SUPPLEMENTAL LETTER OF CREDIT AGREEMENT
 
Dated as of December 5, 2006
 
among
 
FIRSTENERGY CORP.
 
FIRSTENERGY GENERATION CORP.
 
and
 
BARCLAYS BANK PLC,
 
acting through its New York Branch,
 
as Fronting Bank
 
relating to
 
$234,520,000
 
OHIO AIR QUALITY DEVELOPMENT AUTHORITY
 
STATE OF OHIO POLLUTION CONTROL
 
REVENUE REFUNDING BONDS SERIES 2006-A
 
(FirstEnergy Generation Corp. Project)
 

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TABLE OF CONTENTS

PRELIMINARY STATEMENTS
1
       
ARTICLE I
         
DEFINITIONS
       
SECTION 1.01
Certain Defined Terms.
2
SECTION 1.02
Computation of Time Periods.
11
SECTION 1.03
Accounting Terms.
11
SECTION 1.04
Certain References.
11
     
ARTICLE II
AMOUNTS AND TERMS OF THE LETTER OF CREDIT
     
SECTION 2.01
The Letter of Credit
11
SECTION 2.02
Repayments and Prepayments
12
SECTION 2.03
Source of Funds
12
     
ARTICLE III
CONDITIONS OF PRECEDENT
     
SECTION 3.01
Conditions Precedent to Issuance of the Letter of Credit.
12
SECTION 3.02
Additional Conditions Precedent to Issuance of the Letter of Credit
and Amendment of the Letter of Credit
 
14
     
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
     
SECTION 4.01
Representations and Warranties of FirstEnergy
15
SECTION 4.02
Representations and Warranties of the Company
17
       
ARTICLE V
   
COVENANTS
       
SECTION 5.01
Affirmative Covenants of the Company
22
SECTION 5.02
Negative Covenants of the Company
25
SECTION 5.03
Financial Covent of the Company
29
             
ARTICLE VI
   
EVENTS OF DEFAULT
       
SECTION 6.01
Events of Default
30
SECTION 6.02
Upon an Event of Default
32
           

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TABLE OF CONTENTS (CONTINUED)

ARTICLE XII
MISCELLANEOUS
     
SECTION 7.01
Amendments, Etc.
33
SECTION 7.02
Notices, Etc.
33
SECTION 7.03
No Waiver; Remedies
34
SECTION 7.04
Set-off
34
SECTION 7.05
Indemnification
34
SECTION 7.06
Liability of the Fronting Bank
35
SECTION 7.07
Costs, Expenses and Taxes
36
SECTION 7.08
Binding Effect
36
SECTION 7.09
Assignments and Participation
36
SECTION 7.10
Severability
37
SECTION 7.11
GOVERNING LAW
37
SECTION 7.12
Headings
37
SECTION 7.13
Submission to Jurisdiction; Waivers
37
SECTION 7.14
Acknowledgments
38
SECTION 7.15
WAIVERS OF JURY TRIAL
38
SECTION 7.16
Execution in Counterparts
38
SECTION 7.17
“Reimbursement Agreement” for Purposes of Indenture
38
SECTION 7.18
USA PATRIOT Act
38
     
ARTICLE XIII
GUARANTY
     
SECTION 8.01
Guaranty; Limitation of Liability
39
SECTION 8.02
Guaranty Absolute
40
SECTION 8.03
Waivers and Acknowledgments
41
SECTION 8.04
Subrogation
42
SECTION 8.05
Subordination
42

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EXHIBITS
   
 
Exhibit A
 
-
 
Form of Letter of Credit
Exhibit B
-
Form of Custodian Agreement
Exhibit C
-
Form of Opinion of Gary D. Benz, Esq., Counsel to FirstEnergy and the Company
Exhibit D
-
Form of Opinion of Akin Gump Strauss Hauer & Feld LLP, special New York counsel
to FirstEnergy and the Company
Exhibit E
-
Form of Opinions of Sidley Austin LLP, special New York counsel to the Fronting
Bank
Exhibit F
-
Form of Opinion of Lovells, special English counsel to the Fronting Bank

 

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SUPPLEMENTAL LETTER OF CREDIT AGREEMENT
 
SUPPLEMENTAL LETTER OF CREDIT AGREEMENT, dated as of December 5, 2006 among:
 

 
(i)
FIRSTENERGY CORP., an Ohio corporation (“FirstEnergy”); and

 

 
(ii)
FIRSTENERGY GENERATION CORP., an Ohio corporation (the “Company”); and

 

 
(iii)
BARCLAYS BANK PLC, a banking corporation organized under the laws of England and
Wales, acting through its New York Branch (the “Bank”), as Fronting Bank (in
such capacity, together with its successors and permitted assigns in such
capacities, respectively, the “Fronting Bank”).

 
PRELIMINARY STATEMENTS
 
(1) The Ohio Air Quality Development Authority (the “Issuer”) has caused to be
issued, sold and delivered, pursuant to a Trust Indenture, dated as of December
1, 2006 (as amended from time to time in accordance with the terms thereof and
hereof, the “Indenture”), between the Issuer and The Bank of New York Trust
Company, N.A., as trustee (such entity, or its successor as trustee, being the
“Trustee”), $234,520,000 original aggregate principal amount of State of Ohio
Pollution Control Revenue Refunding Bonds, Series 2006-A (FirstEnergy Generation
Corp. Project) (the “Bonds”) to various purchasers.
 
(2) FirstEnergy has requested that the Fronting Bank issue and the Fronting Bank
agrees to issue, on the terms and conditions set forth in this Agreement and the
Credit Agreement (as hereinafter defined), its Irrevocable Transferable Letter
of Credit No. SB-01054, to be dated on or before December 5, 2006, in favor of
the Trustee in the stated amount of $236,833,074, a form of which is attached
hereto as Exhibit A (such letter of credit, as it may from time to time be
extended or amended pursuant to the terms of the Credit Agreement, the “Letter
of Credit”), of which (i) $234,520,000 shall support the payment of principal of
the Bonds, and (ii) $2,313,074 shall support the payment of up to 36 days’
interest on the principal amount of the Bonds computed at a maximum rate of
10.0% per annum (calculated on the basis of a year of 365 days for the actual
days elapsed).
 
(3) FirstEnergy desires that the Letter of Credit be a “Letter of Credit” issued
pursuant to the Credit Agreement.
 
(4) Section 2.04(b) of the Credit Agreement provides that the amount, terms and
conditions of each “Letter of Credit” issued under the Credit Agreement shall be
subject to approval by the applicable Fronting Bank and FirstEnergy (as defined
in the Credit Agreement).
 
(5)  The Fronting Bank and FirstEnergy agree that the Letter of Credit be issued
in the amount and under the terms and conditions set forth herein and in the
Credit Agreement.

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NOW, THEREFORE, in consideration of the premises and in order to induce the
Fronting Bank to issue the Letter of Credit as provided herein, the parties
hereto agree as follows:
 
ARTICLE I
 
DEFINITIONS
 
SECTION 1.01. Certain Defined Terms. Capitalized terms used herein and not
otherwise defined shall have the meanings given such terms in the Credit
Agreement or the Indenture. As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
 
“Advances” has the meaning assigned to that term in the Credit Agreement.
 
“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person.
 
“Agreement” means this Supplemental Letter of Credit Agreement as it may be
amended, supplemented or otherwise modified in accordance with the terms hereof
at any time and from time to time.
 
“Applicable Booking Office” means, with respect to the Fronting Bank, the office
of the Fronting Bank specified as such opposite its name on Schedule I hereto or
the office of an assignee in an Assignment and Acceptance relating to the Letter
of Credit, or such other office of the Fronting Bank or such assignee may from
time to time specify to FirstEnergy and the Company.
 
“Applicable Law” means all applicable laws, statutes, treaties, rules, codes,
ordinances, regulations, permits, certificates, orders, interpretations,
licenses, and permits of any Governmental Authority and judgments, decrees,
injunctions, writs, orders or like action of any court, arbitrator or other
judicial or quasi-judicial tribunal (including, without limitation, those
pertaining to health, safety, the environment or otherwise).
 
“Assignment and Acceptance” has the meaning assigned to that term in the Credit
Agreement.
 
“Available Amount” in effect at any time means the maximum amount available to
be drawn at such time under the Letter of Credit, the determination of such
maximum amount to assume compliance with all conditions for drawing and no
reduction for any amount drawn by the Trustee in order to make a regularly
scheduled payment of interest on the Bonds (unless such amount is not reinstated
under the Letter of Credit).
 
“Bankruptcy Code” means Title 11 of the United States Code, as now constituted
or hereafter amended.

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“Bankruptcy Law” has the meaning assigned to that term in Section 8.01(a).
 
“Beneficiary” has the meaning assigned to that term in Section 8.01(a).
 
“Bonds” has the meaning assigned to that term in the Preliminary Statements
hereto.
 
“Business Day” means any day other than (i) a Saturday or Sunday or legal
holiday or day on which banking institutions in the city or cities in which the
“Designated Office” (as defined in the Indenture) of the Trustee, the Tender
Agent or the Paying Agent or the office of the Fronting Bank which will honor
draws upon the Letter of Credit, are located are authorized by law or executive
order to close or (ii) a day on which the New York Stock Exchange, FirstEnergy,
the Company or the Remarketing Agent is closed.
 
“Cancellation Date” has the meaning assigned to that term in the Letter of
Credit.
 
“Capital Lease” means any lease which is capitalized on the books of the lessee
in accordance with GAAP, consistently applied. The term “Capital Lease” shall
not include any operating leases that, under GAAP, are not so capitalized.
 
“Cash and Cash Equivalents” means (i) cash on hand; (ii) demand deposits
maintained in the United States or any other country with any commercial bank,
trust company, savings and loan association, savings bank or other financial
institution; (iii) time deposits maintained in the United States or any other
country with, or certificates of deposit having a maturity of one year or less
issued by, any commercial bank, securities dealer, trust company, savings and
loan association, savings bank or other financial institution; (iv) direct
obligations of, or unconditionally guaranteed by, the United States or any
agency thereof and having a maturity of one year or less; and (v) commercial
paper having a maturity of one year or less.
 
“Change in Control (Company)” means the occurrence of either of the following:
(i) any entity, person (within the meaning of Section 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), which theretofore
was beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of less
than 20% of the Company’s then outstanding common stock either (x) acquires
shares of common stock of the Company in a transaction or series of transactions
that results in such entity, person or group directly or indirectly owning
beneficially 20% or more of the outstanding common stock of the Company, other
than solely as a result of such entity, person or group having acquired
beneficial ownership of 20% or more of the outstanding common stock of
FirstEnergy, or (y) acquires, by proxy or otherwise, the right to vote for the
election of directors, for any merger, combination or consolidation of the
Company or any of its direct or indirect subsidiaries, or, for any other matter
or question, more than 20% of the then outstanding voting securities of the
Company; or (ii) at any time prior to the Cancellation Date when FirstEnergy is
not the sole legal and beneficial owner, directly or indirectly, of the
outstanding capital stock of the Company, the election or appointment of persons
to the Company’s board of directors who were not directors of the Company on the
date hereof, and whose election or appointment was not approved by a majority of
those persons who were directors at the beginning of such period, where such
newly elected or appointed directors constitute 20% or more of the directors of
the board of directors of the Company.

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“Code” means the United States Internal Revenue Code of 1986, as amended from
time to time, and the applicable regulations thereunder.
 
“Company” has the meaning assigned to that term in the preamble hereto.
 
“Consolidated Debt” means, at any date of determination, the aggregate Debt of
the Company and its Consolidated Subsidiaries determined on a consolidated basis
in accordance with GAAP, but shall not include (i) Nonrecourse Debt of the
Company and any of its Subsidiaries, (ii) the aggregate principal amount of
Trust Preferred Securities of the Company and its Consolidated Subsidiaries,
(iii) obligations under leases that shall have been or should be, in accordance
with GAAP, recorded as operating leases in respect of which the Company or any
of its Consolidated Subsidiaries is liable as a lessee, and (iv) the aggregate
principal amount of Stranded Cost Securitization Bonds of the Company and its
Consolidated Subsidiaries.
 
“Consolidated Subsidiary” means, as to any Person, any Subsidiary of such Person
the accounts of which are or are required to be consolidated with the accounts
of such Person in accordance with GAAP.
 
“Controlled Group” means all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under common control
that, together with FirstEnergy and its Subsidiaries, are treated as a single
employer under Section 414(b) or 414(c) of the Code.
 
“Conversion Date” means the effective date for conversion to an Interest Rate
Mode for an Interest Period ending on the maturity date of the Bonds as such
date is specified in the certificate of the Trustee in the form of Exhibit 6 to
the Letter of Credit.
 
“Credit Agreement” means that certain Credit Agreement, dated as of August 24,
2006, among FirstEnergy and certain other borrowers, certain banks, Citibank,
N.A., as Administrative Agent, Barclays Bank PLC, acting through its New York
Branch, as a Fronting Bank and certain other Fronting Banks, and the Swing Line
Lenders named therein, as it may be amended, supplemented or otherwise modified
in accordance with the terms thereof at any time and from time to time.
 
“Credit Documents” means this Agreement, the Credit Agreement and any and all
other instruments and documents (including, without limitation, any fee letter)
executed and delivered in connection with any of the foregoing.
 
“Credit Party” means each of FirstEnergy and the Company.
 
“Custodian” means The Bank of New York Trust Company, N.A., in its capacity as
Custodian under the Custodian Agreement, together with its successors and
assigns in such capacity.
 
“Custodian Agreement” means the Custodian and Pledge Agreement of even date
herewith among FirstEnergy, the Fronting Bank and the Custodian, substantially
in the form of Exhibit B attached hereto.

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“Date of Issuance” means the date of issuance of the Letter of Credit.
 
“Debt” of any Person means at any date, without duplication, (i) all obligations
of such Person for borrowed money, or with respect to deposits or advances of
any kind, or for the deferred purchase price of property or services, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (iii) all obligations of such Person upon which interest charges
are customarily paid, (iv) all obligations under leases that shall have been or
should be, in accordance with GAAP, recorded as Capital Leases in respect of
which such Person is liable as lessee, (v) liabilities in respect of unfunded
vested benefits under Plans, (vi) withdrawal liability incurred under ERISA by
such Person or any of its affiliates to any Multiemployer Plan, (vii)
reimbursement obligations of such Person (whether contingent or otherwise) in
respect of letters of credit, bankers acceptances, surety or other bonds and
similar instruments, (viii) all Debt of others secured by a Lien on any asset of
such Person, whether or not such Debt is assumed by such Person and (ix)
obligations of such Person under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to above.
 
“Debt to Capitalization Ratio” means the ratio of Consolidated Debt of the
Company to Total Capitalization of the Company.
 
“Default” means any event or condition that would constitute an Event of Default
but for the requirement that notice be given or time elapse or both.
 
“Disclosure Documents” means FirstEnergy’s Annual Report on Form 10-K filed with
the Securities and Exchange Commission for the year ended December 31, 2005,
FirstEnergy’s Quarterly Reports on Form 10-Q filed with the Securities and
Exchange commission for the quarters ended March 31, 2006, June 30, 2006, and
September 30, 2006 and FirstEnergy’s Current Reports on Form 8-K filed with the
Securities and Exchange Commission on or before December 4, 2006.
 
“Drawing” has the meaning assigned to that term in the Credit Agreement.
 
“Environmental Laws” means any federal, state or local laws, ordinances or
codes, rules, orders, or regulations relating to pollution or protection of the
environment, including, without limitation, laws relating to hazardous
substances, laws relating to reclamation of land and waterways and laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollution, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
 
“Event of Default” has the meaning assigned to that term in Section 6.01.

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“First Mortgage Bond Indenture” means, an indenture or similar instrument
pursuant to which the Company may issue bonds, notes or similar instruments
secured by a lien on all or substantially all of its Fixed Assets.
 
“First Mortgage Bonds” means first mortgage bonds at any time issued by the
Company pursuant to a First Mortgage Bond Indenture.
 
“FirstEnergy” has the meaning assigned to that term in the preamble hereto.
 
“Fixed Assets” means, with respect to any Person, at any time, total net plant,
including construction work in progress, as reported by such Person on its most
recent consolidated balance sheet.
 
“Fronting Bank” has the meaning assigned to that term in the preamble hereto.
 
“Fronting Bank Fee Letter” has the meaning assigned to that term in the Credit
Agreement.
 
“GAAP” means generally accepted accounting principles in the United States in
effect from time to time.
 
“Governmental Action” means all authorizations, consents, approvals, waivers,
exceptions, variances, orders, licenses, exemptions, publications, filings,
notices to and declarations of or with any Governmental Authority, other than
routine reporting requirements the failure to comply with which will not affect
the validity or enforceability of any Credit Document or any Related Documents
or have a material adverse effect on the transactions contemplated by any Credit
Document or any Related Document.
 
“Governmental Authority” means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
 
“Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Debt or other monetary obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including in any event any obligation of the guarantor, direct or indirect, (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Debt or other obligation or to purchase (or to advance or supply funds for
the purchase of) any security for the payment thereof, (ii) to purchase or lease
property, securities or services for the purpose of assuring the owner of such
Debt or other obligation of the payment thereof, (iii) to maintain working
capital, equity capital or any other financial statement condition or liquidity
of the primary obligor as to enable the primary obligor to pay such Debt or
other obligation or (iv) as an account party in respect of any letter of credit
or letter of guaranty issued to support such Debt or obligation, provided that
the term “Guarantee” shall not include endorsements for collection or deposit in
the ordinary course of business. The term “Guaranteed” has a meaning correlative
thereto.

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“Guaranteed Obligations” has the meaning assigned to that term in Section
8.01(a).
 
“Guaranty” has the meaning assigned to that term in Section 8.01(a).
 
“Indenture” has the meaning assigned to that term in the Preliminary Statements
hereto.
 
“Interest Period” has the meaning assigned to that term in the Indenture.
 
“Interest Rate Mode” has the meaning assigned to that term in the Indenture.
 
“Issuer” has the meaning assigned to that term in the Preliminary Statements
hereto.
 
“Letter of Credit” has the meaning assigned to that term in the Preliminary
Statements hereto.
 
“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset. For the
purposes of this Agreement and the other Credit Documents, a Person or any of
its Subsidiaries shall be deemed to own, subject to a Lien, any asset that it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, Capital Lease or other title retention agreement
relating to such asset.
 
“Loan Agreement” has the meaning assigned to the term “Agreement” in the
Indenture.
 
“Material Adverse Effect” means, with respect to any Person, a material adverse
effect on (a) the business, operations, property, condition (financial or
otherwise) or prospects of such Person and its Subsidiaries taken as a whole,
(b) the ability of such Person to perform its obligations under any Credit
Document, the Credit Agreement or any Related Document or (c) the validity or
enforceability of any Credit Document, the Credit Agreement or any Related
Document or the rights or remedies of the Fronting Bank hereunder or thereunder.
 
“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.
 
“Multiemployer Plan” means a “multiemployer plan” as defined in Section
4001(a)(3) of ERISA.
 
“Nonrecourse Debt” means any Debt that finances the acquisition, development,
ownership or operation of an asset in respect of which the Person to which such
Debt is owed has no recourse whatsoever to the Company or any of its Affiliates
other than:
 
(i) recourse to the named obligor with respect to such Debt (the “Debtor”) for
amounts limited to the cash flow or net cash flow (other than historic cash
flow) from the asset; and
 
(ii) recourse to the Debtor for the purpose only of enabling amounts to be
claimed in respect of such Debt in an enforcement of any security interest or
lien given by the Debtor over the asset or the income, cash flow or other
proceeds deriving from the asset (or given by any shareholder or the like in the
Debtor over its shares or like interest in the capital of the Debtor) to secure
the Debt, but only if the extent of the recourse to the Debtor is limited solely
to the amount of any recoveries made on any such enforcement; and

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(iii) recourse to the Debtor generally or indirectly to any Affiliate of the
Debtor, under any form of assurance, undertaking or support, which recourse is
limited to a claim for damages (other than liquidated damages and damages
required to be calculated in a specified way) for a breach of an obligation
(other than a payment obligation or an obligation to comply or to procure
compliance by another with any financial ratios or other tests of financial
condition) by the Person against which such recourse is available.
 
“Notes” means any bonds, notes or similar instruments (unsecured other than by
First Mortgage Bonds) issued by the Company in exchange for cash in any
publicly-registered offering, private placement, or other offering exempt from
registration under Federal and state securities laws, but excluding any notes
issued by the Company in connection with any revolving credit facility, term
loan facility, letter of credit reimbursement agreement or other bank credit
facility of the Company.
 
“Obligations” means Reimbursement Obligations with respect to the Letter of
Credit and Advances made to satisfy any such Reimbursement Obligation, fees
relating to the Letter of Credit, all accrued and unpaid commitment fees and all
other obligations of the Credit Parties to the Fronting Bank arising under or in
relation to this Agreement and the Letter of Credit and the Credit Agreement
with respect to the Letter of Credit or any other Credit Document.
 
“Official Statement” means the Official Statement, dated November 21, 2006
relating to the Bonds, together with any supplements or amendments thereto and
all documents incorporated therein (or in any such supplements or amendments) by
reference.
 
“Organizational Documents” shall mean, as applicable to any Person, the charter,
code of regulations, articles of incorporation, by-laws, certificate of
formation, operating agreement, certificate of partnership, partnership
agreement, certificate of limited partnership, limited partnership agreement or
other constitutive documents of such Person.
 
“Paying Agent” has the meaning assigned to that term in the Indenture.
 
“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.
 
“Permitted Investments” means (i) direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent that such obligations
are backed by the full faith and credit of the United States of America), in
each case maturing within one year from the date of acquisition thereof, (ii)
investments in commercial paper maturing within one year from the date of
acquisition thereof and having, at such date of acquisition, the highest credit
rating obtainable from S&P or Moody’s, (iii) investments in certificates of
deposit, banker’s acceptances and time deposits maturing within one year from
the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic office of any
commercial bank organized under the laws of the United States of America or any
State thereof that has combined capital and surplus and undivided profits of not
less than $500,000,000, and (iv) fully collateralized repurchase agreements with
a term of not more than 30 days for securities described in clause (i) of this
definition and entered into with a financial institution satisfying the criteria
described in clause (iii) of this definition.

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“Permitted Liens” has the meaning assigned to that term in Section 5.02(a).
 
“Person” means an individual, partnership, corporation (including, without
limitation, a business trust), joint stock company, limited liability company,
trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
 
“Plan” means, at any time, an employee pension benefit plan that is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code and is either (i) maintained by a member of the Controlled Group for
employees of a member of the Controlled Group or (ii) maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which a member of the Controlled Group
is then making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions.
 
“Pledged Bonds” means the Bonds purchased with moneys received under the Letter
of Credit in connection with a Tender Drawing and owned or held by the Company
or an affiliate of the Company or by the Trustee and pledged to the Fronting
Bank pursuant to the Custodian Agreement.
 
“Post Petition Interest” has the meaning assigned to that term in Section
8.05(b).
 
“Purchase Agreement” means the Bond Purchase Agreement dated December 4, 2006,
between the Issuer and the “Underwriters” identified therein.
 
“Reimbursement Obligations” has the meaning assigned to that term in the Credit
Agreement.
 
“Related Documents” means the Bonds, the Indenture, the Loan Agreement, the
Remarketing Agreement, the Custodian Agreement and the Fronting Bank Fee Letter
with respect to the Letter of Credit.
 
“Remarketing Agent” has the meaning assigned to that term in the Indenture.
 
“Remarketing Agreement” means any agreement or other arrangement pursuant to
which a Remarketing Agent has agreed to act as such pursuant to the Indenture.
 
“Restricted Payment” means any dividend or other distribution by the Company or
any of its Subsidiaries (whether in cash, securities or other property) with
respect to any ownership interest or shares of any class of equity securities of
the Company or any such Subsidiary, or any payment (whether in cash, securities
or other property), including, without limitation, any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such interest or shares or any option,
warrant or other right to acquire any such interest or shares.
 
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., or any successor thereto.

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“Stated Expiration Date” has the meaning assigned to that term in the Letter of
Credit.
 
“Stranded Cost Securitization Bonds” means any instruments, pass-through
certificates, notes, debentures, certificates of participation, bonds,
certificates of beneficial interest or other evidences of indebtedness or
instruments evidencing a beneficial interest that are secured by or otherwise
payable from non-bypassable cent per kilowatt hour charges authorized pursuant
to an order of a state commission regulating public utilities to be applied and
invoiced to customers of such utility. The charges so applied and invoiced must
be deducted and stated separately from the other charges invoiced by such
utility against its customers.
 
“Subordinated Obligations” has the meaning assigned to that term in Section
8.05.
 
“Subsidiary” means, with respect to any Person, any corporation or
unincorporated entity of which more than 50% of the outstanding capital stock
(or comparable interest) having ordinary voting power (irrespective of whether
at the time capital stock (or comparable interest) of any other class or classes
of such corporation or entity shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned by
said Person (whether directly or through one of more other Subsidiaries). In the
case of an unincorporated entity, a Person shall be deemed to have more than 50%
of interests having ordinary voting power only if such Person’s vote in respect
of such interests comprises more than 50% of the total voting power of all such
interests in the unincorporated entity.
 
“Tender Agent” has the meaning assigned to that term in the Indenture.
 
“Tender Drawing” means a drawing under the Letter of Credit resulting from the
presentation of a certificate in the form of Exhibit 2 to the Letter of Credit.
 
“Termination Event” means (i) a Reportable Event described in Section 4043 of
ERISA and the regulations issued thereunder (other than a Reportable Event not
subject to the provision for 30-day notice to the PBGC under such regulations),
or (ii) the withdrawal of any member of the Controlled Group from a Plan during
a plan year in which it was a “substantial employer” as defined in Section
4001(a) (2) of ERISA, or (iii) the filing of a notice of intent to terminate a
Plan or the treatment of a Plan amendment as a termination under Section 4041 of
ERISA, or (iv) the institution of proceedings to terminate a Plan by the PBGC,
or (v) any other event or condition which might constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan.
 
“Total Capitalization” means at any date of determination the sum, without
duplication, of (i) Consolidated Debt of the Company, (ii) consolidated equity
of the common stockholders of the Company and its Consolidated Subsidiaries,
(iii) consolidated equity of the preference stockholders of the Company and its
Consolidated Subsidiaries, and (iv) the aggregate principal amount of Trust
Preferred Securities of the Company and its Consolidated Subsidiaries.
 
“Transition Plan Order” means the Opinion and Order of The Public Utilities
Commission of Ohio in Case Nos. 99—1212—EL—ETP, 99—1213—EL—ATA and
99—1214—EL—AAM, entered July 19, 2000, as amended and supplemented by the
Opinion and Order in Case No. 03-2144-EL-ATA, entered June 9, 2004.

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“Trust Preferred Securities” means securities, however denominated, (A) issued
by the Company or any of its Consolidated Subsidiaries, (B) that are not subject
to mandatory redemption or the underlying securities, if any, of which are not
subject to mandatory redemption, (C) that are perpetual or mature no less than
30 years from the date of issuance, (D) the indebtedness issued in connection
with which, including any guaranty, is subordinate in right of payment to the
unsecured and unsubordinated indebtedness of the issuer of such indebtedness or
guaranty, and (E) the terms of which permit the deferral of the payment of
interest or distributions thereon to a date occurring after the Stated
Expiration Date.
 
“Trustee” has the meaning assigned to that term in the Preliminary Statements
hereto.
 
“Underwriters” means the “Underwriters” identified in the Purchase Agreement.
 
“Unfunded Vested Liabilities” means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all vested nonforfeitable
benefits under such Plan exceeds (ii) the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.
 
SECTION 1.02. Computation of Time Periods. In this Agreement, in the computation
of a period of time from a specified date to a later specified date, the word
“from” means “from and including” and the words “to” and “until” each means “to
but excluding”.
 
SECTION 1.03. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP, except as otherwise stated
herein.
 
SECTION 1.04. Internal References. The words “herein”, “hereof’ and “hereunder”
and words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any provision of this Agreement, and “Article”,
“Section”, “subsection”, “paragraph”, “Exhibit”, “Schedule” and respective
references are to this Agreement unless otherwise specified. References herein
or in any Related Document to any agreement or other document shall, unless
otherwise specified herein or therein, be deemed to be references to such
agreement or document as it may be amended, modified or supplemented after the
date hereof from time to time in accordance with the terms hereof or of such
Related Document, as the case may be.
 
ARTICLE II
 
AMOUNT AND TERMS OF THE LETTER OF CREDIT
 
SECTION 2.01. The Letter of Credit. The Fronting Bank agrees, on the terms and
conditions hereinafter set forth and the satisfaction of the conditions for the
issuance of a “Letter of Credit” set forth in Sections 3.01 and 3.02 of the
Credit Agreement, to issue the Letter of Credit to the Trustee at or before
1:00 P.M. (New York City time) on December 5, 2006. The Fronting Bank and
FirstEnergy agree that the Letter of Credit shall be a “Letter of Credit” as
defined in, and is issued pursuant to, the Credit Agreement. The Fronting Bank,
the Company and FirstEnergy acknowledge and agree that the Letter of Credit is
the initial “Credit Facility” under the Indenture.

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SECTION 2.02. Repayments and Prepayments. Prior to or simultaneously with the
receipt of proceeds related to the remarketing of Bonds purchased pursuant to
one or more Tender Drawings, the Credit Parties shall directly, or through the
Remarketing Agent, the Tender Agent or the Paying Agent on behalf of the Credit
Parties, repay or prepay (as the case may be) the then-outstanding Reimbursement
Obligations with respect to the Letter of Credit and Advances made to satisfy
any such Reimbursement Obligation (in the order in which they were made) by
paying to the Fronting Bank an amount equal to the sum of (i) the aggregate
principal amount of the Bonds remarketed plus (ii) all accrued interest on the
principal amount of such Reimbursement Obligations and/or Advances so repaid or
prepaid, in each case in accordance with the provisions of Section 2.04(g) or
2.12 of the Credit Agreement, as the case may be.
 
SECTION 2.03. Source of Funds. All payments made by the Fronting Bank pursuant
to the Letter of Credit shall be made from funds of the Fronting Bank,
respectively, and not from funds obtained from any other Person.
 
ARTICLE III
 
CONDITIONS PRECEDENT
 
SECTION 3.01. Conditions Precedent to Issuance of the Letter of Credit. The
obligation of the Fronting Bank to issue the Letter of Credit is subject to
conditions precedent to the issuance of a “Letter of Credit” set forth in
Sections 3.01 and 3.02 of the Credit Agreement and the additional conditions
precedent that the Fronting Bank shall have received on or before the Date of
Issuance the following, each dated such date, in form and substance satisfactory
to the Fronting Bank:
 
(a) Counterparts of each of this Agreement and Fronting Bank Fee Letter with
respect to the Letter of Credit, duly executed by the Credit Parties and the
Fronting Bank;
 
(b) Counterparts of the Custodian Agreement, duly executed by the Company, the
Fronting Bank and the Custodian;
 
(c) Certified copies of each of FirstEnergy’s and Company’s Organizational
Documents;
 
(d) Evidence of the status of each of FirstEnergy and the Company as a duly
organized and validly existing corporation under the laws of the State of Ohio;
 
(e) A duplicate copy, certified, as of the Date of Issuance, by the Company (in
a manner satisfactory to the Fronting Bank) to be a true and complete copy, of
all proceedings relating to the issuance and sale of the Bonds;
 
(f) A duplicate copy, certified, as of the Date of Issuance, by FirstEnergy (in
a manner satisfactory to the Fronting Bank) to be a true and complete copy, of
each Related Document not delivered pursuant to subsection (e) above, together
with opinion letters of counsel to the Issuer, the Trustee and/or the Custodian,
as applicable, providing for the reliance thereon by the Fronting Bank and any
related closing certificates of the Issuer;
 
(g) Certified copies of audited consolidated financial statements of FirstEnergy
and its Subsidiaries for the 2004 and 2005 fiscal years;

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(h) Certified copies of the resolutions of the Board of Directors of each of
FirstEnergy and the Company authorizing each Credit Document to which it is a
party and all of the Related Documents to which each such Credit Party is a
party and the transactions contemplated hereby and thereby, and of all other
documents evidencing any other necessary corporate action;
 
(i) Evidence that the Remarketing Agent has acknowledged and accepted in writing
its appointment as Remarketing Agent under the Indenture and its duties and
obligations thereunder;
 
(j) Duplicate copies (certified by the Secretary or an Assistant Secretary of
FirstEnergy to be true and complete copies) of all governmental actions and
regulatory approvals (including, without limitation, approvals or orders of the
Issuer and the FERC, if any) necessary for FirstEnergy to enter into this
Agreement and each of the Related Documents to which FirstEnergy is a party and
the transactions contemplated hereby and thereby;
 
(k) Duplicate copies (certified by the Secretary or an Assistant Secretary of
the Company to be true and complete copies) of all governmental actions and
regulatory approvals (including, without limitation, approvals or orders of the
Issuer and the FERC, if any) necessary for the Company to enter into this
Agreement and each of the Related Documents to which the Company is a party and
the transactions contemplated hereby and thereby;
 
(l) A certificate of the Secretary or an Assistant Secretary of each of
FirstEnergy and the Company certifying the names, true signatures and incumbency
of the officers of each such Credit Party authorized to sign each Credit
Document to which it is a party and the other documents to be delivered by it
hereunder or thereunder;
 
(m) An opinion letter of Gary D. Benz, Esq., Associate General Counsel of
FirstEnergy and counsel to the Company, in substantially the form of Exhibit C
and as to such other matters as the Fronting Bank may reasonably request;
 
(n) An opinion letter of Akin Gump Strauss Hauer & Feld LLP, special New York
counsel to FirstEnergy and the Company, in substantially the form of Exhibit D
and as to such matters as the Fronting Bank may reasonably request;
 
(o) An opinion letter of Sidley Austin LLP, special New York counsel to the
Fronting Bank, in substantially the form of Exhibit E and as to such other
matters as the Fronting Bank my reasonably request;
 
(p) An opinion letter of Lovells, special English counsel to the Fronting Bank,
in substantially the form of Exhibit F and as to such matters as the Fronting
Bank may reasonably request;
 
(q) A letter from Squire, Sanders & Dempsey, L.L.P., Bond Counsel, addressed to
the Fronting Bank and stating therein that such Person may rely on the final
approving opinion letter of such firm delivered in connection with the issuance
of the Bonds;
 
(r) Copies of the Official Statement used in connection with the offering of the
Bonds;

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(s) Letters from S&P and Moody’s to the effect that the Bonds have been rated
the ratings of the Fronting Bank, such letters to be in form and substance
satisfactory to the Fronting Bank;
 
(t) A certificate of an authorized officer of the Custodian certifying the
names, true signatures and incumbency of the officers of the Custodian
authorized to sign the documents to be delivered by it hereunder and as to such
other matters as the Fronting Bank may reasonably request;
 
(u) A certificate of an authorized officer of the Trustee certifying the names,
true signatures and incumbency of the officers of the Trustee authorized to make
drawings under the Letter of Credit and as to such other matters as the Fronting
Bank may reasonably request; and
 
(v)  The Fronting Bank shall have received from the Credit Parties the amounts
payable to the Fronting Bank upon the issuance of the Letter of Credit pursuant
to the Fronting Bank Fee Letter.
 
SECTION 3.02. Additional Conditions Precedent to Issuance of the Letter of
Credit and Amendment of the Letter of Credit.  The obligation of the Fronting
Bank to issue the Letter of Credit, or to amend, modify or extend the Letter of
Credit, shall be subject to the further conditions precedent that on the Date of
Issuance and on the date of such amendment, modification or extension, as the
case may be:
 
(a) The following statements shall be true and the Fronting Bank shall have
received a certificate from each Credit Party signed by a duly authorized
officer of such Credit Party, dated such date, stating that:
 
(i) The representations and warranties of such Credit Party contained in Article
IV of this Agreement or in the Credit Agreement, as the case may be, and as
applicable in the Related Documents are true and correct in all material
respects on and as of such date as though made on and as of such date (except to
the extent such representations and warranties relate solely to a specified
earlier date, in which case such representations and warranties were true and
correct on and as of such earlier date); and
 
(ii) No event has occurred and is continuing, or would result from the issuance
of the Letter of Credit or such amendment, modification or extension of the
Letter of Credit (as the case may be), which constitutes a Default or an Event
of Default; and
 
(iii) True and complete copies of the Related Documents (including all exhibits,
attachments, schedules, amendments or supplements thereto) have previously been
delivered to the Fronting Bank and the Related Documents have not been modified,
amended or rescinded, and are in full force and effect as of the Date of
Issuance; and

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(b) The Fronting Bank shall have received such other approvals, opinions or
documents as the Fronting Bank may reasonably request.
 
ARTICLE IV
 
REPRESENTATIONS AND WARRANTIES
 
SECTION 4.01. Representations and Warranties of FirstEnergy. FirstEnergy hereby
represents and warrants as of (i) the date hereof, (ii) the Date of Issuance,
(iii) the date of any Drawing under the Letter of Credit, and (iv) the date of
any amendment, modification or extension of the Letter of Credit, as follows:
 
(a) Corporate Authorization. The execution, delivery and performance by
FirstEnergy of this Agreement and each Related Document are within FirstEnergy’s
corporate powers, have been duly authorized by all necessary corporate action on
the part of FirstEnergy and did not, do not, and will not, require the consent
or approval of FirstEnergy shareholders, or any trustee or holder of any Debt or
other obligation of FirstEnergy, other than such consents and approvals as have
been, or on or before the Date of Issuance, will have been, duly obtained, given
or accomplished.
 
(b) No Violation, Etc. Neither the execution, delivery or performance by
FirstEnergy of this Agreement or any Related Document nor the consummation by
FirstEnergy of the transactions contemplated hereby, nor compliance by
FirstEnergy with the provisions hereof, conflicts or will conflict with, or
results or will result in a breach or contravention of any of the provisions of
FirstEnergy’s Organizational Documents or any Applicable Law, or any indenture,
mortgage, lease or any other agreement or instrument to which it or any of its
Affiliates is party or by which its property or the property of any of its
Affiliates is bound, or results or will result in the creation or imposition of
any Lien upon any of its property or the property of any of its Affiliates.
There is no provision of (i) any of FirstEnergy’s Organizational Documents, (ii)
except as disclosed in the Disclosure Documents, any Applicable Law, or (iii)
any such indenture, mortgage, lease or other agreement or instrument that
materially adversely affects, or in the future is likely to materially adversely
affect, the business, operations, affairs, condition, properties or assets of
FirstEnergy, or its ability to perform its obligations under this Agreement or
any Related Document.

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(c) Governmental Actions. No Governmental Action is or will be required in
connection with the execution, delivery or performance by FirstEnergy of, or the
consummation by FirstEnergy of the transactions contemplated by, this Agreement
or any Related Document to which it is, or is to become, a party, except such
Governmental Actions as have been duly obtained, given or accomplished. No
Governmental Action by any Governmental Authority relating to the Securities Act
of 1933, as amended, the Securities Exchange Act of 1934, as amended, the Trust
Indenture Act of 1939, as amended, the Federal Power Act, the Atomic Energy Act,
the Nuclear Waste Act, the Public Utility Holding Company Act of 1935, the Ohio
Public Utility Act, energy or nuclear matters, public utilities, the environment
or health and safety matters is or will be required in connection with the
participation by the Fronting Bank in the consummation of the transactions
contemplated by this Agreement and the Related Documents, or will be required to
be obtained by any of such Persons during the term of this Agreement, except
such Governmental Actions (i) as have been duly obtained, given or accomplished
or (ii) as may be required by Applicable Law not now in effect. None of the
Governmental Actions referred to in the first sentence of this subsection (d) or
in clause (i) of the second sentence of this subsection (d) are the subject of
appeal or reconsideration or other review, and the time in which to make an
appeal or request the review or reconsideration of any such Governmental Action
has expired with any appeal or request for review or reconsideration not having
been taken or made.
 
(d) Execution and Delivery. This Agreement and any Related Document to which
FirstEnergy is a party have been duly executed and delivered by FirstEnergy, and
this Agreement and each such Related Document is the legal, valid and binding
obligation of FirstEnergy enforceable in accordance with its respective terms,
subject, however, to the application by a court of general principles of equity
and to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights generally.
 
(e) Full Force and Effect.  The Credit Agreement and each Related Document is in
full force and effect. FirstEnergy has duly and punctually performed and
observed all the terms, covenants and conditions contained in each such Related
Document on its part to be performed or observed, and no Default or Event of
Default has occurred and is continuing.
 
(f) Material Adverse Change. Since December 31, 2005, there has been no material
adverse change in the ability of FirstEnergy to perform its obligations under
this Agreement, the Credit Agreement or any Related Document to which it is a
party.
 
(g) Litigation. There is no pending or threatened action, investigation or
proceeding (including, without limitation, any proceeding relating to or arising
out of Environmental Laws) before any court, governmental agency or arbitrator
against or affecting FirstEnergy or any of its Subsidiaries which purports to
affect the legality, validity or enforceability of this Agreement, the Credit
Agreement or any Related Document.

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(h) Accuracy of Information. No exhibit, schedule, report or other written
information provided by or on behalf of FirstEnergy or its agents to the
Fronting Bank in connection with the negotiation, execution and closing of this
Agreement knowingly contained when made any material misstatement of fact or
knowingly omitted to state any material fact necessary to make the statements
contained therein not misleading in light of the circumstances under which they
were made.
 
(i) Taxability. The performance of this Agreement and the transactions
contemplated herein will not affect the status of the interest on the Bonds as
exempt from Federal income tax.
 
(j)  No Material Misstatements. The reports, financial statements and other
written information furnished by or on behalf of FirstEnergy to the Fronting
Bank pursuant to or in connection with this Agreement and the transactions
contemplated hereby do not contain and will not contain, when taken as a whole,
any untrue statement of a material fact and do not omit and will not omit, when
taken as a whole, to state any fact necessary to make the statements therein, in
the light of the circumstances under which they were or will be made, not
misleading in any material respect.
 
SECTION 4.02. Representations and Warranties of the Company. The Company hereby
represents and warrants as of (i) the date hereof, (ii) the Date of Issuance,
(iii) the date of any Drawing under the Letter of Credit, and (iv) the date of
any amendment, modification or extension of the Letter of Credit, as follows:
 
(a) Corporate Existence and Power. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Ohio, is duly qualified to do business as a foreign corporation in and is in
good standing under the laws of the Commonwealth of Pennsylvania and each other
state in which the ownership of its properties or the conduct of its business
makes such qualification necessary except where the failure to be so qualified
would not have a Material Adverse Effect with respect to the Company, and has
all corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
 
(b) Corporate Authorization. The execution, delivery and performance by the
Company of this Agreement and each Related Document are within the Company’s
corporate powers, have been duly authorized by all necessary corporate action on
the part of the Company and did not, do not, and will not, require the consent
or approval of the Company shareholders, or any trustee or holder of any Debt or
other obligation of the Company, other than such consents and approvals as have
been, or on or before the Date of Issuance, will have been, duly obtained, given
or accomplished.

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(c) No Violation, Etc. Neither the execution, delivery or performance by the
Company of this Agreement or any Related Document nor the consummation by the
Company of the transactions contemplated hereby, nor compliance by the Company
with the provisions hereof, conflicts or will conflict with, or results or will
result in a breach or contravention of any of the provisions of the Company’s
Organizational Documents or any Applicable Law, or any indenture, mortgage,
lease or any other agreement or instrument to which it or any of its Affiliates
is party or by which its property or the property of any of its Affiliates is
bound, or results or will result in the creation or imposition of any Lien upon
any of its property or the property of any of its Affiliates. There is no
provision of (i) any of the Company’s Organizational Documents, (ii) except as
disclosed in the Disclosure Documents, any Applicable Law, or (iii) any such
indenture, mortgage, lease or other agreement or instrument that has, or in the
future is likely to have, a Materially Adversely Effect.
 
(d) Governmental Actions. No Governmental Action is or will be required in
connection with the execution, delivery or performance by the Company of, or the
consummation by the Company of the transactions contemplated by, this Agreement
or any Related Document to which it is, or is to become, a party, except such
Governmental Actions as have been duly obtained, given or accomplished. No
Governmental Action by any Governmental Authority relating to the Securities Act
of 1933, as amended, the Securities Exchange Act of 1934, as amended, the Trust
Indenture Act of 1939, as amended, the Federal Power Act, the Atomic Energy Act,
the Nuclear Waste Act, the Public Utility Holding Company Act of 1935, the Ohio
Public Utility Act, energy or nuclear matters, public utilities, the environment
or health and safety matters is or will be required in connection with the
participation by the Fronting Bank in the consummation of the transactions
contemplated by this Agreement and the Related Documents, or will be required to
be obtained by any of such Persons during the term of this Agreement, except
such Governmental Actions (i) as have been duly obtained, given or accomplished
or (ii) as may be required by Applicable Law not now in effect. None of the
Governmental Actions referred to in the first sentence of this subsection (d) or
in clause (i) of the second sentence of this subsection (d) are the subject of
appeal or reconsideration or other review, and the time in which to make an
appeal or request the review or reconsideration of any such Governmental Action
has expired with any appeal or request for review or reconsideration not having
been taken or made.
 
(e) Execution and Delivery. This Agreement and any Related Document to which the
Company is a party have been duly executed and delivered by the Company, and
this Agreement and each such Related Document is the legal, valid and binding
obligation of the Company enforceable in accordance with its respective terms.
 
(f) Full Force and Effect.  The Credit Agreement and each Related Document is in
full force and effect. The Company has duly and punctually performed and
observed all the terms, covenants and conditions contained in each such Related
Document on its part to be performed or observed, and no Default or Event of
Default has occurred and is continuing.

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(g) Bonds Validly Issued. The Bonds have been duly authorized, authenticated and
issued and delivered, and are the legal, valid and binding obligations of the
Issuer, and are not in default.
 
(h) Material Adverse Change. Since December 31, 2005, there has been no material
adverse change in the Company’s properties or business or results of operations,
or in the prospects of the Company and its Subsidiaries, or in the ability of
the Company to perform its obligations under this Agreement or any Related
Document to which it is a party.
 
(i) Litigation. There is no pending or threatened action, investigation or
proceeding (including, without limitation, any proceeding relating to or arising
out of Environmental Laws) before any court, governmental agency or arbitrator
against or affecting the Company or any of its Subsidiaries which (i) purports
to affect the legality, validity or enforceability of this Agreement or any
Related Document or (ii) may have a Material Adverse Effect with respect to the
Company except (with respect to this clause (ii) only) as is disclosed in the
Disclosure Documents.
 
(j) Taxes. The Company and each of its Subsidiaries have filed all tax returns
(Federal, state and local) required to be filed and paid all taxes shown thereon
to be due, including interest and penalties, or provided adequate reserves for
payment thereof other than such taxes that the Company or such Subsidiary is
contesting in good faith by appropriate legal proceedings.
 
(k) Environmental. Except as otherwise disclosed in the Disclosure Documents or
otherwise to the Fronting Bank by the Company in writing, (i) facilities and
property (including underlying groundwater) owned or leased by the Company or
any of its Subsidiaries have been, and continue to be, owned or leased by it and
its Subsidiaries in compliance with all Environmental Laws, except for such
failures to comply which would not give rise to any potential material liability
of the Company or any of its Subsidiaries; and (ii) there have been no past,
and, to the Company’s actual knowledge, there are no pending or threatened (A)
claims, complaints or notices for information received by the Company or any of
its Subsidiaries with respect to any alleged violation of any Environmental Law,
or (B) complaints or notices to the Company or any of its Subsidiaries regarding
potential material liability under any Environmental Law, except for such
alleged violations which would not give rise to any potential material liability
of the Company or any of its Subsidiaries.
 
(l) Title to Real Property. The Company and each of its Subsidiaries has good
and marketable title to all of the real property it purports to own, free and
clear of Liens other than Permitted Liens.
 
(m) ERISA. (i) No Termination Event has occurred nor is reasonably expected to
occur with respect to any Plan.

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(ii) Schedule B (Actuarial Information) to the 2003 annual report (Form 5500
Series) with respect to each Plan, copies of which have been filed with the
Internal Revenue Service and furnished to the Fronting Bank, is complete and
accurate and fairly presents the funding status of such Plan, and since the date
of such Schedule B there has been no material adverse change in such funding
status.
 
(iii) Neither the Company nor any of its Affiliates has incurred nor reasonably
expects to incur any withdrawal liability under ERISA to any Multiemployer Plan.
 
(n) Official Statement. Except for information contained in the Official
Statement furnished in writing by or on behalf of the Issuer, the Trustee, the
Tender Agent, the Paying Agent, the Underwriters, the Remarketing Agent or the
Fronting Bank specifically for inclusion therein, the Official Statement and any
supplement or “sticker” thereto are accurate in all material respects for the
purposes for which their use shall be authorized; and the Official Statement and
any such supplement or “sticker”, when read together with the statement that it
supplements or amends, does not, as of its date, contain any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances under which they are
or were made, not misleading.
 
(o) Accuracy of Information. No exhibit, schedule, report or other written
information provided by or on behalf of the Company or its agents to the
Fronting Bank in connection with the negotiation, execution and closing of this
Agreement and the Custodian Agreement (including, without limitation, the
Official Statement) knowingly contained when made any material misstatement of
fact or knowingly omitted to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances under
which they were made.
 
(p) Margin Stock; Investment Company. No proceeds of the Bonds or of the Letter
of Credit will be used in violation of, or in any manner that would result in a
violation by any party hereto of, Regulations T, U or X promulgated by the Board
of Governors of the Federal Reserve System or any successor regulations. The
Company (i) is not an “investment company” within the meaning ascribed to that
term in the Investment Company Act of 1940 and (ii) is not engaged in the
business of extending credit for the purpose of buying or carrying margin stock.
 
(q) Taxability. The performance of this Agreement and the transactions
contemplated herein will not affect the status of the interest on the Bonds as
exempt from Federal income tax.

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(r) Solvency. (i) The fair salable value of the Company’s assets will exceed the
amount that will be required to be paid on or in respect of the probable
liability on the Company’s existing debts and other liabilities (including
contingent liabilities) as they mature; (ii) the Company’s assets do not
constitute unreasonably small capital to carry out its business as now conducted
or as proposed to be conducted; (iii) the Company does not intend to incur debt
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be received by it and the amounts to be payable on
or in respect of its obligations); and (iv) the Company does not believe that
final judgments against it in actions for money damages presently pending will
be rendered at a time when, or in an amount such that, it will be unable to
satisfy any such judgments promptly in accordance with their terms (taking into
account the maximum reasonable amount of such judgments in any such actions and
the earliest reasonable time at which such judgments might be rendered). The
Company’s cash flow, after taking into account all other anticipated uses of its
cash (including the payments on or in respect of debt referred to in clause
(iii) above), will at all times be sufficient to pay all such judgments promptly
in accordance with their terms.
 
(s) No Material Misstatements. The reports, financial statements and other
written information furnished by or on behalf of the Company to the Fronting
Bank pursuant to or in connection with this Agreement and the transactions
contemplated hereby do not contain and will not contain, when taken as a whole,
any untrue statement of a material fact and do not omit and will not omit, when
taken as a whole, to state any fact necessary to make the statements therein, in
the light of the circumstances under which they were or will be made, not
misleading in any material respect.
 
(t) Utility Regulation. Pursuant to the Public Utility Holding Company Act of
2005, the Company will be subject to the jurisdiction of the FERC as a “public
utility” within the meaning of the Federal Power Act, as amended (“FPA”), and
subject to FERC regulation, including such regulations as the FERC may adopt
relating to accounting, cost allocation, record keeping another rules governing
transactions between holding companies and their service companies. The Company
is also subject to the limited jurisdiction of any State commission with
jurisdiction to regulate a public utility company in the Company's holding
company system, with respect to access to the books and records of the Company.
The Company has obtained blanket authority from the FERC under Section 204 of
the FPA, and/or is exempt from any requirement to obtain FERC approval, to issue
securities and assume liabilities, and such authorization and/or exemption
remains in full force and effect. No further regulatory authorizations from
either the FERC or any State commission are required for this transaction.

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ARTICLE V
 
COVENANTS
 
SECTION 5.01. Affirmative Covenants of the Company. So long as a drawing is
available under the Letter of Credit or the Credit Parties shall have any
obligation to pay any amount to the Fronting Bank with respect to the Letter of
Credit under the Credit Agreement or hereunder, the Company will, unless the
Fronting Bank shall otherwise consent in writing:
 
(a) Preservation of Corporate Existence, Etc. Without limiting the rights of the
Company under Section 5.02(f) hereof, (i) preserve and maintain its corporate
existence in the state of its incorporation and qualify and remain qualified as
a foreign corporation in each jurisdiction in which such qualification is
reasonably necessary in view of its business and operations or the ownership of
its properties and (ii) preserve, renew and keep in full force and effect the
rights, privileges, licenses, permits and franchises necessary or desirable in
the normal conduct of its business.
 
(b) Compliance with Laws, Payment of Taxes, Etc. Comply, and cause each of its
Subsidiaries to comply, in all respects with all Applicable Laws of any
Governmental Authority, the noncompliance with which in such respect could
reasonably be expected to have a Material Adverse Effect with respect to the
Company, such compliance to include, without limitation, paying before the same
become delinquent all taxes, assessments and governmental charges imposed upon
it or upon its property, except to the extent compliance with any of the
foregoing is then being contested is good faith.
 
(c) Maintenance of Insurance, Etc. Maintain insurance with responsible and
reputable insurance companies or associations or through its own program of
self-insurance in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which the Company operates and furnish to the Fronting
Bank, within a reasonable time after written request therefor, such information
as to the insurance carried as the Fronting Bank may reasonably request.

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(d) Visitation Rights. At any reasonable time and from time to time as the
Fronting Bank may reasonably request, permit the Fronting Bank or any agents or
representatives thereof to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the Company and
any of its Subsidiaries, and to discuss the affairs, finances and accounts of
the Company and any of its Subsidiaries with any of their respective officers or
directors and with their independent public accountants; provided, however, that
the Company reserves the right to restrict access to any of its generating
facilities in accordance with reasonably adopted procedures relating to safety
and security. The Fronting Bank agrees to use reasonable efforts to ensure that
any information concerning the Company or any of its Subsidiaries obtained by
the Fronting Bank pursuant to this Section which is not contained in a report or
other document filed with the Securities and Exchange Commission, distributed by
the Company to its security holders or otherwise generally available to the
public, will, to the extent permitted by law and except as may be required by
valid subpoena or in the normal course of the Fronting Bank’s business
operations (which shall include, without limitation, providing such information
to regulatory authorities and such Fronting Bank’s sharing of its liability
under the Letters of Credit with other banks), be treated confidentially by the
Fronting Bank and will not be distributed or otherwise made available by the
Fronting Bank to any Person, other than (i) the Fronting Bank’s affiliates,
employees, authorized agents or representatives, (ii) to legal counsel,
accountants, and other professional advisors to the Fronting Bank or to
prospective assignees and participants pursuant to Section 7.09, (iii) to its
direct or indirect contractual counterparties in swap agreements or to legal
counsel, accountants and other professional advisors to such counterparties, and
(iv) to rating agencies if requested or required by such agencies in connection
with a rating relating to the Letter of Credit issued hereunder; provided that,
for purposes of the foregoing clauses (ii), (iii) and (iv), prior to any such
disclosure to any such Person, such Person shall agree to preserve the
confidentiality of any confidential information relating to the Company or any
of its Subsidiaries received by it from the Fronting Bank.
 
(e) Keeping of Books; Access to Information on Remarketing Agent and Tender
Agent. Keep, and cause each of its Subsidiaries to keep, proper books of record
and account in which entries shall be made of all financial transactions and the
assets and business of the Company and such Subsidiary in accordance with
generally accepted accounting principles, consistently applied except to the
extent described therein, and to the extent permitted under the terms of the
Indenture and reasonably requested by the Fronting Bank, inspect, and provide
access to information received by the Company with respect to any inspection of,
the books and records of the Remarketing Agent and the Tender Agent.
 
(f) Maintenance of Properties. Maintain and preserve, and cause each of its
Subsidiaries to maintain and preserve all of its properties which are used or
which are useful in the conduct of its business in good working order and
condition, ordinary wear and tear excepted (it being understood that this
covenant relates only to the good working order and condition of such properties
and shall not be construed as a covenant of the Company or any of its
Subsidiaries not to dispose of such properties by sale, lease, transfer or
otherwise).

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(g) Reporting Requirements. Furnish, or cause to be furnished, to the Fronting
Bank, the following:
 
(i) as soon as possible and in any event within five Business Days after the
occurrence of each Default or Event of Default, the statement of an authorized
officer of the Company setting forth details of such Default or Event of Default
and the action which the Credit Parties have taken and propose to take with
respect thereto;
 
(ii)  promptly and in any event within two Business Days after receipt thereof,
copies of each written notice received by the Company from the Trustee, the
Paying Agent, the Underwriters, the Remarketing Agent or the Tender Agent
pursuant to any of the Related Documents; and
 
(iii) promptly and in any event within two Business Days after the Trustee
resigns as trustee under the Indenture, notice of such resignation.
 
(h) Transactions with Affiliates. Conduct, and cause each of its Subsidiaries to
conduct, all transactions with any of its Affiliates on terms that are fair and
reasonable and no less favorable to the Company or such Subsidiary than it would
obtain in a comparable arm’s-length transaction with a Person not an Affiliate;
provided, however, that any transaction with any Affiliate of the Company which
transaction (or any plan that involves such transaction) has been approved by
the Public Utilities Commission of Ohio, the Pennsylvania Public Utility
Commission, the FERC or the Securities and Exchange Commission, as the case may
be, shall not be subject to this Section.
 
(i) Environmental Laws.  (i) Comply with, cause each of its Subsidiaries to
comply with, and insure compliance by all tenants and subtenants, if any, with,
all Environmental Laws and obtain and comply with and maintain, cause each of
its Subsidiaries to obtain and comply with and maintain, and insure that all
tenants and subtenants obtain and comply with and maintain, any and all
licenses, approvals, registrations or permits required by Environmental Laws,
except to the extent that failure to do so would not have a material adverse
effect on the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Company or any of its Subsidiaries.
 
(ii) Conduct and complete, and cause each of its Subsidiaries to conduct and
complete, all investigations, studies, sampling, and testing and remedial,
removal and other actions required under Environmental Laws and promptly comply
with, and cause each of its Subsidiaries to promptly comply with, all lawful
orders and directives of all Governmental Authorities respecting Environmental
Laws, except to the extent that the same are being contested in good faith by
appropriate proceedings and the pendency of such proceedings would not have a
material adverse effect on the business, condition (financial or otherwise),
operations, performance, properties or prospects of the Company or any of its
Subsidiaries.
 
(iii) Defend, indemnify and hold harmless the Fronting Bank, the Fronting Bank
and each Bank, and their respective employees, agents, officers, directors and
affiliates from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of or in any way relating to the
violation of or noncompliance with any Environmental Laws applicable to the real
property owned or operated by the Company or any of its Subsidiaries, or any
orders, requirements or demands of Governmental Authorities relating thereto,
including, without limitation, attorney’s and consultant’s fees, investigation
and laboratory fees, court costs and litigation expenses, except to the extent
that any of the foregoing arise out of the gross negligence or willful
misconduct of the party seeking indemnification therefor.

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(j) Redemption or Defeasance of Bonds. Use its best efforts to cause the
Trustee, upon redemption or defeasance of all of the Bonds pursuant to the
Indenture, to surrender the Letter of Credit to the Fronting Bank for
cancellation.
 
(k) Registration of Bonds. Cause all Bonds which it acquires, or which it has
had acquired for its account, to be registered forthwith in accordance with the
Indenture and the Custodian Agreement in the name of the Company or its nominee
(the name of any such nominee to be disclosed to the Trustee and the Fronting
Bank).
 
(l) Related Documents. Perform and comply in all material respects with each of
the provisions of each Related Document to which it is a party.
 
(m) Use of Letter of Credit. Cause the Letter of Credit to be used in support of
the payment of principal, and interest on the principal amount, of the Bonds.
 
SECTION 5.02. Negative Covenants of the Company. So long as a drawing is
available under the Letter of Credit or the Credit Parties shall have any
obligation to pay any amount to the Fronting Bank with respect to the Letter of
Credit under the Credit Agreement or hereunder, the Company will not, without
the written consent of the Fronting Bank:
 
(a) Liens, Etc. Except as permitted in Section 5.02(b) and (c), create or suffer
to exist, or permit any of its Subsidiaries to create or suffer to exist, any
Lien upon or with respect to any of its properties, in each case to secure or
provide for the payment of Debt, other than the following Liens (“Permitted
Liens”) (i) Liens consisting of (A) pledges or deposits in the ordinary course
of business to secure obligations under worker’s compensation laws or similar
legislation, (B) deposits in the ordinary course of business to secure, or in
lieu of, surety, appeal, or customs bonds to which the Company or any of its
Subsidiaries is a party, (C) pledges or deposits in the ordinary course of
business to secure performance in connection with bids, tenders or contracts
(other than contracts for the payment of money), or (D) materialmen’s,
mechanics’, carriers’, workers’, repairmen’s or other like Liens incurred in the
ordinary course of business for sums not yet due or currently being contested in
good faith by appropriate proceedings diligently conducted, or deposits to
obtain in the release of such Liens; (ii) purchase money liens or purchase money
security interests upon or in any property acquired or held by the Company or
any of its Subsidiaries in the ordinary course of business to secure the
purchase price of such property or to secure indebtedness incurred solely for
the purpose of financing the acquisition of such property; (iii) Liens existing
on the property of any Person at the time that such Person becomes a direct or
indirect Subsidiary of the Company; provided that such Liens were not created to
secure the acquisition of such Person; (iv) Liens created to secure Debt in
respect of First Mortgage Bonds; provided, however, that the principal amount of
Debt secured by the Liens described in this clause (iv) shall not at any time
exceed the depreciated book value of the property subject to such Liens; (v)
Liens in existence on the date of this Agreement; and (vi) Liens created for the
sole purpose of extending, renewing or replacing in whole or in part Debt
secured by any Lien referred to in the foregoing clauses (i) through (v);
provided, however, that the principal amount of Debt secured thereby shall not
exceed the principal amount of Debt so secured at the time of such extension,
renewal or replacement, and that such extension, renewal or replacement, as the
case may be, shall be limited to all or a part of the property or Debt that
secured the Lien so extended, renewed or replaced (and any improvements on such
property). Notwithstanding the foregoing, this subsection (a) shall have no
force or effect if and for so long as the Obligations are secured by First
Mortgage Bonds and/or cash collateral in an aggregate principal amount at least
equal to the sum of (x) the Available Amount and (y) the aggregate outstanding
principal amount of all unreimbursed Drawings and Advances with respect to the
Letter of Credit.

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(b) Cash Collateral. Create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any lien, security interest, other
charge or encumbrance, or any other type of preferential arrangement upon or
with respect to its Cash and Cash Equivalents or marketable securities, in each
case to secure or provide for the payment of Debt, in an amount in excess of
$100,000,000 in the aggregate, unless, on or prior to the date thereof, the
Company shall have (i) pursuant to documentation satisfactory to the Fronting
Bank, equally and ratably secured the obligations of the Company under this
agreement by a preferential arrangement with respect to such Cash and Cash
Equivalents and marketable securities of a similar type acceptable to the
Fronting Bank in its sole discretion, and (ii) caused the creditor or creditors,
as the case may be, in respect of such Debt to have entered into an
intercreditor agreement in form, scope and substance satisfactory to the
Fronting Bank. Notwithstanding the foregoing, this subsection (b) shall have no
force or effect if and for so long as the Obligations are secured by First
Mortgage Bonds and/or cash collateral in an aggregate principal amount at least
equal to the sum of (x) the Available Amount and (y) the aggregate outstanding
principal amount of all unreimbursed Drawings and Advances with respect to the
Letter of Credit.
 
(c) Security. In connection with any Debt incurred after the date hereof by the
Company or any of its Subsidiaries (other than refinancings of Debt of the
Company or any such Subsidiary that is outstanding and secured in the manner
described below as of the date hereof), sell or otherwise transfer, or arrange
for the sale or transfer by any Person of, any security of any Person
(including, without limitation, First Mortgage Bonds), which security is
secured, in whole or in part, directly or indirectly, by any property of the
Company or any of its Subsidiaries, in any case to secure the obligations of the
Company thereunder or in respect thereof, unless, on or prior to the date
thereof, the Company or such Subsidiary (as the case may be) shall have (i)
pursuant to documentation satisfactory to the Fronting Bank, equally and ratably
secured the Obligations of the Company hereunder by a preferential arrangement
with respect to, or by a transfer to the Fronting Bank of, such securities of a
similar type acceptable to the Fronting Bank in its sole discretion, and (ii)
caused the creditor or creditors, as the case may be, in respect of such Debt to
have entered into with the Fronting Bank an intercreditor agreement in form,
scope and substance satisfactory to the Fronting Bank. Notwithstanding the
foregoing, it is expressly understood and agreed that this subsection (c) shall:
(I) not apply to the issuance by the Company of (A) First Mortgage Bonds sold or
issued in exchange for cash in an amount, or other assets having an aggregate
fair market value, in each case not less than the fair market value of such
First Mortgage Bonds at the time of such sale or exchange; (B) First Mortgage
Bonds issued to provide for the payment of the Company’s (1) reimbursement
obligations to any financial institution in respect of any letter of credit,
bond insurance policy or similar credit support that supports the payment of
principal, interest and/or premium (if any) under pollution control revenue
bonds issued for the benefit of the Company, (2) payment obligations to the
trustee under any indenture pursuant to which pollution control revenue bonds
have been issued for the benefit of the Company, to enable the issuer of such
pollution control revenue bonds to satisfy its payment obligations to the
holders of such pollution control revenue bonds, or (3) obligations to the
holders of Notes issued by the Company; or (C) First Mortgage Bonds issued
pursuant to a First Mortgage Bond Indenture of the Company to the trustee under
any new mortgage bond indenture of the Company, which new indenture shall
provide that the Company may not, while any mortgage bonds are outstanding under
such new indenture, issue any First Mortgage Bonds under a First Mortgage Bond
Indenture except to such trustee as the basis for the issuance of mortgage bonds
thereunder described in the foregoing clauses (B) and (C) to entitle such
financial institutions and the holders of such pollution control revenue bonds,
Notes and mortgage bonds to the benefits of the Lien of a First Mortgage Bond
Indenture; and (II) have no force or effect if and for so long as the
Obligations are fully secured by First Mortgage Bonds and/or cash collateral in
an aggregate principal amount at least equal to the sum of (x) the Available
Amount and (y) the aggregate outstanding principal amount of all unreimbursed
Drawings and Advances with respect to the Letter of Credit. For purposes of this
subsection (c), the phrase “refinancings of Debt” shall include, but shall not
be limited to, Debt incurred after the date hereof pursuant to a commitment to
extend credit so long as such commitment replaced one or more commitments to
extend credit entered into prior to the date hereof and the new commitment to
extend credit is in an aggregate principal amount (whether drawn or undrawn) of
the Debt being refinanced.

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(d) Certain Amendments. Amend or modify, or enter into or consent to any
amendment or modification of: (i) any of its Organizational Documents (including
the provisions thereof restricting the payment of dividends), (ii) its
accounting policies, (iii) any First Mortgage Bond Indenture (including the
provisions thereof restricting the payment of dividends), or (iv) any Related
Document, in each case in any manner adverse to the interests of the Fronting
Bank in its reasonable judgment and, with respect to the Indenture and the Loan
Agreement, except in compliance with Section 15.01, 15.02 and 15.03 of the
Indenture; provided, however, that any amendment or modification of any Related
Document that assigns or otherwise transfers the Company’s rights or obligations
thereunder to any other Person shall require the prior written consent of the
Fronting Bank.
 
(e) Compliance with ERISA. (i) Enter into any “prohibited transaction” (as
defined in Section 4975 of the Code, as amended, and in ERISA) involving any
Plan which may result in any liability of the Company to any Person which (in
the reasonable opinion of the Fronting Bank) is material to the financial
position or operations of the Company or (ii) allow or suffer to exist any other
event or condition known to the Company which results in any liability of the
Company to the PBGC which (in the reasonable opinion of the Fronting Bank) is
material to the financial position or operations of the Company. For purposes of
this Section 5.02(d), “liability” shall not include termination insurance
premiums payable under Section 4007 of ERISA.
 
(f) Mergers, Etc. Merge, consolidate or amalgamate, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or (except as
permitted by Section 5.02(g)) convey, sell, lease, assign, transfer or otherwise
dispose of, all or substantially all of its property, business or assets, or
permit any of its Subsidiaries to do so, except that:
 
(i) any Subsidiary of the Company may be merged or consolidated with or into the
Company (provided that the Company shall be the continuing or surviving
corporation) or with or into any one or more wholly-owned Subsidiaries of the
Company (provided that such wholly-owned Subsidiary or Subsidiaries shall be the
continuing or surviving corporation); and
 
(ii) any wholly-owned Subsidiary of the Company may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Company or any other wholly-owned Subsidiary of the Company;
 
provided, that, in any such case, after giving effect thereto: (x) no Default or
Event of Default shall have occurred and be continuing and (y) in the case of
any merger or consolidation to which the Company is a party, the corporation
formed by such consolidation or into which the Company shall be merged shall
assume the Company’s obligations under this Agreement in a written document
satisfactory in form and substance to the Fronting Bank.

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(g) Sale of Assets, etc.  Sell, lease, transfer, enter into any sale and
leaseback agreement involving or otherwise dispose of (including by the Company
to any affiliate of the Company), or permit any of its Subsidiaries to sell,
lease, transfer, enter into any sale and leaseback agreement involving or
otherwise dispose of, whether in one or a series of transactions, more than 15%
(determined at the time of each such sale, lease, transfer, agreement or
disposition) of the aggregate Fixed Assets of the Company and its Subsidiaries;
provided, however, that the Company may consummate the transactions contemplated
by the Transition Plan Order.
 
(h) Change in Nature of Business. Have as its principal business any business
other than the unregulated production, generation and sale of electricity to
Affiliates and other Persons, all in compliance with all Applicable Law; and it
will only conduct such a business in a manner to ensure its continued operation
as an unregulated producer, generator and supplier of electricity and related
activities. For purposes hereof, “unregulated” shall mean unregulated by a
public utility commission or similar agency of any State.
 
(i) Investments, Loans, Advances, Guarantees and Acquisitions. Purchase, hold or
acquire (including, without limitation, pursuant to any merger) any capital
stock, evidences of indebtedness or other securities (including, without
limitation, any option, warrant or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, Guarantee any obligations
of, or make or permit to exist any investment or any other interest in, any
other Person, or purchase or otherwise acquire (in one transaction or a series
of transactions (including, without limitation, pursuant to any merger)) any
assets of any other Person constituting a business unit, or permit any of its
Subsidiaries to do so, except:
 
(i) Permitted Investments;
 
(ii) investments and Guarantees existing on the date hereof and set forth in
Schedule 5.02(i);
 
(iii) investments made by the Company in the equity securities or other
ownership interests of any of its Subsidiaries and made by any such Subsidiary
in the equity securities or other ownership interests of any other such
Subsidiary;
 
(iv) loans or advances made by the Company to any of its Affiliates and made by
any such Subsidiary to the Company or any other Affiliate of the Company, in
each case in the ordinary course of business;
 
(v) acquisitions made by the Company from any of its Subsidiaries or made by any
such Subsidiary from the Company or any other such Subsidiary;
 
(vi) any transaction permitted by Section 5.02(f); and

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(vii) if at the time thereof and immediately after giving effect thereto no
Default or Event of Default shall have occurred and be continuing, other
investments, loans, advances, Guarantees and acquisitions, provided that the sum
of (A) the aggregate consideration paid by the Company or any of its
Subsidiaries in connection with all such acquisitions, (B) the aggregate amount
of all such other investments, loans and advances outstanding and (C) the amount
of obligations and liabilities outstanding in the aggregate that is Guaranteed
pursuant to all such other Guarantees, shall not exceed $5,000,000 at any time.
 
(j) Restricted Payments. If any Default or Event of Default has occurred and is
continuing, declare or make, or agree to pay for or make, directly or
indirectly, any Restricted Payment, or permit any of its Subsidiaries to do so,
except that (i) the Company may declare and pay dividends or other distributions
with respect to its equity interests payable solely in additional equity
interests, and (ii) any Subsidiary of the Company may declare and pay dividends
or other distributions with respect to its equity interests to the Company or
any Subsidiary of the Company.
 
(k) No Action on Bonds. The Company shall not cause, nor shall it consent to, or
instruct any other Person to cause, (i) any redemption or defeasance of all or
any portion of the Bonds pursuant to the Indenture, (ii) any termination of the
Letter of Credit or (iii) any conversion of the Interest Rate Mode applicable to
the Bonds; provided that the Company may cause, instruct and direct the Issuer
to cause, instruct and direct the Trustee, and the Issuer may cause, instruct
and direct the Trustee, to, and the Trustee may, conditionally call all of the
Bonds for optional redemption on any date on which the Bonds can be optionally
redeemed pursuant to Section 4.01(c)(i) of the Indenture pursuant to such
notices and instructions in form and substance reasonably acceptable to the
Fronting Bank.
 
SECTION 5.03. Financial Covenant of the Company. So long as a Drawing is
available under the Letter of Credit or the Company shall have any obligation to
pay any amount to the Fronting Bank with respect to the Letter of Credit under
the Credit Agreement or any Company shall have any obligations under any
Guaranty Agreement:
 
(a) Debt to Capitalization Ratio. The Company shall maintain a Debt to
Capitalization Ratio of no more than 0.65 to 1.00 (determined as of the last day
of each fiscal quarter).

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ARTICLE VI
 
EVENTS OF DEFAULT
 
SECTION 6.01. Events of Default. The occurrence of any of the following events
(whether voluntary or involuntary) shall be an “Event of Default” hereunder:
 
(a) Any “Event of Default” under and as defined in the Credit Agreement shall
have occurred and be continuing; or
 
(b) Any Credit Party shall fail to pay any amount of principal, interest, fees
or other amounts payable under any Credit Document when due; or
 
(c) Any representation or warranty made, or deemed made, by any Credit Party
herein or by any Credit Party (or any of its officers) in connection with this
Agreement, any other Credit Document or any of the Related Documents or any
document delivered pursuant hereto or thereto shall prove to have been incorrect
in any material respect when made or deemed made; or
 
(d) The Company shall fail to perform or observe any term, covenant or agreement
contained in clause (i) of Section 5.01(a) or Section 5.02 or Section 5.03.
 
(e) Any Credit Party shall fail to perform or observe any other term, covenant
or agreement contained in this Agreement or any material term, covenant or
agreement contained in any of the Related Documents on its part to be performed
or observed and, in any such case, such failure shall continue for 30 days after
written notice thereof from the Fronting Bank to FirstEnergy or the Company, as
the case may be; or
 
(f) The Company or any of its Subsidiaries shall fail to make when due (whether
by scheduled maturity, required prepayment, acceleration, demand or otherwise)
any payment on any Debt (other than the Debt represented by this Agreement, and
the Credit Agreement with respect to the Letter of Credit or the Bonds) the
aggregate principal amount of which is greater than $50,000,000, or to make when
due any payment of any interest or premium thereon, and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument relating to such Debt; or any other event or condition shall occur
and shall continue after the applicable grace period, if any, specified in any
agreement or instrument relating to any such Debt, if the effect thereof is to
accelerate, or to permit the acceleration of (other than by a specified
mandatory redemption provision in connection with pollution control bonds
unrelated to any default or event of default with respect thereto) the maturity
of any such Debt; or any such Debt shall be declared due and payable, or
required to be prepaid (other than by a regularly scheduled required prepayment
or a specified mandatory redemption provision in connection with pollution
control bonds unrelated to any default or event of default with respect thereof)
prior to the stated maturity thereof; or

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(g) (i) The Company or any Subsidiary of the Company shall (A) apply for or
consent to the appointment of a receiver, trustee, liquidator or custodian or
the like of itself or of its property, (B) admit in writing its inability to pay
its debts generally as they become due, (C) make a general assignment for the
benefit of creditors, (D) be adjudicated a bankrupt or insolvent, or (E)
commence a voluntary case under the Bankruptcy Code or file a voluntary petition
or answer seeking reorganization, an arrangement with creditors or any 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 or such Subsidiary,
a proceeding shall be instituted in any court of competent jurisdiction, seeking
in respect of the Company or such Subsidiary 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 such
Subsidiary 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 or such Subsidiary in good faith, the same
shall (x) result in the entry of an order for relief of any such adjudication or
appointment or (y) continue undismissed, or pending and unstayed, for any period
of sixty (60) consecutive days; or
 
(h) Any judgment or order for the payment of money exceeding any applicable
insurance coverage by more than $50,000,000 shall be rendered against the
Company or any of its Subsidiaries and either (i) enforcement proceedings shall
have been commenced by any creditor upon such judgment or order or (ii) there
shall be any period of 30 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect; or
 
(i) Any Termination Event with respect to a Plan shall have occurred, and, 30
days after notice thereof shall have been given to the Company by the Fronting
Bank, (i) such Termination Event (if correctable) shall not have been corrected
and (ii) the then Unfunded Vested Liabilities of such Plan exceed $10,000,000
(or in the case of a Termination Event involving the withdrawal of a
“substantial employer” (as defined in Section 4001(a)(2) of ERISA), the
withdrawing employer’s proportionate share of such excess shall exceed such
amount); or
 
(j) The Company or any member of the Controlled Group as employer under a
Multiemployer Plan shall have made a complete or partial withdrawal from such
Multiemployer Plan and the Plan sponsor of such Multiemployer Plan shall have
notified such withdrawing employer that such employer has incurred a withdrawal
liability in an amount exceeding $10,000,000; or
 
(k) Any “Event of Default” under and as defined in the Indenture shall have
occurred and be continuing; or

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(l) Any approval or order of any Governmental Authority related to any Credit
Document or any Related Document shall be (i) rescinded, revoked or set aside or
otherwise cease to remain in full force and effect, or (ii) modified in any
manner that, in the opinion of the Fronting Bank, could reasonably be expected
to have a Material Adverse Effect with respect to any Credit Party; or
 
(m) Any change in Applicable Law or any Governmental Action shall occur which
has the effect of making the transactions contemplated by the Credit Documents
or the Related Documents unauthorized, illegal or otherwise contrary to
Applicable Law; or
 
(n) Any provision of this Agreement, or any material provision of any Related
Document to which any Credit Party is a party, shall at any time for any reason
cease to be valid and binding on such Credit Party other than in accordance with
the terms of such Related Document, or shall be declared to be null and void, or
the validity or enforceability thereof shall be denied or contested by such
Credit Party, or a proceeding shall be commenced by any Governmental Authority
having jurisdiction over such Credit Party seeking to establish the invalidity
or unenforceability thereof and such Credit Party shall fail diligently or
successfully to defend such proceeding; or
 
(o) The Custodian Agreement after delivery under Article III hereof shall for
any reason, except to the extent permitted by the terms thereof, fail or cease
to create valid and perfected Liens (to the extent purported to be granted by
the Custodian Agreement and subject to the exceptions permitted thereunder) in
any of the collateral purported to be covered thereby, provided, that such
failure or cessation relating to any non-material portion of such collateral
shall not constitute an Event of Default hereunder unless the same shall not
have been corrected within 30 days after the Company becomes aware thereof; or
 
(p) A Change in Control (Company) shall occur.
 
SECTION 6.02. Upon an Event of Default. If any Event of Default shall have
occurred and be continuing, the Fronting Bank may (i) by notice to the Credit
Parties, declare the obligation of the Fronting Bank to issue the Letter of
Credit to be terminated, whereupon the same shall forthwith terminate, (ii) give
notice to the Trustee (A) directing a mandatory purchase of the Bonds as
provided in Section 5.01(b)(iii) of the Indenture and/or (B) as provided in
Section 11.02 of the Indenture to declare the principal of all Pledged Bonds
then outstanding to be immediately due and payable, and (iii) in addition to
other rights and remedies provided for herein or in the Custodian Agreement or
otherwise available to any of them, as holder of the Pledged Bonds or otherwise,
exercise all the rights and remedies of a secured party on default under the
Uniform Commercial Code in effect in the State of New York at that time,
provided that, if an Event of Default described in Section 6.01(g) shall have
occurred or an Event of Default described in Section 6.01(a) shall have occurred
by virtue of an event of default under Section 6.01(f) of the Credit Agreement,
then, automatically, (x) the obligation of the Fronting Bank to issue the Letter
of Credit shall terminate, (y) all amounts payable hereunder or under any other
Credit Document or in respect hereof or thereof and any Advance, all interest
thereon and all amounts payable under the Credit Agreement with respect to the
Letter of Credit shall become and be forthwith due and payable, without
presentment, demand, protest, or further notice of any kind, all of which are
hereby expressly waived by the Credit Parties and (z) the Fronting Bank shall
give the notice to the Trustee referred to in clauses (ii) above (iii). The
remedies set forth hereunder shall not limit the application or exercise of any
remedy set forth under the Credit Agreement.
 
 

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ARTICLE XII
 
MISCELLANEOUS
 
SECTION 7.01. Amendments, Etc. No amendment or waiver of any provision of any
Credit Document, nor consent to any departure by any Credit Party therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Fronting Bank, FirstEnergy and the Company and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
 
SECTION 7.02. Notices, Etc. All notices and other communications provided for
hereunder or under any other Credit Document shall be in writing (including
telegraphic communication) and mailed, telecopied, telegraphed or delivered as
follows:
 
 

 FirstEnergy and the Company:          FirstEnergy Corp.
 FirstEnergy Generation Corp.
 76 South Main Street
 Akron, Ohio 44308
 Attention: Treasurer
 Telecopy No.: (330) 384-3772
     The Fronting Bank:      Barclays Bank PLC
 200 Park Avenue, 4th Floor
 New York, New York 10166
 Attention: David E. Barton
 Telecopy No.: (212) 412-7511 
       with a copy to:      
 Barclays Bank PLC
 c/o Barclays Capital Services, LLC
 200 Cedar Knolls Road
 Whippany, NJ 07981
 Attention: Dawn Townsend
 Telecopy No.: (973) 576-3017

 
or, as to each party or at such other address as shall be designated by such
party in a written notice to the other parties. All such notices and
communications shall, when mailed, be effective three days after being deposited
in the mails or when sent by telecopy or telex or delivered to the telegraph
company, respectively, addressed as aforesaid.

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SECTION 7.03. No Waiver; Remedies. No failure on the part of the Fronting Bank
to exercise, and no delay in exercising, any right hereunder or under any other
Credit Document or the Credit Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder or thereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
 
SECTION 7.04. Set-off. (a) Upon the occurrence and during the continuance of any
Event of Default, the Fronting Bank is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by the Fronting Bank to
or for the credit or the account of any Credit Party against any and all of the
obligations of the Credit Parties now or hereafter existing under any Credit
Document, irrespective of whether or not the Fronting Bank shall have made any
demand hereunder and although such obligations may be contingent or unmatured.
 
(b) The Fronting Bank agrees promptly to notify the Credit Parties after any
such set-off and application referred to in subsection (a) above; provided that
the failure to give such notice shall not affect the validity of such set-off
and application. The rights of the Fronting Bank under this Section 7.04 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Fronting Bank may have.
 
SECTION 7.05. Indemnification. The Credit Parties hereby indemnify and hold the
Fronting Bank harmless from and against any and all claims, damages, losses,
liabilities, costs and expenses which such party may incur or which may be
claimed against such party by any Person:
 
(a) by reason of any inaccuracy or alleged inaccuracy in any material respect,
or any untrue statement or alleged untrue statement of any material fact,
contained in the Official Statement or any amendment or supplement thereto,
except to the extent contained in or arising from information in the Official
Statement (or any amendment or supplement thereto) supplied in writing by and
describing the Fronting Bank; or by reason of the omission or alleged omission
to state therein a material fact necessary to make such statements, in the light
of the circumstances under which they were made, not misleading; or
 
(b) by reason of or in connection with the execution, delivery or performance of
this Agreement, the other Credit Documents or the Related Documents, or any
transaction contemplated by this Agreement, the other Credit Documents or the
Related Documents, other than as specified in subsection (c) below; or

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(c) by reason of or in connection with the execution and delivery or transfer
of, or payment or failure to make payment under, the Letter of Credit; provided,
however, that the Credit Parties shall not be required to indemnify any such
party pursuant to this Section 7.05(c) for any claims, damages, losses,
liabilities, costs or expenses to the extent caused by (i) the Fronting Bank’s
willful misconduct or gross negligence in determining whether documents
presented under the Letter of Credit comply with terms of the Letter of Credit
or (ii) the Fronting Bank’s willful or grossly negligent failure to make lawful
payment under the Letter of Credit after the presentation to it by the Trustee
or the Tender Agent under the Indenture of a certificate strictly complying with
the terms and conditions of the Letter of Credit.
 
Nothing in this Section 7.05 is intended to limit the Credit Parties’s
obligations contained in Article II. Without prejudice to the survival of any
other obligation of the Credit Parties hereunder or under any other Credit
Document, the indemnities and obligations of the Credit Parties contained in
this Section 7.05 shall survive the payment in full of amounts payable pursuant
to Article II and the termination of the Letter of Credit.
 
SECTION 7.06. Liability of the Fronting Bank. Each Credit Party assumes all
risks of the acts or omissions of the Trustee, the Tender Agent, the Paying
Agent and any other beneficiary or transferee of the Letter of Credit with
respect to its use of the Letter of Credit. None of the Fronting Bank nor any of
its respective officers or directors shall be liable or responsible for: (a) the
use which may be made of the Letter of Credit or any acts or omissions of the
Trustee, the Tender Agent, the Paying Agent and any other beneficiary or
transferee in connection therewith; (b) the validity, sufficiency or genuineness
of documents, or of any endorsement thereon, even if such documents should prove
to be in any or all respects invalid, insufficient, fraudulent or forged; (c)
payment by the Fronting Bank against presentation of documents which do not
comply with the terms of the Letter of Credit, including failure of any
documents to bear any reference or adequate reference to the Letter of Credit;
or (d) any other circumstances whatsoever in making or failing to make payment
under the Letter of Credit, except that the Credit Parties shall have a claim
against the Fronting Bank and the Fronting Bank shall be liable to the Credit
Parties, to the extent of any direct, as opposed to consequential, damages
suffered by the Credit Parties which the Credit Parties prove were caused by (i)
the Fronting Bank’s willful misconduct or gross negligence in determining
whether documents presented under the Letter of Credit are genuine or comply
with the terms of the Letter of Credit or (ii) the Fronting Bank’s willful or
grossly negligent failure, as determined by a court of competent jurisdiction,
to make lawful payment under the Letter of Credit after the presentation to it
by the Trustee or the Paying Agent under the Indenture of a certificate strictly
complying with the terms and conditions of the Letter of Credit. In furtherance
and not in limitation of the foregoing, the Fronting Bank may accept original or
facsimile (including telecopy) certificates presented under the Letter of Credit
that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.

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SECTION 7.07. Costs, Expenses and Taxes. The Credit Parties agree to pay on
demand all costs and expenses in connection with the preparation, issuance,
delivery, filing, recording, and administration of this Agreement, the Letter of
Credit, the other Credit Documents and any other documents which may be
delivered in connection with the Credit Documents, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Fronting Bank incurred in connection with the preparation and negotiation of
this Agreement, the Letter of Credit, the other Credit Documents and any
document delivered in connection therewith and all costs and expenses incurred
by the Fronting Bank (including reasonable fees and out-of-pocket expenses of
counsel) in connection with (i) the transfer, drawing upon, change in terms,
maintenance, renewal or cancellation of the Letter of Credit, (ii) any and all
amounts which the Fronting Bank has paid relative to the Fronting Bank’s curing
of any Event of Default resulting from the acts or omissions of any Credit Party
under this Agreement, any other Credit Document or any Related Document, (iii)
the enforcement of, or protection of rights under, this Agreement, any other
Credit Document or any Related Document (whether through negotiations, legal
proceedings or otherwise), (iv) any action or proceeding relating to a court
order, injunction, or other process or decree restraining or seeking to restrain
the Fronting Bank from paying any amount under the Letter of Credit or (v) any
waivers or consents or amendments to or in respect of this Agreement, the Letter
of Credit or any other Credit Document requested any Credit Party. In addition,
the Credit Parties shall pay any and all stamp and other taxes and fees payable
or determined to be payable in connection with the execution, delivery, filing
and recording of this Agreement, the Letter of Credit, any other Credit
Documents or any of such other documents (“Other Taxes”), and agrees to save the
Fronting Bank harmless from and against any and all liabilities with respect to
or resulting from any delay in paying or omission to pay such Other Taxes.
 
SECTION 7.08. Binding Effect. This Agreement shall become effective when it
shall have been executed and delivered by FirstEnergy, the Company and the
Fronting Bank and thereafter shall (a) be binding upon FirstEnergy, the Company
and their respective successors and assigns, and (b) inure to the benefit of and
be enforceable by the Fronting Bank and each of its successors, transferees and
assigns; provided that, neither FirstEnergy nor the Company may assign all or
any part of its rights or obligations under any Credit Document without the
prior written consent of the Fronting Bank.
 
SECTION 7.09. Assignments and Participation. The Fronting Bank may assign its
rights and obligations under this Agreement in the same manner as is permitted
with respect to the assignment of the Credit Agreement as set forth in Section
8.08 of the Credit Agreement. The Fronting Bank may sell participations in its
rights and obligations under this Agreement in the same manner as is permitted
with respect to the sale of participations in the Credit Agreement as set forth
in Section 8.08 of the Credit Agreement. Nothing contained in this Section 7.09
shall be construed to relieve the Fronting Bank of any of its obligations under
the Letter of Credit.

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SECTION 7.10. Severability. Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition, unenforceability
or non-authorization without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction.
 
SECTION 7.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
 
SECTION 7.12. Headings. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
 
SECTION 7.13. Submission To Jurisdiction; Waivers. Each Credit Party hereby
irrevocably and unconditionally:
 
(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Related Documents to which it is a
party, or for recognition and enforcement of any judgment in respect thereof, to
the non-exclusive general jurisdiction of the Courts of the State of New York,
the courts of the United States of America for the Southern District of New
York, and appellate courts from any thereof;
 
(b) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;
 
(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the parties at their
address set forth in Section 7.02 or at such other address of which the Fronting
Bank shall have been notified pursuant thereto; and
 
(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction.
 
This Section 7.13 shall not be construed to confer a benefit upon, or grant a
right or privilege to, any Person other than the parties hereto.

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SECTION 7.14. Acknowledgments. Each Credit Party hereby acknowledges:
 
(a) it has been advised by counsel in the negotiation, execution and delivery of
this Agreement, the other Credit Documents and other Related Documents;
 
(b) the Fronting Bank has no fiduciary relationship to any Credit Party, and the
relationship between Fronting Bank, on the one hand, and any Credit Party on the
other hand, is solely that of debtor and creditor; and
 
(c) no joint venture exists between any Credit Party and the Fronting Bank.
 
SECTION 7.15. WAIVERS OF JURY TRIAL. FIRSTENERGY, THE COMPANY AND THE FRONTING
BANK HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE EXTENT PERMITTED BY
LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY RELATED DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. THIS SECTION 7.15
SHALL NOT BE CONSTRUED TO CONFER A BENEFIT UPON, OR GRANT A RIGHT OR PRIVILEGE
TO, ANY PERSON OTHER THAN THE PARTIES HERETO.
 
SECTION 7.16. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. 
 
SECTION 7.17. “Reimbursement Agreement” for Purposes of Indenture.
This Agreement and/or the Credit Agreement (to the extent of obligations of
FirstEnergy thereunder with respect to the Letter of Credit), as the context may
require, shall be deemed to be a “Reimbursement Agreement” for the purpose of
the Indenture.
 
SECTION 7.18. USA PATRIOT Act. The Fronting Bank hereby notifies each Credit
Party that pursuant to the requirements of the USA PATRIOT Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required
to obtain, verify and record information that identifies each Credit Party,
which information includes the name and address of each Credit Party and other
information that will allow the Fronting Bank to identify such Credit Party in
accordance with the Act.

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ARTICLE XIII
 
GUARANTY
 
SECTION 8.01. Guaranty; Limitation of Liability .
 
(a) The Company hereby absolutely, unconditionally and irrevocably guarantees
(the “Guaranty”) the punctual payment when due, whether at scheduled maturity or
on any date of a required prepayment or by acceleration, demand or otherwise, of
all payment, performance and other obligations of FirstEnergy now or hereafter
existing under or in respect of the Credit Agreement and the other Credit
Documents (including, without limitation, the Reimbursement Obligations and any
extensions, modifications, substitutions, amendments or renewals of any or all
of the Reimbursement Obligations) solely with respect to the Letter of Credit,
whether direct or indirect, absolute or contingent, and whether for principal,
interest, reimbursement obligations, premiums, fees, indemnities, contract
causes of action, costs, expenses or otherwise, including, without limitation,
(i) the obligation of FirstEnergy to pay principal, interest, letter of credit
fees, charges, expenses, fees, attorneys’ fees and disbursements, indemnities
and other amounts payable by FirstEnergy under the Credit Agreement or any
Credit Document with respect to the Letter of Credit, (ii) the obligation of
FirstEnergy to reimburse any amount in respect of any drawing under the Letter
of Credit and (iii) any liability of FirstEnergy on any claim relating to the
Letter of Credit, whether or not the right of any creditor to payment in respect
of such claim is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, disputed, undisputed, legal, equitable, secured or
unsecured, and whether or not such claim is discharged, stayed or otherwise
affected by any proceeding (such obligations being the “Guaranteed
Obligations”), and agrees to pay any and all expenses (including, without
limitation, fees and expenses of counsel) incurred by the Administrative Agent
or any Bank under (and as defined in) the Credit Agreement or the Fronting Bank
(each a “Beneficiary”) in enforcing any rights under this Guaranty or, to the
extent related to the Letter of Credit, any other Credit Document. Without
limiting the generality of the foregoing, the Company’s liability shall extend
to all amounts that constitute part of the Guaranteed Obligations and would be
owed by FirstEnergy to any Beneficiary under or in respect of the Credit
Documents but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
FirstEnergy. The Company hereby agrees that this Guaranty is an absolute,
irrevocable and unconditional guaranty of payment and is not a guaranty of
collection. This Guaranty is a continuing guaranty.
 
(b) The Company, and by its acceptance of this Guaranty, the Fronting Bank
hereby confirms that it is the intention of all such Persons that this Guaranty
and the Guaranteed Obligations of the Company hereunder not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law (as hereinafter
defined), the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer
Act or any similar foreign, federal or state law to the extent applicable to
this Guaranty and the Guaranteed Obligations. To effectuate the foregoing
intention, the Fronting Bank and the Company hereby irrevocably agree that the
Guaranteed Obligations at any time shall be limited to the maximum amount as
will result in the Guaranteed Obligations not constituting a fraudulent transfer
or conveyance. For purposes hereof, “Bankruptcy Law” means any proceeding of the
type referred to in Section 6.01(g) of this Agreement or Title 11, U.S. Code, or
any similar foreign, federal or state law for the relief of debtors.

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SECTION 8.02. Guaranty Absolute. The Company guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Credit
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of any Beneficiary
with respect thereto. The obligations of the Company under or in respect of this
Guaranty are independent of the Guaranteed Obligations or any other obligations
of FirstEnergy under or in respect of the Credit Documents, and a separate
action or actions may be brought and prosecuted against the Company to enforce
this Guaranty, irrespective of whether any action is brought against FirstEnergy
or whether FirstEnergy is joined in any such action or actions. The liability of
the Company under this Guaranty shall be irrevocable, absolute and unconditional
irrespective of, and the Company hereby irrevocably waives any defenses it may
now have or hereafter acquire in any way relating to, any or all of the
following:
 
(a) any lack of validity or enforceability of any Credit Document or any
agreement or instrument relating thereto;
 
(b) any change in the time, manner or place of payment of, or in any other term
of, all or any of the Guaranteed Obligations or any other obligations of
FirstEnergy under or in respect of the Credit Documents, or any other amendment
or waiver of or any consent to departure from any Credit Document, including,
without limitation, any increase in the Guaranteed Obligations resulting from
the extension of additional credit to FirstEnergy or any of its Subsidiaries or
otherwise;
 
(c) any taking, exchange, release or non-perfection of any collateral, or any
taking, release or amendment or waiver of, or consent to departure from, any
other guaranty, for all or any of the Guaranteed Obligations;
 
(d) any manner of application of any collateral, or proceeds thereof, to all or
any of the Guaranteed Obligations, or any manner of sale or other disposition of
any collateral for all or any of the Guaranteed Obligations or any other assets
of FirstEnergy or any of its Subsidiaries;
 
(e) any change, restructuring or termination of the corporate structure or
existence of FirstEnergy or any of its Subsidiaries;
 
(f) any failure of any Beneficiary to disclose to the Company any information
relating to the business, condition (financial or otherwise), operations,
performance, properties or prospects of FirstEnergy now or hereafter known to
such Beneficiary (the Company waiving any duty on the part of Beneficiaries to
disclose such information);
 
(g) the failure of any other Person to execute or deliver this Guaranty or any
other guaranty or agreement or the release or reduction of liability of the
Company or other guarantor or surety with respect to the Guaranteed Obligations;
or
 
(h) any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by any
Beneficiary that might otherwise constitute a defense available to, or a
discharge of, the Company or any other guarantor or surety.

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This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Beneficiary or any other Person upon the
insolvency, bankruptcy or reorganization of the Company, FirstEnergy or
otherwise, all as though such payment had not been made.
 
SECTION 8.03. Waivers and Acknowledgments .
 
(a) The Company hereby unconditionally and irrevocably waives promptness,
diligence, notice of acceptance, presentment, demand for performance, notice of
nonperformance, default, acceleration, protest or dishonor and any other notice
with respect to any of the Guaranteed Obligations and this Guaranty and any
requirement that any Beneficiary protect, secure, perfect or insure any Lien or
any property subject thereto or exhaust any right or take any action against
FirstEnergy or any other Person or any collateral.
 
(b) The Company hereby unconditionally and irrevocably waives any right to
revoke this Guaranty and acknowledges that this Guaranty is continuing in nature
and applies to all Guaranteed Obligations, whether existing now or in the
future.
 
(c) The Company hereby unconditionally and irrevocably waives (i) any defense
arising by reason of any claim or defense based upon an election of remedies by
any Beneficiary that in any manner impairs, reduces, releases or otherwise
adversely affects the subrogation, reimbursement, exoneration, contribution or
indemnification rights of the Company or other rights of the Company to proceed
against FirstEnergy, any other guarantor or any other Person or any collateral
and (ii) any defense based on any right of set-off or counterclaim against or in
respect of the Guaranteed Obligations.
 
(d) The Company hereby unconditionally and irrevocably waives any duty on the
part of any Beneficiary to disclose to the Company any matter, fact or thing
relating to the business, condition (financial or otherwise), operations,
performance, properties or prospects of FirstEnergy or any of its Subsidiaries
now or hereafter known by such Beneficiary.
 
(e) The Company acknowledges that it will receive substantial direct and
indirect benefits from the financing arrangements contemplated by the Credit
Documents and that the waivers set forth in Section 8.02 and this Section 8.03
are knowingly made in contemplation of such benefits.

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SECTION 8.04. Subrogation. The Company hereby unconditionally and irrevocably
agrees not to exercise any rights that it may now have or hereafter acquire
against FirstEnergy that arise from the existence, payment, performance or
enforcement of the Guaranteed Obligations under or in respect of this Guaranty,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of any Beneficiary against FirstEnergy, whether or not such
claim, remedy or right arises in equity or under contract, statute or common
law, including, without limitation, the right to take or receive from
FirstEnergy, directly or indirectly, in cash or other property or by set-off or
in any other manner, payment or security on account of such claim, remedy or
right, unless and until all of the Guaranteed Obligations and all other amounts
payable under this Guaranty shall have been paid in full in cash, the Letter of
Credit shall have expired or been terminated and the Commitments shall have
expired or been terminated. If any amount shall be paid to the Company in
violation of the immediately preceding sentence at any time prior to the latest
of (a) the payment in full in cash of the Guaranteed Obligations and all other
amounts payable under this Guaranty, (b) the Stated Expiration Date of the
Letter of Credit, and (c) the latest date of expiration or termination of the
Letter of Credit, such amount shall be received and held in trust for the
benefit of the Beneficiaries, shall be segregated from other property and funds
of the Company and shall forthwith be paid or delivered to the Fronting Bank in
the same form as so received (with any necessary endorsement or assignment) to
be credited and applied to the Guaranteed Obligations and all other amounts
payable under this Guaranty, whether matured or unmatured, in accordance with
the terms of the Credit Documents, or to be held as collateral for any
Guaranteed Obligations or other amounts payable under this Guaranty thereafter
arising. If (i) the Company shall make payment to any Beneficiary of all or any
part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and
all other amounts payable under this Guaranty shall have been paid in full in
cash, (iii) the Stated Expiration Date shall have occurred and (iv) the Letter
of Credit shall have expired or been terminated, the Beneficiaries will, at the
Company’s request and expense, execute and deliver to the Company appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Company of an interest in the
Guaranteed Obligations resulting from such payment made by the Company pursuant
to this Guaranty.
 
SECTION 8.05. Subordination. If any Default shall have occurred and be
continuing, the Company agrees to subordinate any and all debts, liabilities and
other obligations owed to the Company by FirstEnergy (the “Subordinated
Obligations”) to the Guaranteed Obligations to the extent and in the manner
hereinafter set forth in this Section 8.05:
 
(a) Prohibited Payments, Etc. Except during the continuance of an Default
(including the commencement and continuation of any proceeding under any
Bankruptcy Law relating to FirstEnergy), the Company may receive regularly
scheduled payments from FirstEnergy on account of the Subordinated Obligations.
After the occurrence and during the continuance of any Default (including the
commencement and continuation of any proceeding under any Bankruptcy Law
relating to FirstEnergy), however, unless the Fronting Bank otherwise agrees,
the Company shall not demand, accept or take any action to collect any payment
on account of the Subordinated Obligations.

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(b) Prior Payment of Guaranteed Obligations. In any proceeding under any
Bankruptcy Law relating to FirstEnergy, the Company agrees that the
Beneficiaries shall be entitled to receive payment in full in cash of all
Guaranteed Obligations (including all interest and expenses accruing after the
commencement of a proceeding under any Bankruptcy Law, whether or not
constituting an allowed claim in such proceeding (“Post Petition Interest”))
before the Company receives payment of any Subordinated Obligations.
 
(c) Turn-Over. After the occurrence and during the continuance of any Default
(including the commencement and continuation of any proceeding under any
Bankruptcy Law relating to FirstEnergy), the Company shall, if the Fronting Bank
so requests, collect, enforce and receive payments on account of the
Subordinated Obligations as trustee for the Beneficiaries and deliver such
payments to the Fronting Bank on account of the Guaranteed Obligations
(including all Post Petition Interest), together with any necessary endorsements
or other instruments of transfer, but without reducing or affecting in any
manner the liability of the Company under the other provisions of this Guaranty.
 
(d) Fronting Bank Authorization. After the occurrence and during the continuance
of any Default (including the commencement and continuation of any proceeding
under any Bankruptcy Law relating to any other FirstEnergy), the Fronting Bank
is authorized and empowered (but without any obligation to so do), in its
discretion, (i) in the name of the Company, to collect and enforce, and to
submit claims in respect of, Subordinated Obligations and to apply any amounts
received thereon to the Guaranteed Obligations (including any and all Post
Petition Interest), and (ii) to require the Company (A) to collect and enforce,
and to submit claims in respect of, Subordinated Obligations and (B) to pay any
amounts received on such obligations to the Fronting Bank for application to the
Guaranteed Obligations (including any and all Post Petition Interest).
 

 
 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.
 

        FIRSTENERGY CORP.  
   
   
          By:      

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Name:   Title: 

 
 

       
FIRSTENERGY GENERATION CORP.
 
   
   
          By:      

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Name:   Title:

 
 
 

       
BARCLAYS BANK PLC, acting through its
 
   
 
 New York Branch,
 as Fronting Bank 
         By:    

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 Name:    Title: 

 
 

  Signature Page to Supplemental Letter of Credit Agreement
 OHIO AIR QUALITY DEVELOPMENT AUTHORITY
 
 STATE OF OHIO POLLUTION CONTROL
 
 REVENUE REFUNDING BONDS SERIES 2006-A
 
 (FirstEnergy Generation Corp. Project)

 
 

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