans or other IRAs in the form of cash or Common Stock as described in Questions 19 through 23. 9. When may I make contributions into my CX-IRA? You must make a contribution to start your CX-IRA. Thereafter, you may make contributions whenever and as often as you wish, except as described in Questions 19(a) and 23. Federal tax law does not permit cash contributions to be made into your CX-IRA in the tax year in which you attain age 70 1/2 or in any year thereafter to be deductible. Rollover and transfer contributions may be made at any age. 10. To whom do I send my contributions? Send your contributions to the Custodian at the address shown in Question 25. The Custodian will acknowledge receipt of your contribution on your statement of account. DO NOT SEND YOUR CX-IRA CONTRIBUTIONS TO THE COMPANY. If you participate in the Plan both directly and through a CX-IRA, you must send your DRP Plan contributions to the Company and your CX-IRA contributions to the Custodian. 11. May I change my mind and get back my initial contribution? Yes. If you mail or deliver a written notice of revocation to the Custodian within seven days after your CX-IRA is established as described in Question 25, your CX-IRA will be revoked and the Custodian will return to you any initial cash, dividend or stock sale contribution, without interest or earnings, and any Common Stock contributed as a part of an initial rollover or transfer contribution, together with any dividend paid or other distribution made on such Common Stock while it was held by the Custodian. 12. May I change my mind and get back any subsequent contributions? No, but you may receive distributions as described in Questions 35 through 46. LIMITS ON CASH CONTRIBUTIONS 13. How much cash may I contribute into my CX-IRA? You may make any number of cash contributions in any amount, not less than $10 per payment, up to $2,000 per tax year, but not more than your total compensation during the tax A-5 28 year. However, the amount of your contribution which may be deducted on your Federal income tax return may be limited. See Question 2. Importantly, however, if your Federal income tax deduction is limited, the portion in excess of the limitation is a non-deductible contribution to your CX-IRA. Taxation of the dividends and gains on your non-deductible contributions will still be deferred until they are withdrawn. Therefore, your CX-IRA contributions will continue to provide significant tax savings for you. 14. How much cash may my non-working spouse contribute? If you and your spouse each establish a separate CX-IRA, are married and file a joint tax return, and your spouse does not receive any compensation (or elects to be treated as receiving no compensation), you may contribute up to a combined total of $2,250 per tax year (but not more than your compensation during the tax year) into both CX-IRAs. You may divide up the maximum contribution between your CX-IRA and your spouse's CX-IRA any way you desire, but not more than $2,000 per tax year may be placed into any one CX-IRA. However, if you and your non-working spouse become divorced or legally separated under a court decree of separate maintenance in a tax year in which you made a contribution to the CX-IRA of your spouse, that contribution will no longer be deductible on your return. It will be deductible on your former spouse's return up to $2,000, but not more than any compensation your former spouse receives that year. If you die and your surviving spouse is the beneficiary of your CX-IRA, then he or she may make contributions (including rollover and transfer contributions as described in Questions 19 through 23) as though he or she were the original owner of the CX-IRA. 15. How much cash may my working spouse contribute? If your spouse also receives compensation, the $2,250 limit described in Question 14 does not apply unless your spouse has elected to be treated as receiving no compensation during the taxable year. If such election is not made, you may contribute up to $2,000 per tax year into your CX-IRA but not more than the compensation that you received in the tax year. Similarly, your spouse may contribute up to $2,000 per tax year into your spouse's CX-IRA, but not more than the compensation your spouse received in the tax year. If your spouse elects to be treated as receiving no compensation, your spouse may not contribute to an IRA in that tax year. 16. Do the limits on contributions apply to all IRAs I may have? Yes. The limits described in Questions 13 through 15 are imposed by Federal tax law. They apply to the total of all contributions (other than rollover and transfer contributions) you and your spouse make into all the IRAs you have, including CX-IRAs. There is a 6% Federal excise tax penalty on excess contributions in each tax year until they are withdrawn or treated as allowable contributions in a future year. The penalty can be avoided by prompt action. See "Federal Income Tax Treatment of a CX-IRA -- Penalty Taxes on Excess Contributions". A-6 29 CASH CONTRIBUTIONS 17. May I make cash contributions either in cash or by check? No. You may make cash contributions only by check drawn on a United States bank payable to the Custodian in United States Dollars. Post-dated checks will not be accepted. 18. Do I have to make cash contributions each year? No. You may start and stop cash contributions any time. ROLLOVER AND TRANSFER CONTRIBUTIONS 19. What is a rollover contribution? A rollover contribution is a deposit into your CX-IRA of part or all of: (a) A distribution to you from another IRA, established by you, but only if you have not made another rollover contribution from the same IRA to any other IRA (including your CX-IRA) within the last 12 months; (b) A distribution to you from an IRA established by your spouse which is on account of the death of your spouse or a qualified domestic relations order (as defined in the Code); (c) A total distribution to you from a Qualified Retirement Plan if it is made (i) to you after termination of employment if you are not self-employed, (ii) to you after you become disabled if you are self-employed, (iii) after you reach age 59 1/2, (iv) to you after the Qualified Retirement Plan terminates, (v) to you as beneficiary upon the death of your spouse or (vi) under any other circumstances qualifying for rollover into an IRA; or (d) A distribution to you of at least 50% of your account in a Qualified Retirement Plan, but only if you have terminated employment or become disabled, receive the distribution on account of the death of your spouse, or receive a distribution from an employee stock ownership plan pursuant to your election to diversify your investments, and have filed an election with the IRS to treat such a distribution as a rollover. See "Federal Income Tax Treatment of a CX-IRA -- Rollovers and Transfers" for special rules relating to this type of contribution. However, you must exclude from a rollover under (c) or (d), above, any amounts you received from the Qualified Retirement Plan which were your own contributions (or the contributions of your spouse) which you had not deducted on your tax return. A rollover contribution must be made into your CX-IRA within 60 days after you receive the distribution (or receive the last of any series of distributions within one tax year which qualify as one distribution as described above). 20. What is a transfer contribution? A transfer contribution is substantially the same as a rollover contribution from another IRA or Qualified Retirement Plan of the kind described in Question 19, except that: A-7 30 (a) Instead of distributing to you the assets to be transferred, the custodian or trustee of the other IRA or Qualified Retirement Plan transfers them directly to the Custodian to be placed into your CX-IRA; (b) You can transfer less than the total assets in a Qualified Retirement Plan; and (c) You can make as many such transfers as you wish in any 12-month period. 21. How is a rollover or transfer made into my CX-IRA? To make a rollover, you must first receive distribution from the other IRA or Qualified Retirement Plan and then send all or part of it to the Custodian as a contribution into your CX-IRA. To make a transfer, you must advise the Custodian of the name and address of the custodian or trustee of the other IRA or Qualified Retirement Plan, the amount of cash or Common Stock to be transferred and your account number or similar information regarding the other IRA or Qualified Retirement Plan and furnish the Custodian with a signed letter addressed to the custodian or trustee of the other IRA or Qualified Retirement Plan authorizing release of the cash or Common Stock. The Custodian will arrange with the other custodian or trustee to receive the cash or Common Stock. A transfer contribution fee is charged for each such transfer and may be paid either separately by check or deducted from the amount of your transfer contribution. If the rollover or transfer is from a Qualified Retirement Plan or another IRA containing assets which originated from a Qualified Retirement Plan, you must establish a separate rollover CX-IRA for that rollover or transfer as described in Questions 24 through 27. 22. May I rollover or transfer property other than cash? Yes, but only whole shares of Company Common Stock. Any other non-cash rollover or transfer assets must be converted into United States Dollars before contributing them into your CX-IRA. In the case of a rollover or transfer from another IRA, the conversion must be made before the distribution is made to you or your successor custodian. In the case of a rollover or transfer from a Qualified Retirement Plan, the conversion must be made before the transfer or either before or after you receive the distribution to be rolled over. Common Stock held for you by the Company in a Plan account which is not a CX-IRA cannot be rolled over into your CX-IRA. 23.May I combine a rollover or transfer contribution and cash contributions into one CX-IRA? Yes, but only if the rollover or transfer contribution is from another IRA as described in Questions 19 and 20. The Custodian requires that a separate CX-IRA be established to receive a rollover or transfer of the kind described in Questions 19(c) and (d) and 20 from a Qualified A-8 31 Retirement Plan. No other rollover, transfer or cash contribution can be made into that separate rollover CX-IRA. ESTABLISHING AND OPERATING A CX-IRA 24. When may I establish a CX-IRA? You may establish a CX-IRA anytime. 25. How do I establish a CX-IRA? To establish a CX-IRA, you must fill out, sign and return to the Custodian an IRA Agreement, make an initial cash, rollover or transfer contribution, pay the account establishment fee and (if applicable) a transfer contribution fee. Your CX-IRA is established when the Custodian accepts your IRA Agreement by signing it and accepts your initial contribution. The Custodian will send to you a copy of your accepted IRA Agreement. The IRA Agreement and other CX-IRA forms may be obtained at any time by written or telephone request to the Custodian. FOR ALL COMMUNICATIONS ABOUT A CX-IRA CALL THE CUSTODIAN TOLL FREE 1-800-542-7792 In the Cleveland local area (216) 813-5745 or WRITE TO KeyBank National Association Custodian, CX-IRA P.O. Box 6477 Cleveland, Ohio 44101 A-9 32 26. What does the IRA Agreement form provide? The IRA Agreement form has the following Parts: Part I -- information required for any CX-IRA. Part II -- information required only for the initial cash contribution into a CX-IRA which is not a rollover or transfer. Part III -- information required only for an IRA or Qualified Retirement Plan rollover or transfer contribution into a CX-IRA. Part IV -- a Beneficiary Designation form. The applicable portions of Parts I, II and III must be filled out to establish a CX-IRA. Part IV should be filled out so that your intended beneficiaries are named. The IRA Agreement also contains explanatory information relating to a separate Retirement Distribution Instruction form which the Custodian will furnish to you on request. Distribution Instructions and Beneficiary Designations may be changed as described in Questions 38, 50 and 56. The Custodian will send you extra copies of those forms whenever you request. YOU AND YOUR BENEFICIARIES ARE URGED TO KEEP THE CUSTODIAN INFORMED AT ALL TIMES OF THE CURRENT ADDRESSES AND IDENTITIES (NAME CHANGES DUE TO MARRIAGE, DIVORCE, ETC.) OF YOUR BENEFICIARIES. 27. Do I have to submit a Contribution Advice with each contribution? Yes. You must send a Contribution Advice with each contribution you make. This form will be furnished to you with each quarterly statement of account. The Custodian will send you additional copies whenever you request. INVESTMENT OF CX-IRA CONTRIBUTIONS 28. When and in what will my CX-IRA contributions be invested? Each cash contribution and cash rollover or transfer contribution will be invested by the Custodian, as follows: (a) On the day the Custodian receives your contribution, it will be invested initially in a money market retirement account established for your CX-IRA by the Custodian which earns daily interest at money market rates; (b) If the contribution is received by the Custodian before the first business day of a month it will be invested along with any interest it has earned on said first business day of that month in Common Stock, except that (i) in months where a quarterly dividend on Common Stock is paid (February, May, August and November) any cash received on or after the first business day of the preceding month through the 14th calendar day of the month in which the dividend is paid along with any interest it has earned will be invested A-10 33 with the dividends on the 15th of said month and (ii) contributions received on the first business day of the year will be invested on that date; and (c) If the contribution is received by the Custodian on or after the first business day of any month (except (i) February, May, August and November, in which case this provision applies to any cash received on or after the 15th calendar day of the month or (ii) the first business day of the year), the contribution and the interest it earns will be invested in Common Stock on the first business day of the next month. 29. In what will dividends on Common Stock in my CX-IRA be invested? The dividends payable on Common Stock in your CX-IRA on an investment date will be reinvested in additional Common Stock on that investment date. Dividends are not payable to your CX-IRA on an investment date on Common Stock purchased by your CX-IRA on that investment date because your CX-IRA did not own those shares on the applicable record date. 30. How many shares of Common Stock will be purchased by my CX-IRA? The number of shares your CX-IRA purchases on an investment date (including any fraction of a share computed to three decimal places) will be equal to the total funds available in your CX-IRA for investment in Common Stock on that investment date divided by the purchase price per share (including any brokerage commissions and service charges) for that date. 31. What will be the purchase price of Common Stock? If Common Stock is purchased on the open market (whether on an exchange, over the counter or in a negotiated transaction), the purchase price to the participant of those shares will be the average cost of all the shares purchased by the Agent or his authorized fiduciary beginning no later than five business days prior to the investment date and ending no later than 15 business days after the investment date, plus an amount to cover the brokerage commission and service charge. However, purchases on the open market may begin at an earlier date when permissible or end at a later date when necessary or advisable under applicable Federal regulatory and securities laws. If Common Stock is purchased directly from the Company, the purchase price to the participant of those shares will be the average of the most recent five daily high and low sales prices of the Common Stock, ending with the investment date, as reported in The Wall Street Journal report of NYSE -- Composite Transactions, plus an amount to cover any service charge. If The Wall Street Journal's report of share transactions is not published for one or more of the most recent five trading days or if any such report contains reporting errors, the purchase price shall be determined by the Company on the basis of such market quotations as the Company deems appropriate. The amount to cover the brokerage commission and service charge may change from time to time. You will be furnished with a separate notification of the amount and any changes thereto. Any notification of change will be mailed to participants not less than seven days prior to the effective date of the change. A-11 34 32. May my CX-IRA purchase a specific or limited number of shares? No. All the funds in your CX-IRA available for investment in Common Stock on an investment date will be used to purchase Common Stock for your CX-IRA on that investment date. 33. Will there be any cost to me for purchases for my CX-IRA? Yes. An amount to cover any brokerage commission and service charge will be added to the price of Common Stock purchased. See Question 43 regarding the cost of selling Common Stock and distributing your CX-IRA assets. 34. Will I receive stock certificates for shares purchased for my CX-IRA? No. Stock certificates will be issued to the Custodian. The Custodian will hold the Common Stock for your CX-IRA until it is sold or distributed to you or your beneficiaries or transferred into a Qualified Retirement Plan or another IRA. DISTRIBUTIONS FROM A CX-IRA 35. What kinds of distributions may be made from my CX-IRA? You may request the Custodian to make any of the following kinds of distributions to you: (a) A single total distribution at any time; (b) Any number of partial distributions of a specified number of shares of Common Stock, either from time to time or on a regular schedule; and (c) Option B or C type installment distributions as described in Questions 47 through 48 starting any time before your Required Beginning Date, except that installments may extend over any period of time; but remember that: (i) Distributions made before you become age 59 1/2 and which are not rolled over may be subject to a 10% Federal excise tax penalty as described under "Federal Income Tax Treatment of a CX-IRA -- Penalty Tax on Distributions before Age 59 1/2"; (ii) Distributions must be made in a certain manner and in certain minimum amounts starting no later than your Required Beginning Date as described in Questions 47 through 52 or else you will be subject to a 50% Federal excise tax penalty as described under "Federal Income Tax Treatment of a CX-IRA -- Penalty Tax for Insufficient Distributions"; and (iii) As described in Question 57, no partial or installment distribution of less than five shares is permitted, except as described in Question 59, and if you have less than 60 shares of Common Stock in your CX-IRA on your Required Beginning Date or on any January 1 thereafter, all your CX-IRA assets will be distributed to you, unless you roll them over or transfer them. A-12 35 36. How do I request a distribution from my CX-IRA? To request a distribution to be made or started before your Required Beginning Date, you must fill out, sign and send to the Custodian a Distribution Instruction form and, in the case of an Option B or C installment distribution as described in Questions 47(b) and (c), a Beneficiary Designation form. To request a distribution to be made or started on your Required Beginning Date, you must fill out, sign and send Beneficiary Designation and Distribution Instruction forms to the Custodian, unless you have previously done so when you completed your IRA Agreement. The Custodian will send these forms to you upon written or telephone request. 37. Must I submit a separate request for each distribution? You may either submit a separate Distribution Instruction form for each partial distribution or you may submit one form to request several partial distributions on a schedule you specify. However, a request for an Option B or C type or an Option B or C installment distribution, as described in Questions 35(c) and 47(b) and (c), must be made on a single Distribution Instruction form. An additional Distribution Instruction form must be furnished to the Custodian any time you change the period of installments as described in Question 50. 38. May I change or revoke a distribution instruction? Prior to your Required Beginning Date, you may change your distribution instructions any time, including any schedule of partial distributions or Option B or C type installment distributions which have previously started, by submitting a new Distribution Instruction form. You may revoke a Distribution Instruction prior to your Required Beginning Date by writing to the Custodian. After your Required Beginning Date, if you are receiving Option B or C installment distributions, you may not revoke your instructions, but you may make changes in the distribution period and your beneficiary as described in Questions 50 and 56. 39. Is there a deadline for making a distribution request? (a) A distribution of your entire CX-IRA balance will become effective not later than five business days after receipt of a Distribution Instruction form; and (b) If you wish to start receiving periodic distributions in a particular month, your Distribution Instruction form must be received by the Custodian not later than the first business day of that month. The effective date of the distribution will be the second business day of the month. If the Distribution Instruction form for periodic distributions is received after the first business day of the month, the first of a series of distributions will not be made until the next month and its effective date will be the second business day of that month. A-13 36 40. When will a distribution be made? A distribution of your entire CX-IRA balance will be mailed on or before the 10th business day following the effective date for the distribution. All periodic distributions will be mailed about three days before the 15th day of the month. If a periodic distribution is made in a month in which there is an investment date, the dividend payable on that investment date on the Common Stock being distributed will be reinvested in Common Stock. In the case of a distribution of all the assets in your CX-IRA, the dividend earned will not be invested. Instead, it will be distributed to you by check on the dividend payment date. 41. In what form will distributions be made? Distributions will be made in the form of Common Stock or, if you so request, a portion or all of the Common Stock to be distributed will be sold for you and the proceeds from the sale will be distributed as described in Question 44. No cash in your CX-IRA will be distributed to you (other than proceeds from the sale of Common Stock included in the distribution), except in the case of the distribution of all the assets in your CX-IRA. However, cash may be transferred to another IRA or a Qualified Retirement Plan as described in Question 58. 42. Is a distribution from my CX-IRA subject to Federal income tax withholding? Yes, distributions from your CX-IRA are subject to a 10% withholding tax. However, you may elect on your Distribution Instruction form not to have the tax withheld. In any event, your distribution is taxed as ordinary income in the tax year you receive it, except to the extent you roll it over into another IRA or Qualified Retirement Plan. To insure that no tax is withheld, you must elect not to have the tax withheld from any portion of the distribution which you intend to rollover. See "Federal Income Tax Treatment of a CX-IRA -- Withholding Tax". Transfers described in Question 58 are not subject to withholding tax. 43. Will I pay any cost of sale or distribution? Yes. Any brokerage commissions, service charges and transfer costs incurred in any sale of Common Stock in your CX-IRA will be subtracted from the sale proceeds. Also, the Custodian will charge you a small distribution fee and, if applicable, a transfer distribution fee, all as set forth in a schedule it will furnish to you. The Custodian may change the fees from time to time and you will be notified of any such change. See Question 55 regarding costs your beneficiary may incur. 44. How much Common Stock and cash will I receive? If you requested distribution in the form of Common Stock only, any fractional share to be distributed will be sold and, if necessary, additional whole shares also will be sold to pay any withholding tax, costs of sale, service charge and any distribution fees. You will receive the remaining whole shares and a check for the remaining proceeds from the sale. A-14 37 If you requested the Custodian to sell any portion or all of the shares to be distributed, then any withholding tax on both the shares sold and those not sold, the costs of sale, service charge and any distribution fees will be deducted from the sale proceeds of the shares sold. Additional shares will be sold, if necessary, to provide funds for the withholding tax, costs of sale, service charge and any distribution fees. A check for the remaining proceeds will be delivered to you, together with any whole shares not sold. In the case of the distribution of all the remaining assets in your CX-IRA, any cash in your CX-IRA which had not been invested in Common Stock will also be distributed, less any withholding tax. 45. How will my CX-IRA shares be sold, by whom and at what price? The Custodian will instruct the Company to sell any CX-IRA shares which must be sold to carry out your distribution instructions. The Company will have a brokerage firm it selects sell your shares together with other shares the Company may have been instructed to sell under the DRP Plan. All shares will be sold at prevailing market prices. The sale price of your shares will be the average of the prices at which all the shares were sold. Similarly, the costs of sale of your shares will be the average costs of sale of all the shares sold. 46. In whose name will stock certificates and checks be made payable? Stock certificates for Common Stock will be registered and checks will be made payable in the name of the person entitled to the distribution. That would be you or a beneficiary, whichever is applicable, or in the case of a transfer to another IRA, the trustee or custodian of that IRA. If stock certificate or payment of sale proceeds is desired in another name, the requirements for the transfer of ownership of Common Stock must be satisfied. 47. Is there a deadline for distributing or starting to distribute my CX-IRA assets? Yes. Federal tax law requires that no later than your Required Beginning Date your CX-IRA assets must be distributed or begin to be distributed either in: (a) A single total distribution to you ("Option A"); (b) Monthly, quarterly or annual installments distributed over a period of time specified by you not longer than your life expectancy ("Option B"); or (c) Monthly, quarterly or annual installments distributed to you and, after your death, to a designated beneficiary over a period of time specified by you which is not longer than the joint and last survivor life expectancy of you and that designated beneficiary ("Option C"). Therefore, the Custodian must receive from you not later than the March 1 preceding your Required Beginning Date a Distribution Instruction form (and, if necessary, a Beneficiary Designation form) in which you elect either Option A, B or C effective on March 1. If you do not make such election, the Custodian will distribute all your CX-IRA assets to you in a single total distribution under Option A on or about the March 15 before your Required Beginning Date. You A-15 38 must make this election even if you have previously begun to receive distributions as described in Question 35(b) or (c), unless you made this election in your IRA Agreement. When your election becomes effective, any distributions being made as described in Question 35(b) or (c) will stop. NOTE: IF YOU WAIT UNTIL THE YEAR IN WHICH YOUR REQUIRED BEGINNING DATE OCCURS TO TAKE YOUR FIRST DISTRIBUTION, YOU MAY ALSO BE REQUIRED TO TAKE A SECOND DISTRIBUTION BY DECEMBER 31 OF THE SAME YEAR. If you elect Option C and your joint and last survivor beneficiary dies before your Required Beginning Date, the Option C election will become an Option B election distributable over your life expectancy, unless you make another Option A, B or C election. If you elect to receive Option B or C installment distributions, the amount distributed in each year is computed as described in Question 49 based on the number of years you selected for receiving installments. In any event, there is a minimum amount which you must receive each year computed as described in Question 48 based on the life expectancy applicable to the Option you elected. There is a 50% Federal excise tax penalty for not receiving an Option A by, or starting an Option B or C installment distribution by, your Required Beginning Date. See "Federal Income Tax Treatment of a CX-IRA -- Penalty Tax for Insufficient Distributions" for measurement of the tax. 48. Is there a required minimum installment distribution under Option B or C? Yes. If you elect Option B or C, then the amount of your installment distribution (and after your death, installment distributions to your beneficiary as described in Question 51) attributable to the calendar year in which you attain age 70 1/2 and in each calendar year thereafter must be not less than: (a) The fair market value of the CX-IRA on December 31 of the preceding calendar year; (b) Divided by the life expectancy applicable to the Option you elected (i) as last redetermined as described in Question 50 or (ii) minus one for each calendar year which has ended after the time you attained age 70 1/2; or the remaining amount in your CX-IRA, if it is less. As described in Question 47, the minimum distribution attributable to the calendar year in which you attain age 70 1/2 must be paid by your Required Beginning Date. Distributions for each subsequent calendar year must be received by December 31 of that year. For the minimum quarterly installment, divide the result by four and for the minimum monthly installment, divide the result by 12. The minimum installments which must be made for an installment distribution election described in Question 52 are computed in the same manner, except that the life expectancy of your individual beneficiary described in Question 52(a) will be used. There is a Federal excise tax penalty equal to 50% of any shortage in the minimum required distribution in a tax year. See "Federal Income Tax Treatment of a CX-IRA -- Penalty Tax for Insufficient Distributions". A-16 39 49. How do I compute my installment distributions under Options B and C? Prior to the calendar year in which you attain 70 1/2, you compute your actual Option B or C distribution installment in the same manner as your required minimum installment distribution is computed as described in the first two paragraphs of Question 48, except that, instead of using the life expectancy described in clause (b) of the formula in Question 48, you use the number of years you actually selected for your Option B or C election (as it may be changed as described in Question 50). If your actual distribution is less than the minimum computed as described in Question 48, you should use a lesser number of years sufficient to cause the installment distribution to equal or exceed the required minimum. 50. How do I determine my life expectancy and that of my beneficiary? The maximum installment distribution period is determined on your Required Beginning Date for Option B or C and at your death for distributions described in Question 52. Federal regulations require you to use the multiples in Tables V and VI in Treasury Regulation Section 1.72-9 and Proposed Treasury Regulation Section 1.401(a)(9)-2. These tables are contained in IRS Publication 590, "Individual Retirement Accounts (IRAs)", which may be obtained from any office of the IRS. The applicable life expectancy (yours, your beneficiary's or the joint and last survivor of you and your beneficiary, as the case may be) derived from those tables is used to determine: (a) The maximum period of installments which you are allowed to specify; and (b) The annual required minimum installment distribution as described in Question 48. With respect to Option B or C distributions as described in Question 48, your life expectancy and, if applicable, your beneficiary's shall be determined as of your birthdates in the calendar year that you attain age 70 1/2. In subsequent calendar years, the applicable life expectancy shall be reduced by one year for each calendar year ended on or after you attained age 70 1/2 unless the life expectancy is redetermined as discussed below. Notwithstanding the preceding remarks in this answer, if your spouse is not your beneficiary, prior to your death, your joint life expectancy and that of your beneficiary that is determined for any calendar year may not be greater than the amount determined from the table set forth in Q&A -- 4 of Section 1.401(a)(9)-2 of the Proposed Treasury Regulations. In the case of distributions as described in Question 52, your beneficiary's life expectancy is determined as of the beneficiary's birthdate in the calendar year distributions commence. In calendar years subsequent to the calendar year in which distributions commence, your beneficiary's applicable life expectancy shall be reduced by one for each calendar year ended on or after the distribution commencement date unless the life expectancy is redetermined as discussed below. If minimum installments are payable (as described in Question 48) under Option B or C, you may elect to redetermine your life expectancy. If your spouse (or a trust for the benefit of your spouse) is your beneficiary, you may elect to redetermine the life expectancy of your spouse. You must make such election no later than your Required Beginning Date. A-17 40 On the other hand, if minimum installments are payable as described in Question 52, your surviving spouse may elect to redetermine life expectancy prior to the end of the calendar year following your death if you die prior to your Required Beginning Date and you did not elect a method of distribution of your CX-IRA assets. After your Required Beginning Date and, for your spouse, the end of the calendar year following your death, the election to recalculate is irrevocable. To make such change, a new Distribution Instruction form must be delivered to the Custodian. Such redetermined life expectancy may then be applied as a new maximum period of installments resulting in a decrease in the annual required minimum installment distributions. The previously specified period of installments may then be increased up to the new maximum and thereby reduce the annual installment distributions. In this way, assets will remain in your CX-IRA for a longer period of time. However, if you elect to redetermine life expectancy, after the death of the person whose life expectancy was redetermined, any remaining life expectancy of such person cannot be used to determine minimum annual distributions. In that case, only the life expectancy of a beneficiary that was named at the earlier of your Required Beginning Date or death may be used to determine minimum annual distributions. If no such beneficiary remains, all of your CX-IRA assets must be distributed by December 31 of the following calendar year. Only an individual or a trust for the benefit of an individual may be a joint and last survivor beneficiary of a portion or all of your CX-IRA under Option C. A trust is considered for the benefit of an individual if as of the earlier of your required Beginning Date or death (a) the trust is valid under the state law, (b) the beneficiaries are identifiable individuals, (c) the trust is irrevocable and (d) a copy of the trust is provided to the Custodian. If you elect more than one beneficiary, the life expectancy of the oldest beneficiary, determined as of your Required Beginning Date or, if earlier, your death, is used to determine the required annual minimum installment. In addition, if you change your beneficiary after your Required Beginning Date, the life expectancy of your new beneficiary will be used if it is shorter than the life expectancy of your previous beneficiary. 51. If I die after my Required Beginning Date, who receives my CX-IRA assets? If you die after your Required Beginning Date and installment distributions are being made under Option B or C, your CX-IRA assets will be distributed as follows: (a) If you have designated a beneficiary, then to your beneficiary, if living; or (b) If you have not designated a beneficiary or the beneficiary is not living, then to your estate; (c) If your beneficiary dies after becoming entitled to receive distributions and you (or with your authorization, your beneficiary) have designated a successor beneficiary, then to the successor beneficiary, but if no successor beneficiary has been designated or is living, then to the estate of the deceased predecessor beneficiary. Any distribution described above will continue to be made in installments over the remainder of the period in effect for your Option when you died, unless changed as described in Question 53. A-18 41 52. If I die before my Required Beginning Date, who receives my CX-IRA assets? If you die before your Required Beginning Date, then whether or not any partial or any Option B or C type installment distributions have previously begun, your CX-IRA assets will be distributed as follows: (a) If you have designated an individual or a trust for the benefit of an individual to be a beneficiary, then to that beneficiary (i) commencing no later than December 31 of the calendar year following the date of your death, and over a period not extending beyond the life expectancy of that individual (as described in Question 50) or (ii) if longer, over a period not extending beyond the end of the calendar year in which occurs the fifth anniversary of your death, commencing any time, but if distribution to that person or trust does not begin by December 31 of the calendar year following the year you die, then distributions may not extend beyond the end of the calendar year in which occurs the fifth anniversary of the date of your death; (b) If you have designated a beneficiary other than an individual or a trust for the benefit of an individual, then to that beneficiary, if in existence, commencing any time and over a period not extending beyond the end of the calendar year in which occurs the fifth anniversary of your death; (c) If no beneficiary is living or in existence when you die, then to your estate commencing any time and over a period not extending beyond the end of the calendar year in which occurs the fifth anniversary of your death; and (d) If your beneficiary dies after becoming entitled to receive distribution and you (or with your authorization, the beneficiary) have designated a successor beneficiary, then to the successor beneficiary, but if no successor beneficiary has been designated or is living, then to the estate of the deceased predecessor beneficiary, in each case, commencing any time and over a period not extending beyond the end of the calendar year in which occurs the fifth anniversary of your death. However, in the case of a distribution described in (d) above, if the initial beneficiary is an individual or a trust for the benefit of an individual and distribution to the initial beneficiary begins by December 31 of the calendar year following the year of your death, then the period of distribution may be as long as the life expectancy of the initial beneficiary. Any distribution under (a) through (d) above may be made in a single total distribution or in installments over a specified period not longer than the life expectancy of the beneficiary or, if applicable, the end of the calendar year in which occurs the fifth anniversary of your death (except that if distributions do not begin before the end of the calendar year in which occurs the fifth anniversary of your death, distribution will be made in a single total distribution). Notwithstanding (a) above, if the initial beneficiary is your surviving spouse, your surviving spouse may elect to have distribution commence by the later of December 31 of the calendar year following your death or December 31 of the year in which you would have attained age 70 1/2. Such election must be made no later than the earlier of December 31 of the calendar year containing the fifth anniversary of your death or the date distributions are required to commence pursuant to the preceding sentence. If your surviving spouse dies before distributions begin to the surviving spouse, then distributions may be made to a successor A-19 42 beneficiary under (a) and (b), above, applied as though you had no surviving spouse and you had died on the day your surviving spouse died. If you designate your minor child as the initial beneficiary to receive distributions of your CX-IRA assets only until attaining the age of maturity with distributions then continuing to your surviving spouse, the amount of the distributions to your minor child must be calculated based on the life expectancy of your surviving spouse. 53. Who specifies whether distributions will be in installments and the period of installments? You do. Also, unless you or your beneficiary specify in your Distribution Instruction form that the instructions in that form may not be changed, any estate or beneficiary which becomes entitled to receive distributions as described in Questions 51 and 52 may elect either a single total distribution or installments and may specify the period of installments within the applicable maximum period (except where a single total distribution is required as described in the third last paragraph of Question 52). If an estate or beneficiary does not make such an election before the fifth year after your death, then such estate or beneficiary will receive a single total distribution. 54.May distributions be made after my Required Beginning Date in addition to Option B or C installments ? Yes. You may request distribution of all or any part of your CX-IRA assets at any time or times in addition to your installments under Option B or C. Unless you instruct otherwise, after your death your beneficiary also may request such distributions in addition to the distributions being made under Option B or C or Question 52. Any installment distributions remaining to be made in the year any such additional distribution is made will not be reduced in amount. In the following years, distribution amounts will be computed in accordance with the distribution method you selected based on the remaining assets and the applicable installment period. 55. Who may be designated a beneficiary? Any individual, trust, partnership, corporation, charitable organization, other entity or estate may be designated a beneficiary. However, if you elect Option C, only an individual or a trust for the benefit of an individual may be your designated beneficiary (See Question 50). More than one beneficiary may be designated to receive distributions from your CX-IRA at the same time. Those who are living at the time they become entitled to receive distributions will share in equal portions unless otherwise stated in the designation. Question 50 describes the determination of life expectancy for minimum annual distributions. The Custodian will make distributions to a beneficiary only after receiving (a) any required distribution instructions, (b) proof acceptable to it of your death and that the person claiming to be the beneficiary is entitled to distributions and (c) the signature of the beneficiary guaranteed by a commercial bank or broker. Your beneficiary is responsible for the cost of providing any such proof and guaranty. A-20 43 56. How is a beneficiary designated? You or any person entitled to designate a beneficiary must fill out, sign and send a Beneficiary Designation form to the Custodian. A designation of beneficiaries may be changed or revoked in the same manner by the person who made it. A Beneficiary Designation will become effective with respect to distributions not already made before the Custodian has received it. 57. Is there a restriction on the size of a distribution? Yes. No distribution may be made for less than five shares of Common Stock or its cash equivalent at the time of distribution, except as described in Question 59. If on your Required Beginning Date, or on any January 1 thereafter, the assets in your CX-IRA (or the portion of them being distributed to a beneficiary) are less than 60 shares of Common Stock or its cash equivalent, the Custodian will notify you or such person that all those assets will be distributed to the person then entitled to receive distributions, unless within 60 days after such notice such person requests an earlier distribution (which can then be rolled over) or a transfer of assets into another IRA or Qualified Retirement Plan. ROLLOVER OR TRANSFER OF CX-IRA ASSETS TO ANOTHER IRA OR QUALIFIED RETIREMENT PLAN 58.May I rollover or transfer my CX-IRA assets to another IRA or Qualified Retirement Plan? You may make a rollover of all of your CX-IRA assets: (a) To another IRA; or (b) To a Qualified Retirement Plan, but only from a separate rollover CX-IRA containing assets which had been rolled over or transferred into it out of a total distribution from a Qualified Retirement Plan as described in Question 19(c) which is not received on account of the death of your spouse. To carry out such a rollover, you must request a distribution as described in Questions 36 through 46. You must contribute the distributed assets to the other IRA or Qualified Retirement Plan within 60 days after you receive the distribution. You may transfer your CX-IRA assets into another IRA or a Qualified Retirement Plan in a manner similar to a rollover, except that, instead of receiving distribution yourself, the Custodian will transfer the assets directly to the trustee or custodian of the other IRA. To carry out such a transfer, you must provide the custodian or trustee of the other IRA or Qualified Retirement Plan with the information needed to enable that custodian or trustee to arrange with the Custodian for the transfer of assets from your CX-IRA to the other IRA or plan. Transfers will be made in accordance with the procedures similar to those described in Questions 36 through 46 for distributions. If your surviving spouse is your beneficiary, your surviving spouse also may make rollover and transfers out of your CX-IRA as described above. A-21 44 WITHDRAWAL OF EXCESS CONTRIBUTIONS 59. How do I make a withdrawal of an excess contribution? If you wish to make a withdrawal to avoid the penalty tax on excess contributions described under the heading "Federal Income Tax Treatment of a CX-IRA -- Penalty Tax on Excess Contributions", you must request, within the deadline described under that heading, a distribution of the excess contribution and any interest earned on it in the retirement deposit account of the Custodian; or, if it and any interest it earned has been invested in Common Stock, you must request a distribution of that Common Stock and any additional Common Stock purchased with any reinvested dividends thereon. (As described under that heading, in certain cases you do not have to withdraw the interest or reinvested dividends to avoid the penalty tax on excess contributions.) You also may request that all or part of the whole shares of the Common Stock being distributed be sold for you. The excess cash or Common Stock and the proceeds from the sale of shares you requested to be sold and from the sale of any fractional share, less any brokerage commissions, service charge and transfer costs, will be distributed to you. A request for the distribution of an excess contribution and any sale should be made in the manner, and will be carried out in the manner, described in Questions 36 through 46, except that the withholding tax, service charge, distribution fee and the restrictions on the size of distributions described in Questions 42, 43 and 57 do not apply. OTHER MATTERS 60. May I deposit Common Stock registered in my name into my CX-IRA? Only Common Stock which is part of a rollover or transfer from another IRA or Qualified Retirement Plan may be deposited into your CX-IRA. 61. Who will hold the Common Stock in my CX-IRA? The Common Stock in all CX-IRA will be registered in the name of the Custodian who will hold it for all CX-IRA. 62. What information must I provide to the Custodian? You must provide the Custodian with all information necessary for it to administer your CX-IRA and to prepare any reports required with respect to your CX-IRA under the Code. 63. Will the Custodian submit reports to the IRS and me? Yes. You will be sent a quarterly statement of account as soon as practicable after each investment date (generally, by the first day of the following month). It will serve as a continuing record of the purchases and distributions by your CX-IRA. A distribution statement also will be sent to you upon the occasion of each distribution from your CX-IRA. In addition, you will be sent a Prospectus for the DRP Plan, IRA Appendix and copies of the same communications sent to other Share Owners, including the Company's Quarterly Review, Annual Report and Notice of Annual Meeting and Proxy Statement. The Custodian also will submit to the IRS and you any reports required by the IRS. A-22 45 You or any other person entitled to receive distributions from your CX-IRA must advise the Custodian within 90 days after receiving a quarterly statement of account of any errors in the statement. Otherwise, the statement will be considered to be accepted as correct. 64. May I or my beneficiary transfer ownership of my CX-IRA or its assets? No. You may not transfer ownership of your CX-IRA to anyone else or pledge it as security for a loan. You also may not transfer ownership of any assets in your CX-IRA or pledge them for a loan while they are held in your CX-IRA. 65.If the Company has a rights offering, how will my entitlement be computed? Common Stock Share Owners do not have pre-emptive rights. However, if the Company offers them the right to purchase securities, the entitlement of your CX-IRA to such rights will be based upon the total number of shares of Common Stock held in your CX-IRA. Those rights will be sold and the proceeds will be invested for your CX-IRA in Common Stock on the next investment date and, pending such investment, in the money market retirement account of the Custodian. 66. What happens if the Company declares a stock dividend? Any stock dividends distributed by the Company on shares held in your CX-IRA will be to your CX-IRA. 67. What happens if the Company declares a stock split? Any stock split shares distributed by the Company on shares held in your CX-IRA will be added to your CX-IRA. 68. When will I acquire Share Owner rights to shares purchased for my CX-IRA? You acquire beneficial Share Owner rights, including the right to direct the Custodian how to vote, with respect to shares purchased in your CX-IRA on the investment date on which those shares are purchased. However, shares purchased on an investment date that occurs during a period beginning on the ex-dividend date for a dividend and ending on that dividend's payment date do not receive the dividend paid on that date because those shares were not held in your CX-IRA on the record date for the payment of that dividend. Those shares become eligible to receive dividends starting on the next Common Stock dividend payment date. 69. How will my shares be voted at meetings of Share Owners? The Custodian will furnish you with proxy material relating to the shares in your CX-IRA and will vote those shares as instructed by you. In the absence of instructions, those shares will not be voted, except that if you vote shares registered in your name in person or by proxy or if you instruct the Company to vote shares held for you in the DRP Plan, the Custodian will vote your CX-IRA shares in the same manner, unless the Company is unable to inform the Custodian how those other shares are being voted. A-23 46 DUTIES AND RESPONSIBILITIES OF THE COMPANY AND THE CUSTODIAN 70. What is the responsibility of the Company under the DRP Plan? The Company in administering the DRP Plan, maintains records, sends quarterly statements of account to the Custodian and performs other duties relating to the participation of the Custodian in the DRP Plan on behalf of your CX-IRA. Interpretations by the Company of the provisions of the DRP Plan applicable to your CX-IRA participation are binding upon the Custodian, you and your CX-IRA. The Company will not be liable for any act done in good faith or for any good faith omission to act, including, without limitation, any claim of liability arising out of any act or omission to act by the Company after your death and before receipt of proof of death. Also, the Company is not responsible for any tax or penalty you incur as described in the second paragraph of Question 71. YOU SHOULD RECOGNIZE THAT STOCK IS ENTITLED TO A DIVIDEND ONLY IF THE BOARD OF DIRECTORS OF THE ISSUER COMPANY DECLARES ONE. YOU ALSO SHOULD RECOGNIZE THAT THE COMPANY CANNOT ASSURE YOUR CX-IRA OF A PROFIT OR PROTECT IT AGAINST A LOSS ON THE SHARES PURCHASED BY YOUR CX-IRA. 71. What are the duties and responsibilities of the Custodian under my CX-IRA? The Custodian performs the duties and has the responsibilities with respect to your CX-IRA as set forth in the Custody Terms. The Custodian has no duty to perform or refrain from performing any act in connection with your CX-IRA, except as specifically stated in the Custody Terms. In particular, but without limiting the general meaning of the preceding sentence, the Custodian is not responsible for any tax or penalty imposed on you: (a) If you make a contribution into your CX-IRA in excess of the limits described in Questions 13 through 15 and you do not withdraw it and the related earnings, or treat them as a contribution and earnings for the next year; (b) If you receive certain distributions from your CX-IRA before age 59 1/2 as described in Question 35; (c) If you receive distribution of less than the required minimum distributions from your CX-IRA at the required times as described in Question 48; (d) If you make a rollover or transfer contribution into your CX-IRA as described in Questions 19 through 23 which does not qualify for non-taxable rollover or transfer treatment; (e) If you make a rollover or transfer out of your CX-IRA as described in Question 59 which does not qualify for non-taxable rollover or transfer treatment; or (f) For any other transaction you make in connection with your CX-IRA. Except as described in Questions 3, 47 and 57, the Custodian will not make any distribution from your CX-IRA or make any distribution inconsistent with an effective Distribution Instruction form, unless the Custodian has received from the person then entitled to give distribution instructions a written, signed Distribution Instruction form requesting such distribution. A-24 47 72. What is my responsibility under my CX-IRA? IT IS UP TO YOU TO SEE THAT YOU MAKE CONTRIBUTIONS, DISTRIBUTIONS, TRANSFERS AND OTHER TRANSACTIONS UNDER YOUR CX-IRA IN A MANNER WHICH WILL RESULT IN THE RETIREMENT PROGRAM AND TAX TREATMENT YOU DESIRE, INCLUDING AVOIDANCE OF TAX PENALTIES. AMENDMENT AND TERMINATION OF THE DRP PLAN AND A CX-IRA 73. May the DRP Plan be suspended, changed or terminated? Yes. The Company reserves the right to suspend, change or terminate the DRP Plan at any time. You will receive notice of any such suspension, change or termination. 74. May the Custody Terms in my IRA Agreement be changed? Yes. The Custodian may amend the Custody Terms without the consent of you or your beneficiaries (a) to comply with the Code and the regulations thereunder, (b) to conform the Custody Terms to changes in allowable contribution limits under the Code or (c) in any other manner, but no amendment may vest in anyone else any right or interest of you or your beneficiaries in your CX-IRA. Amendments may be made effective retroactively. You or your beneficiaries, as appropriate, will receive a copy of any amendment. 75. May CX-IRA participation in the DRP Plan be terminated by the Company? Yes. The Company reserves the right to change or terminate the DRP Plan so as to terminate participation by CX-IRA. You and the Custodian will be given at least 60 days' notice of termination of such participation. 76. What happens if the Company terminates participation by my CX-IRA? The Custodian (a) will stop accepting any contributions into your CX-IRA which can invested in the DRP Plan or some other dividend reinvestment plan made available by the Company or another company with the agreement of the Custodian, (b) will continue to hold your CX-IRA for you and (c) any CX-IRA assets which may no longer be invested in the DRP Plan or such other plan will be invested in bank accounts, money market retirement accounts, certificates of deposit, money market funds or securities selected by you or your beneficiary, as the case may be, and made available by the Custodian for IRAs. Also, any time after such termination of participation, you may, or the Custodian may require you to, withdraw all your CX-IRA assets (which you can then rollover) or transfer them into another IRA or Qualified Retirement Plan in the manner described in Question 58. 77. Does my CX-IRA terminate when all its assets are distributed? Yes. At such time as you or your beneficiaries receive distribution of all the assets in your CX-IRA, it will terminate. A-25 48 RESIGNATION OR REMOVAL OF CUSTODIAN 78. May the Custodian resign? The Custodian may resign as custodian of your CX-IRA any time whether or not contributions into your CX-IRA have been terminated. The Custodian will resign upon notification by the IRS that such removal is required because the Custodian has failed to comply with the provisions of the Code applicable to a custodian of a CX-IRA or is not keeping records, making returns or rendering statements required by the Code. 79. What happens if the Custodian resigns? The Company will appoint a qualified successor custodian for your CX-IRA. Notice of the appointment will be sent to you. Until such successor is appointed, the Custodian will remain the custodian of your CX-IRA. If you prefer a successor custodian other than the one appointed by the Company, you can rollover or transfer your CX-IRA into another IRA or Qualified Retirement Plan in the manner described in Question 58. FEDERAL INCOME TAX TREATMENT OF A CX-IRA The Custodian intends that your CX-IRA, including the Custody Terms, will meet the requirements of Section 408 of the Code. In 1984, the Code was amended to repeal, as of January 1, 1985, the requirements that distributions from a CX-IRA or any other IRA must be made in a certain manner and in certain minimum amounts in the year after you reach age 70 1/2 and to provide that, instead, the IRS must issue regulations requiring distributions to be made on and after January 1, 1985 in a manner and in amounts similar to new requirements for distributions enacted in 1984 for Qualified Retirement Plans. On July 27, 1987, the IRS issued proposed regulations relating to required distributions. In general, the Custody Terms require distributions to be made starting no later than your Required Beginning Date in such manner and in such minimum amounts as the Custodian believes are required by the proposed regulations. Those provisions of the Custody Terms are described in Questions 47 through 57. When the IRS finalizes its regulations, it may be necessary to amend the Custody Terms in the manner described in Question 74 to conform them to those regulations. In the meantime, you or your beneficiary should consult with an attorney or qualified tax advisor before starting installment distributions described in Questions 47 through 57. In any event, you and your beneficiaries may exercise your CX-IRA rights and the Custodian may carry out its duties only to the extent permitted by Section 408 of the Code. The Tax Reform Act of 1986 provides that, for tax years after 1986, if you or your spouse are an active participant in a Qualified Retirement Plan (or any plan of the United States government or a State or local government entity), you may not be able to claim a deduction on your Federal income tax return for all or a portion of your IRA contribution. If you are single and have adjusted gross income exceeding $25,000, your deduction will be limited; if your adjusted gross income exceeds $35,000 you will not be able to deduct any portion of your A-26 49 contribution. If you are filing a joint return, your deduction will be limited if you or your spouse is an active participant and your adjusted gross income exceeds $40,000; no deduction is permitted if your adjusted gross income exceeds $50,000. If you are a married person filing a separate return, unless you and your spouse lived apart at all times during the year, your deduction is limited if you or your spouse is an active participant in a Qualified Retirement Plan and you have any adjusted gross income; if your adjusted gross income exceeds $10,000 you will not be able to deduct any of your contribution. The Custody Terms are being submitted to the IRS for a determination that they satisfy the requirements of Section 408 of the Code. It is expected that the Custody Terms will obtain a favorable determination from the IRS. Neither the Company nor the Custodian can give tax or other legal advice. However, the following is a general summary of Federal tax laws applicable to CX-IRAs on the date of this IRA Appendix. Because of the unfavorable tax consequences which can result from improper establishment or operation of a CX-IRA, you should consult with your attorney or other qualified tax advisor for definitive advice regarding the establishment of your CX-IRA and the tax treatment of your CX-IRA contributions, distributions, rollovers and transfers. CASH CONTRIBUTIONS Cash contributions may be made into your CX-IRA up to the amounts described in Questions 13 through 16 and are deductible from your taxable income to the extent described in Question 2. DIVIDENDS Dividends reinvested by your CX-IRA are excluded from taxable income until they are distributed. ROLLOVERS AND TRANSFERS A rollover contribution into a CX-IRA as described in items (a) and (b) of the answer to Question 19, a transfer contribution as described in Question 20 and a rollover or transfer out of your CX-IRA as described in Question 58 will not result in taxation of the property and cash involved in the rollover or transfer if all of the requirements of the Code relating to the particular rollover or transfer are satisfied. However, a distribution from a Qualified Retirement Plan to be rolled over into a CX-IRA as described in items (c) and (d) of Question 19 is subject to a mandatory 20 percent withholding requirement to be executed by the Qualified Plan's trustee. You may, however, add back (from other assets) the 20 percent withheld from that distribution when you roll it over into a CX-IRA. You will then be able to claim the 20 percent withheld when you file your Federal tax return for the year in which the tax was withheld. If you make a rollover contribution into your CX-IRA of the kind described in Question 19(d), then (a) none of the assets in that rollover CX-IRA may be thereafter rolled over into a Qualified Retirement Plan, (b) any later distribution from the plan from which you made that rollover will not be entitled to special income averaging or capital gains tax treatment, and (c) the net unrealized appreciation on any employer securities purchased with your own contribu- A-27 50 tions which you received as a part of such other distribution will be taxable to you as ordinary income in the tax year in which you received those securities. If you receive a distribution from a Qualified Retirement Plan on account of your separation from service, are not fully vested in your interest in the Qualified Retirement Plan and rollover contribution described in Question 19(c) or (d), you will not be entitled to special income average or capital gains treatment on any future distributions from that Qualified Retirement Plan (except in the case of certain mandatory employer cash-outs). SALE OF CX-IRA COMMON STOCK BEFORE DISTRIBUTION, ROLLOVER OR TRANSFER Any Common Stock sold by your CX-IRA before a distribution, rollover or transfer out of your CX-IRA is not subject to income tax. However, any distributions from your account will be taxed as described under the heading "Distribution", below. DISTRIBUTION The amount of a distribution from your CX-IRA is equal to the market value of all Common Stock distributed on the effective date of the distribution, plus any cash distributed from your CX-IRA. The amount received in the distribution, less the portion considered to be a return of any non-deductible contributions you had made into your CX-IRA, is taxed as ordinary income in the tax year the distribution is received, except to the extent the distribution is rolled over into another IRA. The non-deductible contribution portion of a distribution in a year is based on the ratio of the total of all non-deductible contributions made to any IRA which have not previously been distributed to the total value of the assets in your CX-IRA and all your other IRAs at the end of that year plus distributions to you during that year. The Custody Terms do not permit you to transfer ownership of your CX-IRA or any of its assets to anyone else or to pledge either of them as security for a loan until after they have been distributed to you. However, if you should make a transfer of ownership or pledge before distribution to you, then the amount transferred or pledged is considered to be distributed to you and this amount must be included in your gross income. WITHHOLDING TAX Unless you or your beneficiary, as the case may be, elect otherwise, distributions from your CX-IRA are subject to a Federal withholding tax in the tax year of the distribution equal to 10% of any cash and the fair market value on the effective date of the distribution of any Common Stock distributed. Unless you elect otherwise, the withholding tax applies to a distribution even if you make a non-taxable rollover of any part or all of it to another IRA or a Qualified Retirement Plan. To insure that your rollover is tax-free, you should elect not to have withholding from any portion of a distribution which you intend to rollover. Transfers are not subject to withholding tax. SALE OF COMMON STOCK AFTER DISTRIBUTION The difference between the net sale proceeds of any Common Stock sold after it has been distributed out of your CX-IRA to you or your beneficiaries and the value at which it was taxed A-28 51 when it was distributed is subject to capital gain or loss tax treatment. Although the Code is not clear, it appears that the holding period starts on the effective date of the distribution. PENALTY TAX ON EXCESS CONTRIBUTIONS If you contribute into your CX-IRA and all your other IRAs in a tax year more than the limits described in Questions 13 through 16, you are subject to a Federal excise tax penalty of 6% of such excess contribution. This excise tax does not apply to such excess contribution if you have not deducted the excess amount on your tax return and you withdraw it and any earnings on it before the deadline for filing your income tax return (including any extensions) for the tax year in which you made the excess contribution. The withdrawn earnings are taxable as ordinary income. (Also, if the earnings are withdrawn before age 59 1/2, the withdrawn earnings may be subject to the 10% penalty tax described under the next heading.) However, if your contributions for the tax year did not exceed $2,250, you may withdraw any excess either before or after the deadline for filing your income tax return and you do not have to withdraw the earnings on the excess, but only if you have not deducted the excess on your return or you have amended it to remove the deduction. The excise tax is imposed for each tax year during which the excess contribution remains in your CX-IRA or other IRA until you withdraw it or treat it as part of your permitted contribution in a future tax year. PENALTY TAX ON DISTRIBUTIONS BEFORE AGE 59 1/2 If a distribution is made from your CX-IRA before you become age 59 1/2, you are subject to a Federal excise tax penalty of 10% of the value of the Common Stock and cash distributed to you, less the portion considered to be a return of any non-deductible contributions you had made into your CX-IRA, determined as described under "Distribution". This excise tax does not apply to the extent the distribution is rolled over into another IRA or Qualified Retirement Plan or if the distribution is made after you have died, while you are disabled within the meaning of Section 72(m) of the Code or if the distribution is a withdrawal of an excess contribution described in the second paragraph under "Penalty Taxes on Excess Contributions". Section 72(m) states that you are disabled if you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration. The excise tax also will not apply if the distribution is one of a series of regular periodic distributions (made at least annually) over the life expectancy of you or you and your designated beneficiary and you continue to receive such distributions for at least five years, or until you reach age 59 1/2, whichever event happens later. PENALTY TAX FOR INSUFFICIENT DISTRIBUTIONS If there are assets remaining in your CX-IRA in the tax year of your Required Beginning Date, you may be subject to a Federal excise tax penalty that year and each tax year thereafter unless you receive a single total distribution or receive at least the minimum distribution as is provided in Option B or C installment distributions. The penalty tax in each of those years is A-29 52 50% of the difference between the amount of your distribution from your CX-IRA and the minimum amount of your CX-IRA assets which should have been distributed under Option B or C, whichever applies. If an Option B or C installment distribution made in a particular year starting with the tax year in which your Required Beginning Date occurs is less than the required minimum installment for the Option, you may not be subject to a 50% excise tax on the shortage. If you received distributions from other IRAs which exceeded the required minimum installments for such IRAs, the excess distributions from the other IRAs may be used to offset the shortage in your CX-IRA. PENALTY TAX ON EXCESS DISTRIBUTIONS If the total amount of distributions you receive in a year from your CX-IRA, any other IRAs you have and any Qualified Retirement Plan (other than a lump sum distribution) exceeds $150,000, you are subject to a Federal excise tax penalty of 15% on such excess. Distributions that are attributable to your after-tax contributions to Qualified Retirement Plans or nondeductible contributions into your CX-IRA or other IRAs (but not earnings on those amounts) are not counted in determining whether you have exceeded the limit. Distributions which you roll over or, in certain instances, are made to someone else pursuant to a qualified domestic relations order, are not subject to this penalty. The penalty tax is applied separately to a lump sum distribution from a Qualified Retirement Plan and is based on five times $150,000. Accumulations remaining in your CX-IRA upon your death will be combined with your savings in other IRAs and Qualified Retirement Plans to determine if your estate is subject to an excise tax on any excess retirement plan accumulations. A-30 53 - - ------------------------------------------------------ - - ------------------------------------------------------ TABLE OF CONTENTS
PAGE ---- Glossary of Terms................................ A-2 Description and Operation of a CX-IRA............ A-3 Participation.................................. A-4 Limits on Cash Contributions................... A-5 Cash Contributions............................. A-7 Rollover and Transfer Contributions............ A-7 Establishing and Operating a CX-IRA............ A-9 Investment of CX-IRA Contributions............. A-10 Distributions from a CX-IRA.................... A-12 Rollover or Transfer of CX-IRA Assets to Another IRA or Qualified Retirement Plan..... A-21 Withdrawal of Excess Contributions............. A-21 Other Matters.................................. A-22 Duties and Responsibilities of the Company and the Custodian................................ A-23 Amendment and Termination of the DRP Plan and a CX-IRA....................................... A-25 Resignation or Removal of Custodian............ A-25 Federal Income Tax Treatment of a CX-IRA......... A-26
- - ------------------------------------------------------ - - ------------------------------------------------------ - - ------------------------------------------------------ - - ------------------------------------------------------ CENTERIOR ENERGY LOGO DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN ------------------------------------------ INDIVIDUAL RETIREMENT ACCOUNT APPENDIX TO THE PROSPECTUS ------------------------------------------ AUGUST 14, 1996 - - ------------------------------------------------------ - - ------------------------------------------------------ 54 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION *Printing............................................................ $ 15,000 *Accountants' Fee.................................................... 5,000 Securities and Exchange Commission Registration Fee................. 8,901 *Blue Sky Fees and Expenses.......................................... 5,000 *Miscellaneous....................................................... 2,099 -------- *TOTAL................................................ $ 36,000
*Estimated. 15 INDEMNIFICATION OF DIRECTORS AND OFFICERS The Regulations of the Company provide that each person who is or has been a director or officer of the Company shall be indemnified by the Company against judgments, penalties, reasonable settlements, legal fees and expenses arising out of any threatened, pending or completed proceedings of a criminal, administrative or investigative nature in which he or she may become involved by reason of his or her relationship to the Company (other than a proceeding by or on behalf of the Company), but only if he or she is found, by the disinterested members of the Board of Directors, by independent legal counsel or by the share owners, (1) to have acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Company and (2) in the case of a criminal matter, to have had no reasonable cause to believe his conduct was unlawful. In the case of actions brought by or on behalf of the Company against a director or officer, indemnification is provided only for reasonable legal fees and expenses and only if it is determined that he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Company; but if he or she is adjudged to be liable due to negligence or misconduct, indemnification is provided only if an appropriate court determines that indemnification is fair and reasonable under the circumstances. Similar indemnification also may be made available by the Company to its directors and officers, and to a limited extent may be available as a matter of right to such persons, under Section 1701.13 of the Revised Code of Ohio. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions or otherwise, the Company is advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by a director, officer or controlling person, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The Company maintains and pays the premium on contracts insuring the Company (with certain exclusions) against any liability to directors and officers it may incur under the above indemnity provisions and insuring each director and officer of the Company II-1 55 (with certain exclusions) against liability and expense, including legal fees, which he or she may incur by reason of his or her relationship to the Company, even if the Company does not have the obligation or right to indemnify him or her against such liability or expense. 16 EXHIBITS See Exhibit Index and exhibits following. 17 UNDERTAKINGS (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment 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. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this 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. (c) See the fourth paragraph of Item 15 above. II-2 56 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF INDEPENDENCE, STATE OF OHIO, ON AUGUST 14, 1996. CENTERIOR ENERGY CORPORATION Registrant By J. T. PERCIO -------------------------------- Janis T. Percio, Secretary PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED:
SIGNATURE TITLE DATE - - ------------------------------------------------------------------------------------------------ (i) Principal executive officer: ) ) *ROBERT J. FARLING Chairman of the Board, ) President and ) Chief Executive Officer ) ) (ii) Principal financial officer: ) ) *TERRENCE G. LINNERT Senior Vice President, ) Chief Financial Officer and ) General Counsel ) August 14, 1996 ) (iii) Principal accounting officer: ) ) *E. LYLE PEPIN Controller ) ) (iv) Directors: ) ) *RICHARD P. ANDERSON Director ) *ALBERT C. BERSTICKER Director ) *THOMAS A. COMMES Director ) *WILLIAM F. CONWAY Director ) *WAYNE R. EMBRY Director ) *ROBERT J. FARLING Director ) *RICHARD A. MILLER Director ) *FRANK E. MOSIER Director ) *SISTER MARY MARTHE REINHARD, SND Director ) *ROBERT C. SAVAGE Director ) *WILLIAM J. WILLIAMS Director )
*By J. T. PERCIO --------------------------------- Janis T. Percio, Attorney-in-fact II-3 57 EXHIBIT INDEX Exhibits Filed Herewith The following exhibits are filed herewith and made a part hereof:
EXHIBIT NUMBER DESCRIPTION ----------------- ------------------------------------------------------------------------- 5 Opinion of counsel for the Company. 23(a) Consent of counsel for the Company -- contained in Exhibit 5. 23(b) Consent of Arthur Andersen LLP 24 Powers of Attorney.
Exhibits Incorporated by Reference The exhibits listed below have been filed heretofore with the Securities and Exchange Commission pursuant to requirements of the Acts administered by the Commission and are incorporated herein by reference and made a part hereof. The exhibit number and file number of such documents are stated in parentheses.
EXHIBIT NUMBER DESCRIPTION ----------------- ------------------------------------------------------------------------- 3(a) Amended Articles of Incorporation of the Company effective April 29, 1986 (Exhibit 4(a), File No. 33-4790). 3(b) Regulations of the Company, effective April 28, 1987 (Exhibit 4(b), Post- Effective Amendment No. 2, File No. 33-7550). 4 Shareholder Rights Agreement dated June 25, 1996 (Exhibit 4, Form 8-K dated June 25, 1996, File No. 1-9130).
II-4 EX-5 2 EXHIBIT 5 1 EXHIBIT 5 CENTERIOR ENERGY LOGO - - -------------------------------------------------------------------------------- 6200 Oak Tree Boulevard Mail Address: TERRENCE G. LINNERT Independence, OH P. O. Box 94661 Senior Vice President, 216-447-3121 Cleveland, OH 44101-4661 Chief Financial Officer Fax 216-447-2592 General Counsel August 13, 1996 Centerior Energy Corporation Post Office Box 94661 Cleveland, Ohio 44101-4661 Gentlemen: With reference to the proposed issue and sale of the amount of Common Stock (the "Stock") of Centerior Energy Corporation (the "Company") set forth in the Registration Statement described below pursuant to the Centerior Energy Corporation Dividend Reinvestment and Stock Purchase Plan (the "Plan"), I am counsel for the Company, and I have examined the following: (a) A copy of the Company's Amended Articles of Incorporation, as amended to date, as filed with the Secretary of State of Ohio; (b) A copy of the Company's Regulations, certified by the Secretary of the Company; (c) A copy of resolutions of the Company's Board of Directors regarding the Stock, certified by the Secretary of the Company; (d) A form of the certificate representing the Stock; (e) The Registration Statement on Form S-3 relating to the Stock which is being filed with the Securities and Exchange Commission on this date and the documents incorporated by reference therein (said Registration Statement, including said documents incorporated by reference therein, being referred to as the "Registration Statement"); (f) The Prospectus (the "Prospectus") pursuant to Section 10(a) of the Securities Act of 1933 (the "Securities Act"), which is part of the Registration Statement; (g) A copy of the Plan; and (h) Such other documents and matters as I deem necessary to express this opinion. 2 Based on the foregoing and such legal considerations as I deem relevant, I am of the opinion that: (1) The Company is a corporation duly organized and validly existing and in good standing under the laws of the State of Ohio, with power to authorize the issue and sale of the Stock; and (2) Upon the issuance and sale of the Stock in accordance with the Registration Statement when the same shall have become effective, the Stock will be legally issued, fully paid and non-assessable. The statements as to matters of law and legal conclusions under the headings "General Regulation", "Environmental Regulation", "Electric Rates", "Title to Property" and "Legal Proceedings" in the Company's Annual Report on Form 10-K incorporated by reference in the Registration Statement, as supplemented by any Quarterly and Current Reports on Forms 10-Q and 8-K, respectively, which have been incorporated by reference therein, and under the heading "Description of Common Stock" in the Prospectus, and under the heading "Indemnification of Directors and Officers" in both the Prospectus and the Registration Statement, have been prepared by me, and in my opinion such statements as to such matters and conclusions are correct. I hereby consent (a) to the use of my name in connection with the statements as to matters of law and legal conclusions under the headings in the documents described in the paragraph immediately preceding, (b) to the inclusion in and incorporation by reference into, as the case may be, the Prospectus of the statements as to matters of law and legal conclusions referred to in clause (a) of this sentence and to be contained in any documents hereafter incorporated by reference into the Prospectus and referred to in such documents as having been reviewed by me and (c) to the filing of this opinion and consent with the Securities and Exchange Commission as an exhibit to the Registration Statement. Respectfully submitted, /S/ TERRENCE G. LINNERT ------------------------------- Terrence G. Linnert General Counsel EX-23.B 3 EXHIBIT 23(B) 1 EXHIBIT 23(B) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement of our report dated February 21, 1996 included in Centerior Energy Corporation's Form 10-K for the year ended December 31, 1995 and to all references to our Firm included in this Registration Statement. ARTHUR ANDERSEN LLP Cleveland, Ohio August 14, 1996 EX-24 4 EXHIBIT 24 1 EXHIBIT 24 POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER OF CENTERIOR ENERGY CORPORATION The undersigned, hereby being a director or officer or both (as stated under his or her signature below) of Centerior Energy Corporation, an Ohio corporation (hereinafter called the "Company"), does hereby constitute and appoint each of Robert J. Farling, Murray R. Edelman, Fred J. Lange, Jr., Gary R. Leidich, Terrence G. Linnert, David M. Blank, E. Lyle Pepin, Janis T. Percio, Ronald J. Studeny, Mary E. O'Reilly and Michael C. Regulinski, as an attorney of the undersigned with power to act alone for and in the name, place and stead of the undersigned, with power of substitution and resubstitution, to sign and file, including electronic filing, on behalf of the undersigned acting in his or her capacity as such director of officer the Company's Form S-3 Registration Statement relating to the Company's Dividend Reinvestment and Stock Purchase Plan for sales under the Plan commencing August 15, 1996, and any and all amendments, exhibits and supplementary information thereto, with the Securities and Exchange Commission pursuant to the Securities Act of 1933, with full power and authority to do and perform any and all acts and things whatsoever requisite and necessary to be done in the premises and the undersigned hereby ratifies and approves the acts of each such attorney and any such substitute or substitutes. IN WITNESS WHEREOF, the undersigned hereby has signed his or her name this 30th day of July, 1996. ROBERT J. FARLING -------------------------------- Robert J. Farling Chairman, President and Chief Executive Officer and Director Signed and acknowledged in the presence of: J. T. PERCIO ------------------------------- 2 EXHIBIT 24 POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER OF CENTERIOR ENERGY CORPORATION The undersigned, hereby being a director or officer or both (as stated under his or her signature below) of Centerior Energy Corporation, an Ohio corporation (hereinafter called the "Company"), does hereby constitute and appoint each of Robert J. Farling, Murray R. Edelman, Fred J. Lange, Jr., Gary R. Leidich, Terrence G. Linnert, David M. Blank, E. Lyle Pepin, Janis T. Percio, Ronald J. Studeny, Mary E. O'Reilly and Michael C. Regulinski, as an attorney of the undersigned with power to act alone for and in the name, place and stead of the undersigned, with power of substitution and resubstitution, to sign and file, including electronic filing, on behalf of the undersigned acting in his or her capacity as such director of officer the Company's Form S-3 Registration Statement relating to the Company's Dividend Reinvestment and Stock Purchase Plan for sales under the Plan commencing August 15, 1996, and any and all amendments, exhibits and supplementary information thereto, with the Securities and Exchange Commission pursuant to the Securities Act of 1933, with full power and authority to do and perform any and all acts and things whatsoever requisite and necessary to be done in the premises and the undersigned hereby ratifies and approves the acts of each such attorney and any such substitute or substitutes. IN WITNESS WHEREOF, the undersigned hereby has signed his or her name this 29th day of July, 1996. TERRENCE G. LINNERT ----------------------------------- Terrence G. Linnert Senior Vice President Chief Financial Officer and General Counsel Signed and acknowledged in the presence of: J. T. PERCIO ----------------------------------- 3 EXHIBIT 24 POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER OF CENTERIOR ENERGY CORPORATION The undersigned, hereby being a director or officer or both (as stated under his or her signature below) of Centerior Energy Corporation, an Ohio corporation (hereinafter called the "Company"), does hereby constitute and appoint each of Robert J. Farling, Murray R. Edelman, Fred J. Lange, Jr., Gary R. Leidich, Terrence G. Linnert, David M. Blank, E. Lyle Pepin, Janis T. Percio, Ronald J. Studeny, Mary E. O'Reilly and Michael C. Regulinski, as an attorney of the undersigned with power to act alone for and in the name, place and stead of the undersigned, with power of substitution and resubstitution, to sign and file, including electronic filing, on behalf of the undersigned acting in his or her capacity as such director of officer the Company's Form S-3 Registration Statement relating to the Company's Dividend Reinvestment and Stock Purchase Plan for sales under the Plan commencing August 15, 1996, and any and all amendments, exhibits and supplementary information thereto, with the Securities and Exchange Commission pursuant to the Securities Act of 1933, with full power and authority to do and perform any and all acts and things whatsoever requisite and necessary to be done in the premises and the undersigned hereby ratifies and approves the acts of each such attorney and any such substitute or substitutes. IN WITNESS WHEREOF, the undersigned hereby has signed his or her name this 29th day of July, 1996. E. L. PEPIN -------------------------------- E. Lyle Pepin Controller Signed and acknowledged in the presence of: CHARLES L. COMES JR. ------------------------------- 4 EXHIBIT 24 POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER OF CENTERIOR ENERGY CORPORATION The undersigned, hereby being a director or officer or both (as stated under his or her signature below) of Centerior Energy Corporation, an Ohio corporation (hereinafter called the "Company"), does hereby constitute and appoint each of Robert J. Farling, Murray R. Edelman, Fred J. Lange, Jr., Gary R. Leidich, Terrence G. Linnert, David M. Blank, E. Lyle Pepin, Janis T. Percio, Ronald J. Studeny, Mary E. O'Reilly and Michael C. Regulinski, as an attorney of the undersigned with power to act alone for and in the name, place and stead of the undersigned, with power of substitution and resubstitution, to sign and file, including electronic filing, on behalf of the undersigned acting in his or her capacity as such director of officer the Company's Form S-3 Registration Statement relating to the Company's Dividend Reinvestment and Stock Purchase Plan for sales under the Plan commencing August 15, 1996, and any and all amendments, exhibits and supplementary information thereto, with the Securities and Exchange Commission pursuant to the Securities Act of 1933, with full power and authority to do and perform any and all acts and things whatsoever requisite and necessary to be done in the premises and the undersigned hereby ratifies and approves the acts of each such attorney and any such substitute or substitutes. IN WITNESS WHEREOF, the undersigned hereby has signed his or her name this 29th day of July, 1996. RICHARD P. ANDERSON ------------------------------ Richard P. Anderson Director Signed and acknowledged in the presence of: JOANNE KAPNICK ----------------------------- 5 EXHIBIT 24 POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER OF CENTERIOR ENERGY CORPORATION The undersigned, hereby being a director or officer or both (as stated under his or her signature below) of Centerior Energy Corporation, an Ohio corporation (hereinafter called the "Company"), does hereby constitute and appoint each of Robert J. Farling, Murray R. Edelman, Fred J. Lange, Jr., Gary R. Leidich, Terrence G. Linnert, David M. Blank, E. Lyle Pepin, Janis T. Percio, Ronald J. Studeny, Mary E. O'Reilly and Michael C. Regulinski, as an attorney of the undersigned with power to act alone for and in the name, place and stead of the undersigned, with power of substitution and resubstitution, to sign and file, including electronic filing, on behalf of the undersigned acting in his or her capacity as such director of officer the Company's Form S-3 Registration Statement relating to the Company's Dividend Reinvestment and Stock Purchase Plan for sales under the Plan commencing August 15, 1996, and any and all amendments, exhibits and supplementary information thereto, with the Securities and Exchange Commission pursuant to the Securities Act of 1933, with full power and authority to do and perform any and all acts and things whatsoever requisite and necessary to be done in the premises and the undersigned hereby ratifies and approves the acts of each such attorney and any such substitute or substitutes. IN WITNESS WHEREOF, the undersigned hereby has signed his or her name this 5th day of August, 1996. A. C. BERSTICKER ---------------------------------- Albert C. Bersticker Director Signed and acknowledged in the presence of: CAROLYN T. SIEKANIEC --------------------------------- 6 EXHIBIT 24 POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER OF CENTERIOR ENERGY CORPORATION The undersigned, hereby being a director or officer or both (as stated under his or her signature below) of Centerior Energy Corporation, an Ohio corporation (hereinafter called the "Company"), does hereby constitute and appoint each of Robert J. Farling, Murray R. Edelman, Fred J. Lange, Jr., Gary R. Leidich, Terrence G. Linnert, David M. Blank, E. Lyle Pepin, Janis T. Percio, Ronald J. Studeny, Mary E. O'Reilly and Michael C. Regulinski, as an attorney of the undersigned with power to act alone for and in the name, place and stead of the undersigned, with power of substitution and resubstitution, to sign and file, including electronic filing, on behalf of the undersigned acting in his or her capacity as such director of officer the Company's Form S-3 Registration Statement relating to the Company's Dividend Reinvestment and Stock Purchase Plan for sales under the Plan commencing August 15, 1996, and any and all amendments, exhibits and supplementary information thereto, with the Securities and Exchange Commission pursuant to the Securities Act of 1933, with full power and authority to do and perform any and all acts and things whatsoever requisite and necessary to be done in the premises and the undersigned hereby ratifies and approves the acts of each such attorney and any such substitute or substitutes. IN WITNESS WHEREOF, the undersigned hereby has signed his or her name this 30th day of July, 1996. THOMAS A. COMMES --------------------------------- Thomas A. Commes Director Signed and acknowledged in the presence of: KATHY SCHILKE -------------------------------- 7 EXHIBIT 24 POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER OF CENTERIOR ENERGY CORPORATION The undersigned, hereby being a director or officer or both (as stated under his or her signature below) of Centerior Energy Corporation, an Ohio corporation (hereinafter called the "Company"), does hereby constitute and appoint each of Robert J. Farling, Murray R. Edelman, Fred J. Lange, Jr., Gary R. Leidich, Terrence G. Linnert, David M. Blank, E. Lyle Pepin, Janis T. Percio, Ronald J. Studeny, Mary E. O'Reilly and Michael C. Regulinski, as an attorney of the undersigned with power to act alone for and in the name, place and stead of the undersigned, with power of substitution and resubstitution, to sign and file, including electronic filing, on behalf of the undersigned acting in his or her capacity as such director of officer the Company's Form S-3 Registration Statement relating to the Company's Dividend Reinvestment and Stock Purchase Plan for sales under the Plan commencing August 15, 1996, and any and all amendments, exhibits and supplementary information thereto, with the Securities and Exchange Commission pursuant to the Securities Act of 1933, with full power and authority to do and perform any and all acts and things whatsoever requisite and necessary to be done in the premises and the undersigned hereby ratifies and approves the acts of each such attorney and any such substitute or substitutes. IN WITNESS WHEREOF, the undersigned hereby has signed his or her name this 29th day of July, 1996. WILLIAM F. CONWAY ---------------------------------- William F. Conway Director Signed and acknowledged in the presence of: MARIE V. CONWAY --------------------------------- 8 EXHIBIT 24 POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER OF CENTERIOR ENERGY CORPORATION The undersigned, hereby being a director or officer or both (as stated under his or her signature below) of Centerior Energy Corporation, an Ohio corporation (hereinafter called the "Company"), does hereby constitute and appoint each of Robert J. Farling, Murray R. Edelman, Fred J. Lange, Jr., Gary R. Leidich, Terrence G. Linnert, David M. Blank, E. Lyle Pepin, Janis T. Percio, Ronald J. Studeny, Mary E. O'Reilly and Michael C. Regulinski, as an attorney of the undersigned with power to act alone for and in the name, place and stead of the undersigned, with power of substitution and resubstitution, to sign and file, including electronic filing, on behalf of the undersigned acting in his or her capacity as such director of officer the Company's Form S-3 Registration Statement relating to the Company's Dividend Reinvestment and Stock Purchase Plan for sales under the Plan commencing August 15, 1996, and any and all amendments, exhibits and supplementary information thereto, with the Securities and Exchange Commission pursuant to the Securities Act of 1933, with full power and authority to do and perform any and all acts and things whatsoever requisite and necessary to be done in the premises and the undersigned hereby ratifies and approves the acts of each such attorney and any such substitute or substitutes. IN WITNESS WHEREOF, the undersigned hereby has signed his or her name this 31st day of July, 1996. WAYNE R. EMBRY ---------------------------------- Wayne R. Embry Director Signed and acknowledged in the presence of: SUSAN R. EILER --------------------------------- 9 EXHIBIT 24 POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER OF CENTERIOR ENERGY CORPORATION The undersigned, hereby being a director or officer or both (as stated under his or her signature below) of Centerior Energy Corporation, an Ohio corporation (hereinafter called the "Company"), does hereby constitute and appoint each of Robert J. Farling, Murray R. Edelman, Fred J. Lange, Jr., Gary R. Leidich, Terrence G. Linnert, David M. Blank, E. Lyle Pepin, Janis T. Percio, Ronald J. Studeny, Mary E. O'Reilly and Michael C. Regulinski, as an attorney of the undersigned with power to act alone for and in the name, place and stead of the undersigned, with power of substitution and resubstitution, to sign and file, including electronic filing, on behalf of the undersigned acting in his or her capacity as such director of officer the Company's Form S-3 Registration Statement relating to the Company's Dividend Reinvestment and Stock Purchase Plan for sales under the Plan commencing August 15, 1996, and any and all amendments, exhibits and supplementary information thereto, with the Securities and Exchange Commission pursuant to the Securities Act of 1933, with full power and authority to do and perform any and all acts and things whatsoever requisite and necessary to be done in the premises and the undersigned hereby ratifies and approves the acts of each such attorney and any such substitute or substitutes. IN WITNESS WHEREOF, the undersigned hereby has signed his or her name this 29th day of July, 1996. R. A. MILLER ---------------------------------- Richard A. Miller Director Signed and acknowledged in the presence of: KATHRYN M. FEDROWISCH --------------------------------- 10 EXHIBIT 24 POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER OF CENTERIOR ENERGY CORPORATION The undersigned, hereby being a director or officer or both (as stated under his or her signature below) of Centerior Energy Corporation, an Ohio corporation (hereinafter called the "Company"), does hereby constitute and appoint each of Robert J. Farling, Murray R. Edelman, Fred J. Lange, Jr., Gary R. Leidich, Terrence G. Linnert, David M. Blank, E. Lyle Pepin, Janis T. Percio, Ronald J. Studeny, Mary E. O'Reilly and Michael C. Regulinski, as an attorney of the undersigned with power to act alone for and in the name, place and stead of the undersigned, with power of substitution and resubstitution, to sign and file, including electronic filing, on behalf of the undersigned acting in his or her capacity as such director of officer the Company's Form S-3 Registration Statement relating to the Company's Dividend Reinvestment and Stock Purchase Plan for sales under the Plan commencing August 15, 1996, and any and all amendments, exhibits and supplementary information thereto, with the Securities and Exchange Commission pursuant to the Securities Act of 1933, with full power and authority to do and perform any and all acts and things whatsoever requisite and necessary to be done in the premises and the undersigned hereby ratifies and approves the acts of each such attorney and any such substitute or substitutes. IN WITNESS WHEREOF, the undersigned hereby has signed his or her name this 29th day of July, 1996. ROBERT C. SAVAGE ----------------------------------- Robert C. Savage Director Signed and acknowledged in the presence of: JOYCE E. DANKERT ---------------------------------- 11 EXHIBIT 24 POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER OF CENTERIOR ENERGY CORPORATION The undersigned, hereby being a director or officer or both (as stated under his or her signature below) of Centerior Energy Corporation, an Ohio corporation (hereinafter called the "Company"), does hereby constitute and appoint each of Robert J. Farling, Murray R. Edelman, Fred J. Lange, Jr., Gary R. Leidich, Terrence G. Linnert, David M. Blank, E. Lyle Pepin, Janis T. Percio, Ronald J. Studeny, Mary E. O'Reilly and Michael C. Regulinski, as an attorney of the undersigned with power to act alone for and in the name, place and stead of the undersigned, with power of substitution and resubstitution, to sign and file, including electronic filing, on behalf of the undersigned acting in his or her capacity as such director of officer the Company's Form S-3 Registration Statement relating to the Company's Dividend Reinvestment and Stock Purchase Plan for sales under the Plan commencing August 15, 1996, and any and all amendments, exhibits and supplementary information thereto, with the Securities and Exchange Commission pursuant to the Securities Act of 1933, with full power and authority to do and perform any and all acts and things whatsoever requisite and necessary to be done in the premises and the undersigned hereby ratifies and approves the acts of each such attorney and any such substitute or substitutes. IN WITNESS WHEREOF, the undersigned hereby has signed his or her name this 31st day of July, 1996. FRANK E. MOSIER ----------------------------------- Frank E. Mosier Director Signed and acknowledged in the presence of: PATRICIA G. CUMBERLAND --------------------------------- 12 EXHIBIT 24 POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER OF CENTERIOR ENERGY CORPORATION The undersigned, hereby being a director or officer or both (as stated under his or her signature below) of Centerior Energy Corporation, an Ohio corporation (hereinafter called the "Company"), does hereby constitute and appoint each of Robert J. Farling, Murray R. Edelman, Fred J. Lange, Jr., Gary R. Leidich, Terrence G. Linnert, David M. Blank, E. Lyle Pepin, Janis T. Percio, Ronald J. Studeny, Mary E. O'Reilly and Michael C. Regulinski, as an attorney of the undersigned with power to act alone for and in the name, place and stead of the undersigned, with power of substitution and resubstitution, to sign and file, including electronic filing, on behalf of the undersigned acting in his or her capacity as such director of officer the Company's Form S-3 Registration Statement relating to the Company's Dividend Reinvestment and Stock Purchase Plan for sales under the Plan commencing August 15, 1996, and any and all amendments, exhibits and supplementary information thereto, with the Securities and Exchange Commission pursuant to the Securities Act of 1933, with full power and authority to do and perform any and all acts and things whatsoever requisite and necessary to be done in the premises and the undersigned hereby ratifies and approves the acts of each such attorney and any such substitute or substitutes. IN WITNESS WHEREOF, the undersigned hereby has signed his or her name this 30th day of July, 1996. SISTER MARY MARTHE REINHARD, SND ------------------------------------- Sister Mary Marthe Reinhard, SND Director Signed and acknowledged in the presence of: MARY JOANNE MILLER ----------------------------------- 13 EXHIBIT 24 POWER OF ATTORNEY OF DIRECTOR AND/OR OFFICER OF CENTERIOR ENERGY CORPORATION The undersigned, hereby being a director or officer or both (as stated under his or her signature below) of Centerior Energy Corporation, an Ohio corporation (hereinafter called the "Company"), does hereby constitute and appoint each of Robert J. Farling, Murray R. Edelman, Fred J. Lange, Jr., Gary R. Leidich, Terrence G. Linnert, David M. Blank, E. Lyle Pepin, Janis T. Percio, Ronald J. Studeny, Mary E. O'Reilly and Michael C. Regulinski, as an attorney of the undersigned with power to act alone for and in the name, place and stead of the undersigned, with power of substitution and resubstitution, to sign and file, including electronic filing, on behalf of the undersigned acting in his or her capacity as such director of officer the Company's Form S-3 Registration Statement relating to the Company's Dividend Reinvestment and Stock Purchase Plan for sales under the Plan commencing August 15, 1996, and any and all amendments, exhibits and supplementary information thereto, with the Securities and Exchange Commission pursuant to the Securities Act of 1933, with full power and authority to do and perform any and all acts and things whatsoever requisite and necessary to be done in the premises and the undersigned hereby ratifies and approves the acts of each such attorney and any such substitute or substitutes. IN WITNESS WHEREOF, the undersigned hereby has signed his or her name this 29th day of July, 1996. WILLIAM J. WILLIAMS ----------------------------------- William J. Williams Director Signed and acknowledged in the presence of: SARA J. WILLIAMS ---------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----