Exhibit 10.7
 
EXECUTION COPY

 

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TRANSFERRED ENVIRONMENTAL CONTROL PROPERTY
SALE AGREEMENT

between

PE ENVIRONMENTAL FUNDING LLC

Issuer
 

 
 
and
 

 
PE RENAISSANCE FUNDING, LLC
 

 

 
Seller
 

 
Dated as of April 11, 2007
 
 
 
 

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  TABLE OF CONTENTS
                 
 Page
 
ARTICLE I
 
Definitions
 
 
Section 1.01.
Definitions
3
Section 1.02.
Other Definitional Provisions
3
 
ARTICLE II
 
Conveyance of Transferred Environmental Control Property
 
 
Section 2.01.
Conveyance of Initial Transferred Environmental Control Property
4
Section 2.02.
Conveyance of Subsequent Transferred Environmental Control Property
5
Section 2.03.
Conditions to Conveyance of Transferred Environmental Control Property
5
 
ARTICLE III
 
Representations and Warranties of Seller
 
 
Section 3.01.
Organization and Good Standing
6
Section 3.02.
Due Qualification
6
Section 3.03.
Power and Authority
6
Section 3.04.
Binding Obligation
6
Section 3.05.
No Violation
7
Section 3.06.
No Proceedings
7
Section 3.07.
Approvals
7
Section 3.08.
The Transferred Environmental Control Property
7
Section 3.09.
The Statute and the Financing Order
8
Section 3.10.
State Pledge
8
Section 3.11.
The Environmental Control Property Rights
9
 
ARTICLE IV
 
Covenants of the Seller
 
 
Section 4.01.
Existence as a Limited Liability Company
9
Section 4.02.
No Liens or Conveyances
9
Section 4.03.
Delivery of Collections
10
Section 4.04.
Notice of Liens
10
Section 4.05.
Compliance with Law
10
Section 4.06.
Use of Proceeds
10
Section 4.07.
Covenants Related to Transferred Environmental Control Property
10
Section 4.08.
Notice of Indemnification Events
11

 
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Section 4.09.
Protection of Title
11
Section 4.10.
Taxes
12
Section 4.11.
Notice of Breach
12
Section 4.12.
Termination
12
Section 4.13.
Further Covenants
12
 
ARTICLE V
 
The Seller
 
Section 5.01.
Liability of Seller; Indemnities
13
Section 5.02.
Merger or Consolidation of, or Assumption of the Obligations of, Seller
14
Section 5.03.
Limitation on Liability of Seller and Others
15
Section 5.04.
Opinions of Counsel
15
 
ARTICLE VI
 
Miscellaneous Provisions
 
 
Section 6.01.
Amendment
16
Section 6.02.
Notices
17
Section 6.03.
Assignment
18
Section 6.04.
Limitations on Rights of Others
18
Section 6.05.
Severability
18
Section 6.06.
Separate Counterparts
18
Section 6.07.
Headings
18
Section 6.08.
GOVERNING LAW
18
Section 6.09.
Assignment to Indenture Trustee
18
Section 6.10.
Nonpetition Covenant
18
Section 6.11.
Perfection
19
Section 6.12.
Limitation of Liability
19
     

Exhibit A    Form of Bill of Sale
Exhibit B      Pending Litigation
Appendix A    Master Definitions
 
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TRANSFERRED ENVIRONMENTAL CONTROL PROPERTY SALE AGREEMENT dated as of April 11,
2007 (as amended, restated, supplemented or otherwise modified from time to
time, “this Agreement”), between PE ENVIRONMENTAL FUNDING LLC, a Delaware
limited liability company (the “Issuer”), and PE RENAISSANCE FUNDING, LLC, a
Delaware limited liability company, and its successors in interest to the extent
permitted hereunder, as Seller (the “Seller”).
 
WHEREAS the Seller received a contribution from the Transferor of Environmental
Control Property created pursuant to the Statute and the Financing Order; and
 
WHEREAS the Issuer desires to purchase from time to time Transferred
Environmental Control Property; and
 
WHEREAS the Seller is willing to sell Transferred Environmental Control Property
to the Issuer; and
 
WHEREAS the Issuer, in order to finance the purchase of the Transferred
Environmental Control Property, will from time to time issue Environmental
Control Bonds under the Indenture; and
 
WHEREAS the Issuer, to secure its obligations under all Environmental Control
Bonds and the Indenture, will pledge its right, title and interest in the
Transferred Environmental Control Property to the Indenture Trustee for the
benefit of the Environmental Control Bondholders; and
 
WHEREAS the Issuer has determined that the transactions contemplated by the
Basic Documents are in the best interest of the Issuer and its creditors and
represent a prudent and advisable course of action that does not impair the
rights and interests of the Issuer’s creditors; and
 
WHEREAS the PSCWV or its attorney will enforce this Agreement pursuant to the
Financing Order for the benefit of Customers to the extent permitted by
applicable Requirements of Law.
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained and intending to be legally bound hereby, the parties hereto agree as
follows:
 
ARTICLE I
 
Definitions
 
Section 1.01.  Definitions.  Capitalized terms used but not otherwise defined
herein have the meanings assigned to them in Appendix A of this Agreement.
 
Section 1.02.  Other Definitional Provisions.  (a) The words “hereof”, “herein”,
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement; Section, Schedule and Exhibit references contained in this Agreement
are references to Sections, Schedules and
 
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Exhibits in or to this Agreement unless otherwise specified; and the term
“including” shall mean “including without limitation”.
 
(b)  The definitions contained in this Agreement are applicable to the singular
as well as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such terms.
 
ARTICLE II
  
Conveyance of Transferred Environmental Control Property
 
Section 2.01.  Conveyance of Initial Transferred Environmental Control Property.
 (a) In consideration of the Issuer’s delivery to or upon the order of the
Seller of $112,408,504, subject to the conditions specified in Section 2.03, the
Seller, pursuant to a Bill of Sale, will irrevocably sell, transfer, assign, set
over and otherwise convey to the Issuer, without recourse (subject to the
obligations herein), all right, title and interest of the Seller in and to the
Initial Transferred Environmental Control Property created pursuant to the
Statute and in accordance with the Financing Order (such sale, transfer,
assignment, set over and conveyance of the Initial Transferred Environmental
Control Property will include, to the fullest extent permitted by the Statute,
the assignment of all revenues, collections, claims, rights, payments, money or
proceeds of or arising from the Environmental Control Charges related to the
Initial Transferred Environmental Control Property, as the same may be adjusted
from time to time). Such sale, transfer, assignment, set over and conveyance
will be expressly stated to be a sale and, pursuant to Section 24-2-4e(m)(1) of
the Statute, shall be treated as an absolute transfer of all of the Seller’s
right, title and interest (as in a true sale), and not as a pledge or other
secured transaction, of the Initial Transferred Environmental Control Property.
The Seller and the Issuer agree and confirm that after giving effect to the sale
contemplated by such Bill of Sale, the Seller has no rights in the Initial
Transferred Environmental Control Property to which a security interest of
creditors of the Seller could attach because it has sold all rights in the
Initial Transferred Environmental Control Property to the Issuer pursuant to
Section 24-2-4e(m)(1) of the Statute. If such sale, transfer, assignment,
setting over and conveyance is held by any court of competent jurisdiction not
to be a true sale as provided in Section 24-2-4e(m)(1) of the Statute, then such
sale, transfer, assignment, setting over and conveyance shall be treated as a
pledge of the Initial Transferred Environmental Control Property and as the
creation of a security interest (within the meaning of the Statute and the UCC)
in the Initial Transferred Environmental Control Property and, without prejudice
to its position that it has absolutely transferred all of its rights in the
Initial Transferred Environmental Control Property to the Issuer, the Seller
hereby grants a security interest in the Initial Transferred Environmental
Control Property to the Issuer (and, to the extent necessary to qualify the
grant as a security interest under the Statute and the UCC, to the Indenture
Trustee for the benefit of the Environmental Control Bondholders to secure the
right of the Issuer under the Basic Documents to receive the Environmental
Control Charges and all other Transferred Environmental Control Property).
 
(b)  Subject to the conditions specified in Section 2.03, the Issuer, pursuant
to a Bill of Sale, will purchase the Initial Transferred Environmental Control
Property from the Seller for the consideration set forth in paragraph (a) above.
 
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(c)  The Seller and the Issuer each acknowledge and agree that the purchase
price for the Initial Transferred Environmental Control Property sold pursuant
to the Bill of Sale is equal to its fair market value at the time of sale.
 
Section 2.02.  Conveyance of Subsequent Transferred Environmental Control
Property.  The Seller may from time to time offer to sell additional Transferred
Environmental Control Property to the Issuer, subject to the conditions
specified in Section 2.03. If any such offer is accepted by the Issuer, such
Subsequent Transferred Environmental Control Property shall be sold to the
Issuer effective on the Subsequent Sale Date specified in the related Addition
Notice, subject to the satisfaction or waiver of the conditions specified in
Section 2.03.
 
Section 2.03.  Conditions to Conveyance of Transferred Environmental Control
Property.  The Seller shall be permitted to sell Transferred Environmental
Control Property to the Issuer only upon the satisfaction or waiver of each of
the following conditions:
 
(i)  on or prior to the Initial Sale Date or Subsequent Sale Date, as
applicable, the Seller shall have delivered to the Issuer a duly executed Bill
of Sale identifying the Transferred Environmental Control Property to be
conveyed on that date;
 
(ii)  as of the Initial Sale Date or the Subsequent Sale Date, as applicable,
the Seller was not insolvent and will not have been made insolvent by such sale
and the Seller is not aware of any pending insolvency with respect to itself;
 
(iii)  as of the Initial Sale Date or the Subsequent Sale Date, as applicable,
no breach by the Seller of its representations, warranties or covenants in this
Agreement shall exist; no Servicer Default shall have occurred and be
continuing; and no breach by the Transferor of its representations and
warranties in the Transfer Agreement shall exist;
 
(iv)  as of the Initial Sale Date or the Subsequent Sale Date, as applicable,
(A) the Issuer shall have sufficient funds available to pay the purchase price
for the Transferred Environmental Control Property to be conveyed on such date
and (B) all conditions to the issuance of one or more Series of Environmental
Control Bonds intended to provide such funds set forth in the Indenture shall
have been satisfied or waived;
 
(v)  on or prior to the Initial Sale Date or the Subsequent Sale Date, as
applicable, the Seller shall have taken all action required to transfer to the
Issuer ownership of the Transferred Environmental Control Property to be
conveyed on such date, free and clear of all Liens other than Liens created
pursuant to the Basic Documents; and the Issuer or the Servicer, on behalf of
the Issuer, shall have taken any action required for the Issuer to grant the
Indenture Trustee a first priority perfected security interest in the Collateral
and maintain such security interest as of such date;
 
(vi)  in the case of a sale of Subsequent Transferred Environmental Control
Property only, on or prior to such Subsequent Sale Date, the Seller shall have
provided the Issuer and the Rating Agencies with a timely Addition Notice;
 
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(vii)  the Seller shall have delivered to the Rating Agencies and the Issuer (A)
an Opinion of Counsel with respect to the transfer of the Transferred
Environmental Control Property then being conveyed to the Issuer and (B) the
Opinion of Counsel required by Section 5.04(a);
 
(viii)  the Seller shall have delivered to the Indenture Trustee and the Issuer
an Officers’ Certificate confirming the satisfaction of each condition precedent
specified in this Section 2.03; and
 
(ix)  the Seller shall have received the purchase price set forth in Section
2.01(a).
 
ARTICLE III  
 
Representations and Warranties of Seller
 
As of the Initial Sale Date and as of any Subsequent Sale Date, as applicable,
the Seller makes the following representations and warranties on which the
Issuer has relied and will rely in acquiring Transferred Environmental Control
Property. The Seller agrees and acknowledges that the following representations
and warranties are also for the benefit of the Indenture Trustee, as collateral
assignee of the Issuer pursuant to the Indenture. The representations and
warranties shall survive the sale of Transferred Environmental Control Property
to the Issuer and the pledges and assignments thereof permitted hereby.
 
Section 3.01.  Organization and Good Standing.  The Seller is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware, with limited liability company power and
authority to own its properties and conduct its business.
 
Section 3.02.  Due Qualification.  The Seller is duly qualified to do business
as a foreign limited liability company in good standing, and has obtained all
necessary licenses and approvals, in all foreign jurisdictions in which the
ownership or lease of property or the conduct of its business shall require such
qualifications, licenses or approvals (except where the failure to so qualify or
obtain such licenses and approvals would not be reasonably likely to have a
material adverse effect on the Seller’s business, operations, assets, revenues
or properties).
 
Section 3.03.  Power and Authority.  The Seller has the requisite limited
liability company power and authority to execute and deliver this Agreement and
to carry out its terms; the Seller has full limited liability company power and
authority to own the Environmental Control Property and sell and assign the
Initial Transferred Environmental Control Property, in the case of the Initial
Sale Date, and the Subsequent Transferred Environmental Control Property, in the
case of each Subsequent Sale Date, as applicable, and the Seller has duly
authorized such sale and assignment to the Issuer by all necessary limited
liability company action; and the execution, delivery and performance of this
Agreement has been duly authorized by the Seller by all necessary limited
liability company action.
 
Section 3.04.  Binding Obligation.  This Agreement constitutes a legal, valid
and binding obligation of the Seller enforceable against the Seller in
accordance with its terms, subject to
 
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bankruptcy, receivership, insolvency, fraudulent transfer, reorganization,
moratorium or other laws relating to or affecting creditors’ rights generally
from time to time in effect and to general principles of equity (regardless of
whether considered in a proceeding in equity or at law).
 
Section 3.05.  No Violation.  The consummation of the transactions contemplated
by this Agreement does not conflict with the organizational documents of the
Seller, or any indenture, or other agreement or instrument to which the Seller
is a party or by which it is bound; result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than may be granted under the Basic
Documents or any Liens created by the Issuer pursuant to the Financing Order) or
violate any Requirements of Law applicable to the Seller or its properties.
 
Section 3.06.  No Proceedings.  There are no proceedings or investigations
pending or, to the Seller’s knowledge, threatened, before any court, federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties (i)
asserting the invalidity of the Basic Documents, the Environmental Control
Bonds, the Statute or the Financing Order, (ii) seeking to prevent the issuance
of the Environmental Control Bonds or the consummation of any of the
transactions contemplated by the Basic Documents (iii) challenging the Seller’s
treatment of the Environmental Control Bonds as debt of the Seller for federal
and state tax purposes, or (iv) except as described in Exhibit B, seeking any
determination or ruling that could reasonably be expected to materially and
adversely affect the performance by the Seller of its obligations under, or the
validity or enforceability of, the Basic Documents, the Environmental Control
Bonds or the Financing Order.
 
Section 3.07.  Approvals.  Except for UCC filings or filings under the Statute,
no approval, authorization, consent, order or other action of, or filing with,
any court, federal or state regulatory body, administrative agency or other
governmental instrumentality is required in connection with the execution and
delivery by the Seller of this Agreement, the performance by the Seller of the
transactions contemplated hereby or the fulfillment by the Seller of the terms
hereof, except those that have been obtained or made.
 
Section 3.08.  The Transferred Environmental Control Property.
 
(a)  All information provided by the Seller to the Issuer in writing with
respect to the Transferred Environmental Control Property is correct in all
material respects.
 
(b)  The transfer, sale, assignment and conveyance of the Transferred
Environmental Control Property constitutes a sale or other absolute transfer of
all of the Seller’s right, title and interest in the Initial Transferred
Environmental Control Property or the Subsequent Transferred Environmental
Control Property, as the case may be, to the Issuer, and, upon the execution of
this Agreement, Seller will have no right, title or interest in the Initial
Transferred Environmental Control Property or the Subsequent Transferred
Environmental Control Property, as the case may be, and the Initial Transferred
Environmental Control Property or the Subsequent Transferred Environmental
Control Property, as the case may be, would not be part of the estate of the
Seller as debtor in the event of a filing of a bankruptcy petition.
 
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(c)  The Seller is the sole owner of the Transferred Environmental Control
Property sold to the Issuer on the Initial Sale Date or Subsequent Sale Date, as
applicable, and such sale has been made free and clear of all Liens other than
Liens created by the Issuer pursuant to the Indenture. All actions or filings,
including filings with the Secretary of State of West Virginia under the Statute
and UCC and with the Delaware Secretary of State under the Delaware UCC,
necessary to give the Issuer a valid first priority perfected ownership interest
in the Transferred Environmental Control Property and to grant the Indenture
Trustee a first priority perfected ownership interest in the Transferred
Environmental Control property, free and clear of all Liens of the Seller or
anyone claiming through the Seller have been made.
 
Section 3.09.  Solvency of Seller. After giving effect to the sale of any
Transferred Environmental Control Property hereunder, the Seller (i) is solvent
and expects to remain solvent, (ii) is adequately capitalized to conduct its
business and affairs considering its size and the nature of its business and
intended purposes, (iii) is not engaged in nor does it expect to engage in a
business for which its remaining property represents an unreasonably small
amount of capital, (iv) reasonably believes that it will be able to pay its
debts as they come due and (v) is able to pay its debts as they mature and does
not intend to incur, or believe that it will incur, indebtedness that it will
not be able to repay at its maturity.
 
Section 3.10.  The Statute and the Financing Order.
 
(a)  The Financing Order has been issued by the PSCWV in accordance with the
Statute and in compliance with all applicable Requirements of Law. The Financing
Order became effective pursuant to the Statute, is in full force and effect and
is final and nonappealable
 
(b)  The Environmental Control Bonds are entitled to the protections provided by
the Statute, the Financing Order is not subject to impairment, and the rights to
impose, collect and adjust the Environmental Control Charges are irrevocable and
not subject to impairment or adjustment, except for the periodic True-Up
Adjustments to the Environmental Control Charges provided for in the Financing
Order.
 
Section 3.11.  State Pledge.
 
(a)  The State of West Virginia may not take or permit any action which would
impair the value of the Environmental Control Property or reduce or alter,
except for periodic True-Up Adjustments allowed under the Financing Order, or
impair the Environmental Control Charges to be imposed, collected or remitted
for the benefit of Environmental Control Bondholders, until all principal,
interest or other charges incurred or contracts to be performed in connection
with the Environmental Control Bonds are paid or performed in full.
 
(b)  The State of West Virginia, including the PSCWV, cannot take any action
that substantially impairs the rights of the Environmental Control Bondholders
unless such action is reasonable exercise of the State of West Virginia’s
sovereign powers and of a character to further a legitimate public purpose.
Under the takings clauses of the West Virginia Constitution and the United
States Constitution, the state cannot repeal or amend the Statute in
contravention of the State Pledge, as described in Section 3.10(a), unless just
compensation, as determined by a court of competition jurisdiction, is provided
to the Environmental Control Bondholders; but
 
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nothing in this paragraph precludes any limitation or alteration of the rights
of the Environmental Control Bondholders if full compensation is made by law for
the full protection of the Environmental Control Charges and of the
Environmental Control Bondholders or any assignee or party entering into a
contract with the Seller.
 
(c)  There is no order by a court providing for the limitation or other
impairment of the Statute, Financing Order, Environmental Control Property or
Environmental Control Charges, or any rights arising under them, or that seeks
to enjoin the performance of any obligations under the Financing Order which is
materially adverse to the position of the Environmental Control Bondholders.
 
(d)  The voters of the State of West Virginia have no right of referendum or
initiative to amend, repeal or revoke the Statute in a manner that would impair
the security of the Environmental Control Bondholders.
 
Section 3.12.  The Environmental Control Property Rights.
 
(a)  The Environmental Control Property constitutes a present property right
that will continue to exist until the Environmental Control Bonds are paid in
full and the financing costs associated with the Environmental Control Bonds
have been recovered in full.
 
(b)  The Environmental Control Property consists of (a) the irrevocable right of
the Seller under the Financing Order to impose, collect and receive
Environmental Control Charges in the amount necessary to provide for full
recovery of principal and interest on the Environmental Control Bonds, together
with the Financing Costs; (b) the right under the Financing Order to obtain
periodic True-Up Adjustments of the Environmental Control Charges and (c) all
proceeds arising out of the rights and interests described in (a) and (b). The
Environmental Control Property does not include any right to any revenues,
collections, claims, rights, payments, money or proceeds of or arising from
certain tax charges.
 
ARTICLE IV  
 
Covenants of the Seller
 
Section 4.01.  Existence as a Limited Liability Company.  Subject to Section
5.02, so long as Environmental Control Bonds of any Series remain Outstanding,
the Seller will keep in full force and effect its existence as a limited
liability company and remain in good standing, in each case under the laws of
the jurisdiction of its formation, and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement and each other instrument or agreement to which the Seller is a party
necessary to the proper administration of this Agreement and the transactions
contemplated hereby.
 
Section 4.02.  No Liens or Conveyances.  Except for the conveyances hereunder,
the Seller will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on, any of the
Transferred Environmental Control Property, whether now existing or hereafter
created, or any interest therein. The Seller shall not at any time assert any
Lien against or with respect to any Transferred Environmental Control Property,
and shall
 
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defend the right, title and interest of the Issuer and the Indenture Trustee, as
collateral assignee of the Issuer, in, to and under the Transferred
Environmental Control Property, whether now existing or hereafter created,
against all claims of third parties claiming through or under the Seller.
 
Section 4.03.  Delivery of Collections.  If the Seller receives collections in
respect of the Environmental Control Charges, or in respect of the Environmental
Control Property or the proceeds thereof, the Seller agrees to pay the Servicer
all estimated collections received by the Seller in respect thereof as soon as
practicable after receipt is known by the Seller, but in no event later than two
Business Days after such receipt is known by the Seller, and the Seller shall
reconcile such estimated amounts with the Servicer within 25 Business Days after
the estimated collections are paid to the Servicer.
 
Section 4.04.  Notice of Liens.  The Seller shall notify the Issuer and the
Indenture Trustee promptly after becoming aware of any Lien on any Environmental
Control Property other than the conveyances hereunder or under the Transfer
Agreement, the Indenture or the other Basic Documents.
 
Section 4.05.  Compliance with Law.  The Seller hereby agrees to materially
comply with its organizational or governing documents and all Requirements of
Law applicable to the Seller, except to the extent that failure to so comply
would not have a material adverse affect on the Issuer’s or the Indenture
Trustee’s interests in the Transferred Environmental Control Property or under
any of the Basic Documents, the timing or amount of Environmental Control
Charges payable by customers or the Seller’s performance of its material
obligations hereunder or under any of the other Basic Documents to which it is a
party.
 
Section 4.06.  Use of Proceeds.  The Seller will use the proceeds of the sale of
the Transferred Environmental Control Property in accordance with the Financing
Order.
 
Section 4.07.  Covenants Related to Transferred Environmental Control Property.
 
(a)  So long as Environmental Control Bonds of any Series remain Outstanding,
the Seller shall treat the Environmental Control Bonds as debt of the Seller for
federal income tax purposes to the extent permitted by applicable Requirements
of Law.
 
(b)  So long as Environmental Control Bonds of any Series remain Outstanding,
the Seller shall (i) treat the Environmental Control Bonds as the debt of the
Issuer, except for financial accounting or tax purposes, (ii) clearly disclose
in its financial statements that it is not the owner of the Transferred
Environmental Control Property and that the assets of the Issuer are not
available to pay creditors of the Seller or any of its Affiliates, (iii) not own
or purchase any Environmental Control Bonds, and (iv) clearly disclose the
effects of all transactions between the Seller and the Issuer in accordance with
GAAP.
 
(c)  The Seller agrees that upon the sale by the Seller of the Transferred
Environmental Control Property to the Issuer pursuant to a Bill of Sale, (i) to
the fullest extent permitted by applicable Requirements of Law, the Issuer shall
have all of the rights originally held by the Seller with respect to the
Transferred Environmental Control Property, including the
 
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right to collect any amounts payable by any Customer or Third Party in respect
of such Transferred Environmental Control Property, notwithstanding any
objection or direction to the contrary by the Seller and (ii) any payment by any
Customer or Third Party to the Issuer shall discharge such Customer’s or such
Third Party’s obligations in respect of such Transferred Environmental Control
Property to the extent of such payment, notwithstanding any objection or
direction to the contrary by the Seller.
 
(d)  So long as Environmental Control Bonds of any Series remain Outstanding,
the Seller (i) in all proceedings relating directly or indirectly to the
Transferred Environmental Control Property, will affirmatively certify and
confirm that it has sold all of its rights and interests in and to the
Transferred Environmental Control Property (other than for financial accounting
or tax purposes), (ii) shall not make any statement or reference in respect of
the Transferred Environmental Control Property that is inconsistent with the
ownership thereof by the Issuer (other than for financial accounting or tax
purposes), (iii) will not take any action in respect of the Transferred
Environmental Control Property except as contemplated by the Basic Documents and
(iv) will not sell Environmental Control Property under a Subsequent Financing
Order in connection with the issuance of additional series of Environmental
Control Bonds unless the Rating Agency Condition has been satisfied.
 
Section 4.08.  Notice of Indemnification Events.   The Seller shall deliver to
the Issuer and the Indenture Trustee promptly after having obtained knowledge
thereof, written notice in an Officers’ Certificate of any Indemnification Event
or any event which, with the giving of notice or the passage of time, would
become an Indemnification Event.
 
Section 4.09.  Protection of Title.
 
(a)  The Seller shall execute and file such filings, including filings with the
PSCWV pursuant to the Statute and the Financing Order, and cause to be executed
and filed such filings, all in such manner and in such places as may be required
by applicable Requirements of Law fully to preserve, maintain, and protect the
interests of the Issuer, the Indenture Trustee and the Environmental Control
Bondholders in the Transferred Environmental Control Property, including all
filings required under the Statute relating to the transfer of the ownership or
security interest in the Transferred Environmental Control Property by the
Seller to the Issuer.
 
(b)  The Seller shall deliver (or cause to be delivered) to the Issuer
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
 
(c)  The Seller agrees to take such legal or administrative actions, including
defending against or instituting and pursuing legal actions and appearing or
testifying at hearings or similar proceedings, as may be reasonably necessary
(i) to protect the Issuer, the Indenture Trustee and the Environmental Control
Bondholders from claims, state actions or other actions or proceedings of third
parties which, if successfully pursued, would result in a breach of any
representation or warranty set forth in Article III or (ii) to block or overturn
any attempts to cause a repeal of, modification of or supplement to the Statute
or the Financing Order or the rights of holders of Transferred Environmental
Control Property by legislative enactment or
 
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constitutional amendment that would be materially adverse to the holders of
Transferred Environmental Control Property.
 
(d)  The Seller will institute any action or proceeding necessary to compel
performance by the PSCWV, the State of West Virginia or any of their respective
agents of any of their obligations or duties under the Statute, any Financing
Order or any Issuance Advice Letter. The Seller will comply with all filing
requirements, including any post closing filings, in accordance with the
Financing Order.
 
The costs of any action described in this Section 4.09 shall be payable from the
Collection Account as an Operating Expense in accordance with Section 8.02(e) of
the Indenture. The Seller’s obligations pursuant to this Section 4.09 shall
survive and continue notwithstanding that payment of such Operating Expense may
be delayed pursuant to the terms of the Indenture it being understood that the
Seller may be required initially to advance its own fund to satisfy its
obligations hereunder).
 
Section 4.10.  Taxes.  So long as any of the Environmental Control Bonds are
Outstanding, the Seller shall, and shall cause each of its subsidiaries to, pay
all material taxes, including assessments and governmental charges imposed upon
it or any of its properties or assets or with respect to any of its franchises,
business, income or property before any penalty accrues thereon if the failure
to pay any such taxes, assessments and governmental charges would, after any
applicable grace periods, notices or other similar requirements, result in a
lien on the Transferred Environmental Control Property; provided that no such
tax need be paid if the Seller or one of its affiliates is contesting the same
in good faith by appropriate proceedings promptly instituted and diligently
conducted and if the Seller or such affiliate has established appropriate
reserves as shall be required in conformity with generally accepted accounting
principles.
 
Section 4.11.  Notice of Breach.  Promptly after obtaining knowledge of any
breach in any material respect of its representations and warranties in this
Agreement, the Seller will notify the Issuer and the Rating Agencies of the
breach.
 
Section 4.12.  Termination.  Even if this Agreement or the Indenture is
terminated, the Seller will not, prior to the date which is one year and one day
after the termination of the Indenture, petition or otherwise invoke or cause
the Issuer to invoke the process of any court or Governmental Authority for the
purpose of commencing or sustaining an involuntary case against the Issuer or
any substantial part of the Issuer’s property under any federal or state
bankruptcy, insolvency or similar law, appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official, or
ordering the winding up or liquidation of the Issuer’s affairs.
 
Section 4.13.  Further Covenants.  Upon the Issuer’s request, the Seller will
execute and deliver such further instruments and do such further acts as may be
necessary to carry out more effectively the provisions and purposes of this
Agreement.
 
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ARTICLE V
  
The Seller
 
Section 5.01.  Liability of Seller; Indemnities.
 
(a)  The Seller shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Seller under this Agreement.
 
(b)  The Seller shall indemnify the Issuer and the Indenture Trustee, for itself
and on behalf of the Environmental Control Bondholders and each of their
respective affiliates, members, managers, officers, directors, employees and
agents, and defend and hold harmless each such Person from and against, any and
all taxes (other than any taxes imposed on Environmental Control Bondholders
solely as a result of their ownership of Environmental Control Bonds) that may
at any time be imposed on or asserted against any such Person under existing law
as of the Initial Sale Date or Subsequent Sale Date as a result of (i) the sale
and assignment of the Environmental Control Property to the Issuer, (ii) the
acquisition or holding of the Environmental Control Property by the Issuer or
(iii) the issuance and sale of the Environmental Control Bonds by the Issuer,
including any sales, gross receipts, general corporation, single business,
personal property, privilege, franchise or license taxes, but excluding any
taxes imposed as a result of a failure of such person to withhold or remit taxes
with respect to payments on any Environmental Control Bonds, it being understood
that the Environmental Control Bondholders shall be entitled to enforce their
rights against the Seller under this Section 5.01(b) solely through a cause of
action brought for their benefit by the Indenture Trustee.
 
(c)  The Seller shall indemnify the Issuer, the Indenture Trustee, for itself
and on behalf of the Environmental Control Bondholders, and each of their
respective affiliates, members, managers, officers, directors, employees and
agents, and defend and hold harmless each such Person from and against, (i) any
and all amounts of principal of and interest on the Environmental Control Bonds
not paid when due or when scheduled to be paid in accordance with their terms,
(ii) the amount of any deposits to the Issuer required to have been made in
accordance with the terms of the Basic Documents or any Financing Order which
are not made when so required, and (iii) any and all other liabilities,
obligations, losses, claims, damages, payment, costs or expenses incurred by any
of these persons, in each case as a result of the Seller’s breach of any of its
representations, warranties or covenants contained in this Agreement; each of
which the Seller will have a 30-day opportunity to cure upon notice from us of a
material breach of a covenant.
 
(d)  The Seller shall indemnify the Issuer, the Indenture Trustee, for itself
and on behalf of the Environmental Control Bondholders, and each of their
respective affiliates, members, managers, officers, directors, employees and
agents, and defend and hold harmless each such Person from and against, any and
all Losses that may be imposed on, incurred by or asserted against any such
Person as a result of (x) the Seller’s willful misconduct, bad faith or
negligence in the performance of its duties or observance of its covenants under
this Agreement, (y) the Seller’s reckless disregard of its obligations and
duties under this Agreement or the Transferor’s reckless disregard of its
obligations and duties under the Transfer Agreement or (z)
 
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the Seller’s breach of any of its representations or warranties contained in
this Agreement or the Transferor’s breach of any of its representations or
warranties contained in the Transfer Agreement (any event described in any of
the foregoing clauses (x), (y) or (z), an “Indemnification Event”). Amounts on
deposit in the Excess Funds Subaccount and the Capital Subaccount shall not be
available to satisfy any Losses for which indemnification is provided in this
Agreement.
 
(e)  The Seller also will indemnify the PSCWV, for the benefit of Customers, for
any and all Losses, including but not limited to Losses in the form of higher
Environmental Control Charges, that Customers may incur by reason of (i) any
failure of the Seller’s representations or warranties in this Agreement,
(ii) any breach of the Seller’s covenants in this Agreement, (iii) any failure
of the Transferor’s representations in the Transfer Agreement or (iv)  breach of
the Transferor’s covenants in the Transfer Agreement.
 
(f)  The Seller shall indemnify the Indenture Trustee its officers, directors
and agents for, and defend and hold harmless each such Person from and against,
any and all Losses that may be imposed upon, incurred by or asserted against any
such Person as a result of the acceptance or performance of the trusts and
duties contained herein and in the Basic Documents to which the Indenture
Trustee is a party, except to the extent that any such Loss shall be due to the
willful misfeasance, bad faith or negligence of the Indenture Trustee. Such
amounts shall be deposited into the Collection Account and distributed in
accordance with the Indenture.
 
(g)  The Seller’s indemnification obligations under Sections 5.01(b), (c), (d)
and (f) for events occurring prior to the removal or resignation of the
Indenture Trustee or the termination of this Agreement shall survive the
resignation or removal of the Indenture Trustee or the termination of this
Agreement and shall include reasonable fees and expenses of investigation and
litigation (including the Indenture Trustee’s reasonable attorney’s fees and
expenses) and will rank in priority with other general, unsecured obligations of
the Seller. Any amounts indemnified by the Seller pursuant to its obligations
under Sections 5.01(b), (c), (d) or (f) shall be deposited into the Collection
Account and distributed in accordance with the Indenture. The Seller shall not
indemnify any party under this Section 5.01 for any changes in law after the
Initial Sale Date or the Subsequent Sale Date, as applicable.
 
Section 5.02.  Merger or Consolidation of, or Assumption of the Obligations of,
Seller.  Any Person (a) into which the Seller may be merged or consolidated or
which succeeds to all or the majority of the Seller’s electric distribution
business, (b) which results from the division of the Seller into two or more
Persons and which succeeds to all or the majority of the Seller’s electric
distribution business, (c) which may result from any merger or consolidation to
which the Seller shall be a party and which succeeds to all or the majority of
the Seller’s electric distribution business, or (d) which may succeed to the
properties and assets of the Seller substantially as a whole and which succeeds
to all or the majority of the Seller’s electric distribution business, which
Person in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Seller under this Agreement, shall be the
successor to the Seller hereunder without the execution or filing of any
document or any further act by any of the parties to this Agreement; provided,
however, that (i) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Article III shall have been breached
and no Servicer Default, and no event that, after notice or lapse of time, or
both,
 
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would become a Servicer Default, shall have occurred and be continuing, (ii) the
Seller shall have delivered to the Issuer and the Indenture Trustee an Officers’
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, (iii) the Rating Agencies
shall have received prior written notice of such transaction, (iv) the Seller
shall have delivered to the Issuer and the Indenture Trustee an Opinion of
Counsel either (A) stating that, in the opinion of such counsel, all filings,
including filings by the Seller with the PSCWV pursuant to the Statute and UCC
filings, have been executed and filed that are necessary fully to preserve and
protect the interest of the Issuer in the Transferred Environmental Control
Property and reciting the details of such filings or (B) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve and
protect such interests and (v) the Seller shall have delivered to the Issuer and
the Indenture Trustee an Opinion of Counsel from independent tax counsel stating
to the effect that, for the federal income tax purposes, such consolidation,
merger or succession to, and assumption of, the obligations of the Seller will
not result in a material adverse federal income tax consequence to the Issuer,
the Seller, the Indenture Trustee or the Environmental Control Bondholders.
Notwithstanding anything herein to the contrary, the execution of the above
described agreement of assumption and compliance with clauses (i), (ii), (iii)
and (iv) above shall be conditions precedent to the consummation of any
transaction referred to in clauses (a), (b), (c) or (d) above.
 
Section 5.03.  Limitation on Liability of Seller and Others.  The Seller and any
director or officer or employee or agent of the Seller may rely in good faith on
the advice of counsel or on any document of any kind, prima facie properly
executed and submitted by any Person, respecting any matters arising hereunder.
Subject to Section 4.08, the Seller shall not be under any obligation to appear
in, prosecute or defend any legal action that is not incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability. The Seller will not be liable for any Losses resulting
solely from a downgrade in the ratings on the Environmental Control Bonds or any
consequential, incidental or indirect damages, including any loss of market
value of the Environmental Control Bonds, resulting from any downgrade of the
ratings of the Environmental Control Bonds.
 
Section 5.04.  Opinions of Counsel.  The Seller shall deliver to the Issuer and
the Indenture Trustee: (a) promptly after the execution and delivery of this
Agreement and of each amendment hereto or to the Servicing Agreement and on each
Subsequent Sale Date, an Opinion of Counsel either (i) to the effect that, in
the opinion of such counsel, all filings, including filings with the PSCWV
pursuant to the Statute, that are necessary to fully preserve and protect the
interests of the Issuer in the Transferred Environmental Control Property have
been executed and filed, and reciting the details of such filings or referring
to prior Opinions of Counsel in which such details are given, or (ii) to the
effect that, in the opinion of such counsel, no such action shall be necessary
to preserve and protect such interest; and (b) within 90 days after the
beginning of each calendar year beginning with the first calendar year beginning
more than three months after the Initial Sale Date, an Opinion of Counsel, dated
as of a date during such 90-day period, either (i) to the effect that, in the
opinion of such counsel, all filings with the PSCWV or otherwise pursuant to the
Statute, have been executed and filed that are necessary to preserve fully and
protect fully the interest of the Issuer in the Transferred Environmental
Control Property, and reciting the details of such filings or referring to prior
Opinions of Counsel in
 
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which such details are given, or (ii) to the effect that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such
interest. Each Opinion of Counsel referred to in clause (a) or (b) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
 
ARTICLE VI  
 
Miscellaneous Provisions
 
Section 6.01.  Amendment..
 
(a)  Subject to Section 6.01(b) below, this Agreement may be amended by the
Seller and the Issuer, with the prior written consent of the Indenture Trustee
and the satisfaction of the Rating Agency Condition. Promptly after the
execution of any such amendment and consent, the Issuer shall furnish written
notification of the substance of such amendment or consent to each of the Rating
Agencies. Prior to the execution of any amendment to this Agreement, the Issuer
and the Indenture Trustee shall be entitled to receive and rely upon an Opinion
of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and the Opinion of Counsel referred to in Section
3.10 of the Servicing Agreement. Subject to paragraph (b) below, the Issuer and
the Indenture Trustee may, but shall not be obligated to, enter into any such
amendment which affects their own rights, duties or immunities under this
Agreement or otherwise.
 
(b)  Notwithstanding anything to the contrary in Section 6.01(a), no amendment
or modification of this Agreement shall be effective except upon satisfaction of
the conditions precedent in this Section 6.01(b).
 
(i)  PSCWV Condition. At least 16 days prior to the effectiveness of any such
amendment or modification, and after obtaining the other necessary approvals set
forth in Section 6.01(a), except for the consent of the Indenture Trustee and
the Environmental Control Bondholders if the consent of the Environmental
Control Bondholders is required or sought by the Indenture Trustee in connection
with such amendment or modification, the Issuer shall have delivered to the
PSCWV’s executive director and general counsel written notification of any
proposed amendment or modification, which notification shall contain:
 
(A)  a reference to Case Nos. 05-0402-E-CN and 05-0750-E-PC and any other case
number under which a Financing Order has been issued;
 
(B)  an Officer’s Certificate stating that the proposed amendment or
modification has been approved by all parties to this Agreement; and
 
(C)  a statement identifying the person to whom the PSCWV is to address any
response to the proposed amendment or to request additional time.
 
(ii)  The PSCWV or its authorized representative shall, within 15 days of
receiving the notification complying with Section 6.01(b)(i) above, either:
 
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(A)  provide notice of its determination that the proposed amendment or
modification will not under any circumstances have the effect of increasing the
ongoing qualified costs related to the Environmental Control Bonds,
 
(B)  provide notice of its consent or lack of consent to the person specified in
Section 6.01(b)(i)(C) above, or
 
(C)  be conclusively deemed to have consented to the proposed amendment or
modification,
 
unless, within 15 days of receiving the notification complying with Section
6.01(b)(i) above, the PSCWV or its authorized representative delivers to the
office of the person specified in Section 6.01(b)(i)(C) above with a written
statement requesting an additional amount of time not to exceed 15 days in which
to consider whether to consent to the proposed amendment or modification. If the
PSCWV or its authorized representative requests an extension of time in the
manner set forth in the preceding sentence, then the PSCWV shall either provide
notice of its consent or lack of consent or notice of its determination that the
proposed amendment or modification will not under any circumstances increase
ongoing qualified costs to the person specified in Section 6.01(b)(i)(C) above
not later than the last day of such extension of time or be conclusively deemed
to have consented to the proposed amendment or modification on the last day of
such extension of time. Any amendment or modification requiring the consent of
the PSCWV shall become effective on the later of (i) the date proposed by the
parties to such amendment or modification or (ii) the first day after the
expiration of the 15-day period provided for in this Section 6.01(b)(ii), or, if
such period has been extended pursuant hereto, the first day after the
expiration of such period as so extended.
 
(c)  For the purpose of this Section 6.01, an “authorized representative” of the
PSCWV means any person authorized to act on behalf of the PSCWV, as evidenced by
an Opinion of Counsel (which may be the general counsel) to the PSCWV.
 

Section 6.02.  Notices. All demands, notices and communications upon or to the
Seller, the Issuer, the Indenture Trustee, the Rating Agencies or the PSCWV
under this Agreement shall be in writing, delivered personally, via facsimile,
reputable overnight courier or by certified mail, return-receipt requested, and
shall be deemed to have been duly given upon receipt (a) in the case of the
Seller, to PE Renaissance Funding, LLC, 2215-B Renaissance Drive, Suite #5, Las
Vegas, Nevada 89119, Attention of Kristine Eppes, (b) in the case of the Issuer,
to PE Environmental Funding LLC, 2215-B Renaissance Drive, Suite #5, Las Vegas,
Nevada 89119, Attention of Kristine Eppes, (c) in the case of the Indenture
Trustee, at the Corporate Trust Office, (d) in the case of Moody’s, to Moody’s
Investors Service, Inc., Asset Finance Group, 99 Church Street, New York, New
York 10007, (e) in the case of Standard & Poor’s, to in the case of Standard &
Poor’s, to Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., 55 Water Street, 42nd Floor, New York, New York 10041-0003,
Attention of ABS Surveillance Group - New Assets, (f) in the case of Fitch, to
Fitch, Inc., One State Street Plaza, New York, New York 10004, Attention of ABS
Surveillance, and (g) in the case of the PSCWV, to Public Service Commission of
West Virginia, 201 Brooks Street, P.O. Box 812,
 
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Charleston, West Virginia 25325, Attention of Executive Secretary; or, as to
each of the foregoing, at such other address as shall be designated by written
notice to the other parties.
 
Section 6.03.  Assignment.  Notwithstanding anything to the contrary contained
herein, except as provided in Section 5.02, this Agreement may not be assigned
by the Seller.
 
Section 6.04.   Limitations on Rights of Others.  The provisions of this
Agreement are solely for the benefit of the Seller, the Issuer, the PSCWV and
the Indenture Trustee, on behalf of itself and the Environmental Control
Bondholders, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Collateral or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
 
Section 6.05.  Severability.  Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
 
Section 6.06.  Separate Counterparts.  This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
 
Section 6.07.  Headings.  The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
 
Section 6.08.  GOVERNING LAW.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF WEST VIRGINIA, WITHOUT REFERENCE TO ITS CONFLICT
OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
 
Section 6.09.  Assignment to Issuer and to Indenture Trustee.
 
(a)  The Seller hereby assigns to the Issuer all of the Seller’s rights in, to
and under the Transfer Agreement.
 
(b)  The Seller hereby acknowledges and consents to the mortgage, pledge,
assignment and grant of a security interest by the Issuer to the Indenture
Trustee pursuant to the Indenture for the benefit of the Environmental Control
Bondholders of all right, title and interest of the Issuer in, to and under the
Transferred Environmental Control Property and the proceeds thereof and the
assignment of any or all of the Issuer’s rights hereunder to the Indenture
Trustee.
 
Section 6.10.  Nonpetition Covenant.  Notwithstanding any prior termination of
this Agreement or the Indenture, but subject to a court of competent
jurisdiction’s rights to order the sequestration and payment of Environmental
Control Revenues arising with respect to the Transferred Environmental Control
Property upon application by the Issuer or the Indenture
 
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Trustee notwithstanding any bankruptcy, reorganization or other insolvency
proceedings with respect to the debtor, pledgor or transferor of the Transferred
Environmental Control Property pursuant to Section 24-2-4e(k)(4) of the Statute,
the Seller shall not, prior to the date which is one year and one day after the
termination of the Indenture, petition or otherwise invoke or cause the Issuer
to invoke the process of any court or Governmental Authority for the purpose of
commencing or sustaining an involuntary case against the Issuer under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of the property of the Issuer, or ordering
the winding up or liquidation of the affairs of the Issuer.
 
Section 6.11.  Perfection.  In accordance with Section 24-2-4e(m) of the
Statute, (i) upon the Financing Order creating the Environmental Control
Property becoming effective, (ii) the execution and delivery of this Agreement
and the related Bill of Sale, (iii) the receipt of value and (iv) the filing of
a financing statement with the office of the Secretary of State of West
Virginia, a transfer of an interest in the Environmental Control Property will
be perfected as against all third persons, including any judicial lien
creditors, other than creditors holding a prior security interest, ownership
interest or assignment in the Environmental Control Property previously
perfected in accordance with the relevant provisions of the Statute.
 
Section 6.12.  Limitation of Liability. It is expressly understood and agreed by
the parties hereto that this Agreement is executed and delivered by U.S. Bank
National Association, not individually or personally but solely as Indenture
Trustee for the benefit of the Environmental Control Bondholders, in the
exercise of the powers and authority conferred and vested in it, and nothing
herein contained shall be construed as creating any liability on U.S. Bank
National Association, individually or personally, to perform any covenant either
expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties who are signatories to this Agreement and by any
Person claiming by, through or under such parties; provided, however, that this
provision shall not protect U.S. Bank National Association against any liability
that would otherwise be imposed by reason of willful misconduct, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations or duties under this Agreement.
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.
 

   
PE ENVIRONMENTAL FUNDING LLC, Issuer
               
by
  /s/ Philip L. Goulding
   
 Title:  Vice President

 

   
PE RENAISSANCE FUNDING, LLC,  Seller
               
by
  /s/ Kristine W. Eppes
   
 Title:  Vice President, Treasurer and Secretary

 
 
Acknowledged and Accepted:
 
U.S. Bank National Association, not in its
individual capacity but solely as Indenture
Trustee on behalf of the Environmental Control
Bondholders.
 
by  /s/ Melissa A. Rosal                
Title:  Vice President
 
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EXHIBIT A
 
FORM OF BILL OF SALE
 

1.  This Bill of Sale is being delivered pursuant to the Transferred
Environmental Control Property Sale Agreement, dated as of April 11, 2007 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Sale Agreement”), between PE Renaissance Funding, LLC (the “Seller”) and PE
Environmental Funding LLC (the “Issuer”) and is subject to all of the terms,
conditions and limitations contained in the Sale Agreement. All capitalized
terms used but not defined herein have the respective meanings ascribed thereto
in the Sale Agreement.

2.  In consideration of the Issuer’s delivery to or upon the order of the Seller
of $112,408,504, the Seller does hereby irrevocably sell, transfer, assign, set
over and otherwise convey to the Issuer, without recourse (subject to the
obligations in the Sale Agreement), all right, title and interest of the Seller
in and to the Transferred Environmental Control Property created by the Statute
and in accordance with the Financing Order related to the Senior Secured Sinking
Fund Environmental Control Bonds, Series A and identified on Schedule 1 hereto
(the “Initial Transferred Environmental Control Property”) (such sale, transfer,
assignment, set over and conveyance of the Initial Transferred Environmental
Control Property includes, to the fullest extent permitted by the Statute, the
assignment of all revenues, collections, claims, rights, payments, money or
proceeds of or arising from the Environmental Control Charges related to the
Initial Transferred Environmental Control Property, as the same may be adjusted
from time to time). Such sale, transfer, assignment, set over and conveyance is
hereby expressly stated to be a sale and, pursuant to Section 24-2-4e(m)(1) of
the Statute, shall be treated as an absolute transfer of all of the Seller’s
right, title and interest (as in a true sale), and not as a pledge or other
secured transaction, of the Initial Transferred Environmental Control Property.
The Seller agrees and confirms that after giving effect to the sale contemplated
hereby, it has no rights in the Initial Transferred Environmental Control
Property to which a security interest of creditors of the Seller could attach
because it has sold all rights in the Initial Transferred Environmental Control
Property to the Issuer pursuant to Section 24-2-4e(m)(1) of the Statute.
 
3.  The Issuer does hereby purchase the Initial Transferred Environmental
Control Property from the Seller for the consideration set forth in paragraph 2
above.
 
4.  The Seller and the Issuer each acknowledge and agree that the purchase price
for the Initial Transferred Environmental Control Property sold pursuant to this
Bill of Sale and the Sale Agreement is equal to its fair market value at the
time of sale.
 
5.  The Seller confirms that each of the representations and warranties on the
part of the Seller contained in the Sale Agreement are true and correct in all
respects on the date hereof as if made on the date hereof.
 
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6.  This Bill of Sale may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
 
7.  This Bill of Sale shall be construed in accordance with the laws of the
State of West Virginia, without reference to its conflict of law provisions, and
the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws.
 
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IN WITNESS WHEREOF, the Seller and the Issuer have duly executed this Bill of
Sale as of this 11th day of April, 2007.

   
PE RENAISSANCE FUNDING, LLC  
               
by
 
   
 Title:
   
 Name:

 
 

   
PE ENVIRONMENTAL FUNDING LLC
               
by
 
   
 Title:
   
 Name:

 
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SCHEDULE 1
 
Transferred Environmental Control Property and the related Environmental Control
Charges with respect to the Senior Secured Sinking Fund Environmental Control
Bonds, Series A identified in the Pricing Advice Letter filed with the PSCWV on
April 4, 2007.
 

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EXHIBIT B
 
PENDING LITIGATION
 
None.
 

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