Unassociated Document


 














EXECUTION

 

 

 

 

 


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






 


 




















 





TABLE OF
CONTENTS







	 	 	 	
      Page

	
      I.
	
      Background,
      Representations and Findings.
	 
	 	
      Section
      1.1
	
      Background
	
      1

	 	
      Section
      1.2
	
      Company
      Representations
	
      4

	 	
      Section
      1.3
	
      Issuer
      Findings and Representations
	
      7

	 	 	 	 
	
      II.
	
      Completion of
      the Project.
	 
	 	
      Section
      2.1
	
      Acquisition,
      Construction and Installation
	
      7

	 	
      Section
      2.2
	
      Plans and
      Specifications
	
      7

	 	 	 	 
	
      III.
	
      Refunding the
      Refunded Bonds.
	 
	 	
      Section
      3.1
	
      Issuance of
      Bonds
	
      8

	 	
      Section
      3.2
	
      Investment of
      Fund Moneys
	
      9

	 	 	 	 
	
      IV.
	
      Loan and
      Repayment.
	 
	 	
      Section
      4.1
	
      Amount and
      Source of Loan
	
      9

	 	
      Section
      4.2
	
      Repayment of
      Loan
	
      9

	 	
      Section
      4.3
	
      The
      Note
	
      10

	 	
      Section
      4.4
	
      Acceleration
      of Payment to Redeem Bonds
	
      10

	 	
      Section
      4.5
	
      No Defense or
      Set-Off
	
      10

	 	
      Section
      4.6
	
      Assignment of
      Issuer’s Rights
	
      11

	 	
      Section
      4.7
	
      Credit
      Facility; Conversion
	
      11

	 	 	 	 
	
      V.
	
      Covenants of
      the Company.
	 
	 	
      Section
      5.1
	
      Maintenance
      and Operation of Project
	
      11

	 	
      Section
      5.2
	
      Corporate
      Existence
	
      12

	 	
      Section
      5.3
	
      Payment of
      Trustee’s Compensation and Expenses
	
      12

	 	
      Section
      5.4
	
      Payment of
      Issuer’s Expenses
	
      12

	 	
      Section
      5.5
	
      Indemnity
      Against Claims
	
      13

	 	
      Section
      5.6
	
      Limitation of
      Liability of the Issuer
	
      14

	 	
      Section
      5.7
	
      Insurance
	
      14

	 	
      Section
      5.8
	
      Default,
      etc.
	
      14

	 	
      Section
      5.9
	
      Deficiencies
      in Revenues
	
      14

	 	
      Section
      5.10
	
      Rebate
      Fund
	
      14

	 	
      Section
      5.11
	
      Assignment of
      Agreement in Whole or in Part by Company
	
      14

	 	
      Section
      5.12
	
      Assignment of
      Agreement in Whole by Company
	
      15

	 	 	 	 
	
      VI.
	
      Miscellaneous.
	 
	 	
      Section
      6.1
	
      Notices
	
      16

	 	
      Section
      6.2
	
      Assignments
	
      16

	 	
      Section
      6.3
	
      Illegal, etc.
      Provisions Disregarded
	
      16

	 	
      Section
      6.4
	
      Applicable
      Law
	
      16

	 	
      Section
      6.5
	
      Amendments
	
      16

	 	
      Section
      6.6
	
      Term of
      Agreement
	
      16

	 	 	 	 
	 	
      EXECUTION
	 	
      17

	
      EXHIBIT A -
      Project Description
	 
	
      EXHIBIT B -
      Form of Company Note
	 







 

 

 







i











 

 


 

WASTE WATER
FACILITIES and SOLID WASTE FACILITIES LOAN AGREEMENT, dated as of December 1,
2006 (the “Agreement”) between the OHIO WATER DEVELOPMENT AUTHORITY (the
“Issuer”) and FIRSTENERGY NUCLEAR GENERATION CORP. (the “Company”).




I. Background,
Representations and Findings.




1.1 Background. The Issuer is a
body corporate and politic, duly organized and existing under Chapters 6121 and
6123 of the Ohio Revised Code, as amended (the “Act”). Pursuant to the Act the
Issuer is authorized and empowered to issue State of Ohio revenue bonds to
finance, in whole or in part, the cost of the acquisition and construction of
“waste water facilities” and “solid waste facilities” within the meaning of the
Act and to issue revenue refunding bonds to refund such revenue
bonds.




Under the Act, the
Issuer may make loans to private corporations for the acquisition or
construction of waste water facilities and solid waste facilities by such
corporations or to assist in the refinancing of such facilities. The Issuer has
heretofore authorized the issuance of several issues of revenue bonds of the
State of Ohio, including the Refunded Bonds, as hereinafter defined, currently
outstanding in the aggregate principal amount of $135,550,000, and loaned the
proceeds thereof to The Cleveland Electric Illuminating Company (“CEI”), Ohio
Edison Company (“OE”) and The Toledo Edison Company (“TE”), each an Ohio
corporation (collectively, the “Companies”) in order to assist the Companies in
refinancing a portion of the cost of acquiring, constructing and installing
certain waste water facilities and solid waste facilities generally described in
Exhibit A to this Agreement (the “Project”). The Companies are affiliates of
FirstEnergy Corp. (“FirstEnergy”) and transferred their respective ownership
interests in the Project on December 16, 2005 as part of the planned FirstEnergy
Intra-System Generation Asset Transfers described in Forms 8-K dated May 19,
2005 and December 16, 2005 of FirstEnergy and the respective Companies filed
with the Securities and Exchange Commission (“SEC”) and as further described in
the Form 10-K for the fiscal year ended December 31, 2005 and the Forms 10-Qs
for the quarters ended March 31, June 30 and September 30, 2006 of
FirstEnergy and the respective Companies filed with the SEC, and in connection
therewith FirstEnergy and the respective Companies have requested that the
Issuer authorize the refunding of a corresponding portion of the outstanding
aggregate principal amount of the Issuer’s $41,000,000 State of Ohio Pollution
Control Revenue Refunding Bonds, Series 1999-A (Ohio Edison Company Project)
(the “1999 OE Bonds”); $33,200,000 State of Ohio Pollution Control Revenue
Refunding Bonds, Series 2000-A (The Toledo Edison Company Project) (the “2000 TE
Bonds”); $20,450,000 State of Ohio Pollution Control Revenue Refunding Bonds,
Series 2004-B (The Cleveland Electric Illuminating Company Project) (the “2004
CEI Bonds”); and $40,900,000 State of Ohio Pollution Control Revenue Refunding
Bonds, Series 2005-A (The Cleveland Electric Illuminating Company Project) (the
“2005 CEI Bonds”, and together with the 1999 OE Bonds, the 2000 TE Bonds and the
2004 CEI Bonds, the “Refunded Bonds”) through the issuance of revenue refunding
bonds to assist the Company, an Affiliate (as defined in the Indenture
identified in Section 3.1 hereof) of the Companies and FirstEnergy, in the
refunding of the Refunded Bonds.








1













The 1999 OE Bonds
were issued under and pursuant to a Trust Indenture dated as of June 1, 1999
(the “1999 OE Indenture”) between the Issuer and the trustee thereunder,
currently The Bank of New York Trust Company, N.A. (the “1999 OE Trustee”), the
proceeds of which were loaned by the Issuer to OE pursuant to a Waste Water
Facilities and Solid Waste Facilities Loan Agreement dated as of June 1, 1999
(the “1999 OE Agreement”) between the Issuer and OE for the purpose of refunding
the Issuer’s State of Ohio Pollution Control Revenue Refunding Bonds, 1989
Series A (Ohio Edison Company Project) (the “1989 OE Bonds”) originally issued
under and pursuant to a Trust Indenture dated as of June 15, 1989 (the “1989 OE
Indenture”) between the Issuer and the trustee thereunder, the proceeds of which
were loaned by the Issuer to OE pursuant to a Waste Water Facilities and Solid
Waste Facilities Loan Agreement dated as of June 15, 1989 (the “1989 OE
Agreement”) between the Issuer and OE for the purpose of refunding the Issuer’s
State of Ohio Pollution Control Revenue Bonds, Series 1984 (Ohio Edison Company
Project) (the “1984 OE Bonds”) originally issued under and pursuant to a Trust
Indenture dated as of October 1, 1984 (the “1984 OE Indenture”) between the
Issuer and the trustee thereunder, the proceeds of which were loaned by the
Issuer to OE pursuant to a Loan Agreement dated as of October 1, 1984 (the “1984
OE Agreement”) between the Issuer and OE to assist OE in the financing of a
portion of the cost of acquiring, constructing and installing the
Project.




The 2000 TE Bonds
were issued under and pursuant to a Trust Indenture dated as of April 1, 2000,
as amended and restated by an Amended and Restated Trust Indenture dated as of
October 1, 2004 (as amended and restated, the “2000 TE Indenture”) between the
Issuer and the trustee thereunder, currently U.S. Bank National Association (the
“2000 TE Trustee”), the proceeds of which were loaned by the Issuer to TE
pursuant to a Waste Water Facilities and Solid Waste Facilities Loan Agreement
dated as of April 1, 2000 (the “2000 TE Agreement”) between the Issuer and TE
for the purpose of refunding the Issuer’s State of Ohio Collateralized Pollution
Control Revenue Refunding Bonds, 1990 Series A (The Toledo Edison Company
Project) (the “1990 TE Bonds”) originally issued under and pursuant to a Trust
Indenture dated as of May 15, 1990 (the “1990 TE Indenture”) between the Issuer
and the trustee thereunder, the proceeds of which were loaned by the Issuer to
TE pursuant to a Loan Agreement dated as of May 15, 1990 (the “1990 TE
Agreement”) between the Issuer and TE for the purpose of refunding the Issuer’s
State of Ohio Pollution Control Revenue Bonds, Series 1985A (The Toledo Edison
Company Project) (the “1985 TE Bonds”) originally issued under and pursuant to a
Trust Indenture dated as of August 1, 1985 (the “1985 TE Indenture”) between the
Issuer and the trustee thereunder, the proceeds of which were loaned by the
Issuer to TE pursuant to a Loan Agreement dated as of August 1, 1985 (the “1985
TE Agreement”) between the Issuer and TE to assist TE in the financing of a
portion of the cost of acquiring, constructing and installing the
Project.




The 2004 CEI Bonds
were issued under and pursuant to a Trust Indenture dated as of October 1, 2004
(the “2004 CEI Indenture”) between the Issuer and the trustee thereunder,
currently The Bank of New York Trust Company, N.A. (the “2004 CEI Trustee”), the
proceeds of which were loaned by the Issuer to CEI pursuant to a Waste Water
Facilities and Solid Waste Facilities Loan Agreement dated as of October 1, 2004
(the “2004 CEI Agreement”) between the Issuer and CEI for the purpose of
refunding a portion of the Issuer’s $23,255,000 State of Ohio Pollution Control
Revenue Refunding Bonds, Series 1998-A (The Cleveland Electric Illuminating
Company Project) (the “1998 CEI Bonds”) originally issued under and pursuant to
a Trust Indenture dated as of October 1, 1998 (the “1998 CEI Indenture”) between
the Issuer and the trustee thereunder, the proceeds of which were loaned by the
Issuer to CEI pursuant to a Waste Water Facilities and Solid Waste Facilities
Loan Agreement dated as of October 1, 1998 (the “1998 CEI Agreement”) between
the Issuer and CEI for the purpose of refunding a portion of the Issuer’s State
of Ohio Floating Rate Collateralized Pollution Control Revenue Bonds, 1984
Series A (The Cleveland Electric Illuminating Company Project) (the “1984 CEI
Bonds”) originally issued under and pursuant to a Trust Indenture dated as of
December 1, 1984 (the “1984 CEI Indenture”) between the Issuer and the trustee
thereunder, the proceeds of which were loaned by the Issuer to CEI pursuant to a
Loan Agreement dated as of December 1, 1984 (the “1984 CEI Agreement”) between
the Issuer and CEI to assist CEI in the financing of a portion of the cost of
acquiring, constructing and installing the Project.








2
















The 2005 CEI Bonds
were issued under and pursuant to a Trust Indenture dated as of July 1, 2005
(the “2005 CEI Indenture”, and together with the 1999 OE Indenture, the 2000 TE
Indenture and the 2004 CEI Indenture, the “Refunded Bonds Indenture”) between
the Issuer and the trustee thereunder, currently The Bank of New York Trust
Company, N.A. (the “2005 CEI Trustee”, and together with the 1999 OE Trustee,
the 2000 TE Trustee and the 2004 CEI Trustee, the “Refunded Bonds Trustee”), the
proceeds of which were loaned by the Issuer to CEI pursuant to a Waste Water
Facilities and Solid Waste Facilities Loan Agreement dated as of July 1, 2005
(the “2005 CEI Agreement”, and together with the 1999 OE Agreement, the 2000 TE
Agreement and the 2004 CEI Agreement, the “Refunded Bonds Agreement”) between
the Issuer and CEI for the purpose of refunding the Issuer’s State of Ohio
Collateralized Pollution Control Revenue Refunding Bonds, Series 1995 (The
Cleveland Electric Illuminating Company Project) (the “1995 CEI Bonds”)
originally issued under and pursuant to a Trust Indenture dated as of August 1,
1995 (the “1995 CEI Indenture”) between the Issuer and the trustee thereunder,
the proceeds of which were loaned by the Issuer to CEI pursuant to a Loan
Agreement dated as of August 1, 1995 (the “1995 CEI Agreement”) between the
Issuer and CEI for the purpose of refunding the Issuer’s State of Ohio
Collateralized Pollution Control Revenue Bonds, 1985 Series A (The Cleveland
Electric Illuminating Company Project) (the “1985 CEI Bonds”, and together with
the 1984 CEI Bonds, the 1984 OE Bonds and the 1985 TE Bonds, the “Original
Bonds”, and the Original Bonds, together with the 1989 OE Bonds, the 1990 TE
Bonds, the 1995 CEI Bonds, the 1998 CEI Bonds and the Refunded Bonds, the “Prior
Bonds”) originally issued under and pursuant to a Trust Indenture dated as of
August 1, 1985 (the “1985 CEI Indenture”, and together with the 1984 CEI
Indenture, the 1984 OE Indenture, the 1985 TE Indenture, the 1989 OE Indenture,
the 1990 TE Indenture, the 1995 CEI Indenture, the 1998 CEI Indenture and the
Refunded Bonds Indenture, the “Prior Bonds Indenture”) between the Issuer and
the trustee thereunder, the proceeds of which were loaned by the Issuer to CEI
pursuant to a Loan Agreement dated as of August 1, 1985 (the “1985 CEI
Agreement”, and together with the 1984 CEI Agreement, the 1984 OE Agreement and
the 1985 TE Agreement, the “Original Bonds Agreement”, and the Original Bonds
Agreements, together with the 1989 OE Agreement, the 1990 TE Agreement, the 1995
CEI Agreement, the 1998 CEI Agreement and the Refunded Bonds Agreement, the
“Prior Bonds Agreement”) between the Issuer and CEI to assist CEI in the
financing of a portion of the cost of acquiring, constructing and installing the
Project.




The Issuer and the
Company intend that the Project will constitute “waste water facilities” and
“solid waste facilities” within the meaning of the Act and qualified facilities
for purposes of Section 103(b)(4) of the Internal Revenue Code of 1954, as
amended and as in effect prior to passage of the Tax Reform Act of 1986 (the
“1954 Code”), so that interest on the bonds issued by the Issuer to finance or
refinance the Project, including the Refunded Bonds, will not be included in
gross income under the Code (as defined herein). The Issuer has agreed to issue,
sell and deliver the State of Ohio Pollution Control Revenue Refunding Bonds,
Series 2006-B (FirstEnergy Nuclear Generation Corp. Project) in the aggregate
principal amount of $135,550,000 (the “Bonds”) and to lend the proceeds to be
derived from the sale thereof to the Company, to assist in the refunding of the
Refunded Bonds, on the terms and conditions set forth in the subsequent sections
of this Agreement.








3
















1.2 Company
Representations. The Company
represents that:




(a) It is a corporation
duly organized and existing in good standing under Ohio law and duly qualified
to do business in Ohio, with full power and legal right to enter into this
Agreement and the Note (all as hereinafter defined) and perform its obligations
hereunder and thereunder. The making and performance of this Agreement and the
Note on the Company’s part have been duly authorized by the Company and will not
violate or conflict with the Company’s Articles of Incorporation, Code of
Regulations or any agreement, indenture or other instrument by which the Company
or its properties are bound. This Agreement and the Note have been duly executed
and delivered by the Company and constitute the valid and binding obligations of
the Company enforceable in accordance with their respective terms except as the
enforcement thereof may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws relating to or
affecting the enforcement of creditors’ rights generally, to general equitable
principles (whether considered in a proceeding in equity or at law) and to an
implied covenant of good faith and fair dealing.




(b) The Project
constitutes “waste water facilities” and “solid waste facilities” as defined in
the Act and is consistent with the purposes of Section 13 of Article VIII of the
Ohio Constitution and of the Act.




(c) None of the proceeds
of the Original Bonds have been or will be used directly or indirectly to
acquire land or any interest therein or for the acquisition of any property or
interest therein unless the first use of such property was pursuant to such
acquisition.




(d) At least 90% of the
proceeds of the Original Bonds were used to provide “pollution control
facilities” and “sewage and solid waste disposal facilities” within the meaning
of Sections 103(b)(4)(E) and (F) of the 1954 Code and the original use of which
facilities commenced with the Companies, the construction of which facilities
began before and was completed after September 26, 1985, and which facilities
were described in an inducement resolution adopted by the Issuer before
September 26, 1985. All of the proceeds of the Original Bonds have been spent
for the Project or to pay costs of issuance of the Original Bonds. All of such
pollution control facilities and sewage and solid waste disposal facilities
consist either of land or of property of a character subject to the allowance
for depreciation provided in Section 167 of the Code.




(e) Less than an
insubstantial portion of the proceeds of each of the Original Bonds and the
Refunded Bonds were, and none of the proceeds of the Bonds will be, used to
provide working capital.




(f) None of the proceeds
of the Original Bonds and the Refunded Bonds were used and none of the proceeds
of the Bonds will be used to provide any airplane, skybox or other private
luxury box, or health club facility; any facility primarily used for gambling;
any store the principal business of which is the sale of alcoholic beverages for
consumption off premises.








4
















(g) The 1984 OE Bonds
were issued on October 24, 1984; the 1984 CEI Bonds were issued on December 12,
1984; the 1985 CEI Bonds were issued on August 7, 1985; the 1985 TE Bonds were
issued on August 27, 1985; the 1989 OE Bonds were issued on July 13, 1989; the
1990 TE Bonds were issued on May 17, 1990; the 1995 CEI Bonds were issued on
August 17, 1995; the 1998 CEI Bonds were issued on October 14, 1998; the 1999 OE
Bonds were issued on June 4, 1999; the 2000 TE Bonds were issued on May 3, 2000;
the 2004 CEI Bonds were issued on October 1, 2004; and the 2005 CEI Bonds were
issued on July 1, 2005.


 

(h) No construction,
reconstruction or acquisition of the Project was commenced prior to the taking
of official action by the Issuer with respect thereto except for preparation of
plans and specifications and other preliminary engineering work.

 

(i) Acquisition,
construction and installation of the Project has been accomplished and the
Project is being utilized substantially in accordance with the purposes of the
Project and consistently with the Act and in conformity with all applicable
zoning, planning, building, environmental and other applicable governmental
regulations and all permits, variances and orders issued or granted pursuant
thereto, which permits, variances and orders have not been withdrawn or
otherwise suspended.




(j) The Project has been
and is currently being used and operated in a manner consistent with the
purposes of the Project and the Act, and the Company presently intends to use or
operate the Project or to cause the Project to be used or operated in a manner
consistent with the purposes of the Project and the Act until the date on which
the Bonds have been fully paid and knows of no reason why the Project will not
be so used or operated.




(k) Neither the Original
Bonds, the Refunded Bonds nor the Bonds are or will be “federally guaranteed,”
as defined in Section 149(b) of the Internal Revenue Code of 1986, as amended
(the “Code”; references to the Code and Sections of the Code (or, as applicable,
to the 1954 Code and Sections thereof) include relevant applicable regulations
and proposed regulations thereunder and under the 1954 Code and any successor
provisions to those Sections, regulations or proposed regulations and, in
addition, all applicable official rulings and judicial determinations under the
foregoing applicable to the Original Bonds, the Refunded Bonds or the Bonds, as
applicable).




(l) At no time will any
funds constituting gross proceeds of the Bonds be used in a manner as would
constitute failure of compliance with Section 148 of the Code.




(m) None of the proceeds
(within the meaning of Section 147(g) of the Code) of the Bonds will be used to
pay for any costs of issuance of the Bonds.








5
















(n) The proceeds derived
from the sale of the Bonds (other than any accrued interest thereon) will be,
and the proceeds derived from the sale of the 1989 OE Bonds, the 1990 TE Bonds,
the 1995 CEI Bonds, the 1998 CEI Bonds, the 1999 OE Bonds, the 2000 TE Bonds,
the 2004 CEI Bonds and the 2005 CEI Bonds (other than accrued interest thereon)
(collectively, the “Prior Refunding Bonds”) were, used exclusively to refund the
principal of the Refunded Bonds and the 1984 OE Bonds, the 1985 TE Bonds, the
1985 CEI Bonds, the 1984 CEI Bonds, the 1989 OE Bonds, the 1990 TE Bonds, a
portion of the 1998 CEI Bonds and the 1995 CEI Bonds (collectively, the “Prior
Refunded Bonds”), respectively. The principal amount of the Bonds does not, and
the principal amount of the Prior Refunding Bonds did not, exceed the principal
amount of the Refunded Bonds and the Prior Refunded Bonds, respectively. The
redemption of the outstanding principal amount of the Refunded Bonds with such
proceeds of the Bonds will, and the redemption of the outstanding principal
amount of the Prior Refunded Bonds with such proceeds of the Prior Refunding
Bonds did, occur not later than 90 days after the date of issuance of the Bonds
and the Prior Refunding Bonds, respectively. All earnings derived from the
investment of such proceeds of the Bonds will be, and all earnings derived from
the investment of such proceeds of the Prior Refunding Bonds were, fully needed
and used on such respective redemption dates to pay a portion of any redemption
premium and interest accrued and payable on the Refunded Bonds and the Prior
Refunded Bonds, respectively.




(o) On the respective
dates of issuance and delivery of the Original Bonds and the Refunded Bonds, the
Companies reasonably expected that all of the proceeds of the respective
Original Bonds and the Refunded Bonds would be used to carry out the
governmental purposes of such issues within the 3-year period beginning on the
date such issues were issued and none of the proceeds of such issues, if any,
were invested in nonpurpose investments having a substantially guaranteed yield
for 3 years or more.




(p) The respective
average maturities of the Original Bonds, the Refunded Bonds and the Bonds do
not exceed 120% of the average reasonably expected economic life of the
facilities financed or refinanced by the respective proceeds of the Original
Bonds, the Refunded Bonds and the Bonds (determined under Section 147(b) of the
Code).




(q) It is not
anticipated, as of the date hereof, that there will be created any “replacement
proceeds,” within the meaning of Section 1.148-1(c) of the Treasury Regulations,
with respect to the Bonds; however, in the event that any such replacement
proceeds are deemed to have been created, such amounts will be invested in
compliance with Section 148 of the Code.




(r) The information
furnished by the Companies and used by the Issuer in preparing the certification
pursuant to Section 148 of the Code and in preparing the information statement
pursuant to Section 149(e) of the Code was accurate and complete as of the
respective dates of issuance of the Original Bonds and the Refunded Bonds, and
the information furnished by the Company and used by the Issuer in preparing the
certification pursuant to Section 148 of the Code and in preparing the
information statement pursuant to Section 149(e) of the Code will be accurate
and complete as of the date of issuance of the Bonds.








6













(s) The Project does not
include any office except for offices (i) located on the site of the Project and
(ii) not more than a de minimis amount of the functions to be performed at which
is not directly related to the day-to-day operations of the
Project.




1.3 Issuer Findings
and Representations. The Issuer hereby
confirms its findings and represents that:




(a) The Project
qualifies as a “water development project” and a “development project” for the
purposes of the Act, and is consistent with the public purposes of the
Act.




(b) The Project
constitutes “waste water facilities” and “solid waste facilities” under the
Act.




(c) The Issuer has the
necessary power under the Act, and has duly taken all action on its part
required, to execute and deliver this Agreement and to undertake the refunding
of the Refunded Bonds through the issuance of the Bonds. The execution and
performance of this Agreement by the Issuer will not violate or conflict with
any instrument by which the Issuer or its properties are bound.




(d) The Issuer adopted
the resolution authorizing the 1984 OE Bonds on October 11, 1984; the 1984 CEI
Bonds on November 29, 1984; the 1985 CEI Bonds on July 16, 1985; the 1985 TE
Bonds on August 15, 1985; the 1989 OE Bonds on June 22, 1989; the 1990 TE Bonds
on December 21, 1989; the 1995 CEI Bonds on July 27, 1995; the 1998 CEI Bonds on
September 24, 1998; the 1999 OE Bonds on March 25, 1999; the 2000 TE Bonds on
May 2, 2000; the 2004 CEI Bonds on July 29, 2004; the 2005 CEI Bonds on May 26,
2005; and the Bonds on August 25, 2005.




(e) Following reasonable
notice, a public hearing was held with respect to the issuance of the Bonds, as
required by Section 147(f) of the Code.




II. Completion of
the Project.




2.1 Acquisition,
Construction and Installation. The Company
represents and agrees that the Project has been acquired, constructed and
installed on the site thereof as described in the Original Bonds Agreement,
substantially in accordance with the plans and specifications for the Project
filed with the Issuer prior to the issuance of the Original Bonds and in
conformance with the Original Bonds Agreement, Section 6121.061 of the Ohio
Revised Code, and all applicable zoning, planning, building and other similar
regulations of all governmental authorities having jurisdiction over the Project
and all permits, variances and orders issued in respect of the Project by the
Ohio Environmental Protection Agency (“EPA”) and that the proceeds derived from
the Prior Bonds, including any investment thereof, have been expended in
accordance with the Prior Bonds Indenture and the Prior Bonds
Agreement.




2.2 Plans and
Specifications. The plans and
specifications identified in the Refunded Bonds Agreement and the description of
the Project may be changed from time to time by, or with the consent of, the
Company, provided that any such change shall also be filed with the Issuer in
accordance with the Refunded Bonds Agreement and provided further that no
amendment in the plans and specifications shall materially change the function
of the Project without (i) an engineer’s certificate that such changes will not
impair the significance or character of the Project as waste water facilities
and solid waste facilities and (ii) an opinion or written advice of nationally
recognized bond counsel or ruling of the IRS that such amendment will not
adversely affect the exclusion from gross income for federal income tax purposes
of the interest paid on either the Bonds or the Refunded Bonds.








7
















III. Refunding the
Refunded Bonds.




3.1 Issuance of
Bonds. In order to assist
the Company in the refunding of the Refunded Bonds, the Issuer, concurrently
with the execution hereof, will issue, sell and deliver the Bonds. The proceeds
of the Bonds shall be loaned to the Company in accordance with Section 4.1. The
Bonds will be issued under and pursuant to the Trust Indenture (as amended from
time to time, the “Indenture”) dated as of December 1, 2006 between the Issuer
and The Bank of New York Trust Company, N.A., as trustee (in that capacity, the
“Trustee”), and will be issued in the aggregate principal amount, will bear
interest, will mature and will be subject to redemption as set forth therein.
The Company hereby approves the terms and conditions of the Indenture and the
Bonds, and the terms and conditions under which the Bonds have been issued, sold
and delivered.




The proceeds from
the sale of the Bonds (other than any accrued interest) shall be loaned to the
Company to assist the Company in refunding the Refunded Bonds. Those proceeds
shall be delivered as follows:




(a) $102,350,000 to the
Escrow Trustee under the CEI/OE Escrow Agreement, each as defined in and
provided in the Indenture, to be held, together with any interest earnings
thereon, in trust, as provided in the CEI/OE Escrow Agreement for the purpose of
paying, together with any moneys provided by the Company, CEI or OE, all of the
remaining principal and interest due on the 2004 CEI Bonds and the 2005 CEI
Bonds to their respective dates of redemption and on the 1999 OE Bonds to the
date of their mandatory tender for purchase under the 1999 OE Indenture, which
1999 OE Bonds shall be purchased for cancellation; and




(b) $33,200,000 to the
Escrow Trustee under the TE Escrow Agreement, each as defined in and provided in
the Indenture, to be held, together with any interest earnings thereon, in
trust, as provided in the TE Escrow Agreement for the purpose of paying,
together with any moneys provided by the Company or TE, all of the remaining
principal and interest due on the 2000 TE Bonds to the date of
redemption.




The Company
acknowledges that the proceeds of the Bonds will be insufficient to pay the full
costs of refunding the Refunded Bonds and that the Issuer has made no
representation or warranty with respect to the sufficiency thereof. The Company
further acknowledges that it and the Companies are (and will remain after the
issuance of the Bonds) obligated to, and hereby confirms that it and the
respective Companies will, pay all costs of the refunding of the Refunded Bonds,
whether by redemption or by purchase and cancellation. The Issuer acknowledges
and confirms that the 2004 CEI Bonds Trustee has been notified, on behalf of and
at the direction of CEI, that the entire outstanding principal amount of the
2004 CEI Bonds has been conditionally called for redemption on December 13,
2006.




The Company, on
behalf of and at the direction of the Companies, hereby requests that the Issuer
notify the 2000 TE Trustee and the 2005 CEI Trustee, pursuant to the 2000 TE
Bonds Indenture, the 2005 CEI Bonds Indenture and the respective Escrow
Agreements, that the entire outstanding principal amount of the 2000 TE Bonds
and the 2005 CEI Bonds are to be redeemed on December 20, 2006 and December 21,
2006, respectively, all as set forth and provided for in the respective Escrow
Agreements. The Company acknowledges and confirms that OE has directed the 1999
OE Trustee, as Tender Agent under the 1999 OE Bonds Indenture, to purchase the
1999 OE Bonds for cancellation on December 5, 2006, as provided for in the
CEI/OE Escrow Agreement. The Issuer acknowledges and confirms that it has
directed the 2000 TE Trustee and the 2005 CEI Trustee to call the 2000 TE Bonds
and the 2005 CEI Bonds for optional redemption on December 20, 2006 and December
21, 2006, respectively.








8
















3.2 Investment of
Fund Moneys. Any moneys held as
part of the Bond Fund or the Rebate Fund shall be invested or reinvested by the
Trustee as provided in the Indenture. The Issuer (to the extent it retained or
retains direction or control) and the Company each hereby represent that the
investment and reinvestment and the use of the proceeds of the Refunded Bonds
were restricted in such manner and to such extent as was necessary so that the
Refunded Bonds would not constitute arbitrage bonds under Section 148 of the
Code and each hereby covenants that it will restrict that investment and
reinvestment and the use of the proceeds of the Bonds in such manner and to such
extent, if any, as may be necessary so that the Bonds will not constitute
arbitrage bonds under Section 148 of the Code. The Company further covenants and
represents that it has taken and caused to be taken and shall take and cause to
be taken all actions that may be required of it for the interest on the Bonds to
be and to remain excluded from gross income for federal income tax purposes, and
that it has not taken or permitted to be taken on its behalf, and covenants that
it will not take, or permit to be taken on its behalf, any action which, if
taken, would adversely affect that exclusion under the provisions of the
Code.




The Company shall
provide the Issuer with, and the Issuer may base its certificate and statement,
each authorized by Section 8(a) of the legislation authorizing the Bonds, on, a
certificate of an appropriate officer, employee or agent of or consultant to the
Company for inclusion in the transcript of proceedings for the Bonds, setting
forth the reasonable expectations of the Company on the date of delivery of and
payment for the Bonds regarding the amount and use of the proceeds of the Bonds
and the facts, estimates and circumstances on which those expectations are
based.




IV. Loan and
Repayment.




4.1 Amount and Source
of Loan. Concurrently with
the delivery of the Bonds, the Issuer will, upon the terms and conditions of
this Agreement, lend the proceeds of the Bonds (other than any accrued interest)
to the Company, by deposit thereof in accordance with the provisions of the
Indenture. The Bonds may be sold by the Issuer at a discount from their
principal amount, and in such event, the amount of such discount shall be deemed
to have been loaned to the Company. To the extent that accrued interest on the
Bonds is received by the Issuer upon the sale of the Bonds and is deposited into
the Bond Fund under the Indenture, such accrued interest shall be applied to the
first interest payment due on the Bonds with a corresponding credit on the
amounts otherwise due under the Note (as hereinafter defined).




4.2 Repayment of
Loan. The Company agrees
to repay the loan made by the Issuer under Section 4.1 in installments which, as
to amount, shall correspond to the payments of principal on the Bonds and, if
applicable, any redemption price and shall bear interest at the rate or rates
and at the times payable on the Bonds, when such principal, redemption price, if
applicable, or interest is due in accordance with the terms of the Indenture
whether on scheduled payment dates, at maturity, by acceleration, by redemption
or otherwise; provided that such amount shall be reduced to the extent that
other moneys on deposit with the Trustee are available for such purpose, and a
credit in respect thereof has been granted pursuant to such Indenture. All such
repayments made by the Company pursuant to this Agreement shall be made in funds
that will be available to the Trustee no later than 4:00 p.m. (New York City
time) on the corresponding principal or applicable redemption price or interest
payment date or other date for payment on the Bonds. The Company also agrees to
pay to the Tender Agent (as defined in the Indenture) the amounts necessary to
purchase Bonds pursuant to Section 5.01 of the Indenture to the extent that
moneys are not otherwise available therefor pursuant to Section 5.03 of the
Indenture. To evidence its obligation to pay such amounts, the Company will
deliver the Note, as described under Section 4.3.








9













4.3 The
Note. Concurrently with
the issuance by the Issuer of the Bonds, the Company will execute and deliver to
the Trustee a debt instrument of the Company, which debt instrument shall be in
the form of a nonnegotiable promissory note (the “Note”), which Note shall be in
substantially the form of the Waste Water Facilities and Solid Waste Facilities
Note, Series 2006-B, attached hereto as Exhibit B. The Note shall:




(a) be payable to the
Trustee;




(b) be in a principal
amount equal to the aggregate principal amount of the Bonds;




(c) provide for payments
of interest at least equal to the payments of interest on the Bonds, except to
the extent provision is made for the payment of accrued interest;




(d) require payments of
principal plus a premium, if any, equal to the corresponding payments on the
Bonds;




(e) contain provisions
in respect of the prepayment of principal and premium, if any, corresponding to
the redemption provisions of the Bonds; and




(f) require all payments
on the Note to be made on or prior to the due date for the corresponding payment
to be made on the Bonds.




4.4 Acceleration of
Payment to Redeem Bonds. The Issuer will
redeem any of the Bonds or portions thereof upon the occurrence of an event
which gives rise to any mandatory redemption specified therein and in accordance
with the provisions of the Indenture. Whenever the Bonds are subject to optional
redemption, the Issuer will, but only upon request of the Company, redeem the
same in accordance with such request and the Indenture. In either event, the
Company will pay an amount equal to the applicable redemption price as a
prepayment of the Note, together with interest accrued to the date of
redemption, as provided in the Note.




In the event that
the Company receives notice from the Trustee pursuant to the Indenture that a
proceeding has been instituted against a Bondholder which could lead to a final
determination that interest on the Bonds is taxable and subject to special
mandatory redemption of Bonds as contemplated by the Indenture, the Company
shall promptly notify in writing the Trustee and the Issuer whether or not it
intends to contest such proceeding. In the event that the Company chooses to so
contest, it will use its best efforts to obtain a prompt final determination or
decision in such proceeding or litigation and will keep the Trustee and the
Issuer informed of the progress of any such proceeding or
litigation.




4.5 No Defense or
Set-Off. The obligations of
the Company to make payments on the Note shall be absolute and unconditional
without defense or setoff by reason of any default by the Issuer under this
Agreement or under any other agreement between the Company and the Issuer or by
a Credit Facility Issuer (as defined in the Indenture), if any, under a Credit
Facility (as defined in the Indenture), if any, or for any other reason,
including without limitation, loss or impairment of investments in the Bond
Fund, any acts or circumstances that may constitute failure of consideration,
destruction of or damage to the Project, commercial frustration of purpose, or
failure of the Issuer to perform and observe any agreement, whether express or
implied, or any duty, liability or obligation arising out of or connected with
this Agreement, it being the intention of the parties that the payments required
hereunder will be paid in full when due without any delay or diminution
whatsoever.








10
















4.6 Assignment of
Issuer’s Rights. As the source of
payment for the Bonds, the Issuer will assign to the Trustee pursuant to the
Indenture all the Issuer’s rights under this Agreement with respect to the Bonds
(except rights to receive payments under Sections 5.4 and 5.5) including all of
its right, title and interest in the Note and the moneys payable thereunder. The
Company consents to such assignment and agrees to make payments on the Note and
interest thereon directly to the Trustee without defense or setoff by reason of
any dispute between the Company and the Issuer or the Trustee. The Company
acknowledges and agrees that the Trustee and the Credit Facility Issuer are each
a third party beneficiary of this Agreement and may enforce the obligations of
the Company hereunder as if it were a party hereto. The Company further agrees
to observe and perform all covenants and agreements required to be observed and
performed by it under the Indenture.




4.7 Credit Facility;
Conversion. Concurrently with
the issuance of the Bonds, the Company shall cause to be delivered to the
Trustee an irrevocable letter of credit issued by a bank or trust company having
the terms specified in the Indenture. Nothing herein shall require the Company
to maintain the Letter of Credit (as defined in the Indenture) or any other
Credit Facility with respect to the Bonds. As provided in the Indenture, the
Interest Rate Mode (as defined in the Indenture) for any of the Bonds is subject
to Conversion (as defined in the Indenture) to a different Interest Rate Mode or
Modes from time to time by the Company and the Company may from time to time
change any of the Bonds from one Long-Term Rate Period (as defined in the
Indenture) to another Long-Term Rate Period or Periods.




V. Covenants of the
Company.




5.1 Maintenance and
Operation of Project. The Company shall
use its best efforts to cause the Project, including all appurtenances thereto
and any personal property therein or thereon, to be kept and maintained in good
repair and good operating condition so that the Project will continue to
constitute a Waste Water Facility and a Solid Waste Facility (each as defined in
the Act) for the purposes of the operation thereof as required hereby. So long
as such shall not be in violation of the Act or impair the character of the
Project as a Waste Water Facility and a Solid Waste Facility, as the case may
be, and provided there is continued compliance with applicable laws and
regulations of governmental entities having jurisdiction thereof, the Company
shall have the right to remodel the Project or make additions, modifications and
improvements thereto, from time to time as it, in its discretion, may deem to be
desirable for its uses and purposes, the cost of which remodeling, additions,
modifications and improvements shall be paid by the Company and the same shall,
when made, become a part of the Project.




To the extent not
heretofore commenced, the Company shall not be under any obligation to renew,
repair or replace any inadequate, obsolete, worn out, unsuitable, undesirable or
unnecessary portions of the Project, except to the extent, if any, necessary to
ensure the continued character of the Project as a Waste Water Facility and a
Solid Waste Facility. The Company shall have the right from time to time to
substitute personal property or fixtures for any portions of the Project,
provided that the personal property or fixtures so substituted shall not impair
the character of the Project as a Waste Water Facility and a Solid Waste
Facility. Any such substituted property or fixtures shall, when so substituted,
become a part of the Project. The Company shall also have the right to remove
any portions of the Project, without substitution therefor, provided that the
Company shall deliver to the Trustee a certificate upon which the Trustee may
conclusively rely signed by an engineer describing said portions of the Project
and stating that the removal of such property or fixtures will not impair the
character of the Project as a Waste Water Facility and a Solid Waste
Facility.








11













The Company shall,
subject to its obligations and rights to maintain, repair or remove portions of
the Project, as herein provided, use its best efforts to cause the operation of
the Project to continue so long as and to the extent that operation thereof is
required to comply with laws or regulations of governmental entities having
jurisdiction thereof or unless the Issuer shall have approved the discontinuance
of such operation (which approval shall not be unreasonably withheld). The
Company agrees that it will, within the design capacities thereof, cause the
Project to be operated and maintained in accordance with all applicable, valid
and enforceable rules and regulations of the EPA and the Department of Health of
the State of Ohio or any successor body, agency, commission or department to
either, including those regulations relating to the prevention, control and
abatement of water and solid waste pollution and the prescribing of waste water
and solid waste standards for that area of the State of Ohio in which the
Project is located; provided, that the Company reserves the right to contest in
good faith any such laws or regulations.




Nothing in this
Section shall (a) require the Company to operate or cause to be operated any
portion of any property after it is no longer economical and feasible, in the
Company’s judgment, to do so or (b) prevent or restrict the Company, in its sole
discretion, at any time, from discontinuing or suspending either permanently or
temporarily its use of any facility of the Company served by the Project and in
the event such discontinuance or suspension shall render unnecessary the
continued operation of the Project, the Company shall have the right to
discontinue the operation of the Project during the period of any such
discontinuance or suspension.




5.2 Corporate
Existence. So long as the
Bonds are outstanding, the Company will maintain its corporate existence and its
qualification to do business in Ohio, except that it may dissolve or otherwise
dispose of all or substantially all of its assets and may consolidate with or
merge into another corporation or permit one or more corporations to consolidate
with or merge into it, if the surviving, resulting or transferee corporation, if
other than the Company, is solvent, has a net worth equal to the net worth of
the Company immediately prior to the transaction, and assumes in writing all of
the obligations of the Company hereunder and under the Note and is a corporation
organized under one of the states of the United States of America and is duly
qualified to do business in Ohio.




5.3 Payment of
Trustee’s Compensation and Expenses. The Company will
pay the Trustee’s compensation and expenses under the Indenture, including
out-of-pocket, incidental and attorneys’ fees and expenses and all costs of
redeeming Bonds thereunder and the compensation and expenses of any
authenticating agent, the Bond Registrar, the Tender Agent and the Paying Agent
appointed in respect of the Bonds, including, out-of-pocket, incidental and
attorneys’ fees and expenses.




5.4 Payment of
Issuer’s Expenses. The Company will
pay the Issuer’s administrative fees and expenses, including legal and
accounting fees, incurred by the Issuer in connection with the issuance of the
Bonds and the performance by the Issuer of any and all of its functions and
duties under this Agreement or the Indenture, including, but not limited to, all
duties which may be required of the Issuer by the Trustee and the
Bondholders.








12
















5.5 Indemnity Against
Claims. The Company
releases the Issuer from, agrees that the Issuer shall not be liable for, and
indemnifies the Issuer against, all liabilities, claims, costs and expenses
imposed upon or asserted against the Issuer on account of: (a) the maintenance,
operation and use of the Project; (b) any breach or default on the part of the
Company in the performance of any covenant or agreement of the Company under
this Agreement or the Note or arising from any act or failure to act by the
Company under such documents; (c) the refunding of the Refunded Bonds, the
issuance of the Bonds, and the provision of any information furnished by the
Company in connection therewith concerning the Project or the Company
(including, without limitation, any information furnished by the Company for
inclusion in any certifications made by the Issuer under Section 3.2 or for
inclusion in, or as a basis for preparation of, the information statements filed
by the Issuer pursuant to the Code) or the subsequent remarketing or
determination of the interest rate or rates on the Bonds; (d) any audit of the
tax status of the interest on the Bonds; and (e) any claim or action or
proceeding with respect to the matters set forth in (a), (b), (c) and (d) above
brought thereon, except to the extent that any liability, claim, cost or loss
was due to the Issuer’s willful misconduct.




The Company agrees
to indemnify the Trustee and to hold the Trustee harmless against, any and all
loss, claim, damage, fine, penalty, liability or expense incurred by it,
including out-of-pocket and incidental expenses and legal fees and expenses
(“Losses”), arising out of or in connection with the acceptance or
administration of the Indenture or the trusts thereunder or the performance of
its duties thereunder or under this Agreement, including the costs and expenses
of defending itself against or investigating any claim (whether asserted by the
Issuer, the Company, a Bondholder, or any other person) of liability in the
premises, except to the extent that any such loss, liability or expense was due
to its own negligence or bad faith. In addition to and not in limitation of the
preceding sentence, the Company agrees to indemnify the Trustee and any
predecessor Trustee and its agents, officers, directors and employees for any
Losses that may be imposed on, incurred by or asserted against it for following
any instructions or directions upon which the Trustee is authorized to rely
pursuant to the Indenture.




In case any action
or proceeding is brought against the Issuer or the Trustee, in respect of which
indemnity may be sought hereunder, the party seeking indemnity shall promptly
give notice of that action or proceeding to the Company, and the Company upon
receipt of that notice shall have the obligation and the right to assume the
defense of the action or proceeding; provided, that failure to give that notice
shall not relieve the Company from any of its obligations under this section
except to the extent, and only to the extent, that such failure prejudices the
defense of the claim, demand, action or proceeding by the Company. At its own
expense, an indemnified party may employ separate counsel and participate in the
defense; provided, however, where it is ethically inappropriate for one firm to
represent the interests of the Issuer and any other indemnified party or
parties, the Company shall pay the Issuer’s or the Trustee’s legal expenses,
respectively, in connection with the Issuer’s or the Trustee’s retention of
separate counsel. The Company shall not be liable for any settlement made
without its consent.




The indemnification
set forth above is intended to and shall include the indemnification of all
affected officials, directors, officers and employees of the Issuer and the
Trustee. That indemnification is intended to and shall be enforceable by the
Issuer and the Trustee, respectively, to the full extent permitted by
law.








13













5.6 Limitation of
Liability of the Issuer. All covenants,
stipulations, obligations and agreements of the Issuer contained in this
Agreement or the Indenture shall be effective to the extent authorized and
permitted by applicable law. No such covenant, stipulation, obligation or
agreement shall be deemed to be a covenant, stipulation, obligation or agreement
of any present or future member, officer, agent or employee of the Issuer in
other than his official capacity, and neither the members of the Issuer nor any
official executing the Bonds shall be liable personally on the Bonds or be
subject to any personal liability or accountability by reason of the issuance
thereof or by reason of the covenants, stipulations, obligations or agreements
of the Issuer contained in this Agreement or in the Indenture. Furthermore, no
obligation of the Issuer hereunder or under the Bonds shall be deemed to
constitute a pledge of the faith and credit of the Issuer, or the faith and
credit or taxing power of the State of Ohio or of any other political
subdivision thereof, but shall be payable solely out of Revenues provided under
the Indenture.




5.7 Insurance. The Company, at
its expense, shall procure and maintain, or cause to be procured and maintained,
continuously during the term of this Agreement, insurance policies with respect
to the Project against such risks (including all liability for injury to persons
or property arising from the operation of the Project) and in such amounts as
property of a similar character is usually insured by corporations similarly
situated and operating like properties.




5.8 Default,
etc. In addition to all
other rights of the Issuer granted herein, in the Note, or otherwise by law, the
Issuer shall have the right to specifically enforce the performance and
observation by the Company of any of its obligations, agreements or covenants
under this Agreement or under the Note and may take any actions at law or in
equity to collect any payments due or to obtain other remedies. If the Company
shall default under any provisions of this Agreement or in any payment under
this Agreement or the Note, and the Issuer shall employ attorneys or incur other
expenses for the collection of payments due or for the enforcement of the
performance or observation of any obligation or agreement on the part of the
Company contained herein or therein, the Company will on demand therefor
reimburse the reasonable fees of such attorneys and such reasonable expenses so
incurred.




5.9 Deficiencies in
Revenues. If for any reason,
including the Company’s being required to withhold or pay any tax imposed by
reason of its obligations evidenced by the Note, amounts paid to the Trustee on
the Note, together with other moneys held by the Trustee and then available,
would not be sufficient to make the corresponding payments of principal or
redemption price of, and interest on, the Bonds when such payments become due,
the Company will pay or cause to be paid the amounts required from time to time,
when due, to make up any such deficiency.




5.10 Rebate
Fund. If and to the
extent required by Section 6.04 of the Indenture, the Company shall calculate
the amount of Excess Earnings (as defined in the Indenture) as of the end of a
Bond Year or the date of payment in full of all outstanding Bonds and shall
notify the Trustee of that amount in writing. If the amount then on deposit in
the Rebate Fund created under the Indenture is less than the amount of Excess
Earnings, the Company shall, within five days after the date of the aforesaid
calculation, pay to the Trustee for deposit in the Rebate Fund an amount
sufficient to cause the Rebate Fund to contain an amount equal to the Excess
Earnings. The obligation of the Company to make such payments, if and to the
extent required by Section 6.04 of the Indenture, shall remain in effect and be
binding upon the Company notwithstanding the release and discharge of the
Indenture or the repayment of the loan as contemplated by Section 4.2. The
Company shall obtain and keep such records of the calculations made pursuant to
this Section as are required under Section 148(f) of the Code.




5.11 Assignment of
Agreement in Whole or in Part by Company. This Agreement may
be assigned in whole or in part by the Company without the necessity of
obtaining the consent of either the Issuer or the Trustee, subject, however, to
each of the following conditions:








14













(a) No assignment (other
than pursuant to Section 5.2 or Section 5.12 hereof) shall relieve the Company
from primary liability for any of its obligations hereunder, and in the event of
any such assignment the Company shall continue to remain primarily liable for
the payments under Sections 4.2, 5.3 and 5.4 hereof and for performance and
observance of the agreements on its part herein provided to be performed and
observed by it.




(b) Any assignment by
the Company must retain for the Company such rights and interests as will permit
it to perform its remaining obligations under this Agreement, and any assignee
from the Company shall assume the obligations of the Company hereunder to the
extent of the interest assigned.




(c) The Company shall
furnish to the Issuer, the Credit Facility Issuer and the Trustee an opinion of
Bond Counsel (as defined in the Indenture) addressed to the Issuer, the Credit
Facility Issuer and the Trustee that such assignment is authorized or permitted
by the Act and will not adversely affect the exclusion from gross income of
interest on the Bonds.




(d) The Company shall,
within 30 days after execution thereof, furnish or cause to be furnished to the
Issuer, the Credit Facility Issuer and the Trustee a true and complete copy of
each such assignment together with any instrument of assumption.




(e) Any assignment from
the Company shall not materially impair fulfillment of the purpose of the
Project as herein provided.




5.12 Assignment of
Agreement in Whole by Company. In addition to an
assignment contemplated by Sections 5.2 and 5.11 hereof, this Agreement may be
assigned as a whole by the Company, subject, however, to each of the following
conditions:




(a) The Company’s
rights, duties and obligations under this Agreement and all related documents
are assigned to, and assumed in full by, the assignee, all as of a date the
Bonds are subject to mandatory purchase under Section 5.01(b) of the
Indenture.




(b) The assignee and the
Company shall execute an assignment and assumption agreement, in form and
substance reasonably acceptable to the Company, and acknowledged and agreed to
by the Issuer, the Credit Facility Issuer and the Trustee, whereby the assignee
shall confirm and acknowledge that it has assumed all of the rights, duties and
obligations of the Company under this Agreement and all related documentation
and agrees to be bound by and to perform and comply with the terms and
provisions of this Agreement and all related documentation as if it had
originally executed the same; provided, however, that such acknowledgement and
agreement by the Issuer, the Credit Facility Issuer and the Trustee shall not be
necessary if  the assignee is an Affiliate of the Company.




(c) The Company shall
furnish to the Issuer, the Credit Facility Issuer and the Trustee an opinion of
Bond Counsel (as defined in the Indenture) addressed to the Issuer, the Credit
Facility Issuer and the Trustee that such assignment is authorized or permitted
by the Act and will not adversely affect the exclusion from gross income of
interest on the Bonds.




(d) The Company shall,
within 30 days after execution thereof, furnish or cause to be furnished to the
Issuer, the Credit Facility Issuer and the Trustee a true and complete copy of
such assignment and assumption agreement.




(e) Any assignment from
the Company shall not materially impair fulfillment of the purpose of the
Project as herein provided.

 

 







15












 



(f)  Upon the
effectiveness of such assignment and assumption, the assignee shall be deemed to
be the “Company” hereunder and the assignor shall be relieved of all liability
hereunder.

 

	   
      (g)   	
        VI.
      Miscellaneous.








6.1 Notices. Notice hereunder
shall be given in writing, either by registered mail, to be deemed effective two
days after mailing, by telegram, by telecopy or other similar facsimile
transmission, or by telephone, confirmed in writing, addressed as
follows:





	
      The
      Issuer
	
      -
	
      Ohio Water
      Development Authority

	 	 	
      480 South High
      Street

	 	 	
      Columbus, Ohio
      43215

	 	 	
      Attention:
      Executive Director

	 	 	 
	
      The
      Company
	
      -
	
      FirstEnergy
      Nuclear Generation Corp.

	 	 	
      76 South Main
      Street

	 	 	
      Akron, Ohio
      44308

	 	 	
      Attention:
      Secretary

	 	 	 
	
      The
      Trustee
	
      -
	
      The Bank of
      New York Trust Company, N.A.

	 	 	
      250 West Huron
      Road, 4th
      Floor

	 	 	
      Cleveland,
      Ohio 44113

	 	 	
      Attention:
      Corporate Trust Department







or to such other
address as may be filed in writing with the parties to this Agreement and with
the Trustee.




6.2 Assignments. This Agreement may
be assigned by the Company pursuant to Sections 5.11 and 5.12. This Agreement
may not be assigned by the Issuer without the consent of the Company and the
consent of the Trustee, which consent shall not be unreasonably withheld, except
that the Issuer may assign rights with respect to the Bonds to the Trustee
pursuant to Section 4.6 or to a successor public body. The Issuer will do all
things in its power in order to maintain its existence or assure the assignment
of its rights under this Agreement and the Indenture to, and the assumption of
its obligations under this Agreement and the Indenture by, any successor public
body. Notwithstanding the foregoing, no merger or consolidation permitted under
Section 5.2 shall be deemed to be an assignment for purposes of this Section
6.2.




6.3 Illegal, etc.
Provisions Disregarded. In case any
provision of this Agreement shall for any reason be held invalid, illegal or
unenforceable in any respect, this Agreement shall be construed as if such
provision had never been contained herein.




6.4 Applicable
Law. This Agreement has
been delivered in the State of Ohio and shall be deemed to be governed by, and
interpreted under, the laws of that State.




6.5 Amendments. This Agreement may
not be amended except by an instrument in writing signed by the parties and
consented to by the Trustee and otherwise in compliance with the provisions of
Section 15.03 of the Indenture.




6.6 Term of
Agreement. This Agreement
shall become effective upon its delivery and shall continue in effect until all
Bonds have been paid or provision for such payment has been made in accordance
with the Indenture, except that the provisions hereof contained in Sections 1.2,
3.2, 4.4, 4.5, 5.1, 5.3, 5.4, 5.5, 5.6, 5.10 and 6.4, this Section 6.6 and the
ninth paragraph of the Note shall continue in effect
thereafter.








16
















IN WITNESS WHEREOF,
the parties hereto, in consideration of the mutual covenants set forth herein
and intending to be legally bound, have caused this Agreement to be executed and
delivered as of the date first written above.








	 	
      OHIO WATER
      DEVELOPMENT AUTHORITY

	 	 
	
      By
	 
	 	
      Executive
      Director

	 	 
	 	 
	 	
      FIRSTENERGY
      NUCLEAR GENERATION

      CORP.

	 	 
	
      By
	 
	 	
      Assistant
      Treasurer















17













EXHIBIT
A

PROJECT
DESCRIPTION

 

The following waste
water facilities and solid waste facilities have been installed at the Perry
Nuclear Power Plant:




1.       Cooling Tower
System




Waste heat from the
Perry Nuclear Power Plant is discharged to the atmosphere using a natural draft
cooling tower. This closed cycle cooling water system prevents thermal pollution
by disposing of waste heat to the atmosphere instead of into Lake
Erie.




The natural draft
cooling tower is a large structure with a hyperbolic vertical shape. Cooling air
flow is established through the tower by the natural draft induced within the
tower. One natural draft cooling tower is required for Unit 1 of the Perry
Nuclear Power Plant. This tower will dissipate the waste heat of the unit during
normal operation which is 8.3 x 109 BTU per hour. The
cooling tower design flow rate is 545,000 gallons per minute.




At the base, the
cooling tower is 395 feet in diameter and the height is 514 feet. The outer
shell or “veil” of the cooling tower is reinforced concrete and the tower stands
over a 2.7 million gallon concrete basin.




The cooling tower
location is east of the main plant structures. This location required expansion
of the site area. It also required an extension of the shore protection barrier
750 feet to stabilize and protect the cooling tower foundation area from
erosion.




Heated circulating
water flows from the plant to the fill section of the cooling tower. As the warm
water falls downward through the fill it transfers waste heat to air rising
upward through the fill. The cooled water falls to the bottom of the tower and
is collected in the cold-water basin before it flows back to the plant. A
circulating water pumphouse encloses the three 185,000 gpm circulating water
pumps. These large pumps move cooling water between the plant and cooling towers
in a closed loop. Buried 12 foot diameter reinforced fiberglass pipes convey
cooling water through the closed loop between the cooling tower and the
plant.




To compensate for
evaporative and drift losses, make up water is supplied to the cooling tower.
Make up water is drawn from 2550 feet offshore into two submerged intake
structures in Lake Erie and flows through the 10 foot diameter intake tunnel to
the site.




Each offshore intake
structure is 36 feet in diameter to provide a low approach velocity. Inflow is
through eight ports around the perimeter of each circular intake structure. The
ports are each 3.62 feet high by 12 feet wide and are located 3 feet above the
lake bottom.




Cooling tower
blowdown is required to maintain dissolved solids in the recirculating cooling
water at acceptable levels. Accordingly, a continuous low volume flow of
recirculating cooling water is drawn from the system and discharged. Heated
service water discharge is combined with the cooling tower blowdown. This
combined effluent stream is then conveyed 1650 feet offshore in a 10 foot
diameter tunnel and discharged. The submerged diffuser discharge nozzle is
located in about 19 feet of water.




To control algae and
plant growth, a chlorine solution will be injected into the cooling-tower
circulating water. It is estimated that a daily dosage of approximately 96,000
pounds of 0.8 percent sodium hypochlorite solution will be required for the
cooling tower circulating water system. The circulating water system will be
sampled, monitored and recorded for chlorine residual. The chlorine solution is
generated by equipment in the hypochlorite generation building.








A-1













Sodium sulfite will
be injected into the cooling-tower blowdown at the discharge tunnel entrance
structure to remove any residual chlorine. This dechlorination system will be
operated in conjunction with the chlorine injection system. During chlorination
and dechlorination, the plant blowdown discharge will be continuously sampled at
the entrance to the plant discharge tunnel and monitored for chlorine residual.
Conductivity and pH will also be monitored. Sulfuric acid will be added to the
cooling tower circulating water system to prevent scale formation. A total daily
dosage of approximately 9,100 pounds of 93 percent sulfuric acid will be
required for the Unit 1 cooling tower circulating water system. The sulfuric
acid will be added on an automatic pH control basis to maintain circulating
water pH within desired operational limits.




In summary, the
scope of the closed cycle cooling tower system includes the following components
and subsystems:





	
      natural draft
      cooling tower

	
      circulating
      water pump house

	
      circulating
      water pumps

	
      circulating
      water pipe

	
      offshore
      intake structures

	
      intake
      tunnel

	
      discharge
      tunnel

	
      discharge
      diffuser structure

	
      hypochlorite
      generation subsystem

	
      hypochlorite
      generation building

	
      dechlorination
      subsystem

	
      acid storage
      building and equipment

	
      monitors

	
      related civil,
      mechanical and electrical auxiliaries







	 2.  	
            Waste Water
      Runoff System






The waste water
runoff system collects and treats yard area drainage. In accordance with
environmental requirements, it is necessary to treat yard runoff to remove
pollutants before discharge to Lake Erie.




Runoff from
throughout the site area is collected by yard drains and catch basins. These
collection devices are arranged into three separate drainage and treatment
subsystems. Each of the three collection and drainage subsystems leads to a
retention settling pond where settleable solids are removed from the waste
water. The three retention settling ponds are formed by construction of a cutoff
dike across a ravine or natural drainage course. Each cutoff dike is provided
with an outfall to permit selective discharge of treated waste water and
retention of floating or settleable solids.




The scope of
equipment included in this system includes:





	
      catch
      basins

	
      yard waste
      water drain pipe

	
      retention-settling
      ponds with cutoff dikes







	3.  	
            Chemical and Oily Waste
      System






The chemical and
oily waste treatment system collects, stores, processes, treats and disposes of
nonradioactive chemical and oily wastes. Waste water containing chemicals, oil
and other pollutants results from construction, start-up and operation of the
plant. These wastes are collected and treated to remove
pollutants.








A-2
















Water Treatment
Waste:




Chemical wastes are
produced by the water make up treatment plant during construction, startup and
normal operation. These wastes result from chemical treatment and resin
regeneration operations related to water filtration and demineralization. Acid
and caustic waste chemicals are collected in the waste neutralizing sump located
beneath the water make up treatment building. Neutralization equipment,
including acid and caustic tanks with associated pumps and piping, is used to
treat wastes in the sump. After treatment the waste is transferred to the
cooling water blowdown for discharge.




Sludge wastes are
also produced by the make up treatment plant. This waste results from
pretreatment of raw make up water in the make up water coagulators. Waste water
containing sludge and other settleable solids is transferred to the sludge
lagoons for storage and disposal. Auxiliary boiler blowdown is also routed to
the sludge lagoon for storage and disposal.




System Flush
Waste:




Preoperational
chemical cleaning wastes are produced during startup chemical flush of plant
systems. The plant systems will be flushed with alkaline chemicals including
trisodium phosphate, disodium phosphate and biodegradable detergent. Waste
chemical flush water will be discharged to the chemical cleaning waste lagoon
and neutralized using acid and lime. Following chemical flush, an additional
water rinse will be conducted to flush the system and will also be discharged to
the chemical cleaning waste lagoon.




System chemical
cleaning waste and final flush water will be transferred to the chemical
cleaning waste lagoon with temporary pipe installed for that purpose only. The
temporary pipe will extend 550 feet in length from the plant to the
lagoon.




Treatment in the
chemical cleaning waste lagoon will precipitate phosphate in the chemical flush
waste water. Upon precipitation the water is transferred to the stream
impoundment pond for further settling before discharge to the lake. The
phosphate sludge which settles to the bottom of the chemical cleaning waste
lagoon will be removed and disposed of by a contractor.




Oily
Waste:




Oily wastes are
collected from the turbine lubricating - oil area and diesel-generator area.
These wastes are transferred to the sludge lagoon for storage and
disposal.




Other oily wastes
originate from the main transformer, auxiliary transformer, interbus transformer
and startup transformer. All are provided with special curbs and drains to
collect waste oil and transfer it to oil interceptor-separator tanks. After
treatment for removal of waste oil, the waste water is discharged to the yard
drainage system. None of the waste oil collected by this system is recovered for
use or sold by the Company.








A-3
















Equipment and
components in the scope of exempt facilities used for the chemical and oil waste
system include:





	
      Water
      Treatment Waste

	 	
      waste
      neutralizing sump

	 	
      acid feed tank
      and pump

	 	
      caustic feed
      tank and pump

	 	
      sludge
      lagoons

	 	
      pipes and
      valves

	 	
      controls and
      instrumentation

	 	
      water
      treatment building portion

	 	 
	
      System Flush
      Waste

	 	
      chemical
      cleaning waste lagoon

	 	
      550 feet
      temporary waste pipe

	 	
      related
      support equipment

	 	 
	
      Oily
      Waste

	 	
      oil
      interceptor-separator

	 	
      curbs and
      drains

	 	
      pipe and
      valves

	 	
      related
      support equipment










	
      4.  
	
            Sanitary Waste
      System






Sanitary waste is
collected and disposed of by the sanitary waste system. Sanitary drains collect
waste from throughout the plant building and transfer it to yard piping which
leads to the sanitary waste collection and holding facility. The sanitary waste
collection and holding facility includes storage basins, sumps and transfer
pumps. Sanitary waste is collected and transferred to a sanitary sewer pipe
leading offsite to the municipal sewage system.




Equipment and
components in the scope of this exempt facility include:





	 	
      sanitary
      drains

	 	
      sumps and
      pumps

	 	
      holdup
      basins

	 	
      pump
      station

	 	
      control
      building







	5.  	
            Condensate Demineralizer
      Resin Regeneration System






The condensate
demineralizer resin regeneration system collects, processes and recycles spent
radioactive resin from the condensate demineralizers. The condensate
demineralizers use resin to filter and demineralize condensate. As the resin
accumulates impurities, it becomes ineffective and is removed from the
demineralizer vessels. The ineffective resin filled with impurities is called
spent resin because it is unusable as a filter-demineralizer. Spent resin from
the condensate demineralizers is radioactive and consequently it must be treated
as solid radwaste if it is to be disposed. Spent condensate demineralizer resin
is useless and has no value. The Company does not expect to sell, or to be able
to sell, spent radioactive resin at any price.








A-4













To minimize the
amount of solid radwaste produced by the plant, a condensate demineralizer resin
regeneration system has been installed. This will permit recycling of the spent
resin by a chemical regeneration process. The regeneration process involves
flushing the spent resin with acid and caustic chemicals in a rinse water
solution. This flushes trapped particles from the spent resin and restores its
ion exchange properties.




To regenerate spent
resin, it is first transferred from the condensate demineralizer vessels (not
part of the exempt facilities) to the resin separation and anion regeneration
tank. Cation resin is separated and transferred to the cation regeneration tank.
Dilute solutions of acid and caustic are prepared and pumped into the
regeneration vessels. Strong acid and caustic are supplied by the acid and
caustic tanks. Regenerated anion and cation resins are transferred to the resin
mix and storage tank for final preparation and treatment prior to being
transferred back to the condensate demineralizer. The turbine subbasement is an
area located under the turbine that is used exclusively in connection with the
resin regeneration process and is not used to store regenerated
resins.




Radioactive chemical
wastes are produced by the condensate demineralizer resin regeneration process.
These liquid wastes are collected and transferred to the liquid radwaste system
for processing and treatment.




Equipment and
components in the scope of this exempt facility include:





	
      acid
      tank

	
      caustic
      tank

	
      caustic
      dilution water heater

	
      resin
      separation and anion regeneration vessel

	
      cation
      regeneration vessel

	
      control panel
      with controls

	
      allocated
      portion of enclosure building, including

	 	
      turbine
      subbasement

	
      related pumps,
      piping, valves, electrical and

	 	
      mechanical
      support equipment




 

6.        Liquid Radwaste
System




	6.1  	
      Overview






The liquid radwaste
(LRW) system collects, processes, treats, recycles and disposes of low level
radioactive liquid-waste streams from normal operation of the Perry Nuclear
Power Plant Unit 1. The LRW system is designed to limit the annual release of
radioactivity in liquid effluents to ALARA levels in accordance with 10 CFR 50,
Appendix I.




The LRW is divided
into four subsystems for processing the following categories of liquid waste:
high-purity/low conductivity wastewater, medium-to-low purity/medium
conductivity wastewater, high conductivity chemical wastes and detergent drains.
The LRW system also provides for collection of the spent demineralizer resins,
filter/demineralizer and filter sludges, and evaporator bottoms, before
treatment in the solid radwaste disposal system. All waste streams are either
processed and recycled or processed and discharged to the lake. Processing
includes removal of radioactive contamination and other
pollutants.








A-5



















All LRW processing
equipment is located in the Radwaste Building. This building is fully dedicated
to exempt facilities including liquid radwaste, gaseous radwaste and solid
radwaste. The LRW system also includes dedicated space in the auxiliary building
and intermediate building. The qualifying portion of each building is calculated
by dividing the space used for LRW equipment by the total equipment space in the
building excluding common areas such as hallways. This space is functionally
related and subordinate to the LRW system, it is an integral part of the LRW
system, and the character, size and cost of such building space are dictated by
the LRW system through federal government construction criteria.




	6.2  	
      System
      Description






High-Purity/Low-Conductivity
Wastewater Subsystem:




This subsystem
collects drainage from equipment, rinse water from the condensate mixed-bed
demineralizers, and residual heat removal system flush/test water. The system
includes the drains from these sources as well as processing and treatment
equipment. These wastes are collected in one of two waste-collector tanks (on an
alternating basis) each sized to hold the normal daily input; they are processed
as a batch by being passed through a traveling belt filter to remove suspended
solids and a mixed-bed demineralizer to remove dissolved solids. Two waste
sample tanks, each sized to hold one batch of waste, are provided for sampling,
mixing and temporarily storing the treated effluent. After sampling, the batch
may either be recycled to the waste-collector tank for further treatment, sent
to the condensate-storage system, or discharged. For greater reliability, this
subsystem is cross-connected with identical equipment in the medium-to-low
purity subsystem.




Medium-to-Low-Purity/High-Conductivity
Wastewater Subsystem:




This subsystem
collects radioactive floor drainage, decantate from all the sludge-settling
tanks, backwash from the radwaste demineralizers, and the decantate from the
solid radwaste disposal system. Collection drain piping for these wastes is not
included in the exempt facility. With the exception of the floor drainage, the
wash streams can be diverted to the high purity subsystem, if water quality or
flow conditions warrant. The waste is collected in the two collector tanks which
are not included in the exempt facilities. Waste is processed as a batch by a
filter and demineralizer identical with those described above for the
high-purity wastes. Two floor-drain sample tanks, each sized to hold one batch
of waste, are provided for sampling, mixing, and temporarily storing treated
effluent. After sampling, the batch may be recycled to the floor-drain collector
tank for further treatment, sent to the condensate-storage system, or
discharged. This subsystem is cross-connected with identical equipment in the
high-purity subsystem.




Chemical Waste
Subsystem:




This subsystem
treats laboratory drains and regeneration solutions from the mixed-bed
condensate-polishing demineralizers. The wastes are collected in one of two
chemical waste tanks, each sized to hold the regeneration solutions from one
mixed-bed demineralizer. They are processed in a 30-gallon-per-minute horizontal
waste evaporator, sized to handle a batch in 10.5 hours. Before entering the
evaporator, the wastes are sampled and the pH level monitored. The pH will be
maintained at a level of 7 to 10 for optimum evaporator performance. Bottoms
from the evaporator are pumped to one of two concentrated-waste tanks and then
transferred from these tanks to the solid-waste treatment system. Distillate
from the evaporators is temporarily stored in one of two chemical waste
distillate tanks. After sampling, the distillate can be further processed
through the floor drainage demineralizer, pumped to the condensate-storage
system, or discharged.








A-6



















Detergent-Drains
Subsystem:




This subsystem
handles miscellaneous nonradioactive floor drains from the control complex, and
personnel decontamination station drains. The floor drains are not included in
the exempt facility. The waste is collected in one of two detergent drainage
tanks. After sampling, the waste is filtered and discharged via the sanitary
waste treatment system.




Collection of
Spent Resins, Filter/Demineralizer Sludge, and Filter Sludge:




Spent resins from
the mixed-bed condensate demineralizers, the suppression pool clean up
demineralizers, the radwaste demineralizer, and the floor drains demineralizer
is collected in one of two spent-resin tanks. Each tank is sized to hold the
spent resins from six condensate demineralizer vessels. The spent resins are
transferred as a water slurry to the solid-waste treatment system.




Backwash from the
condensate filter backwash receiving tanks and the reactor water clean up (RWCU)
filter/demineralizer backwash receiving tanks are pumped to settling tanks in
the radwaste building. The sludge will be allowed to settle to the bottom of
these tanks, while relatively clean water will be drawn off the top and pumped
to the floor-drain collector tank for further processing. After 10.5 days for
the condensate filter backwash and 60 days for the RWCU F/D backwash system, the
sludge is transferred to the solid-waste treatment system as a concentrated
water slurry.




Backwash from the
fuel pool filter/demineralizers is pumped to one of two fuel-pool
filter/demineralizer backwash settling tanks. The sludge is allowed to settle to
the bottom of these tanks while relatively clean water is drawn off the top and
pumped to the floor-drains collector tank for further processing. Periodically,
the sludge is transferred to the solid-waste treatment system as a concentrated
water slurry.




	6.3  	
      Equipment
      Listing






The following
equipment is included in the scope of exempt facilities:





	 	
      waste
      collector tanks

	 	
      waste
      collector filter

	 	
      radwaste
      demineralizer

	 	
      waste sample
      tanks

	 	
      floor drain
      filter

	 	
      floor drain
      demineralizer

	 	
      floor drain
      sample tanks

	 	
      chemical waste
      tanks

	 	
      evaporators

	 	
      chemical waste
      distillate tanks

	 	
      concentrated
      waste tank

	 	
      detergent
      drain tanks

	 	
      detergent
      drain filters

	 	
      condensate
      filter backwash receiving tanks











A-7

















	 	
      condensate
      backwash settling tanks

	 	
      RWCU filter
      demineralizer backwash receiving tanks

	 	
      RWCU filter
      demineralizer backwash settling tanks

	 	
      spent resin
      tanks

	 	
      fuel pool
      filter demineralizer backwash settling tanks

	 	
      equipment
      drains

	 	
      chemical
      drains

	 	
      detergent
      drains

	 	
      radiation
      monitors

	 	
      controls and
      instrumentation

	 	
      radwaste
      building portion (51.8% based on volume) for

	 	    LRW including
      all support services
	 	
      intermediate
      building portion for LRW

	 	
      auxiliary
      building portion for LRW

	 	
      related
      electrical, mechanical and structural
auxiliaries







7.       Solid Radwaste
System




7.l Overview




The solid radwaste
system (SRW) collects, stores, packages and prepares solid radioactive wastes
for disposal. Radioactive solid wastes processed by this system include spent
resins, filter sludges, evaporator concentrates as well as dry active waste
consisting of rags, clothing, paper and other trash. These radioactive solid
wastes have no use and no value. The company does not expect to sell, or to be
able to sell, these solid radioactive wastes at any price.




The SRW has two
subsystems. The waste solidification subsystem is used to solidify “wet” solid
wastes from plant equipment and from the LRW system. The Dry Active Waste (DAW)
Subsystem compacts dry trash type waste into standard 55-gallon
drums.




The SRW system also
includes dedicated space in the intermediate building. The qualifying portion of
such building is calculated by dividing the space used for SRW equipment by the
total equipment space in the building excluding common areas such as hallways.
This space is functionally related and subordinate to the SRW system, it is an
integral part of the SRW system, and the character, size and cost of such
building space are dictated by the SRW system through federal government
construction criteria.




	7.2  	
      System
      Description






Waste
Solidification: Waste
solidification subsystem is a packaged system; it uses portland cement and
sodium silicate to solidify liquid and slurry wastes. The system consists of
waste mixing and dewatering tanks, waste feed pumps, decanting pumps,
waste/cement mixing pumps, container fillports, cement and sodium silicate
storage tanks and feed equipment, drum capper, drum swipe-test station, drum
decontamination station, drum transfer cart, and overhead bridge
crane.








A-8



















All operations are
performed remotely and manually or semiautomatically from a centralized SRW
system control panel. All drum handling, capping, and decontamination activities
are also done remotely from this panel. The system is designed to handle
containers ranging in size from 55-gallon drums to 200-cubic-foot liners. Waste
to be solidified is first pumped to the mixing/dewatering tank. In the case of
radwaste filter cake, the cake falls by gravity through a chute connecting the
tank to the filters. Excess free water is then decanted and returned to the
liquid-radwaste system for further processing. The remaining liquid or slurry
waste is then pumped to a mixing pump, where it is mixed with cement. This
mixture is pumped from there to a retractable fillport located above the
container to be filled. As the waste/cement mixture enters the container, sodium
silicate is sprayed into the mixture. This patented cement/sodium silicate
process ensures against any free water by chemical reaction between the water
and both the cement and sodium silicate. The solidification process results in
forming a monolithic, free-standing, water-free solid consisting of waste,
cement and sodium silicate.




After the container
is filled, the radiation level at the surface of the container is measured
remotely, and the reading is logged in a record book, along with the quantity
and type of waste in the container. The fillport is then retracted and the
container moved by a self-powered, remote controlled transfer cart to a
swipe-test and capper station, where it is capped using a remote controlled
capper; a swipe test is taken remotely and manually. If the swipe test proves
negative (no contamination), the container is picked up by a remote-control
overhead bridge crane and placed in an in-plant, shielded storage vault. If the
container has been contaminated during the filling operation, it is moved by the
transfer cart to a decontamination station, where it is washed down remotely,
dried by a remote controlled heater/blower, swipe-tested again, and then
transferred by the bridge crane to the storage area. When it become permissible
to ship containers offsite and when there are enough filled containers to make a
shipment, the bridge crane will remotely transfer the containers from the
storage vault to a trailer in an adjacent in-plant truck bay. Until such time,
the filled containers will be transferred to an interim disposal
facility.




Dry Active
Waste: The dry active
waste subsystem uses a hydraulic compactor to compact trash such as paper,
cloth, glass, floor sweepings and other low level dry waste into 55-gallon
drums.




The drum
filling/compacting space is vented by a fan to prevent escape of radioactive
dust. The air is filtered to trap radioactive dust. An operators’ station is
provided with controls and instrumentation. The decontamination facility is
located in the intermediate building and is used for decontamination of solid
waste (i.e., low-level
radioactive contaminated items such as tools). It includes special equipment for
cleaning and removing low-level radioactive contamination. The facility also
includes a room with a filtered exhaust.




	7.3  	
      Equipment
      Listing






The following
equipment is included in the scope of the exempt facility:





	 	
      cement
      handling equipment

	 	
      sodium
      silicate handling equipment

	 	
      waste/cement
      mixing pumps

	 	
      waste
      mixing/dewatering tanks

	 	
      waste
      dewatering pumps

	 	
      waste feed
      pumps

	 	
      fill
      ports

	 	
      drum
      capper











A-9

















	 	
      hot air
      dryer

	 	
      decontamination
      station

	 	
      decontamination
      facility

	 	
      overhead
      bridge crane

	 	
      transfer
      cart

	 	
      hydraulic
      compactor

	 	
      solidified
      waste storage vault

	 	
      interim
      disposal and storage facility and related equipment

	 	
      low level
      compacted waste storage area

	 	
      radiation
      monitors

	 	
      controls and
      instrumentation

	 	
      intermediate
      building portion for SRW

	 	
      radwaste
      building portion (48.2% based on volume) for

	 	   SRW, including
      services and support equipment
	 	related
      electrical, mechanical and civil support	
       







8.       Spent Fuel
Handling Facility




	8.1  	
      Design
      Basis






The Perry Nuclear
Power Plant has a common spent fuel handling and storage facility located
between the reactor buildings. This facility has storage capacity for
approximately 4020 spent fuel assemblies. This constitutes spent fuel storage
capacity for over 15 years of operation. In addition the facility has additional
storage capacity for other high level solid wastes including discarded reactor
internals, control rods and fuel channels. The extended storage capacity of the
Perry spent fuel facility is needed in accordance with current practice to treat
and dispose of spent nuclear fuel and fuel assemblies as solid waste. Spent fuel
is unusable and has no value. The Company does not expect to sell or to be able
to sell spent nuclear fuel or fuel assemblies at any price.




The Perry spent fuel
facility is located in the fuel handling building and the intermediate building.
It includes two connected spent fuel storage pools with a related cooling
system, fuel handling and transfer equipment, and spent fuel cask handling
equipment. Spent fuel may be transferred between the fuel storage pools. The
spent fuel handling facility also includes dedicated space in the intermediate
building. The qualifying portion of such building is calculated by dividing the
space used for the spent fuel handling facility equipment by the total equipment
space in the building excluding common areas such as hallways. This space is
functionally related and subordinate to the spent fuel handling facility, it is
an integral part of the spent fuel handling facility, and the character, size
and cost of such building space are dictated by the spent fuel handling facility
through federal government construction criteria.




Also located in the
fuel handling building are production-related fuel handling equipment including
2 sets of new fuel racks, 2 fuel transfer tubes, 1 fuel transfer canal, a truck
bay for new fuel delivery and non fuel related equipment. These items and the
space they occupy in the fuel handling building are excluded from the scope of
the qualifying portion of exempt facilities because they are not dedicated to
spent fuel storage.




In the absence of
current spent fuel storage requirements, the spent fuel storage facility would
not be necessary. The reactor building and fuel handling equipment is adequate
to provide production related fuel handling functions which include new fuel
loading and 1 core offload for maintenance. None of this production-related
equipment is included in the scope of the qualifying portion of exempt
facilities.








A-10
















	8.2  	
      Components
      and Equipment






The Perry fuel
handling system includes the following 3 types of equipment:





	 	
      spent fuel
      handling and storage equipment

	 	
      production-related
      equipment for new fuel loading and

	 	 	
      1 core
      offload

	 	
      dual function
      equipment for spent fuel and production-

	 	 	
      related
      functions







	8.3  	
      Spent Fuel
      Handling and Storage Equipment






spent fuel pools:
located in the fuel handling building and constructed of reinforced concrete
with stainless steel liner plate attached to the interior walls and floor; pool
dimensions are 36 ft. x 20 ft. x 44 ft. deep and 36 ft. x 25 ft. x 44 ft.
deep




spent fuel racks:
located in each spent fuel pool with total storage capacity of 4020 fuel
assemblies (5.4 reactor cores) plus 30 additional spaces for multipurpose
storage of other high level solid waste including discarded reactor internals,
control rods and fuel channels




spent fuel cask
pool: located in the fuel handling building and constructed of reinforced
concrete with overall dimensions of 14 ft. x 23 ft. x 44 ft. deep




spent fuel cask
decontamination: located in the fuel handling building and consisting of a
concrete enclosure and pad with washdown and drain piping




3 spent fuel
transfer canals: located in the fuel handling building and constructed of
reinforced concrete with stainless steel liner and gates; these canals provide
underwater transfer pathway for spent fuel between each pool and to the spent
fuel cask pool




spent fuel cask
loading bay: located in the fuel handling building for loading spent fuel casks
onto a railroad car or truck




spent fuel cask
building crane and hoist: located in the fuel handling building; this is a
125-ton capacity bridge crane and hoist for handling the spent fuel
cask




	8.4  	
      Production
      Related Fuel Handling Equipment:






reactor building
fuel pool: located in the reactor building and constructed of reinforced
concrete with stainless steel liner plate on the interior walls and floor; this
pool has sufficient capacity for 1 core and is connected to the reactor cavity
by a fuel transfer canal




reactor building
fuel handling equipment: located in the reactor building and used to load new
fuel into the reactor or remove fuel from the reactor








A-11



















2 new fuel storage
pits and racks: located in the fuel handling building and used to store new fuel
before transfer into the reactor building




new fuel truck bay:
located in the fuel handling building and used to unload new fuel from
trucks




residual heat
removal system: used to remove 1 core decay heat from either the reactor or fuel
pools




control rod drives
decontamination equipment




	8.5  	
      Dual
      Function Equipment






fuel transfer pool:
located in the fuel handling building and constructed of reinforced concrete
with stainless steel liner plate on the interior walls and floor; this pool is
used for the transfer of new fuel into the reactor building and for transfer of
spent fuel out of the reactor building




2 fuel transfer
tubes: connecting the fuel transfer pool to the reactor building pools; each
tube allows transfer of new fuel into and spent fuel out of the reactor
building




2 fuel transfer
carriages: transfers new or spent fuel assemblies through the fuel transfer
tubes




fuel pool cooling
and cleanup system: provides cooling to the spent fuel pools, cask pool,
transfer pool and reactor building pool; the heat exchangers are located in the
intermediate building




closed cooling
system components and piping for waste heat removal from the spent fuel pool
heat exchangers




fuel handling
building: located between the reactor building and constructed of reinforced
concrete; this building encloses the spent fuel pools, fuel transfer pool, cask
pool, new fuel pits, truck bay, cask loading bay as well as related
equipment




fuel handling
equipment in fuel handling building: transfers fuel assemblies and includes
cranes, platforms, tools and other equipment




	8.6  	
      Cost
      Allocation Methodology






The cost of the
Perry fuel handling system allocable to the qualifying portion of spent fuel
storage is determined by analyzing the function, usage and capacity of
individual components.








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All equipment which
is fully dedicated to spent fuel storage and disposal is included in the scope
of the qualifying portion of exempt facilities. Accordingly, the entire cost of
the following is included in the qualifying portion:





	
      2 spent fuel
      storage pools

	
      spent fuel
      storage racks

	
      spent fuel
      transfer canals

	
      spent fuel
      cask pool

	
      spent fuel
      cask decontamination equipment

	
      spent fuel
      cask loading bay

	
      spent fuel
      cask bridge crane and hoist

	
      related
      electrical, mechanical and structural
auxiliaries







None of the cost of
production related components are included in the scope of the qualifying
portion of exempt facilities because this equipment would have been necessary
for plant operation in the absence of spent fuel storage. Accordingly, none of
the cost of the following is included in the scope of the qualifying portion of
exempt facilities:





	 	
      reactor
      building fuel pool and attached piping

	 	
      reactor
      building fuel handling equipment

	 	
      2 new fuel
      storage pits and racks

	 	
      new fuel truck
      bay

	 	
      residual heat
      removal system

	 	
      control rod
      drives decontamination equipment







Dual function
equipment is analyzed to determine if any portion of its cost may be allocated
to spent fuel storage. Based on this analysis, the following allocations are
applied.




The fuel pool
cooling system will function to remove decay heat from all spent fuel and decay
heat from a l/3 core offload of production related fuel. Based on the total heat
removal capacity of this system it is determined that 74.2% of its capacity is
for spent fuel related heat removal and 25.8% is for production related heat
removal. Accordingly, 74.2% of the cost of the fuel pool cooling system is
included in the qualifying portion of exempt facilities.




Allocation of the
fuel handling building cost is based on a volumetric analysis. By eliminating
the space for non spent fuel usage, it is determined that 93.6% of the fuel
handling building volume is dedicated to spent fuel. This is computed by
eliminating the space for the new fuel pit and truck bay as well as the fuel
transfer pool and tubes. Accordingly 93.6% of the fuel handling building cost is
included in the qualifying portion of exempt facilities.




Likewise, for the
intermediate building, 1.8% of its space is dedicated to spent fuel related
equipment including the spent fuel heat exchangers and piping. Accordingly, 1.8%
of the intermediate building cost is included in the qualifying portion of
exempt facilities.




Piping in the fuel
handling system also serves qualified and nonqualified functions. Based on an
analysis by linear feet of pipe, 93.l% of the piping is determined to serve
spent fuel functions. Accordingly 93.l% of the fuel handling system piping cost
is included in the qualifying portion of exempt facilities.








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The heating,
ventilating and air conditioning (HVAC) system in the fuel handling building
serves qualified and nonqualified areas of the building. All of the cost of the
HVAC exhaust system has been separately identified as an air pollution control
facility and consequently is not included here. However, the HVAC supply air
system in the fuel handling building is included to the extent that it serves
qualified building space for spent fuel. Since 93.6% of the fuel handling
building is dedicated to spent fuel, 93.6% of the HVAC supply system is included
in the qualifying portion of exempt facilities.




Some of the dual
function equipment equally serves qualified and nonqualified functions. This
includes equipment for which half of its usage is new fuel loading and half is
for spent fuel handling. This includes the fuel handling platform, fuel carriage
and other fuel handling or transfer equipment in the fuel handling building.
None of the cost of this equipment has been included in the qualifying portion
of exempt facilities.




 


 







A-14













EXHIBIT
B

FORM OF COMPANY
NOTE

FIRSTENERGY NUCLEAR
GENERATION CORP.

WASTE WATER
FACILITIES AND SOLID WASTE FACILITIES
NOTE

SERIES
2006-B


 

FIRSTENERGY NUCLEAR
GENERATION CORP. (the “Company”), an Ohio corporation, for value received,
promises to pay to The Bank of New York Trust Company, N.A. (the “Trustee”), as
Trustee under the Trust Indenture dated as of December 1, 2006 (the “Indenture”)
of the Ohio Water Development Authority (the “Issuer”), the principal sum of
$135,550,000 on December 1, 2033 and to pay (i) interest thereon from the date
hereof until the payment of said principal sum has been made or provided for at
a rate or rates at all times equal to the interest rate or rates from time to
time borne by the Issuer’s State of Ohio Pollution Control Revenue Refunding
Bonds, Series 2006-B (FirstEnergy Nuclear Generation Corp. Project) (the
“Bonds”) and payable on each date that interest is payable on the Bonds, and
(ii) interest on overdue principal, and to the extent permitted by law, on
overdue interest, at the rate or rates borne by the Bonds.


 

In addition to its
obligations hereunder to pay the principal of and interest on this Note, the
Company also agrees to pay to The Bank of New York Trust Company, N. A., as
Tender Agent (the “Tender Agent”), the amounts necessary to purchase Bonds
pursuant to Section 5.01 of the Indenture to the extent that moneys are not
otherwise available therefor pursuant to Section 5.03 of the
Indenture.




This Note is issued
pursuant to a certain Waste Water Facilities and Solid Waste Facilities Loan
Agreement (the “Agreement”) dated as of December 1, 2006 between the Issuer and
the Company relating to the refunding of certain obligations of the Issuer
previously issued to assist certain affiliates of the Company in the financing
of a portion of the cost of acquiring, constructing and installing certain waste
water facilities and solid waste facilities described in Exhibit A to the
Agreement (the “Project”). The obligations of the Company to make the payments
required hereunder shall be absolute and unconditional without defense or
set-off by reason of any default by the Issuer under the Agreement or under any
other agreement between the Company and the Issuer or by a Credit Facility
Issuer, if any, under a Credit Facility, if any, or for any other reason,
including without limitation, loss or impairment of investments in the Bond
Fund, any acts or circumstances that may constitute failure of consideration,
destruction of or damage to the Project, commercial frustration of purpose, or
failure of the Issuer to perform and observe any agreement, whether express or
implied, or any duty, liability or obligation arising out of or connected with
the Agreement, it being the intention of the Company and the Issuer that the
payments hereunder will be paid in full when due without any delay or diminution
whatsoever.




This Note is subject
to prepayment, at the option of the Company, upon written notice to the Trustee
given not less than 15 days prior to the day on which the Trustee is required to
give notice of optional redemption to the Bondholders pursuant to Section 9.04
of Indenture, to the extent that the Bonds are subject to optional redemption
pursuant to Section 9.01(a) of the Indenture at a prepayment price equal to the
corresponding redemption price of the Bonds. Notice of any optional prepayment
of this Note shall be conditional if the corresponding notice of optional
redemption of the Bonds under Section 9.04 of the Indenture is conditional and
if the optional redemption of the Bonds does not occur as a result of a failure
of such condition, the notice of optional prepayment of this Note shall be of no
effect.








B-1
















If the Bonds are
being called for mandatory redemption as provided in Section 9.01(b) of the
Indenture, the Company shall, on or before the proposed redemption date for the
Bonds, pay to the Trustee the whole or portion of the unpaid principal amount of
this Note equal to the principal amount of the Bonds being called for mandatory
redemption.




In the event that
the Company receives notice from the Trustee pursuant to Section 9.01(b) of the
Indenture that a proceeding has been instituted against a Bondholder which could
lead to a final determination that interest on the Bonds is taxable and to
Special Mandatory Redemption of the Bonds as contemplated by such Section, the
Company shall promptly notify the Trustee and the Issuer whether or not it
intends to contest such proceeding. In the event that the Company chooses to so
contest, it will use its best efforts to obtain a prompt final determination or
decision in such proceeding or litigation and will keep the Trustee and the
Issuer informed of the progress of any such proceeding or
litigation.




Upon receipt by the
Trustee of notice of optional prepayment in accordance with Section 9.01(a) of
the Indenture and at the time of the giving of notice by the Trustee to the
Company of a mandatory prepayment, the Trustee shall take all action necessary
under and in accordance with the Indenture to redeem Bonds in an amount
corresponding to that specified in the particular notice.




The Company is
entitled to a credit against its obligations under this Note and this Note shall
not be subject to required payment or prepayment to the extent that amounts
which would otherwise be payable by the Company hereunder are paid from drawings
under or payments made pursuant to the Credit Facility, if any, then held by the
Trustee or from other funds held by the Trustee under the Indenture and
available for such payment.




Whenever payment or
provision therefor has been made in respect of the principal or redemption price
of all or any portion of the Bonds and interest on all or any portion of the
Bonds, together with all other sums payable by the Issuer under the Indenture,
in accordance with Article XVI of the Indenture, this Note shall be deemed paid
to the extent such payment or provision therefor has been made, and if thereby
deemed paid in full, this Note shall be canceled and returned to the Company.
Notwithstanding the foregoing, if, for any reason, the amounts specified above
are not sufficient to make corresponding payments of principal or redemption
price of the Bonds and interest on the Bonds, when such payments are due, the
Company shall pay as additional amounts due hereunder, the amounts required from
time to time to make up any such deficiency.




All payments of
principal, prepayment price, if any, and interest shall be made to the Trustee
at its designated corporate trust office or as otherwise directed by the
Trustee, and all payments pursuant to the second paragraph of this Note shall be
made to the Tender Agent at its designated corporate trust office or as
otherwise directed by the Trustee, in each case, in such coin or currency of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts. All payments shall be in the full amount
required hereunder unless the Trustee notifies the Company that it is entitled
to a credit under the Agreement, this Note or the Indenture.




Each of the
following events is hereby defined as, and is declared to be and to constitute,
an “Event of Default”:




(a) failure by the
Company to pay the principal or prepayment price of this Note in the amounts and
at the times necessary to enable the Trustee to pay the principal or redemption
price of the Bonds at maturity or upon unconditional proceedings for redemption
when due; or








B-2













(b) failure by the
Company to pay interest on this Note in amounts and at these times necessary to
enable the Trustee to pay interest on the Bonds, (i) if such Bonds bear interest
at a Commercial Paper Rate, Dutch Auction Rate, Daily Rate, Weekly Rate or
Semi-Annual Rate, when due, and (ii) if such Bonds bear interest in any other
Interest Rate Mode then within one Business Day of when such interest becomes
due and payable; or




(c) failure by the
Company to pay the amounts due on this Note sufficient to enable the Tender
Agent to pay the purchase price of any Bonds in accordance with Section 5.01 of
the Indenture when such payment has become due and payable; or




(d) (i) if the Company
shall (1) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian or the like of itself or of its property, (2) admit in
writing its inability to pay its debts generally as they become due, (3) make a
general assignment for the benefit of creditors, (4) be adjudicated a bankrupt
or insolvent, (5) commence a voluntary case under Title 11 of the United States
Code (the “Bankruptcy Code”) or file a voluntary petition or answer seeking
reorganization, an arrangement with creditors or an order for relief or seeking
to take advantage of any insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy, reorganization or
insolvency proceeding; or corporate action shall be taken by it for the purpose
of effecting any of the foregoing, or (ii) if without the application, approval
or consent of the Company, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of the Company an order
for relief or an adjudication in bankruptcy, reorganization, dissolution,
winding up, liquidation, a composition or arrangement with creditors, a
readjustment of debts, the appointment of a trustee, receiver, liquidator or
custodian or the like of the Company or of all or any substantial part of its
assets, or other like relief in respect thereof under any bankruptcy or
insolvency law, and, if such proceeding is being contested by the Company in
good faith, the same shall (A) result in the entry of an order for relief or any
such adjudication or appointment or (B) continue undismissed, or pending and
unstayed, for any period of sixty (60) consecutive days; or




(e)  acceleration of
maturity of the Bonds under Section 11.02 of the Indenture.




Upon the occurrence
of an Event of Default and during the continuance thereof, the Trustee, by
notice in writing to the Company, shall in the case of an Event of Default under
paragraph (e) above and may in the case of any other Event of Default declare
the unpaid balance of this Note to be due and payable immediately if,
concurrently with or prior to such notice, the unpaid principal amount of the
Bonds has been declared due and payable, and upon any such declaration the same
shall become and shall be immediately due and payable, anything in this Note to
the contrary notwithstanding. Notwithstanding the foregoing, if after any
declaration of acceleration hereunder there is an annulment of any declaration
of acceleration with respect to the Bonds, such annulment shall also
automatically constitute an annulment of any corresponding declaration under
this Note and a waiver and rescission of the consequences of such
declaration.








B-3













In case the Trustee
shall have proceeded to enforce any right under this Note and such proceedings
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Trustee, then and in every such case the Company and
the Trustee shall be restored to their respective positions and rights
hereunder, and all rights, remedies and powers of the Company and the Trustee
shall continue as though no such proceeding had been taken, but subject to the
limitations of any such adverse determination.




The Company
covenants that, in case default shall be made in the payment of any installment
of principal, prepayment price or interest in respect of this Note, whether at
maturity or by declaration or otherwise, then, upon demand of the Issuer or the
Trustee, the Company will pay to the Trustee the whole amount that then shall
have become due and payable on this Note for principal, prepayment price and
interest with interest on the overdue principal and prepayment price and (to the
extent enforceable under applicable law) on the overdue installments of interest
at the rate or rates borne by this Note; and, in addition thereto, such further
amount as shall be sufficient to cover the reasonable costs and expenses of
collection, including a reasonable compensation to the Trustee, its agents,
attorneys and counsel, and any expenses or liabilities incurred by the Trustee
other than through its negligence or bad faith.




In case the Company
shall fail forthwith to pay such amounts upon such demand, the Trustee shall be
entitled and empowered to take any actions permitted under applicable law and to
institute any actions or proceedings at law or in equity for the collection of
the sums so due and unpaid, and may prosecute any such action or proceeding to
judgment or final decree, and may enforce any such judgment or final decree
against the Company and collect in the manner provided by law out of the
property of the Company the moneys adjudged or decreed to be
payable.




In case there shall
be pending proceedings for the bankruptcy or for the reorganization of the
Company under the Bankruptcy Code or any other applicable law, or in case a
receiver or trustee shall have been appointed for the property of the Company or
in the case of any other similar judicial proceedings relative to the Company,
or to the creditors or property of the Company, the Trustee shall be entitled
and empowered, by intervention in such proceedings or otherwise, to file and
prove a claim or claims for the whole amount of this Note and interest owing and
unpaid in respect thereof and, in case of any judicial proceedings, to file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee allowed in such judicial proceedings
relative to the Company, its creditors, or its property, and to collect and
receive any moneys or other property payable or deliverable on any such claims,
and to distribute the same after the deduction of its charges and expenses; and
any receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized to make such payments to the Trustee, and to pay to the Trustee any
amount due it for compensation and expenses, including counsel fees incurred by
it up to the date of such distribution.




No remedy herein
conferred is intended to be exclusive of any other remedy or
remedies.




No recourse shall be
had for the payment of the principal or prepayment price of or interest on this
Note, or for any claim based hereon or on the Agreement, against any officer,
director or stockholder, past, present or future, of the Company as such, either
directly or through the Company, under any constitutional provision, statute or
rule of law, or by the enforcement of any assessment or by any legal or
equitable proceeding or otherwise.




This Note shall at
all times be and remain part of the trust estate under the Indenture, and no
assignment or transfer by the Trustee of its rights hereunder, other than (i) a
transfer made after an Event of Default under the Indenture in the course of the
Trustee’s exercise of its rights and remedies consequent upon such Event of
Default, or (ii) a transfer required in the performance of the Trustee’s duties
under the Indenture, shall be effective.








B-4
















Capitalized terms
used in this Note not defined herein shall have the meanings ascribed to them in
the Indenture.




IN WITNESS WHEREOF,
the Company has caused this Note to be duly executed and delivered.








	
      Dated:  December
      5, 2006
	 	
      FIRSTENERGY
      NUCLEAR 

      GENERATION
      CORP.

	 	 	 
	 	
      By:
	 
	 	 	
      Assistant
      Treasurer










 


 







B-5