EXHIBIT
10.4

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WASTE WATER FACILITIES
 
LOAN AGREEMENT
 
Between
 
OHIO WATER DEVELOPMENT AUTHORITY
 
and
 
FIRSTENERGY GENERATION CORP.
 
 
Dated as of April 1, 2006
 
 
 
 

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TABLE OF CONTENTS
 

     
Page
I.
Background, Representations and Findings.
           
Section 1.1
Background
1
 
Section 1.2
Company Representations
2
 
Section 1.3
Issuer Findings and Representations
5
       
II.
Completion of the Project.
           
Section 2.1
Acquisition, Construction and Installation
5
 
Section 2.2
Plans and Specifications
5
       
III.
Refunding the Refunded Bonds.
           
Section 3.1
Issuance of Bonds
6
 
Section 3.2
Investment of Fund Moneys
6
       
IV.
Loan and Repayment.
           
Section 4.1
Amount and Source of Loan
7
 
Section 4.2
Repayment of Loan
7
 
Section 4.3
The Note
7
 
Section 4.4
Acceleration of Payment to Redeem Bonds
8
 
Section 4.5
No Defense or Set-Off
8
 
Section 4.6
Assignment of Issuer’s Rights
8
 
Section 4.7
Credit Facility; Conversion
8
       
V.
Covenants of the Company.
           
Section 5.1
Maintenance and Operation of Project
9
 
Section 5.2
Corporate Existence
9
 
Section 5.3
Payment of Trustee’s Compensation and Expenses
10
 
Section 5.4
Payment of Issuer’s Expenses
10
 
Section 5.5
Indemnity Against Claims
10
 
Section 5.6
Limitation of Liability of the Issuer
11
 
Section 5.7
Insurance
11
 
Section 5.8
Default, etc.
11
 
Section 5.9
Deficiencies in Revenues
11
 
Section 5.10
Rebate Fund
11
 
Section 5.11
Assignment of Agreement in Whole or in Part by Company
12
 
Section 5.12
Assignment of Agreement in Whole by Company
12
       
VI.
Miscellaneous.
             
Section 6.1
Notices
13
 
Section 6.2
Assignments
13
 
Section 6.3
Illegal, etc. Provisions Disregarded
13
 
Section 6.4
Applicable Law
13
 
Section 6.5
Amendments
13
 
Section 6.6
Term of Agreement
13
         
EXECUTION
 
14
       
EXHIBIT A - Project Description
 
EXHIBIT B - Form of Company Note
 

 

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WASTE WATER FACILITIES LOAN AGREEMENT, dated as of April 1, 2006 (the
“Agreement”) between the OHIO WATER DEVELOPMENT AUTHORITY (the “Issuer”) and
FIRSTENERGY GENERATION CORP. (the “Company”).
 
I. Background, Representations and Findings.
 
1.1 Background. The Issuer is a body corporate and politic, duly organized and
existing under Chapter 6121 of the Ohio Revised Code, as amended (the “Act”).
Pursuant to the Act the Issuer is authorized and empowered to issue State of
Ohio revenue bonds to finance, in whole or in part, the cost of the acquisition
and construction of “waste water facilities” within the meaning of the Act and
to issue revenue refunding bonds to refund such revenue bonds.
 
Under the Act, the Issuer may make loans to private corporations for the
acquisition or construction of waste water facilities by such corporations or to
assist in the refinancing of such facilities. The Issuer has heretofore
authorized the issuance of several issues of revenue bonds of the State of Ohio,
including the Refunded Bonds, as hereinafter defined, currently outstanding in
the aggregate principal amount of $90,140,000, and loaned the proceeds thereof
to The Cleveland Electric Illuminating Company (“CEI”), an Ohio corporation, in
order to assist CEI in refinancing a portion of the cost of acquiring,
constructing and installing certain waste water facilities generally described
in Exhibit A to this Agreement (the “Project”). CEI is an affiliate of
FirstEnergy Corp. (“FirstEnergy”) and transferred its ownership interest in the
Project on October 24, 2005 as part of the planned FirstEnergy Intra-System
Generation Asset Transfers described in Forms 8-K dated May 19, 2005 and
December 16, 2005 of FirstEnergy and CEI filed with the Securities and Exchange
Commission (“SEC”), and as further described in the Form 10-K for the fiscal
year ended December 31, 2005 of FirstEnergy and CEI filed with the SEC, and in
connection therewith FirstEnergy and CEI have requested that the Issuer
authorize the refunding of a corresponding portion of the outstanding aggregate
principal amount of the Issuer’s $39,835,000 State of Ohio Collateralized
Pollution Control Revenue Refunding Bonds, 1988 Series A (The Cleveland Electric
Illuminating Company Project) (the “1988 Bonds”), $47,500,000 State of Ohio
Collateralized Pollution Control Revenue Refunding Bonds, Series 1997-B (The
Cleveland Electric Illuminating Company Project) (the “1997 Bonds”) and
$2,805,000 aggregate principal amount of the outstanding $23,255,000 State of
Ohio Pollution Control Revenue Refunding Bonds, Series 2004-B (The Cleveland
Electric Illuminating Company Project) (such portion being referred to as the
“2004 Bonds”, and together with the 1988 Bonds and the 1997 Bonds, the “Refunded
Bonds”) through the issuance of revenue refunding bonds to assist the Company,
an Affiliate (as defined in the Indenture identified in Section 3.1 hereof) of
CEI and FirstEnergy, in the refunding of the Refunded Bonds.
 
The 1997 Bonds were issued under and pursuant to a Trust Indenture dated as of
August 1, 1997 (the “1997 Indenture”) between the Issuer and the trustee
thereunder, currently J.P. Morgan Trust Company, National Association (the “1997
Bonds Trustee”), the proceeds of which were loaned by the Issuer to CEI pursuant
to a Loan Agreement dated as of August 1, 1997 (the “1997 Agreement”) between
the Issuer and CEI for the purpose of refunding the Issuer’s State of Ohio
Collateralized Pollution Control Revenue Bonds, 1978 Series A (The Cleveland
Electric Illuminating Company Project) (the “1978 Bonds”) originally issued
under and pursuant to a Trust Indenture dated as of May 1, 1978 (the “1978
Indenture”) between the Issuer and the trustee thereunder, the proceeds of which
were loaned by the Issuer to CEI pursuant to a Loan Agreement dated as of May 1,
1978 (the “1978 Agreement”) between the Issuer and CEI to assist CEI in the
financing of a portion of the cost of acquiring, constructing and installing the
Project.
 
The 1988 Bonds were issued under and pursuant to a Trust Indenture dated as of
March 1, 1988, as amended and supplemented (collectively, the “1988 Indenture”)
between the Issuer and the trustee thereunder, currently J.P. Morgan Trust
Company, National Association (the “1988 Bonds Trustee”), the proceeds of which
were loaned by the Issuer to CEI pursuant to a Loan Agreement dated as of March
1, 1988, as amended (collectively, the “1988 Agreement”) between the Issuer and
CEI for the purpose of refunding a portion of the Issuer’s State of Ohio
Floating Rate Collateralized Pollution Control Revenue Bonds, 1980 Series A (The
Cleveland Electric Illuminating Company Project) (the “1980 Bonds”, and together
with the 1978 Bonds, the “Original Bonds”) originally issued under and pursuant
to the 1978 Indenture, as amended and supplemented by a First Supplemental Trust
Indenture dated as of December 10, 1980 (collectively, the “1980 Indenture”)
between the Issuer and the trustee thereunder, the proceeds of which were loaned
by the Issuer to CEI pursuant to the 1978 Agreement, as amended and supplemented
by the First Supplemental Loan Agreement dated as of December 10, 1980
(collectively, the “1980 Agreement”) between the Issuer and CEI to assist CEI in
the financing of a portion of the cost of acquiring, constructing and installing
the Project.
 

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The 2004 Bonds were issued under and pursuant to a Trust Indenture dated as of
October 1, 2004 (the “2004 Indenture”, and together with the 1988 Indenture and
the 1997 Indenture, the “Refunded Bonds Indenture”) between the Issuer and the
trustee thereunder, currently J.P. Morgan Trust Company, National Association
(the “2004 Bonds Trustee”, and together with the 1988 Bonds Trustee and the 1997
Bonds Trustee, the “Refunded Bonds Trustee”), the proceeds of which were loaned
by the Issuer to CEI pursuant to a Waste Water Facilities and Solid Waste
Facilities Loan Agreement dated as of October 1, 2004 (the “2004 Agreement”, and
together with the 1988 Agreement and the 1997 Agreement, the “Refunded Bonds
Agreement”) between the Issuer and CEI for the purpose of refunding a portion of
the Issuer’s State of Ohio Pollution Control Revenue Refunding Bonds, Series
1998-A (The Cleveland Electric Illuminating Company Project) (the “1998 Bonds”,
and together with the Original Bonds and the Refunded Bonds, the “Prior Bonds”)
a portion of which 1998 Bonds was originally issued under and pursuant to a
Trust Indenture dated as of October 1, 1998 (the “1998 Indenture”, and together
with the 1978 Indenture, the 1980 Indenture and the Refunded Bonds Indenture,
the “Prior Bonds Indenture”) between the Issuer and the trustee thereunder, the
proceeds of which were loaned by the Issuer to CEI pursuant to a Waster Water
Facilities and Solid Waste Facilities Loan Agreement dated as of October 1, 1998
(the “1998 Agreement”, and together with the 1978 Agreement, the 1980 Agreement
and the Refunded Bonds Agreement, the “Prior Bonds Agreement”) between the
Issuer and CEI for the purpose of refunding a portion of the 1980 Bonds
originally issued under and pursuant to the 1980 Indenture, the proceeds of
which were loaned by the Issuer to CEI pursuant to the 1980 Agreement to assist
CEI in the financing of a portion of the cost of acquiring, constructing and
installing the Project.
 
The Issuer and the Company intend that the Project will constitute “waste water
facilities” within the meaning of the Act and qualified facilities for purposes
of Section 103(b)(4) of the Internal Revenue Code of 1954, as amended and as in
effect prior to passage of the Tax Reform Act of 1986 (the “1954 Code”), so that
interest on the bonds issued by the Issuer to finance or refinance the Project,
including the Refunded Bonds, will not be included in gross income under the
Code (as defined herein). The Issuer has agreed to issue, sell and deliver the
State of Ohio Pollution Control Revenue Refunding Bonds, Series 2006-A
(FirstEnergy Generation Corp. Project) in the aggregate principal amount of
$90,140,000 (the “Bonds”) and to lend the proceeds to be derived from the sale
thereof to the Company, to assist in the refunding of the Refunded Bonds, on the
terms and conditions set forth in the subsequent sections of this Agreement.
 
1.2 Company Representations. The Company represents that:
 
(a) It is a corporation duly organized and existing in good standing under Ohio
law and duly qualified to do business in Ohio, with full power and legal right
to enter into this Agreement and the Note (all as hereinafter defined) and
perform its obligations hereunder and thereunder. The making and performance of
this Agreement and the Note on the Company’s part have been duly authorized by
the Company and will not violate or conflict with the Company’s Articles of
Incorporation, Code of Regulations or any agreement, indenture or other
instrument by which the Company or its properties are bound. This Agreement and
the Note have been duly executed and delivered by the Company and constitute the
valid and binding obligations of the Company enforceable in accordance with
their respective terms except as the enforcement thereof may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other similar laws relating to or affecting the enforcement of creditors’ rights
generally, to general equitable principles (whether considered in a proceeding
in equity or at law) and to an implied covenant of good faith and fair dealing.
 
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(b) The Project constitutes “waste water facilities” as defined in the Act and
is consistent with the purposes of Section 13 of Article VIII of the Ohio
Constitution and of the Act.
 
(c) None of the proceeds of the Original Bonds have been or will be used
directly or indirectly to acquire land or any interest therein or for the
acquisition of any property or interest therein unless the first use of such
property was pursuant to such acquisition.
 
(d) At least 90% of the proceeds of the Original Bonds were used to provide
“pollution control facilities” within the meaning of Section 103(b)(4)(F) of the
1954 Code. All of the proceeds of the Original Bonds have been spent for the
Project or to pay costs of issuance of the Original Bonds. All of such pollution
control facilities consist either of land or of property of a character subject
to the allowance for depreciation provided in Section 167 of the Code.
 
(e) Less than an insubstantial portion of the proceeds of each of the Original
Bonds and the Refunded Bonds were, and none of the proceeds of the Bonds will
be, used to provide working capital.
 
(f) None of the proceeds of the Original Bonds and the Refunded Bonds were used
and none of the proceeds of the Bonds will be used to provide any airplane,
skybox or other private luxury box, or health club facility; any facility
primarily used for gambling; any store the principal business of which is the
sale of alcoholic beverages for consumption off premises.
 
(g) The 1978 Bonds were issued on May 9, 1978; the 1980 Bonds were issued on
December 10, 1980; the 1988 Bonds were issued on March 2, 1988; the 1997 Bonds
were issued on August 27, 1997; the 1998 Bonds were issued on October 14, 1998;
and the 2004 Bonds were issued on October 1, 2004.
 
(h) No construction, reconstruction or acquisition of the Project was commenced
prior to the taking of official action by the Issuer with respect thereto except
for preparation of plans and specifications and other preliminary engineering
work.
 
(i) Acquisition, construction and installation of the Project has been
accomplished and the Project is being utilized substantially in accordance with
the purposes of the Project and consistently with the Act and in conformity with
all applicable zoning, planning, building, environmental and other applicable
governmental regulations and all permits, variances and orders issued or granted
pursuant thereto, which permits, variances and orders have not been withdrawn or
otherwise suspended.
 
(j) The Project has been and is currently being used and operated in a manner
consistent with the purposes of the Project and the Act, and the Company
presently intends to use or operate the Project or to cause the Project to be
used or operated in a manner consistent with the purposes of the Project and the
Act until the date on which the Bonds have been fully paid and knows of no
reason why the Project will not be so used or operated.
 
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(k) Neither the Original Bonds, the 1998 Bonds, the Refunded Bonds nor the Bonds
are or will be “federally guaranteed,” as defined in Section 149(b) of the
Internal Revenue Code of 1986, as amended (the “Code”; references to the Code
and Sections of the Code (or, as applicable, to the 1954 Code and Sections
thereof) include relevant applicable regulations and proposed regulations
thereunder and under the 1954 Code and any successor provisions to those
Sections, regulations or proposed regulations and, in addition, all applicable
official rulings and judicial determinations under the foregoing applicable to
the Original Bonds, the 1998 Bonds, the Refunded Bonds or the Bonds, as
applicable).
 
(l) At no time will any funds constituting gross proceeds of the Bonds be used
in a manner as would constitute failure of compliance with Section 148 of the
Code.
 
(m) None of the proceeds (within the meaning of Section 147(g) of the Code) of
the Bonds will be used to pay for any costs of issuance of the Bonds.
 
(n) The proceeds derived from the sale of the Bonds (other than any accrued
interest thereon) will be, and the proceeds derived from the sale of the 1988
Bonds, the 1997 Bonds, the 1998 Bonds and the 2004 Bonds (other than accrued
interest thereon) (collectively, the “Prior Refunding Bonds”) were, used
exclusively to refund the principal of the Refunded Bonds and the 1978 Bonds,
the 1980 Bonds and a portion of the 1998 Bonds (collectively, the “Prior
Refunded Bonds”), respectively. The principal amount of the Bonds does not, and
the principal amount of the Prior Refunding Bonds did not, exceed the principal
amount of the Refunded Bonds and the Prior Refunded Bonds, respectively. The
redemption of the outstanding principal amount of the Refunded Bonds with such
proceeds of the Bonds will, and the redemption of the outstanding principal
amount of the Prior Refunded Bonds with such proceeds of the Prior Refunding
Bonds did, occur not later than 90 days after the date of issuance of the Bonds
and the Prior Refunding Bonds, respectively. All earnings derived from the
investment of such proceeds of the Bonds will be, and all earnings derived from
the investment of such proceeds of the Prior Refunding Bonds were, fully needed
and used on such respective redemption dates to pay a portion of any redemption
premium and interest accrued and payable on the Refunded Bonds and the Prior
Refunded Bonds, respectively.
 
(o) On the respective dates of issuance and delivery of the Original Bonds, the
1998 Bonds and the Refunded Bonds, CEI reasonably expected that all of the
proceeds of the respective Original Bonds, the 1998 Bonds and the Refunded Bonds
would be used to carry out the governmental purposes of such issues within the
3-year period beginning on the date such issues were issued and none of the
proceeds of such issues, if any, were invested in nonpurpose investments having
a substantially guaranteed yield for 3 years or more.
 
(p) The respective average maturities of the Original Bonds, the 1998 Bonds, the
Refunded Bonds and the Bonds do not exceed 120% of the average reasonably
expected economic life of the facilities financed or refinanced by the
respective proceeds of the Original Bonds, the 1998 Bonds, the Refunded Bonds
and the Bonds (determined under Section 147(b) of the Code).
 
(q) It is not anticipated, as of the date hereof, that there will be created any
“replacement proceeds,” within the meaning of Section 1.148-1(c) of the Treasury
Regulations, with respect to the Bonds; however, in the event that any such
replacement proceeds are deemed to have been created, such amounts will be
invested in compliance with Section 148 of the Code.
 
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(r) The information furnished by CEI and used by the Issuer in preparing the
certification pursuant to Section 148 of the Code and in preparing the
information statement pursuant to Section 149(e) of the Code was accurate and
complete as of the respective dates of issuance of the Original Bonds, the 1998
Bonds and the Refunded Bonds, and the information furnished by the Company and
used by the Issuer in preparing the certification pursuant to Section 148 of the
Code and in preparing the information statement pursuant to Section 149(e) of
the Code will be accurate and complete as of the date of issuance of the Bonds.
 
(s) The Project does not include any office except for offices (i) located on
the site of the Project and (ii) not more than a de minimis amount of the
functions to be performed at which is not directly related to the day-to-day
operations of the Project.
 
1.3 Issuer Findings and Representations. The Issuer hereby confirms its findings
and represents that:
 
(a) The Project qualifies as a “water development project” for the purposes of
the Act, and is consistent with the public purposes of the Act.
 
(b) The Project constitutes “waste water facilities” under the Act.
 
(c) The Issuer has the necessary power under the Act, and has duly taken all
action on its part required, to execute and deliver this Agreement and to
undertake the refunding of the Refunded Bonds through the issuance of the Bonds.
The execution and performance of this Agreement by the Issuer will not violate
or conflict with any instrument by which the Issuer or its properties are bound.
 
(d) The Issuer adopted the resolution authorizing 1978 Bonds on April 26, 1978;
the 1980 Bonds on November 26, 1980; the 1988 Bonds on February 25, 1988; the
1997 Bonds on June 26, 1997; the 1998 Bonds on September 24, 1998; the 2004
Bonds on July 29, 2004 and the Bonds on August 25, 2005.
 
(e) Following reasonable notice, a public hearing was held with respect to the
issuance of the Bonds, as required by Section 147(f) of the Code.
 
II. Completion of the Project.
 
2.1 Acquisition, Construction and Installation. The Company represents and
agrees that the Project has been acquired, constructed and installed on the site
thereof as described in the Original Bonds Agreement, substantially in
accordance with the plans and specifications for the Project filed with the
Issuer prior to the issuance of the Original Bonds and in conformance with the
Original Bonds Agreement, Section 6121.061 of the Ohio Revised Code, and all
applicable zoning, planning, building and other similar regulations of all
governmental authorities having jurisdiction over the Project and all permits,
variances and orders issued in respect of the Project by the Ohio Environmental
Protection Agency (“EPA”) and that the proceeds derived from the Prior Bonds,
including any investment thereof, have been expended in accordance with the
Prior Bonds Indenture and the Prior Bonds Agreement.
 
2.2 Plans and Specifications. The plans and specifications identified in the
Refunded Bonds Agreement and the description of the Project may be changed from
time to time by, or with the consent of, the Company, provided that any such
change shall also be filed with the Issuer in accordance with the Refunded Bonds
Agreement and provided further that no amendment in the plans and specifications
shall materially change the function of the Project without (i) an engineer’s
certificate that such changes will not impair the significance or character of
the Project as waste water facilities and (ii) an opinion or written advice of
nationally recognized bond counsel or ruling of the IRS that such amendment will
not adversely affect the exclusion from gross income for federal income tax
purposes of the interest paid on either the Bonds or the Refunded Bonds.
 
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III. Refunding the Refunded Bonds.
 
3.1 Issuance of Bonds. In order to assist the Company in the refunding of the
Refunded Bonds, the Issuer, concurrently with the execution hereof, will issue,
sell and deliver the Bonds. The proceeds of the Bonds shall be loaned to the
Company in accordance with Section 4.1. The Bonds will be issued under and
pursuant to the Trust Indenture (as amended from time to time, the “Indenture”)
dated as of April 1, 2006 between the Issuer and The Bank of New York Trust
Company, N.A., as trustee (in that capacity, the “Trustee”), and will be issued
in the aggregate principal amount, will bear interest, will mature and will be
subject to redemption as set forth therein. The Company hereby approves the
terms and conditions of the Indenture and the Bonds, and the terms and
conditions under which the Bonds have been issued, sold and delivered.
 
The proceeds from the sale of the Bonds (other than any accrued interest) shall
be loaned to the Company to assist the Company in refunding the Refunded Bonds.
Those proceeds shall be delivered as follows:
 
(a) $47,500,000 to the 1997 Bonds Trustee, to be deposited in the Company
Account of the Bond Fund established in the 1997 Indenture and to be utilized,
as provided therein (and with capitalized terms hereafter used in this paragraph
having the meanings set forth therein), to reimburse, together with any moneys
provided by the Company or CEI, the Credit Facility Issuer for the draws on the
Credit Facility by the 1997 Bonds Trustee for the payment in full of the Debt
Charges on the 1997 Bonds on April 3, 2006; and
 
(b) $42,640,000 to the Escrow Trustee as defined and provided in the Indenture
to be held, together with any interest earnings thereon, in trust, as provided
in the Escrow Agreement (as defined in the Indenture) for the purpose of paying,
together with any moneys provided by the Company or CEI, all of the remaining
principal and interest due on the 1988 Bonds and the 2004 Bonds to their
respective dates of redemption.
 
The Company acknowledges that the proceeds of the Bonds will be insufficient to
pay the full costs of refunding the Refunded Bonds and that the Issuer has made
no representation or warranty with respect to the sufficiency thereof. The
Company further acknowledges that it and CEI are (and will remain after the
issuance of the Bonds) obligated to, and hereby confirms that it and CEI will,
pay all costs of the refunding and redemption of the Refunded Bonds. The Issuer
acknowledges and confirms that the Refunded Bonds Trustee has been notified, on
behalf of and at the direction of CEI, that the entire outstanding principal
amount of the 1997 Bonds and $2,805,000 outstanding principal amount of the 2004
Bonds have been conditionally called for redemption on April 3, 2006 and April
12, 2006, respectively.
 
The Company, on behalf of and at the direction of CEI, hereby requests that the
Issuer notify the 1988 Bonds Trustee, pursuant to the 1988 Indenture, that the
entire outstanding principal amount of the 1988 Bonds is to be redeemed on May
3, 2006 at a redemption price of 100% of the principal amount thereof, plus
interest accrued to that redemption date. The Issuer acknowledges and confirms
that it has directed the 1988 Bonds Trustee to so call the 1988 Bonds for
optional redemption on that date.
 
3.2 Investment of Fund Moneys. Any moneys held as part of the Bond Fund or the
Rebate Fund shall be invested or reinvested by the Trustee as provided in the
Indenture. The Issuer (to the extent it retained or retains direction or
control) and the Company each hereby represent that the investment and
reinvestment and the use of the proceeds of the Refunded Bonds were restricted
in such manner and to such extent as was necessary so that the Refunded Bonds
would not constitute arbitrage bonds under Section 148 of the Code and each
hereby covenants that it will restrict that investment and reinvestment and the
use of the proceeds of the Bonds in such manner and to such extent, if any, as
may be necessary so that the Bonds will not constitute arbitrage bonds under
Section 148 of the Code. The Company further covenants and represents that it
has taken and caused to be taken and shall take and cause to be taken all
actions that may be required of it for the interest on the Bonds to be and to
remain excluded from gross income for federal income tax purposes, and that it
has not taken or permitted to be taken on its behalf, and covenants that it will
not take, or permit to be taken on its behalf, any action which, if taken, would
adversely affect that exclusion under the provisions of the Code.
 
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The Company shall provide the Issuer with, and the Issuer may base its
certificate and statement, each authorized by Section 8(a) of the legislation
authorizing the Bonds, on, a certificate of an appropriate officer, employee or
agent of or consultant to the Company for inclusion in the transcript of
proceedings for the Bonds, setting forth the reasonable expectations of the
Company on the date of delivery of and payment for the Bonds regarding the
amount and use of the proceeds of the Bonds and the facts, estimates and
circumstances on which those expectations are based.
 
IV. Loan and Repayment.
 
4.1 Amount and Source of Loan. Concurrently with the delivery of the Bonds, the
Issuer will, upon the terms and conditions of this Agreement, lend the proceeds
of the Bonds (other than any accrued interest) to the Company, by deposit
thereof in accordance with the provisions of the Indenture. The Bonds may be
sold by the Issuer at a discount from their principal amount, and in such event,
the amount of such discount shall be deemed to have been loaned to the Company.
To the extent that accrued interest on the Bonds is received by the Issuer upon
the sale of the Bonds and is deposited into the Bond Fund under the Indenture,
such accrued interest shall be applied to the first interest payment due on the
Bonds with a corresponding credit on the amounts otherwise due under the Note
(as hereinafter defined).
 
4.2 Repayment of Loan. The Company agrees to repay the loan made by the Issuer
under Section 4.1 in installments which, as to amount, shall correspond to the
payments of principal on the Bonds and, if applicable, any redemption price and
shall bear interest at the rate or rates and at the times payable on the Bonds,
when such principal, redemption price, if applicable, or interest is due in
accordance with the terms of the Indenture whether on scheduled payment dates,
at maturity, by acceleration, by redemption or otherwise; provided that such
amount shall be reduced to the extent that other moneys on deposit with the
Trustee are available for such purpose, and a credit in respect thereof has been
granted pursuant to such Indenture. All such repayments made by the Company
pursuant to this Agreement shall be made in funds that will be available to the
Trustee no later than 4:00 p.m. (New York City time) the corresponding principal
or applicable redemption price or interest payment date or other date for
payment on the Bonds. The Company also agrees to pay to the Tender Agent (as
defined in the Indenture) the amounts necessary to purchase Bonds pursuant to
Section 5.01 of the Indenture to the extent that moneys are not otherwise
available therefor pursuant to Section 5.03 of the Indenture. To evidence its
obligation to pay such amounts, the Company will deliver the Note, as described
under Section 4.3.
 
4.3 The Note. Concurrently with the issuance by the Issuer of the Bonds, the
Company will execute and deliver to the Trustee a debt instrument of the
Company, which debt instrument shall be in the form of a nonnegotiable
promissory note (the “Note”), which Note shall be in substantially the form of
the Waste Water Facilities Note, Series 2006-A, attached hereto as Exhibit B.
The Note shall:
 
(a) be payable to the Trustee;
 
(b) be in a principal amount equal to the aggregate principal amount of the
Bonds;
 
(c) provide for payments of interest at least equal to the payments of interest
on the Bonds, except to the extent provision is made for the payment of accrued
interest;
 
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(d) require payments of principal plus a premium, if any, equal to the
corresponding payments on the Bonds;
 
(e) contain provisions in respect of the prepayment of principal and premium, if
any, corresponding to the redemption provisions of the Bonds; and
 
(f) require all payments on the Note to be made on or prior to the due date for
the corresponding payment to be made on the Bonds.
 
4.4 Acceleration of Payment to Redeem Bonds. The Issuer will redeem any of the
Bonds or portions thereof upon the occurrence of an event which gives rise to
any mandatory redemption specified therein and in accordance with the provisions
of the Indenture. Whenever the Bonds are subject to optional redemption, the
Issuer will, but only upon request of the Company, redeem the same in accordance
with such request and the Indenture. In either event, the Company will pay an
amount equal to the applicable redemption price as a prepayment of the Note,
together with interest accrued to the date of redemption, as provided in the
Note.
 
In the event that the Company receives notice from the Trustee pursuant to the
Indenture that a proceeding has been instituted against a Bondholder which could
lead to a final determination that interest on the Bonds is taxable and subject
to special mandatory redemption of Bonds as contemplated by the Indenture, the
Company shall promptly notify in writing the Trustee and the Issuer whether or
not it intends to contest such proceeding. In the event that the Company chooses
to so contest, it will use its best efforts to obtain a prompt final
determination or decision in such proceeding or litigation and will keep the
Trustee and the Issuer informed of the progress of any such proceeding or
litigation.
 
4.5 No Defense or Set-Off. The obligations of the Company to make payments on
the Note shall be absolute and unconditional without defense or setoff by reason
of any default by the Issuer under this Agreement or under any other agreement
between the Company and the Issuer or by a Credit Facility Issuer (as defined in
the Indenture), if any, under a Credit Facility (as defined in the Indenture),
if any, or for any other reason, including without limitation, loss or
impairment of investments in the Bond Fund, any acts or circumstances that may
constitute failure of consideration, destruction of or damage to the Project,
commercial frustration of purpose, or failure of the Issuer to perform and
observe any agreement, whether express or implied, or any duty, liability or
obligation arising out of or connected with this Agreement, it being the
intention of the parties that the payments required hereunder will be paid in
full when due without any delay or diminution whatsoever.
 
4.6 Assignment of Issuer’s Rights. As the source of payment for the Bonds, the
Issuer will assign to the Trustee pursuant to the Indenture all the Issuer’s
rights under this Agreement with respect to the Bonds (except rights to receive
payments under Sections 5.4 and 5.5) including all of its right, title and
interest in the Note and the moneys payable thereunder. The Company consents to
such assignment and agrees to make payments on the Note and interest thereon
directly to the Trustee without defense or setoff by reason of any dispute
between the Company and the Issuer or the Trustee. The Company acknowledges and
agrees that the Trustee and the Credit Facility Issuer are each a third party
beneficiary of this Agreement and may enforce the obligations of the Company
hereunder as if it were a party hereto. The Company further agrees to observe
and perform all covenants and agreements required to be observed and performed
by it under the Indenture.
 
4.7 Credit Facility; Conversion. Concurrently with the issuance of the Bonds,
the Company shall cause to be delivered to the Trustee an irrevocable letter of
credit issued by a bank or trust company having the terms specified in the
Indenture. Nothing herein shall require the Company to maintain the Letter of
Credit (as defined in the Indenture) or any other Credit Facility with respect
to the Bonds. As provided in the Indenture, the Interest Rate Mode (as defined
in the Indenture) for any of the Bonds is subject to Conversion (as defined in
the Indenture) to a different Interest Rate Mode or Modes from time to time by
the Company and the Company may from time to time change any of the Bonds from
one Long-Term Rate Period (as defined in the Indenture) to another Long-Term
Rate Period or Periods.
 
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V. Covenants of the Company.
 
5.1 Maintenance and Operation of Project. The Company shall use its best efforts
to cause the Project, including all appurtenances thereto and any personal
property therein or thereon, to be kept and maintained in good repair and good
operating condition so that the Project will continue to constitute a Waste
Water Facility (as defined in the Act) for the purposes of the operation thereof
as required hereby. So long as such shall not be in violation of the Act or
impair the character of the Project as a Waste Water Facility, and provided
there is continued compliance with applicable laws and regulations of
governmental entities having jurisdiction thereof, the Company shall have the
right to remodel the Project or make additions, modifications and improvements
thereto, from time to time as it, in its discretion, may deem to be desirable
for its uses and purposes, the cost of which remodeling, additions,
modifications and improvements shall be paid by the Company and the same shall,
when made, become a part of the Project.
 
To the extent not heretofore commenced, the Company shall not be under any
obligation to renew, repair or replace any inadequate, obsolete, worn out,
unsuitable, undesirable or unnecessary portions of the Project, except to the
extent, if any, necessary to ensure the continued character of the Project as a
Waste Water Facility. The Company shall have the right from time to time to
substitute personal property or fixtures for any portions of the Project,
provided that the personal property or fixtures so substituted shall not impair
the character of the Project as a Waste Water Facility. Any such substituted
property or fixtures shall, when so substituted, become a part of the Project.
The Company shall also have the right to remove any portions of the Project,
without substitution therefor, provided that the Company shall deliver to the
Trustee a certificate upon which the Trustee may conclusively rely signed by an
engineer describing said portions of the Project and stating that the removal of
such property or fixtures will not impair the character of the Project as a
Waste Water Facility.
 
The Company shall, subject to its obligations and rights to maintain, repair or
remove portions of the Project, as herein provided, use its best efforts to
cause the operation of the Project to continue so long as and to the extent that
operation thereof is required to comply with laws or regulations of governmental
entities having jurisdiction thereof or unless the Issuer shall have approved
the discontinuance of such operation (which approval shall not be unreasonably
withheld). The Company agrees that it will, within the design capacities
thereof, cause the Project to be operated and maintained in accordance with all
applicable, valid and enforceable rules and regulations of the EPA and the
Department of Health of the State of Ohio or any successor body, agency,
commission or department to either, including those regulations relating to the
prevention, control and abatement of water pollution and the prescribing of
waste water standards for that area of the State of Ohio in which the Project is
located; provided, that the Company reserves the right to contest in good faith
any such laws or regulations.
 
Nothing in this Section shall (a) require the Company to operate or cause to be
operated any portion of any property after it is no longer economical and
feasible, in the Company’s judgment, to do so or (b) prevent or restrict the
Company, in its sole discretion, at any time, from discontinuing or suspending
either permanently or temporarily its use of any facility of the Company served
by the Project and in the event such discontinuance or suspension shall render
unnecessary the continued operation of the Project, the Company shall have the
right to discontinue the operation of the Project during the period of any such
discontinuance or suspension.
 
5.2 Corporate Existence. So long as the Bonds are outstanding, the Company will
maintain its corporate existence and its qualification to do business in Ohio,
except that it may dissolve or otherwise dispose of all or substantially all of
its assets and may consolidate with or merge into another corporation or permit
one or more corporations to consolidate with or merge into it, if the surviving,
resulting or transferee corporation, if other than the Company, is solvent, has
a net worth equal to the net worth of the Company immediately prior to the
transaction, and assumes in writing all of the obligations of the Company
hereunder and under the Note and is a corporation organized under one of the
states of the United States of America and is duly qualified to do business in
Ohio.
 
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5.3 Payment of Trustee’s Compensation and Expenses. The Company will pay the
Trustee’s compensation and expenses under the Indenture, including
out-of-pocket, incidental and attorneys’ fees and expenses and all costs of
redeeming Bonds thereunder and the compensation and expenses of any
authenticating agent, the Bond Registrar, the Tender Agent and the Paying Agent
appointed in respect of the Bonds, including, out-of-pocket, incidental and
attorneys’ fees and expenses.
 
5.4 Payment of Issuer’s Expenses. The Company will pay the Issuer’s
administrative fees and expenses, including legal and accounting fees, incurred
by the Issuer in connection with the issuance of the Bonds and the performance
by the Issuer of any and all of its functions and duties under this Agreement or
the Indenture, including, but not limited to, all duties which may be required
of the Issuer by the Trustee and the Bondholders.
 
5.5 Indemnity Against Claims. The Company releases the Issuer from, agrees that
the Issuer shall not be liable for, and indemnifies the Issuer against, all
liabilities, claims, costs and expenses imposed upon or asserted against the
Issuer on account of: (a) the maintenance, operation and use of the Project; (b)
any breach or default on the part of the Company in the performance of any
covenant or agreement of the Company under this Agreement or the Note or arising
from any act or failure to act by the Company under such documents; (c) the
refunding of the Refunded Bonds, the issuance of the Bonds, and the provision of
any information furnished by the Company in connection therewith concerning the
Project or the Company (including, without limitation, any information furnished
by the Company for inclusion in any certifications made by the Issuer under
Section 3.2 or for inclusion in, or as a basis for preparation of, the
information statements filed by the Issuer pursuant to the Code) or the
subsequent remarketing or determination of the interest rate or rates on the
Bonds; (d) any audit of the tax status of the interest on the Bonds; and (e) any
claim or action or proceeding with respect to the matters set forth in (a), (b),
(c) and (d) above brought thereon, except to the extent that any liability,
claim, cost or loss was due to the Issuer’s willful misconduct.
 
The Company agrees to indemnify the Trustee and to hold the Trustee harmless
against, any and all loss, claim, damage, fine, penalty, liability or expense
incurred by it, including out-of-pocket and incidental expenses and legal fees
and expenses (“Losses”), arising out of or in connection with the acceptance or
administration of the Indenture or the trusts thereunder or the performance of
its duties thereunder or under this Agreement, including the costs and expenses
of defending itself against or investigating any claim (whether asserted by the
Issuer, the Company, a Bondholder, or any other person) of liability in the
premises, except to the extent that any such loss, liability or expense was due
to its own negligence or bad faith. In addition to and not in limitation of the
preceding sentence, the Company agrees to indemnify the Trustee and any
predecessor Trustee and its agents, officers, directors and employees for any
Losses that may be imposed on, incurred by or asserted against it for following
any instructions or directions upon which the Trustee is authorized to rely
pursuant to the Indenture.
 
In case any action or proceeding is brought against the Issuer or the Trustee,
in respect of which indemnity may be sought hereunder, the party seeking
indemnity shall promptly give notice of that action or proceeding to the
Company, and the Company upon receipt of that notice shall have the obligation
and the right to assume the defense of the action or proceeding; provided, that
failure to give that notice shall not relieve the Company from any of its
obligations under this section except to the extent, and only to the extent,
that such failure prejudices the defense of the claim, demand, action or
proceeding by the Company. At its own expense, an indemnified party may employ
separate counsel and participate in the defense; provided, however, where it is
ethically inappropriate for one firm to represent the interests of the Issuer
and any other indemnified party or parties, the Company shall pay the Issuer’s
or the Trustee’s legal expenses, respectively, in connection with the Issuer’s
or the Trustee’s retention of separate counsel. The Company shall not be liable
for any settlement made without its consent.
 
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The indemnification set forth above is intended to and shall include the
indemnification of all affected officials, directors, officers and employees of
the Issuer and the Trustee. That indemnification is intended to and shall be
enforceable by the Issuer and the Trustee, respectively, to the full extent
permitted by law.
 
5.6 Limitation of Liability of the Issuer. All covenants, stipulations,
obligations and agreements of the Issuer contained in this Agreement or the
Indenture shall be effective to the extent authorized and permitted by
applicable law. No such covenant, stipulation, obligation or agreement shall be
deemed to be a covenant, stipulation, obligation or agreement of any present or
future member, officer, agent or employee of the Issuer in other than his
official capacity, and neither the members of the Issuer nor any official
executing the Bonds shall be liable personally on the Bonds or be subject to any
personal liability or accountability by reason of the issuance thereof or by
reason of the covenants, stipulations, obligations or agreements of the Issuer
contained in this Agreement or in the Indenture. Furthermore, no obligation of
the Issuer hereunder or under the Bonds shall be deemed to constitute a pledge
of the faith and credit of the Issuer, or the faith and credit or taxing power
of the State of Ohio or of any other political subdivision thereof, but shall be
payable solely out of Revenues provided under the Indenture.
 
5.7 Insurance. The Company, at its expense, shall procure and maintain, or cause
to be procured and maintained, continuously during the term of this Agreement,
insurance policies with respect to the Project against such risks (including all
liability for injury to persons or property arising from the operation of the
Project) and in such amounts as property of a similar character is usually
insured by corporations similarly situated and operating like properties.
 
5.8 Default, etc. In addition to all other rights of the Issuer granted herein,
in the Note, or otherwise by law, the Issuer shall have the right to
specifically enforce the performance and observation by the Company of any of
its obligations, agreements or covenants under this Agreement or under the Note
and may take any actions at law or in equity to collect any payments due or to
obtain other remedies. If the Company shall default under any provisions of this
Agreement or in any payment under this Agreement or the Note, and the Issuer
shall employ attorneys or incur other expenses for the collection of payments
due or for the enforcement of the performance or observation of any obligation
or agreement on the part of the Company contained herein or therein, the Company
will on demand therefor reimburse the reasonable fees of such attorneys and such
reasonable expenses so incurred.
 
5.9 Deficiencies in Revenues. If for any reason, including the Company’s being
required to withhold or pay any tax imposed by reason of its obligations
evidenced by the Note, amounts paid to the Trustee on the Note, together with
other moneys held by the Trustee and then available, would not be sufficient to
make the corresponding payments of principal or redemption price of, and
interest on, the Bonds when such payments become due, the Company will pay or
cause to be paid the amounts required from time to time, when due, to make up
any such deficiency.
 
5.10 Rebate Fund. If and to the extent required by Section 6.04 of the
Indenture, the Company shall calculate the amount of Excess Earnings (as defined
in the Indenture) as of the end of a Bond Year or the date of payment in full of
all outstanding Bonds and shall notify the Trustee of that amount in writing. If
the amount then on deposit in the Rebate Fund created under the Indenture is
less than the amount of Excess Earnings, the Company shall, within five days
after the date of the aforesaid calculation, pay to the Trustee for deposit in
the Rebate Fund an amount sufficient to cause the Rebate Fund to contain an
amount equal to the Excess Earnings. The obligation of the Company to make such
payments, if and to the extent required by Section 6.04 of the Indenture, shall
remain in effect and be binding upon the Company notwithstanding the release and
discharge of the Indenture or the repayment of the loan as contemplated by
Section 4.2. The Company shall obtain and keep such records of the calculations
made pursuant to this Section as are required under Section 148(f) of the Code.
 
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5.11.  Assignment of Agreement in Whole or in Part by Company. This Agreement
may be assigned in whole or in part by the Company without the necessity of
obtaining the consent of either the Issuer or the Trustee, subject, however, to
each of the following conditions:
 
(a) No assignment (other than pursuant to Section 5.2 or Section 5.12 hereof)
shall relieve the Company from primary liability for any of its obligations
hereunder, and in the event of any such assignment the Company shall continue to
remain primarily liable for the payments under Sections 4.2, 5.3 and 5.4 hereof
and for performance and observance of the agreements on its part herein provided
to be performed and observed by it.
 
(b) Any assignment by the Company must retain for the Company such rights and
interests as will permit it to perform its remaining obligations under this
Agreement, and any assignee from the Company shall assume the obligations of the
Company hereunder to the extent of the interest assigned.
 
(c) The Company shall furnish to the Issuer, the Credit Facility Issuer and the
Trustee an opinion of Bond Counsel (as defined in the Indenture) addressed to
the Issuer, the Credit Facility Issuer and the Trustee that such assignment is
authorized or permitted by the Act and will not adversely affect the exclusion
from gross income of interest on the Bonds.
 
(d) The Company shall, within 30 days after execution thereof, furnish or cause
to be furnished to the Issuer, the Credit Facility Issuer and the Trustee a true
and complete copy of each such assignment together with any instrument of
assumption.
 
(e) Any assignment from the Company shall not materially impair fulfillment of
the purpose of the Project as herein provided.
 
5.12.  Assignment of Agreement in Whole by Company. In addition to an assignment
contemplated by Sections 5.2 and 5.11 hereof, this Agreement may be assigned as
a whole by the Company, subject, however, to each of the following conditions:
 
(a) The Company’s rights, duties and obligations under this Agreement and all
related documents are assigned to, and assumed in full by, the assignee, all as
of a date the Bonds are subject to mandatory purchase under Section 5.01(b) of
the Indenture.
 
(b) The assignee and the Company shall execute an assignment and assumption
agreement, in form and substance reasonably acceptable to the Company, and
acknowledged and agreed to by the Issuer, the Credit Facility Issuer and the
Trustee, whereby the assignee shall confirm and acknowledge that it has assumed
all of the rights, duties and obligations of the Company under this Agreement
and all related documentation and agrees to be bound by and to perform and
comply with the terms and provisions of this Agreement and all related
documentation as if it had originally executed the same; provided, however, that
such acknowledgement and agreement by the Issuer, the Credit Facility Issuer and
the Trustee shall not be necessary if  the assignee is an Affiliate of the
Company.
 
(c) The Company shall furnish to the Issuer, the Credit Facility Issuer and the
Trustee an opinion of Bond Counsel (as defined in the Indenture) addressed to
the Issuer, the Credit Facility Issuer and the Trustee that such assignment is
authorized or permitted by the Act and will not adversely affect the exclusion
from gross income of interest on the Bonds.
 
(d) The Company shall, within 30 days after execution thereof, furnish or cause
to be furnished to the Issuer, the Credit Facility Issuer and the Trustee a true
and complete copy of such assignment and assumption agreement.
 
(e) Any assignment from the Company shall not materially impair fulfillment of
the purpose of the Project as herein provided.
 
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(f) Upon the effectiveness of such assignment and assumption, the assignee shall
be deemed to be the “Company” hereunder and the assignor shall be relieved of
all liability hereunder.
 
VI. Miscellaneous.
 
6.1 Notices. Notice hereunder shall be given in writing, either by registered
mail, to be deemed effective two days after mailing, by telegram, by telecopy or
other similar facsimile transmission, or by telephone, confirmed in writing,
addressed as follows:

The Issuer
-
Ohio Water Development Authority
   
480 South High Street
   
Columbus, Ohio 43215
   
Attention: Executive Director
     
The Company
-
FirstEnergy Generation Corp.
   
76 South Main Street
   
Akron, Ohio 44308
   
Attention: Secretary
     
The Trustee
-
The Bank of New York Trust Company, N.A.
   
525 Vine Street, Suite 900
   
Cincinnati, Ohio 45202
   
Attention: Corporate Trust Department
     

 
or to such other address as may be filed in writing with the parties to this
Agreement and with the Trustee.
 
6.2 Assignments. This Agreement may be assigned by the Company pursuant to
Sections 5.11 and 5.12. This Agreement may not be assigned by the Issuer without
the consent of the Company and the consent of the Trustee, which consent shall
not be unreasonably withheld, except that the Issuer may assign rights with
respect to the Bonds to the Trustee pursuant to Section 4.6 or to a successor
public body. The Issuer will do all things in its power in order to maintain its
existence or assure the assignment of its rights under this Agreement and the
Indenture to, and the assumption of its obligations under this Agreement and the
Indenture by, any successor public body. Notwithstanding the foregoing, no
merger or consolidation permitted under Section 5.2 shall be deemed to be an
assignment for purposes of this Section 6.2.
 
6.3 Illegal, etc. Provisions Disregarded. In case any provision of this
Agreement shall for any reason be held invalid, illegal or unenforceable in any
respect, this Agreement shall be construed as if such provision had never been
contained herein.
 
6.4 Applicable Law. This Agreement has been delivered in the State of Ohio and
shall be deemed to be governed by, and interpreted under, the laws of that
State.
 
6.5 Amendments. This Agreement may not be amended except by an instrument in
writing signed by the parties and consented to by the Trustee and otherwise in
compliance with the provisions of Section 15.03 of the Indenture.
 
6.6 Term of Agreement. This Agreement shall become effective upon its delivery
and shall continue in effect until all Bonds have been paid or provision for
such payment has been made in accordance with the Indenture, except that the
provisions hereof contained in Sections 1.2, 3.2, 4.4, 4.5, 5.1, 5.3, 5.4, 5.5,
5.6, 5.10 and 6.4, this Section 6.6 and the ninth paragraph of the Note shall
continue in effect thereafter.
 
(balance of page intentionally left blank)
 
 

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IN WITNESS WHEREOF, the parties hereto, in consideration of the mutual covenants
set forth herein and intending to be legally bound, have caused this Agreement
to be executed and delivered as of the date first written above.
 
                                                            OHIO WATER
DEVELOPMENT AUTHORITY
                   
                                                            By_______________________________________
                                                     Executive Director
       
                                                            FIRSTENERGY
GENERATION CORP.
                   
                                                            By________________________________________
                                                     Assistant Treasurer

 

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EXHIBIT A
 
PROJECT DESCRIPTION
 
The Waste Water Facilities comprising the Project have been installed at the
plants listed below to control, abate, or reduce water pollution. The major
units or components of the facilities comprising the Project, portions of the
cost of which are being refinanced under the Agreement to which this Project
Description is attached, are as follows:
 

AVON LAKE PROJECT UNIT

There were installed at the Avon Lake Power Plant the following Waste Water
Facilities for nine electric-generating units, of which Units 1 to 5 are
oil-fired and Units 6 to 9 are coal-fired:

Ash Transport Water

All hydrovac water from Units 6, 7 and 8 as well as all ash spillage is directed
to the ash settling basin.

Bottom ash from Units 6, 7 and 8 is sluiced to two new dewatering bins. Overflow
and decant from the two new and the two existing dewatering bins flows to a new
bottom ash sluice water settling/surge tank before being recycled.

Pyrites from Units 6, 7 and 8 are collected dry. Pyrites from Units 6 to 9 are
hauled offsite for disposal.

The two existing ash ponds were separated. Only the first continues to operate
as an ash settling basin. The second ash pond was enlarged and converted to an
oily wastebasin. Effluent from the ash pond is pumped through three new pressure
filters prior to discharge into Lake Erie.

Regenerants

Approximately stoichrometric quantities of sulfuric acid and sodium hydroxide
are used in regenerating the ion exchange resins to provide a near neutral
mixture in two new neutralization tanks. The waste is pumped at a controlled
rate by the oily waste basin for further neutralization.

Floor and Equipment Drains

Floor and equipment drains from all units, including the machine shop, are
collected in various sumps and are pumped to the 1.4 acre new oily waste basin.
Effluent from the basin is split vertically by an overflow-underflow weir. The
overflow is skimmed and stored in an underground storage tank. Underflow from
the oily waste basin weir is pumped through four new pressure filters and
discharged to Lake Erie.

Coal Pile Runoff

A collection ditch was constructed around the perimeter of the coal pile. A coal
pile runoff retention basin was constructed between the coal pile and Lake Road.
The basin was sized to contain the runoff from the 10-year, 24-hour rainfall of
3.5 inches. Two pumps transfer coal pile runoff from the retention basin to the
new ash settling basin.
 

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Pretreatment Systems

The only modification required for the recommended system was the connection of
these waste discharges (other than the Unit 9 precoat filter backwash) to a
header leading to the ash settling basin.

Boiler Cleaning Wastes and Air Heater Washes

Boiler cleaning wastes and air heater washes from Units 6 to 9 (evaporation of
boiler cleaning wastes from Units 6 and 7 may continue) is pumped to two
existing clarifiers for treatment. The raw waste influent will be adjusted to a
neutral pH by caustic addition to minimize corrosion. Lime and polyelectrolytes
are added to precipitate soluble iron and copper. The treated waste solution is
then filtered and dewatered. Filter cake is hauled offsite for disposal;
filtrate is pumped to the ash settling basin.

LAKE SHORE PROJECT UNIT

There were installed at the Lake Shore Power Plant the following Waste Water
Facilities for five electric generating units, of which Units Nos. 14 to 17 are
oil-fired and Unit No. 18 is coal-fired.

Ash Transport Water

An existing 100 ton dewatering bin was relocated and another dewatering bin
added. Bottom ash from Unit 18 is pumped to these dewatering bins. Decant and
overflow from the dewatering bins as well as ash spillage from the dewatering
bins and fly ash silo areas is routed to the enlarged ash pond. Pyrites from
Unit 18 are also pumped to the ash settling basin.

The existing ash pond was enlarged. Two pumps recycle water from the ash
settling basin to the bottom ash sluice system. Blowdown from the recycle system
is pumped through two pressure filters to Lake Erie. One filter can treat the
total flow while the other is being backwashed.

Regenerants

Wastewater from ion exchange resin regeneration is pumped to a new
neutralization tank from which it flows at a controlled rate to the oil waste
basin.

Floor and Equipment Drains

Uncontaminated drains, mainly steam condensate and fire protection blowdown, are
discharged to the intake canal. Other floor and equipment drain wastewaters are
collected and routed to a new oily waste basin.

The minimum retention time in the new 4.0 million gallon oily waste basin is
adequate for pond stability. Effluent from the basin is split vertically by an
overflow-underflow weir. The overflow is skimmed and flows to an underground
storage tank. Underflow from the wire is pumped through three pressure filters
to Lake Erie.
 

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Pretreatment System

Sludge from the clarification equipment and gravity sand filter backwashes are
routed to the new neutralization tank and then to the oily waste basin before
discharge to Lake Erie.

Boiler Cleaning Wastes and Air Heater Washes

Boiler tube chemical cleaning wastes and air heater washes are pumped to a new
chemical waste basin. The basin is provided with a liner to prevent ground water
contamination. Wastewater is pumped from the chemical waste basin to two
chemical treatment tanks. Lime slurry is added to the tanks to precipitate
soluble iron and copper. The treated solution is then filtered and dewatered.
Filter cake is hauled offsite for disposal; filtrate is discharged to the ash
settling basin.

EASTLAKE PROJECT UNIT

There were installed at the Eastlake Power Plant the following Waste Water
Facilities for five coal-fired electric generating units:

Ash Transport Water

A bottom ash sluice recycle system and an enlarged ash settling basin were
installed and filtration of the ash settling basin effluent was employed.

Two dewatering bins were installed to receive bottom ash from Units 1 to 4.
Overflow and decant water from these are sent to settling surge tanks and then
returned to the ash sluicing system for reuse. Surges in excess of the sluice
water recycle pumps’ capacity overflows into the ash settling basin.

Bottom ash at Unit 5 continues to be sluiced to two existing dewatering bins.
The decant and overflow from these bins flows to a new settling surge tank
recycling.

Ash spillage from the new dewatering bins (Units 1 to 4), the fly ash silo area
(Units 2 to 4), Unit 5 dewatering bins and the Unit 5 precipitator unloading
area are directed to the modified ash basin. Filtrate from the chemical waste
treatment tanks and wastewater from the coal pile runoff basin are discharged
into a new collection basin. Two pumps then transfer the water to the improved
ash settling basin.

The enlarged ash settling basin also receives wastewater from the hydrovac
recycle clarifier sludge.

Three pressure filters were installed at the end of the ash settling basin. The
ash settling basin overflow is pumped through the filters to the discharge
channel. Two filters can handle full flow while the third is being backwashed.
The filters backwash into the settling basin.

Regenerants

Stoichrometric quantities of sulfuric acid and sodium hydroxide are used in
regenerating the ion exchange resins. This is an increased dosage of caustic
resulting in a more nearly neutral effluent. New neutralization tanks for Units
No. 1-4 were equipped with mixing eductors or agitators. The contents are
discharged to the new oil waste basin for further neutralization before
discharge to Lake Erie.
 

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Floor and Equipment Drains

Floor and equipment drains from Units 1 to 5 are collected and rerouted to the
new oily waste collection sump. The bilge sump discharge in the boiler room
basement of Units 1 to 4 are rerouted to the ash settling surge tank. Four pumps
transfer the wastewater from the new oily waste collection sump to the new oily
waste basin.

The new oily waste basin is to be constructed on the east side of the plant.
Effluent from the basin is split vertically by an overflow-underflow weir. The
overflow is skimmed and stored in storage tanks for eventual disposal. The
underflow is pumped through three pressure filters and then is discharged to the
intake canal.

Coal Pile Runoff

A collection ditch around the perimeter of the coal pile was constructed. A coal
pile runoff retention basin, sized to contain the runoff resulting from the
10-year, 24-hour rainfall of about 3.5 inches, was constructed to the east of
the coal pile. The retention basin discharges at 250 gpm to the ash settling
basin.

Pretreatment System

Filter backwash, clarifier sludge and condensate polisher backwash are pumped to
the ash settling basin via an intermediate collection basin.

Boiler Cleaning Wastes and Air Heater Washes

Boiler cleaning wastes and air heater washes for all units are pumped to the
chemical waste holding tank No. 1 (the “C” clarifloculator). Any excess or
overflow goes to chemical waste holding tank No. 2 (“B” thickener). Influent pH
is adjusted to 7.0 to prevent excessive corrosion. Lime and polyelectrolytes are
added to precipitate soluble iron and copper. The treated waste solution is then
filtered and dewatered. Filter cake is hauled offsite for disposal; filtrate is
pumped to the ash settling basin for further neutralization and filtration.

ASHTABULA A & B PROJECT UNIT

There were installed at the Ashtabula A & B Power Plant the following Waste
Water Facilities for fire electric-generating units of which Units Nos. 1 to 4
are oil-fired and Unit No. 5 is coal-fired.

Ash Transport Water

Bottom ash from Unit 5 is sluiced to two new dewatering bins.  Decant and
overflow from these bins flow by gravity to the improved ash settling basin.
Bottom ash is hauled offsite for disposal.
 

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Ash spillage at the existing fly ash site and new precipitators and at the
dewatering bins is transported to the ash settling basin.

The ash settling basin overflows to a sump where two pumps recycle water to the
bottom ash sluice system and two other pumps discharge through three pressure
filters to the discharge channel. Two of three filters can treat the entire flow
while the third is being backwashed.

Floor and Equipment Drains

All flows from floor and equipment drains in the plant are collected in sumps
and pumped to the new oily waste basin. The oily waste basin is located to the
east of the plant. Effluent from the basin is split vertically by an
overflow-underflow weir. The overflow is skimmed and flows to an underground oil
storage tank. The underflow from the basin discharge weir is pumped through
three pressure filters to the discharge channel. Two of the filters can treat
the entire flow while the third is being backwashed.

Coal Pile Runoff

A collection ditch is constructed around the perimeter of the coal pile. The
existing underdrain system is plugged to prevent the discharge of coal pile
runoff directly to the discharge channel. The new collection ditch drains to a
retention basin, designed to contain the 10-year, 24-hour rainfall of 3.5
inches. The coal pile retention basin gravity flows to the ash settling basin at
250 gpm or less.

Clarifier sludge and gravity sand filter backwashes from the pretreatment system
are pumped to the improved ash retention basin.

Boiler Cleaning Wastes and Air Heater Washes

Boiler tube chemical cleaning wastes and air heater washes are routed to a new
chemical waste retention basin. This basin is lined to prevent ground water
contamination. Chemical wastes are pumped from the basin to two chemical
treatment tanks. Lime slurry is added to the tanks to adjust the pH,
precipitating iron and copper. The treated wastewater is then filtered and
dewatered. Filter cake is hauled offsite for disposal. Filtrate combines with
ash basin effluent prior to discharge to the discharge channel.

ASHTABULA C PROJECT UNIT

There were installed at the Ashtabula C Power Plant the following Waste Water
Facilities for four coal-fired electric generating units:

Ash Transport Water

Bottom ash and pyrites are pumped to one of two new bottom ash storage bins,
which are located north of the existing fly ash storage silos. Overflow and
decant from the bottom ash storage bins are directed to a new ash collection
sump, as is spillage from the fly ash silo, bottom ash storage bins and coal
unloading area. Sump contents are pumped to the new ash settling basin.
 

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The new ash settling basin is located in the northeast corner of the property.
The pond is constructed with sheet piling walls on the north and west sides.
Four pumps will recycle water from the ash settling basin to the bottom ash
sluice system. Blowdown from the recycling system is pumped through one of two
pressure filters to Lake Erie.

Regenerants

Wastewater from ion exchange resin regeneration flows by gravity to the new ash
collection sump, where it is pumped to the oily waste basin.

Floor and Equipment Drains

Wastewater from all floor and equipment drains is collected and routed to a new
oily waste sump. This water is pumped to a new oily waste basin.

The new oily waste basin is located south of the new ash settling basin.
Effluent from the basin is split vertically by an overflow-underflow weir. The
overflow is skimmed and flows to an underground oil storage tank. Underflow from
the weir is pumped through three pressure filters to Lake Erie. Two filters can
treat the entire flow, while the third is being backwashed.

Pretreatment System

Clarifier sludge and gravity filter backwash is pumped to the ash settling
basin.

Boiler Cleaning Wastes and Air Heater Washes

Boiler tube chemical cleaning wastes and air heater washes are routed to a new
chemical waste basin. The basin is provided with a liner to prevent groundwater
contamination. Wastewater is pumped from the chemical waste basin to two
chemical treatment tanks. Lime slurry is added to the tanks to precipitate
soluble iron and copper. The treated solution is then filtered and dewatered.
Filter cake is hauled offsite for disposal; filtrate combines with ash settling
basin effluent prior to discharge to Lake Erie.

CANAL ROAD PROJECT UNIT

There were installed at the Canal Road Steam Heating Plant the following Waste
Water Facilities for five coal-fired boilers:

Ash Transport Water

Bottom ash and fly ash are sluiced to the ash sump. Discharge from the ash sump
is piped to the existing and new bottom ash storage bins located southeast of
the existing coal pile. In addition, the coal reclaim hopper sump which
discharged into the elevator sump was rerouted to discharge into the ash sump.

Solids settling in the bins are trucked offsite for disposal. The decant and
overflow from both bottom ash storage bins is piped to gravity settling
equipment. Solids from the gravity settler are recycled to the bins. The gravity
settler discharge is returned to the ash sluicing water system for recycling.

The effluent from the coal area and bottom ash storage bin drains is collected
in the coal area sump and pumped into the ash sump discharge line which flows to
the bottom ash storage bins.
 

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Regenerants

Regenerant waste from the plant water softening system drains by gravity to a
new sump. The waste is transferred from the sump to the municipal sewer.

Floor and Equipment Drains

All potentially oily floor and equipment drains, which discharge flow from the
operating floor, were piped to a header where they flow by gravity to the new
oil/water separator. Floor and equipment drains, which discharged to the ash
sluicing trench and well No. 2, were routed to the new oily waste sump which
discharges to the oil water separator. The elevator sump also discharges into
the separator.

The removed oil from the separator was pumped to an oil storage tank and trucked
offsite for disposal. The discharge from the oil/water separators is pumped to
the municipal sewer.

Coal Pile Runoff

Coal pile runoff is collected in a new sump and pumped to the ash transport
water piping system which flows to the bottom ash storage bins. The mixing of
ash wastewater and coal pile runoff neutralizes the acid condition of the
runoff. The settling process in the bottom ash storage bins and gravity settling
equipment renders the water suitable for recycling.

Boiler Cleaning Wastes

The boiler blowdown system consists of two neutralization tanks, each equipped
with a recirculation pump and a mixing eductor.

Blowdown waste collects in one neutralization tank until it is filled to
capacity. The blowdown flow is then diverted to the second tank. To provide
adequate mixing, the contents of the tanks are continuously recirculated through
the mixing eductor, located within the tank. Concentrated sulfuric acid is
injected into the waste to provide a neutral pH.

Following neutralization, the boiler blowdown waste is discharged to the
municipal sewer via the new regenerant waste sump. The neutralization procedure
is repeated for the second neutralization tank.
 

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EXHIBIT B
 
FORM OF COMPANY NOTE
 
FIRSTENERGY GENERATION CORP.
 
WASTE WATER FACILITIES NOTE
 
SERIES 2006-A
 
FIRSTENERGY GENERATION CORP. (the “Company”), an Ohio corporation, for value
received, promises to pay to The Bank of New York Trust Company, N.A. (the
“Trustee”), as Trustee under the Trust Indenture dated as of April 1, 2006 (the
“Indenture”) of the Ohio Water Development Authority (the “Issuer”), the
principal sum of $90,140,000 on May 15, 2019 and to pay (i) interest thereon
from the date hereof until the payment of said principal sum has been made or
provided for at a rate or rates at all times equal to the interest rate or rates
from time to time borne by the Issuer’s State of Ohio Pollution Control Revenue
Refunding Bonds, Series 2006-A (FirstEnergy Generation Corp. Project) (the
“Bonds”) and payable on each date that interest is payable on the Bonds, and
(ii) interest on overdue principal, and to the extent permitted by law, on
overdue interest, at the rate or rates borne by the Bonds.
 
In addition to its obligations hereunder to pay the principal of and interest on
this Note, the Company also agrees to pay to The Bank of New York Trust Company,
N.A., as Tender Agent (the “Tender Agent”), the amounts necessary to purchase
Bonds pursuant to Section 5.01 of the Indenture to the extent that moneys are
not otherwise available therefor pursuant to Section 5.03 of the Indenture.
 
This Note is issued pursuant to a certain Waste Water Facilities Loan Agreement
(the “Agreement”) dated as of April 1, 2006 between the Issuer and the Company
relating to the refunding of certain obligations of the Issuer previously issued
to assist certain affiliates of the Company in the financing of a portion of the
cost of acquiring, constructing and installing certain waste water facilities
described in Exhibit A to the Agreement (the “Project”). The obligations of the
Company to make the payments required hereunder shall be absolute and
unconditional without defense or set-off by reason of any default by the Issuer
under the Agreement or under any other agreement between the Company and the
Issuer or by a Credit Facility Issuer, if any, under a Credit Facility, if any,
or for any other reason, including without limitation, loss or impairment of
investments in the Bond Fund, any acts or circumstances that may constitute
failure of consideration, destruction of or damage to the Project, commercial
frustration of purpose, or failure of the Issuer to perform and observe any
agreement, whether express or implied, or any duty, liability or obligation
arising out of or connected with the Agreement, it being the intention of the
Company and the Issuer that the payments hereunder will be paid in full when due
without any delay or diminution whatsoever.
 
This Note is subject to prepayment, at the option of the Company, upon written
notice to the Trustee given not less than 15 days prior to the day on which the
Trustee is required to give notice of optional redemption to the Bondholders
pursuant to Section 9.04 of Indenture, to the extent that the Bonds are subject
to optional redemption pursuant to Section 9.01(a) of the Indenture at a
prepayment price equal to the corresponding redemption price of the Bonds.
Notice of any optional prepayment of this Note shall be conditional if the
corresponding notice of optional redemption of the Bonds under Section 9.04 of
the Indenture is conditional and if the optional redemption of the Bonds does
not occur as a result of a failure of such condition, the notice of optional
prepayment of this Note shall be of no effect.
 
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If the Bonds are being called for mandatory redemption as provided in Section
9.01(b) of the Indenture, the Company shall, on or before the proposed
redemption date for the Bonds, pay to the Trustee the whole or portion of the
unpaid principal amount of this Note equal to the principal amount of the Bonds
being called for mandatory redemption.
 
In the event that the Company receives notice from the Trustee pursuant to
Section 9.01(b) of the Indenture that a proceeding has been instituted against a
Bondholder which could lead to a final determination that interest on the Bonds
is taxable and to Special Mandatory Redemption of the Bonds as contemplated by
such Section, the Company shall promptly notify the Trustee and the Issuer
whether or not it intends to contest such proceeding. In the event that the
Company chooses to so contest, it will use its best efforts to obtain a prompt
final determination or decision in such proceeding or litigation and will keep
the Trustee and the Issuer informed of the progress of any such proceeding or
litigation.
 
Upon receipt by the Trustee of notice of optional prepayment in accordance with
Section 9.01(a) of the Indenture and at the time of the giving of notice by the
Trustee to the Company of a mandatory prepayment, the Trustee shall take all
action necessary under and in accordance with the Indenture to redeem Bonds in
an amount corresponding to that specified in the particular notice.
 
The Company is entitled to a credit against its obligations under this Note and
this Note shall not be subject to required payment or prepayment to the extent
that amounts which would otherwise be payable by the Company hereunder are paid
from drawings under or payments made pursuant to the Credit Facility, if any,
then held by the Trustee or from other funds held by the Trustee under the
Indenture and available for such payment.
 
Whenever payment or provision therefor has been made in respect of the principal
or redemption price of all or any portion of the Bonds and interest on all or
any portion of the Bonds, together with all other sums payable by the Issuer
under the Indenture, in accordance with Article XVI of the Indenture, this Note
shall be deemed paid to the extent such payment or provision therefor has been
made, and if thereby deemed paid in full, this Note shall be canceled and
returned to the Company. Notwithstanding the foregoing, if, for any reason, the
amounts specified above are not sufficient to make corresponding payments of
principal or redemption price of the Bonds and interest on the Bonds, when such
payments are due, the Company shall pay as additional amounts due hereunder, the
amounts required from time to time to make up any such deficiency.
 
All payments of principal, prepayment price, if any, and interest shall be made
to the Trustee at its designated corporate trust office or as otherwise directed
by the Trustee, and all payments pursuant to the second paragraph of this Note
shall be made to the Tender Agent at its designated corporate trust office or as
otherwise directed by the Trustee, in each case, in such coin or currency of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts. All payments shall be in the full amount
required hereunder unless the Trustee notifies the Company that it is entitled
to a credit under the Agreement, this Note or the Indenture.
 
Each of the following events is hereby defined as, and is declared to be and to
constitute, an “Event of Default”:
 
(a) failure by the Company to pay the principal or prepayment price of this Note
in the amounts and at the times necessary to enable the Trustee to pay the
principal or redemption price of the Bonds at maturity or upon unconditional
proceedings for redemption when due; or
 
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(b) failure by the Company to pay interest on this Note in amounts and at these
times necessary to enable the Trustee to pay interest on the Bonds, (i) if such
Bonds bear interest at a Commercial Paper Rate, Dutch Auction Rate, Daily Rate,
Weekly Rate or Semi-Annual Rate, when due, and (ii) if such Bonds bear interest
in any other Interest Rate Mode then within one Business Day of when such
interest becomes due and payable; or
 
(c) failure by the Company to pay the amounts due on this Note sufficient to
enable the Tender Agent to pay the purchase price of any Bonds in accordance
with Section 5.01 of the Indenture when such payment has become due and payable;
or
 
(d) (i) if the Company shall (1) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian or the like of itself or of its
property, (2) admit in writing its inability to pay its debts generally as they
become due, (3) make a general assignment for the benefit of creditors, (4) be
adjudicated a bankrupt or insolvent, (5) commence a voluntary case under Title
11 of the United States Code (the “Bankruptcy Code”) or file a voluntary
petition or answer seeking reorganization, an arrangement with creditors or an
order for relief or seeking to take advantage of any insolvency law or file an
answer admitting the material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding; or corporate action shall
be taken by it for the purpose of effecting any of the foregoing, or (ii) if
without the application, approval or consent of the Company, a proceeding shall
be instituted in any court of competent jurisdiction, under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking in respect
of the Company an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of a
trustee, receiver, liquidator or custodian or the like of the Company or of all
or any substantial part of its assets, or other like relief in respect thereof
under any bankruptcy or insolvency law, and, if such proceeding is being
contested by the Company in good faith, the same shall (A) result in the entry
of an order for relief or any such adjudication or appointment or (B) continue
undismissed, or pending and unstayed, for any period of sixty (60) consecutive
days; or
 
(e) acceleration of maturity of the Bonds under Section 11.02 of the Indenture.
 
Upon the occurrence of an Event of Default and during the continuance thereof,
the Trustee, by notice in writing to the Company, shall in the case of an Event
of Default under paragraph (e) above and may in the case of any other Event of
Default declare the unpaid balance of this Note to be due and payable
immediately if, concurrently with or prior to such notice, the unpaid principal
amount of the Bonds has been declared due and payable, and upon any such
declaration the same shall become and shall be immediately due and payable,
anything in this Note to the contrary notwithstanding. Notwithstanding the
foregoing, if after any declaration of acceleration hereunder there is an
annulment of any declaration of acceleration with respect to the Bonds, such
annulment shall also automatically constitute an annulment of any corresponding
declaration under this Note and a waiver and rescission of the consequences of
such declaration.
 
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In case the Trustee shall have proceeded to enforce any right under this Note
and such proceedings shall have been discontinued or abandoned for any reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company and the Trustee shall be restored to their respective positions and
rights hereunder, and all rights, remedies and powers of the Company and the
Trustee shall continue as though no such proceeding had been taken, but subject
to the limitations of any such adverse determination.
 
The Company covenants that, in case default shall be made in the payment of any
installment of principal, prepayment price or interest in respect of this Note,
whether at maturity or by declaration or otherwise, then, upon demand of the
Issuer or the Trustee, the Company will pay to the Trustee the whole amount that
then shall have become due and payable on this Note for principal, prepayment
price and interest with interest on the overdue principal and prepayment price
and (to the extent enforceable under applicable law) on the overdue installments
of interest at the rate or rates borne by this Note; and, in addition thereto,
such further amount as shall be sufficient to cover the reasonable costs and
expenses of collection, including a reasonable compensation to the Trustee, its
agents, attorneys and counsel, and any expenses or liabilities incurred by the
Trustee other than through its negligence or bad faith.
 
In case the Company shall fail forthwith to pay such amounts upon such demand,
the Trustee shall be entitled and empowered to take any actions permitted under
applicable law and to institute any actions or proceedings at law or in equity
for the collection of the sums so due and unpaid, and may prosecute any such
action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company and collect in the manner provided
by law out of the property of the Company the moneys adjudged or decreed to be
payable.
 
In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Company under the Bankruptcy Code or any other applicable
law, or in case a receiver or trustee shall have been appointed for the property
of the Company or in the case of any other similar judicial proceedings relative
to the Company, or to the creditors or property of the Company, the Trustee
shall be entitled and empowered, by intervention in such proceedings or
otherwise, to file and prove a claim or claims for the whole amount of this Note
and interest owing and unpaid in respect thereof and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee allowed in
such judicial proceedings relative to the Company, its creditors, or its
property, and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of its charges and expenses; and any receiver, assignee or trustee in bankruptcy
or reorganization is hereby authorized to make such payments to the Trustee, and
to pay to the Trustee any amount due it for compensation and expenses, including
counsel fees incurred by it up to the date of such distribution.
 
No remedy herein conferred is intended to be exclusive of any other remedy or
remedies.
 
No recourse shall be had for the payment of the principal or prepayment price of
or interest on this Note, or for any claim based hereon or on the Agreement,
against any officer, director or stockholder, past, present or future, of the
Company as such, either directly or through the Company, under any
constitutional provision, statute or rule of law, or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise.
 
This Note shall at all times be and remain part of the trust estate under the
Indenture, and no assignment or transfer by the Trustee of its rights hereunder,
other than (i) a transfer made after an Event of Default under the Indenture in
the course of the Trustee’s exercise of its rights and remedies consequent upon
such Event of Default, or (ii) a transfer required in the performance of the
Trustee’s duties under the Indenture, shall be effective.
 
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Capitalized terms used in this Note not defined herein shall have the meanings
ascribed to them in the Indenture.
 
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed and
delivered.
 
Dated:  April 3, 2006
FIRSTENERGY GENERATION CORP.
                 
By: ______________________________
 
Assistant Treasurer

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