Unassociated Document








 

SUPPLEMENTAL
LETTER OF CREDIT AGREEMENT

 

Dated as of
December 5, 2006

 

among

 

FIRSTENERGY
CORP.

 

FIRSTENERGY
GENERATION CORP.

 

and

 

BARCLAYS
BANK PLC, 

 

acting
through its New York Branch,

 

as
Fronting Bank

 

relating
to

 

$234,520,000

 

OHIO AIR
QUALITY DEVELOPMENT AUTHORITY

 

STATE OF
OHIO POLLUTION CONTROL 

 

REVENUE
REFUNDING BONDS SERIES 2006-A

 

(FirstEnergy
Generation Corp. Project)

 




















CH1
3653079v.7 43208/30110























TABLE OF
CONTENTS








	
      PRELIMINARY
      STATEMENTS
	
      1

	 	 	 
	 	
      ARTICLE
      I
	 
	 	 	 
	 	
      DEFINITIONS
      
	 
	 	 	 
	
      SECTION
      1.01
	
      Certain
      Defined Terms.
	
      2

	
      SECTION
      1.02
	
      Computation of
      Time Periods.
	
      11

	
      SECTION
      1.03
	
      Accounting
      Terms.
	
      11

	
      SECTION
      1.04
	
      Certain
      References.
	
      11

	 	 	 
	
      ARTICLE
      II

	
      AMOUNTS AND
      TERMS OF THE LETTER OF CREDIT

	 	 	 
	
      SECTION
      2.01
	
      The Letter of
      Credit
	
      11

	
      SECTION
      2.02
	
      Repayments and
      Prepayments
	
      12

	
      SECTION
      2.03
	
      Source of
      Funds
	
      12

	 	 	 
	
      ARTICLE
      III

	
      CONDITIONS OF
      PRECEDENT

	 	 	 
	
      SECTION
      3.01
	
      Conditions
      Precedent to Issuance of the Letter of Credit.
	
      12

	
      SECTION
      3.02
	
      Additional
      Conditions Precedent to Issuance of the Letter of Credit 

      and Amendment
      of the Letter of Credit
	
       

      14

	 	 	 
	
      ARTICLE
      IV

	
      REPRESENTATIONS
      AND WARRANTIES

	 	 	 
	
      SECTION
      4.01
	
      Representations
      and Warranties of FirstEnergy
	
      15

	
      SECTION
      4.02
	
      Representations
      and Warranties of the Company
	
      17

	 	 	 
	 	
      ARTICLE
      V
	 
	 	
      COVENANTS
      
	 
	 	 	 
	
      SECTION
      5.01
	
      Affirmative
      Covenants of the Company
	
      22

	
      SECTION
      5.02
	
      Negative
      Covenants of the Company
	
      25

	
      SECTION
      5.03
	
      Financial
      Covent of the Company
	
      29

	 	 	 
	 	 	 
	 	
      ARTICLE
      VI
	 
	 	
      EVENTS OF
      DEFAULT
	 
	 	 	 
	
      SECTION
      6.01
	
      Events of
      Default
	
      30

	
      SECTION
      6.02
	
      Upon an Event
      of Default
	
      32

	 	 	 
	 	 	 










i




CH1
3653079v.7 43208/30110























TABLE OF
CONTENTS (CONTINUED)





	
      ARTICLE
      XII

	
      MISCELLANEOUS

	 	 	 
	
      SECTION
      7.01
	
      Amendments,
      Etc.
	
      33

	
      SECTION
      7.02
	
      Notices,
      Etc.
	
      33

	
      SECTION
      7.03
	
      No Waiver;
      Remedies
	
      34

	
      SECTION
      7.04
	
      Set-off
	
      34

	
      SECTION
      7.05
	
      Indemnification
	
      34

	
      SECTION
      7.06
	
      Liability of
      the Fronting Bank
	
      35

	
      SECTION
      7.07
	
      Costs,
      Expenses and Taxes
	
      36

	
      SECTION
      7.08
	
      Binding
      Effect
	
      36

	
      SECTION
      7.09
	
      Assignments
      and Participation
	
      36

	
      SECTION
      7.10
	
      Severability
	
      37

	
      SECTION
      7.11
	
      GOVERNING
      LAW
	
      37

	
      SECTION
      7.12
	
      Headings
	
      37

	
      SECTION
      7.13
	
      Submission to
      Jurisdiction; Waivers
	
      37

	
      SECTION
      7.14
	
      Acknowledgments
	
      38

	
      SECTION
      7.15
	
      WAIVERS
      OF JURY TRIAL
	
      38

	
      SECTION
      7.16
	
      Execution in
      Counterparts
	
      38

	
      SECTION
      7.17
	
      “Reimbursement
      Agreement” for Purposes of Indenture
	
      38

	
      SECTION
      7.18
	
      USA PATRIOT
      Act
	
      38

	 	 	 
	
      ARTICLE
      XIII

	
      GUARANTY

	 	 	 
	
      SECTION
      8.01
	
      Guaranty;
      Limitation of Liability
	
      39

	
      SECTION
      8.02
	
      Guaranty
      Absolute
	
      40

	
      SECTION
      8.03
	
      Waivers and
      Acknowledgments
	
      41

	
      SECTION
      8.04
	
      Subrogation
	
      42

	
      SECTION
      8.05
	
      Subordination
	
      42

















ii




CH1
3653079v.7 43208/30110



























	
       

      EXHIBITS
	 	 
	
       

      Exhibit
      A
	
       

      -
	
       

      Form of
      Letter of Credit

	
      Exhibit
      B
	
      -
	
      Form of
      Custodian Agreement

	
      Exhibit
      C
	
      -
	
      Form of
      Opinion of Gary D. Benz, Esq., Counsel to FirstEnergy and the
      Company

	
      Exhibit
      D
	
      -
	
      Form of
      Opinion of Akin Gump Strauss Hauer & Feld LLP, special New York
      counsel to FirstEnergy and the Company

	
      Exhibit
      E
	
      -
	
      Form of
      Opinions of Sidley Austin LLP, special New York counsel to the Fronting
      Bank

	
      Exhibit
      F
	
      -
	
      Form of
      Opinion of Lovells, special English counsel to the Fronting
      Bank







 











CH1
3653079v.7 43208/30110























 

SUPPLEMENTAL
LETTER OF CREDIT AGREEMENT

 

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

 


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




 


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




 


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




 

PRELIMINARY
STATEMENTS

 

(1) The Ohio Air Quality
Development Authority (the “Issuer”) has caused to be
issued, sold and delivered, pursuant to a Trust Indenture, dated as of December
1, 2006 (as amended from time to time in accordance with the terms thereof and
hereof, the “Indenture”), between the
Issuer and The Bank of New York Trust Company, N.A., as trustee (such entity, or
its successor as trustee, being the “Trustee”), $234,520,000
original aggregate principal amount of State of Ohio Pollution Control Revenue
Refunding Bonds, Series 2006-A (FirstEnergy Generation Corp. Project) (the
“Bonds”) to various
purchasers.

 

(2) FirstEnergy has
requested that the Fronting Bank issue and the Fronting Bank agrees to issue, on
the terms and conditions set forth in this Agreement and the Credit Agreement
(as hereinafter defined), its Irrevocable Transferable Letter of Credit No.
SB-01054, to be dated on or before December 5, 2006, in favor of the Trustee in
the stated amount of $236,833,074, a form of which is attached hereto as Exhibit
A (such letter of credit, as it may from time to time be extended or amended
pursuant to the terms of the Credit Agreement, the “Letter
of Credit”), of which (i)
$234,520,000 shall support the payment of principal of the Bonds, and (ii)
$2,313,074 shall support the payment of up to 36 days’ interest on the principal
amount of the Bonds computed at a maximum rate of 10.0% per annum
(calculated on the
basis of a year of 365 days for the actual days elapsed). 

 

(3) FirstEnergy desires
that the Letter of Credit be a “Letter of Credit” issued pursuant to the Credit
Agreement.

 

(4) Section 2.04(b) of
the Credit Agreement provides that the amount, terms and conditions of each
“Letter of Credit” issued under the Credit Agreement shall be subject to
approval by the applicable Fronting Bank and FirstEnergy (as defined in the
Credit Agreement). 

 

(5)  The Fronting Bank
and FirstEnergy agree that the Letter of Credit be issued in the amount and
under the terms and conditions set forth herein and in the Credit
Agreement.






















 

NOW, THEREFORE, in
consideration of the premises and in order to induce the Fronting Bank to issue
the Letter of Credit as provided herein, the parties hereto agree as
follows:

 

ARTICLE
I

 

DEFINITIONS

 

SECTION
1.01. Certain Defined Terms. Capitalized terms
used herein and not otherwise defined shall have the meanings given such terms
in the Credit Agreement or the Indenture. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms
defined):

 

“Advances” has the meaning
assigned to that term in the Credit Agreement.

 

“Affiliate” means, as to any
Person, any other Person that, directly or indirectly, controls, is controlled
by or is under common control with such Person or is a director or officer of
such Person.

 

“Agreement” means this
Supplemental Letter of Credit Agreement as it may be amended, supplemented or
otherwise modified in accordance with the terms hereof at any time and from time
to time.

 

“Applicable
Booking Office” means, with respect
to the Fronting Bank, the office of the Fronting Bank specified as such opposite
its name on Schedule I hereto or the office of an assignee in an Assignment and
Acceptance relating to the Letter of Credit, or such other office of the
Fronting Bank or such assignee may from time to time specify to FirstEnergy and
the Company.

 

“Applicable
Law” means all applicable
laws, statutes, treaties, rules, codes, ordinances, regulations, permits,
certificates, orders, interpretations, licenses, and permits of any Governmental
Authority and judgments, decrees, injunctions, writs, orders or like action of
any court, arbitrator or other judicial or quasi-judicial tribunal (including,
without limitation, those pertaining to health, safety, the environment or
otherwise).

 

“Assignment
and Acceptance” has the meaning
assigned to that term in the Credit Agreement.

 

“Available
Amount” in effect at any
time means the maximum amount available to be drawn at such time under the
Letter of Credit, the determination of such maximum amount to assume compliance
with all conditions for drawing and no reduction for any amount drawn by the
Trustee in order to make a regularly scheduled payment of interest on the Bonds
(unless such amount is not reinstated under the Letter of Credit).

 

“Bankruptcy
Code” means Title 11 of
the United States Code, as now constituted or hereafter
amended.






















 

“Bankruptcy
Law” has the meaning
assigned to that term in Section 8.01(a).

 

“Beneficiary” has the meaning
assigned to that term in Section 8.01(a).

 

“Bonds” has the meaning
assigned to that term in the Preliminary Statements hereto.

 

“Business
Day” means any day
other than (i) a Saturday or Sunday or legal holiday or day on which banking
institutions in the city or cities in which the “Designated Office” (as defined
in the Indenture) of the Trustee, the Tender Agent or the Paying Agent or the
office of the Fronting Bank which will honor draws upon the Letter of Credit,
are located are authorized by law or executive order to close or (ii) a day on
which the New York Stock Exchange, FirstEnergy, the Company or the Remarketing
Agent is closed.

 

“Cancellation
Date” has the meaning
assigned to that term in the Letter of Credit.

 

“Capital
Lease” means any lease
which is capitalized on the books of the lessee in accordance with GAAP,
consistently applied. The term “Capital Lease” shall not include any operating
leases that, under GAAP, are not so capitalized.

 

“Cash and
Cash Equivalents” means (i) cash on
hand; (ii) demand deposits maintained in the United States or any other country
with any commercial bank, trust company, savings and loan association, savings
bank or other financial institution; (iii) time deposits maintained in the
United States or any other country with, or certificates of deposit having a
maturity of one year or less issued by, any commercial bank, securities dealer,
trust company, savings and loan association, savings bank or other financial
institution; (iv) direct obligations of, or unconditionally guaranteed by, the
United States or any agency thereof and having a maturity of one year or less;
and (v) commercial paper having a maturity of one year or less.

 

“Change
in Control (Company)” means the
occurrence of either of the following: (i) any entity, person (within the
meaning of Section 14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”)) or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), which
theretofore was beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) of less than 20% of the Company’s then outstanding common stock either (x)
acquires shares of common stock of the Company in a transaction or series of
transactions that results in such entity, person or group directly or indirectly
owning beneficially 20% or more of the outstanding common stock of the Company,
other than solely as a result of such entity, person or group having acquired
beneficial ownership of 20% or more of the outstanding common stock of
FirstEnergy, or (y) acquires, by proxy or otherwise, the right to vote for the
election of directors, for any merger, combination or consolidation of the
Company or any of its direct or indirect subsidiaries, or, for any other matter
or question, more than 20% of the then outstanding voting securities of the
Company; or (ii) at any time prior to the Cancellation Date when FirstEnergy is
not the sole legal and beneficial owner, directly or indirectly, of the
outstanding capital stock of the Company, the election or appointment of persons
to the Company’s board of directors who were not directors of the Company on the
date hereof, and whose election or appointment was not approved by a majority of
those persons who were directors at the beginning of such period, where such
newly elected or appointed directors constitute 20% or more of the directors of
the board of directors of the Company.






















 

“Code” means the United
States Internal Revenue Code of 1986, as amended from time to time, and the
applicable regulations thereunder.

 

“Company” has the meaning
assigned to that term in the preamble hereto.

 

“Consolidated
Debt” means, at any date
of determination, the aggregate Debt of the Company and its Consolidated
Subsidiaries determined on a consolidated basis in accordance with GAAP, but
shall not include (i) Nonrecourse Debt of the Company and any of its
Subsidiaries, (ii) the aggregate principal amount of Trust Preferred Securities
of the Company and its Consolidated Subsidiaries, (iii) obligations under leases
that shall have been or should be, in accordance with GAAP, recorded as
operating leases in respect of which the Company or any of its Consolidated
Subsidiaries is liable as a lessee, and (iv) the aggregate principal amount of
Stranded Cost Securitization Bonds of the Company and its Consolidated
Subsidiaries.

 

“Consolidated
Subsidiary” means, as to any
Person, any Subsidiary of such Person the accounts of which are or are required
to be consolidated with the accounts of such Person in accordance with
GAAP.

 

“Controlled
Group” means all members
of a controlled group of corporations and all trades or businesses (whether or
not incorporated) under common control that, together with FirstEnergy and its
Subsidiaries, are treated as a single employer under Section 414(b) or 414(c) of
the Code.

 

“Conversion
Date” means the
effective date for conversion to an Interest Rate Mode for an Interest Period
ending on the maturity date of the Bonds as such date is specified in the
certificate of the Trustee in the form of Exhibit 6 to the Letter of Credit.


 

“Credit
Agreement” means that certain
Credit Agreement, dated as of August 24, 2006, among FirstEnergy and certain
other borrowers, certain banks, Citibank, N.A., as Administrative Agent,
Barclays Bank PLC, acting through its New York Branch, as a Fronting Bank and
certain other Fronting Banks, and the Swing Line Lenders named therein, as it
may be amended, supplemented or otherwise modified in accordance with the terms
thereof at any time and from time to time.

 

“Credit
Documents” means this
Agreement, the Credit Agreement and any and all other instruments and documents
(including, without limitation, any fee letter) executed and delivered in
connection with any of the foregoing.

 

“Credit
Party” means each of
FirstEnergy and the Company.

 

“Custodian” means The Bank of
New York Trust Company, N.A., in its capacity as Custodian under the Custodian
Agreement, together with its successors and assigns in such
capacity.

 

“Custodian
Agreement” means the
Custodian and Pledge Agreement of even date herewith among FirstEnergy, the
Fronting Bank and the Custodian, substantially in the form of Exhibit B attached
hereto.






















 

“Date of
Issuance” means the date of
issuance of the Letter of Credit.

 

“Debt” of any Person
means at any date, without duplication, (i) all obligations of such Person for
borrowed money, or with respect to deposits or advances of any kind, or for the
deferred purchase price of property or services, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (iii) all
obligations of such Person upon which interest charges are customarily paid,
(iv) all obligations under leases that shall have been or should be, in
accordance with GAAP, recorded as Capital Leases in respect of which such Person
is liable as lessee, (v) liabilities in respect of unfunded vested benefits
under Plans, (vi) withdrawal liability incurred under ERISA by such Person or
any of its affiliates to any Multiemployer Plan, (vii) reimbursement obligations
of such Person (whether contingent or otherwise) in respect of letters of
credit, bankers acceptances, surety or other bonds and similar instruments,
(viii) all Debt of others secured by a Lien on any asset of such Person, whether
or not such Debt is assumed by such Person and (ix) obligations of such Person
under direct or indirect guaranties in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or obligations of others of
the kinds referred to above.

 

“Debt to
Capitalization Ratio” means the ratio of
Consolidated Debt of the Company to Total Capitalization of the
Company.

 

“Default” means any event or
condition that would constitute an Event of Default but for the requirement that
notice be given or time elapse or both.

 

“Disclosure
Documents” means FirstEnergy’s
Annual Report on Form 10-K filed with the Securities and Exchange Commission for
the year ended December 31, 2005, FirstEnergy’s Quarterly Reports on Form 10-Q
filed with the Securities and Exchange commission for the quarters ended March
31, 2006, June 30, 2006, and September 30, 2006 and FirstEnergy’s Current
Reports on Form 8-K filed with the Securities and Exchange Commission on or
before December 4, 2006.

 

“Drawing” has the meaning
assigned to that term in the Credit Agreement.

 

“Environmental
Laws” means any federal,
state or local laws, ordinances or codes, rules, orders, or regulations relating
to pollution or protection of the environment, including, without limitation,
laws relating to hazardous substances, laws relating to reclamation of land and
waterways and laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollution, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes.

 

“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended from time to
time.

 

“Event of
Default” has the meaning
assigned to that term in Section 6.01.






















 

“First
Mortgage Bond Indenture” means, an
indenture or similar instrument pursuant to which the Company may issue bonds,
notes or similar instruments secured by a lien on all or substantially all of
its Fixed Assets.

 

“First
Mortgage Bonds” means first
mortgage bonds at any time issued by the Company pursuant to a First Mortgage
Bond Indenture.

 

“FirstEnergy” has the meaning
assigned to that term in the preamble hereto.

 

“Fixed
Assets” means, with
respect to any Person, at any time, total net plant, including construction work
in progress, as reported by such Person on its most recent consolidated balance
sheet.

 

“Fronting
Bank” has the meaning
assigned to that term in the preamble hereto.

 

“Fronting
Bank Fee Letter” has the meaning
assigned to that term in the Credit Agreement.

 

“GAAP” means generally
accepted accounting principles in the United States in effect from time to
time.

 

“Governmental
Action” means all
authorizations, consents, approvals, waivers, exceptions, variances, orders,
licenses, exemptions, publications, filings, notices to and declarations of or
with any Governmental Authority, other than routine reporting requirements the
failure to comply with which will not affect the validity or enforceability of
any Credit Document or any Related Documents or have a material adverse effect
on the transactions contemplated by any Credit Document or any Related
Document.

 

“Governmental
Authority” means any nation or
government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

 

“Guarantee” of or by any
Person (the “guarantor”) means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Debt or other monetary obligation of any
other Person (the “primary
obligor”) in any manner,
whether directly or indirectly, and including in any event any obligation of the
guarantor, direct or indirect, (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt or other obligation or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof, (ii) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Debt or other obligation of the
payment thereof, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor as to enable
the primary obligor to pay such Debt or other obligation or (iv) as an account
party in respect of any letter of credit or letter of guaranty issued to support
such Debt or obligation, provided that the term
“Guarantee” shall not include
endorsements for collection or deposit in the ordinary course of business. The
term “Guaranteed” has a meaning
correlative thereto.






















 

“Guaranteed
Obligations” has the meaning
assigned to that term in Section 8.01(a).

 

“Guaranty” has the meaning
assigned to that term in Section 8.01(a).

 

“Indenture” has the meaning
assigned to that term in the Preliminary Statements hereto.

 

“Interest
Period” has the meaning
assigned to that term in the Indenture.

 

“Interest
Rate Mode” has the meaning
assigned to that term in the Indenture.

 

“Issuer” has the meaning
assigned to that term in the Preliminary Statements hereto.

 

“Letter
of Credit” has the meaning
assigned to that term in the Preliminary Statements hereto.

 

“Lien” means, with respect
to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset. For the purposes of this
Agreement and the other Credit Documents, a Person or any of its Subsidiaries
shall be deemed to own, subject to a Lien, any asset that it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, Capital Lease or other title retention agreement relating to such
asset.

 

“Loan
Agreement” has the meaning
assigned to the term “Agreement” in the
Indenture.

 

“Material
Adverse Effect” means, with respect
to any Person, a material adverse effect on (a) the business, operations,
property, condition (financial or otherwise) or prospects of such Person and its
Subsidiaries taken as a whole, (b) the ability of such Person to perform its
obligations under any Credit Document, the Credit Agreement or any Related
Document or (c) the validity or enforceability of any Credit Document, the
Credit Agreement or any Related Document or the rights or remedies of the
Fronting Bank hereunder or thereunder.

 

“Moody’s” means Moody’s
Investors Service, Inc., or any successor thereto.

 

“Multiemployer
Plan” means a
“multiemployer plan” as defined in Section 4001(a)(3) of ERISA.

 

“Nonrecourse
Debt” means any Debt
that finances the acquisition, development, ownership or operation of an asset
in respect of which the Person to which such Debt is owed has no recourse
whatsoever to the Company or any of its Affiliates other than:

 

(i) recourse to the
named obligor with respect to such Debt (the “Debtor”) for amounts
limited to the cash flow or net cash flow (other than historic cash flow) from
the asset; and

 

(ii) recourse to the
Debtor for the purpose only of enabling amounts to be claimed in respect of such
Debt in an enforcement of any security interest or lien given by the Debtor over
the asset or the income, cash flow or other proceeds deriving from the asset (or
given by any shareholder or the like in the Debtor over its shares or like
interest in the capital of the Debtor) to secure the Debt, but only if the
extent of the recourse to the Debtor is limited solely to the amount of any
recoveries made on any such enforcement; and






















 

(iii) recourse to the
Debtor generally or indirectly to any Affiliate of the Debtor, under any form of
assurance, undertaking or support, which recourse is limited to a claim for
damages (other than liquidated damages and damages required to be calculated in
a specified way) for a breach of an obligation (other than a payment obligation
or an obligation to comply or to procure compliance by another with any
financial ratios or other tests of financial condition) by the Person against
which such recourse is available.

 

“Notes” means any bonds,
notes or similar instruments (unsecured other than by First Mortgage Bonds)
issued by the Company in exchange for cash in any publicly-registered offering,
private placement, or other offering exempt from registration under Federal and
state securities laws, but excluding
any notes issued by
the Company in connection with any revolving credit facility, term loan
facility, letter of credit reimbursement agreement or other bank credit facility
of the Company.

 

“Obligations” means Reimbursement
Obligations with respect to the Letter of Credit and Advances made to satisfy
any such Reimbursement Obligation, fees relating to the Letter of Credit, all
accrued and unpaid commitment fees and all other obligations of the Credit
Parties to the Fronting Bank arising under or in relation to this Agreement and
the Letter of Credit and the Credit Agreement with respect to the Letter of
Credit or any other Credit Document.

 

“Official
Statement” means the Official
Statement, dated November 21, 2006 relating to the Bonds, together with any
supplements or amendments thereto and all documents incorporated therein (or in
any such supplements or amendments) by reference.

 

“Organizational
Documents” shall mean, as
applicable to any Person, the charter, code of regulations, articles of
incorporation, by-laws, certificate of formation, operating agreement,
certificate of partnership, partnership agreement, certificate of limited
partnership, limited partnership agreement or other constitutive documents of
such Person.

 

“Paying
Agent” has the meaning
assigned to that term in the Indenture.

 

“PBGC” means the Pension
Benefit Guaranty Corporation or any successor thereto.

 

“Permitted
Investments” means (i) direct
obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency
thereof to the extent that such obligations are backed by the full faith and
credit of the United States of America), in each case maturing within one year
from the date of acquisition thereof, (ii) investments in commercial paper
maturing within one year from the date of acquisition thereof and having, at
such date of acquisition, the highest credit rating obtainable from S&P or
Moody’s, (iii) investments in certificates of deposit, banker’s acceptances and
time deposits maturing within one year from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic office of any commercial bank organized under the
laws of the United States of America or any State thereof that has combined
capital and surplus and undivided profits of not less than $500,000,000, and
(iv) fully collateralized repurchase agreements with a term of not more than 30
days for securities described in clause (i) of this definition and entered into
with a financial institution satisfying the criteria described in clause (iii)
of this definition.






















 

“Permitted
Liens” has the meaning
assigned to that term in Section 5.02(a).

 

“Person” means an
individual, partnership, corporation (including, without limitation, a business
trust), joint stock company, limited liability company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.

 

“Plan” means, at any
time, an employee pension benefit plan that is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code and is
either (i) maintained by a member of the Controlled Group for employees of a
member of the Controlled Group or (ii) maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which a member of the Controlled Group is then making
or accruing an obligation to make contributions or has within the preceding five
plan years made contributions. 

 

“Pledged
Bonds” means the Bonds
purchased with moneys received under the Letter of Credit in connection with a
Tender Drawing and owned or held by the Company or an affiliate of the Company
or by the Trustee and pledged to the Fronting Bank pursuant to the Custodian
Agreement.

 

“Post
Petition Interest” has the meaning
assigned to that term in Section 8.05(b).

 

“Purchase
Agreement” means the Bond
Purchase Agreement dated December 4, 2006, between the Issuer and the
“Underwriters” identified therein.

 

“Reimbursement
Obligations” has the meaning
assigned to that term in the Credit Agreement.

 

“Related
Documents” means the Bonds,
the Indenture, the Loan Agreement, the Remarketing Agreement, the Custodian
Agreement and the Fronting Bank Fee Letter with respect to the Letter of
Credit.

 

“Remarketing
Agent” has the meaning
assigned to that term in the Indenture.

 

“Remarketing
Agreement” means any
agreement or other arrangement pursuant to which a Remarketing Agent has agreed
to act as such pursuant to the Indenture.

 

“Restricted
Payment” means any dividend
or other distribution by the Company or any of its Subsidiaries (whether in
cash, securities or other property) with respect to any ownership interest or
shares of any class of equity securities of the Company or any such Subsidiary,
or any payment (whether in cash, securities or other property), including,
without limitation, any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such interest or shares or any option, warrant or other right to acquire any
such interest or shares.

 

“S&P” means Standard
& Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or
any successor thereto.






















 

“Stated
Expiration Date” has the meaning
assigned to that term in the Letter of Credit.

 

“Stranded
Cost Securitization Bonds” means any
instruments, pass-through certificates, notes, debentures, certificates of
participation, bonds, certificates of beneficial interest or other evidences of
indebtedness or instruments evidencing a beneficial interest that are secured by
or otherwise payable from non-bypassable cent per kilowatt hour charges
authorized pursuant to an order of a state commission regulating public
utilities to be applied and invoiced to customers of such utility. The charges
so applied and invoiced must be deducted and stated separately from the other
charges invoiced by such utility against its customers.

 

“Subordinated
Obligations” has the meaning
assigned to that term in Section 8.05.

 

“Subsidiary” means, with
respect to any Person, any corporation or unincorporated entity of which more
than 50% of the outstanding capital stock (or comparable interest) having
ordinary voting power (irrespective of whether at the time capital stock (or
comparable interest) of any other class or classes of such corporation or entity
shall or might have voting power upon the occurrence of any contingency) is at
the time directly or indirectly owned by said Person (whether directly or
through one of more other Subsidiaries). In the case of an unincorporated
entity, a Person shall be deemed to have more than 50% of interests having
ordinary voting power only if such Person’s vote in respect of such interests
comprises more than 50% of the total voting power of all such interests in the
unincorporated entity.

 

“Tender
Agent” has the meaning
assigned to that term in the Indenture.

 

“Tender
Drawing” means a drawing
under the Letter of Credit resulting from the presentation of a certificate in
the form of Exhibit 2 to the Letter of Credit.

 

“Termination
Event” means (i) a
Reportable Event described in Section 4043 of ERISA and the regulations issued
thereunder (other than a Reportable Event not subject to the provision for
30-day notice to the PBGC under such regulations), or (ii) the withdrawal of any
member of the Controlled Group from a Plan during a plan year in which it was a
“substantial employer” as defined in Section 4001(a) (2) of ERISA, or (iii) the
filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, or (iv) the institution
of proceedings to terminate a Plan by the PBGC, or (v) any other event or
condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
Plan.

 

“Total
Capitalization” means at any date
of determination the sum, without duplication, of (i) Consolidated Debt of the
Company, (ii) consolidated equity of the common stockholders of the Company and
its Consolidated Subsidiaries, (iii) consolidated equity of the preference
stockholders of the Company and its Consolidated Subsidiaries, and (iv) the
aggregate principal amount of Trust Preferred Securities of the Company and its
Consolidated Subsidiaries.

 

“Transition
Plan Order” means the Opinion
and Order of The Public Utilities Commission of Ohio in Case Nos.
99—1212—EL—ETP, 99—1213—EL—ATA and 99—1214—EL—AAM, entered July 19, 2000, as
amended and supplemented by the Opinion and Order in Case No. 03-2144-EL-ATA,
entered June 9, 2004.






















 

“Trust
Preferred Securities” means securities,
however denominated, (A) issued by the Company or any of its Consolidated
Subsidiaries, (B) that are not subject to mandatory redemption or the underlying
securities, if any, of which are not subject to mandatory redemption, (C) that
are perpetual or mature no less than 30 years from the date of issuance, (D) the
indebtedness issued in connection with which, including any guaranty, is
subordinate in right of payment to the unsecured and unsubordinated indebtedness
of the issuer of such indebtedness or guaranty, and (E) the terms of which
permit the deferral of the payment of interest or distributions thereon to a
date occurring after the Stated Expiration Date.

 

“Trustee” has the meaning
assigned to that term in the
Preliminary Statements hereto.

 

“Underwriters” means the
“Underwriters” identified in the Purchase Agreement.

 

“Unfunded
Vested Liabilities” means, with
respect to any Plan at any time, the amount (if any) by which (i) the present
value of all vested nonforfeitable benefits under such Plan exceeds (ii) the
fair market value of all Plan assets allocable to such benefits, all determined
as of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the Controlled
Group to the PBGC or the Plan under Title IV of ERISA.

 

SECTION
1.02. Computation of Time Periods. In this Agreement,
in the computation of a period of time from a specified date to a later
specified date, the word “from” means “from and including” and the words “to”
and “until” each means “to but excluding”.

 

SECTION
1.03. Accounting Terms. All accounting terms
not specifically defined herein shall be construed in accordance with GAAP,
except as otherwise stated herein.

 

SECTION
1.04. Internal References. The words “herein”,
“hereof’ and “hereunder” and words of similar import, when used in this
Agreement, shall refer to this Agreement as a whole and not to any provision of
this Agreement, and “Article”, “Section”, “subsection”, “paragraph”, “Exhibit”,
“Schedule” and respective references are to this Agreement unless otherwise
specified. References herein or in any Related Document to any agreement or
other document shall, unless otherwise specified herein or therein, be deemed to
be references to such agreement or document as it may be amended, modified or
supplemented after the date hereof from time to time in accordance with the
terms hereof or of such Related Document, as the case may be.

 

ARTICLE
II

 

AMOUNT AND
TERMS OF THE LETTER OF CREDIT

 

SECTION
2.01. The Letter of Credit. The Fronting Bank
agrees, on the terms and conditions hereinafter set forth and the satisfaction
of the conditions for the issuance of a “Letter of Credit” set forth in Sections
3.01 and 3.02 of the Credit Agreement, to issue the Letter of Credit to the
Trustee at or before 1:00 P.M. (New York City time) on December 5, 2006.
The Fronting Bank and FirstEnergy agree that the Letter of Credit shall be a
“Letter of Credit” as defined in, and is issued pursuant to, the Credit
Agreement. The Fronting Bank, the Company and FirstEnergy acknowledge and agree
that the Letter of Credit is the initial “Credit Facility” under the
Indenture.






















 

SECTION
2.02. Repayments and Prepayments. Prior to or
simultaneously with the receipt of proceeds related to the remarketing of Bonds
purchased pursuant to one or more Tender Drawings, the Credit Parties shall
directly, or through the Remarketing Agent, the Tender Agent or the Paying Agent
on behalf of the Credit Parties, repay or prepay (as the case may be) the
then-outstanding Reimbursement Obligations with respect to the Letter of Credit
and Advances made to satisfy any such Reimbursement Obligation (in the order in
which they were made) by paying to the Fronting Bank
an amount equal to the sum of (i) the aggregate principal amount of the
Bonds remarketed plus (ii) all
accrued interest on the principal amount of such Reimbursement Obligations
and/or Advances so repaid or prepaid, in each case in accordance with the
provisions of Section 2.04(g) or 2.12 of the Credit Agreement, as the case may
be.

 

SECTION
2.03. Source of Funds. All payments made by
the Fronting Bank pursuant to the Letter of Credit shall be made from funds of
the Fronting Bank, respectively, and not from funds obtained from any other
Person.

 

ARTICLE
III

 

CONDITIONS
PRECEDENT

 

SECTION
3.01. Conditions Precedent to Issuance of the Letter of
Credit. The obligation of
the Fronting Bank to issue the Letter of Credit is subject to conditions
precedent to the issuance of a “Letter of Credit” set forth in Sections 3.01 and
3.02 of the Credit Agreement and the additional conditions precedent that the
Fronting Bank shall have received on or before the Date of Issuance the
following, each dated such date, in form and substance satisfactory to the
Fronting Bank:

 

(a) Counterparts of each
of this Agreement and Fronting Bank Fee Letter with respect to the Letter of
Credit, duly executed by the Credit Parties and the Fronting Bank;

 

(b) Counterparts of the
Custodian Agreement, duly executed by the Company, the Fronting Bank and the
Custodian;

 

(c) Certified copies of
each of FirstEnergy’s and Company’s Organizational Documents;

 

(d) Evidence of the
status of each of FirstEnergy and the Company as a duly organized and validly
existing corporation under the laws of the State of Ohio;

 

(e) A duplicate copy,
certified, as of the Date of Issuance, by the Company (in a manner satisfactory
to the Fronting Bank) to be a true and complete copy, of all proceedings
relating to the issuance and sale of the Bonds;

 

(f) A duplicate copy,
certified, as of the Date of Issuance, by FirstEnergy (in a manner satisfactory
to the Fronting Bank) to be a true and complete copy, of each Related Document
not delivered pursuant to subsection (e) above, together with opinion letters of
counsel to the Issuer, the Trustee and/or the Custodian, as applicable,
providing for the reliance thereon by the Fronting Bank and any related closing
certificates of the Issuer;

 

(g) Certified copies of
audited consolidated financial statements of FirstEnergy and its Subsidiaries
for the 2004 and 2005 fiscal years;






















 

(h) Certified copies of
the resolutions of the Board of Directors of each of FirstEnergy and the Company
authorizing each Credit Document to which it is a party and all of the Related
Documents to which each such Credit Party is a party and the transactions
contemplated hereby and thereby, and of all other documents evidencing any other
necessary corporate action;

 

(i) Evidence that the
Remarketing Agent has acknowledged and accepted in writing its appointment as
Remarketing Agent under the Indenture and its duties and obligations
thereunder;

 

(j) Duplicate copies
(certified by the Secretary or an Assistant Secretary of FirstEnergy to be true
and complete copies) of all governmental actions and regulatory approvals
(including, without limitation, approvals or orders of the Issuer and the FERC,
if any) necessary for FirstEnergy to enter into this Agreement and each of the
Related Documents to which FirstEnergy is a party and the transactions
contemplated hereby and thereby;

 

(k) Duplicate copies
(certified by the Secretary or an Assistant Secretary of the Company to be true
and complete copies) of all governmental actions and regulatory approvals
(including, without limitation, approvals or orders of the Issuer and the FERC,
if any) necessary for the Company to enter into this Agreement and each of the
Related Documents to which the Company is a party and the transactions
contemplated hereby and thereby;

 

(l) A certificate of the
Secretary or an Assistant Secretary of each of FirstEnergy and the Company
certifying the names, true signatures and incumbency of the officers of each
such Credit Party authorized to sign each Credit Document to which it is a party
and the other documents to be delivered by it hereunder or
thereunder;

 

(m) An opinion letter of
Gary D. Benz, Esq., Associate General Counsel of FirstEnergy and counsel to the
Company, in substantially the form of Exhibit C and as to such other matters as
the Fronting Bank may reasonably request;

 

(n) An opinion letter of
Akin Gump Strauss Hauer & Feld LLP, special New York counsel to FirstEnergy
and the Company, in substantially the form of Exhibit D and as to such matters
as the Fronting Bank may reasonably request; 

 

(o) An opinion letter of
Sidley Austin LLP, special New York counsel to the Fronting Bank, in
substantially the form of Exhibit E and as to such other matters as the Fronting
Bank my reasonably request; 

 

(p) An opinion letter of
Lovells, special English counsel to the Fronting Bank, in substantially the form
of Exhibit F and as to such matters as the Fronting Bank may reasonably request;


 

(q) A letter from
Squire, Sanders & Dempsey, L.L.P., Bond Counsel, addressed to the Fronting
Bank and stating therein that such Person may rely on the final approving
opinion letter of such firm delivered in connection with the issuance of the
Bonds;

 

(r) Copies of the
Official Statement used in connection with
the offering of the Bonds;






















 

(s) Letters from S&P
and Moody’s to the effect that the Bonds have been rated the ratings of the
Fronting Bank, such letters to be in form and substance satisfactory to the
Fronting Bank;

 

(t) A certificate of an
authorized officer of the Custodian certifying the names, true signatures and
incumbency of the officers of the Custodian authorized to sign the documents to
be delivered by it hereunder and as to such other matters as the Fronting Bank
may reasonably request; 

 

(u) A certificate of an
authorized officer of the Trustee certifying the names, true signatures and
incumbency of the officers of the Trustee authorized to make drawings under the
Letter of Credit and as to such other matters as the Fronting Bank may
reasonably request; and

 

(v)  The Fronting Bank
shall have received from the Credit Parties the amounts payable to the Fronting
Bank upon the issuance of the Letter of Credit pursuant to the Fronting Bank Fee
Letter.

 

SECTION
3.02. Additional Conditions Precedent to Issuance of the Letter of Credit and
Amendment of the Letter of Credit.  The obligation of
the Fronting Bank to issue the Letter of Credit, or to amend, modify or extend
the Letter of Credit, shall be subject to the further conditions precedent that
on the Date of Issuance and on the date of such amendment, modification or
extension, as the case may be:

 

(a) The following
statements shall be true and the Fronting Bank shall have received a certificate
from each Credit Party signed by a duly authorized officer of such Credit Party,
dated such date, stating that:

 

(i) The representations
and warranties of such Credit Party contained in Article IV of this Agreement or
in the Credit Agreement, as the case may be, and as applicable in the Related
Documents are true and correct in all material respects on and as of such date
as though made on and as of such date (except to the extent such representations
and warranties relate solely to a specified earlier date, in which case such
representations and warranties were true and correct on and as of such earlier
date); and

 

(ii) No event has
occurred and is continuing, or would result from the issuance of the Letter of
Credit or such amendment, modification or extension of the Letter of Credit (as
the case may be), which constitutes a Default or an Event of Default;
and

 

(iii) True and complete
copies of the Related Documents (including all exhibits, attachments, schedules,
amendments or supplements thereto) have previously been delivered to the
Fronting Bank and the Related Documents have not been modified, amended or
rescinded, and are in full force and effect as of the Date of Issuance;
and






















 

(b) The Fronting Bank
shall have received such other approvals, opinions or documents as the Fronting
Bank may reasonably request.

 

ARTICLE
IV

 

REPRESENTATIONS
AND WARRANTIES

 

SECTION
4.01. Representations and Warranties of FirstEnergy. FirstEnergy hereby
represents and warrants as of (i) the date hereof, (ii) the Date of Issuance,
(iii) the date of any Drawing under the Letter of Credit, and (iv) the date of
any amendment, modification or extension of the Letter of Credit, as
follows:

 

(a) Corporate
Authorization. The execution,
delivery and performance by FirstEnergy of this Agreement and each Related
Document are within FirstEnergy’s corporate powers, have been duly authorized by
all necessary corporate action on the part of FirstEnergy and did not, do not,
and will not, require the consent or approval of FirstEnergy shareholders, or
any trustee or holder of any Debt or other obligation of FirstEnergy, other than
such consents and approvals as have been, or on or before the Date of Issuance,
will have been, duly obtained, given or accomplished.

 

(b) No
Violation, Etc. Neither the
execution, delivery or performance by FirstEnergy of this Agreement or any
Related Document nor the consummation by FirstEnergy of the transactions
contemplated hereby, nor compliance by FirstEnergy with the provisions hereof,
conflicts or will conflict with, or results or will result in a breach or
contravention of any of the provisions of FirstEnergy’s Organizational Documents
or any Applicable Law, or any indenture, mortgage, lease or any other agreement
or instrument to which it or any of its Affiliates is party or by which its
property or the property of any of its Affiliates is bound, or results or will
result in the creation or imposition of any Lien upon any of its property or the
property of any of its Affiliates. There is no provision of (i) any of
FirstEnergy’s Organizational Documents, (ii) except as disclosed in the
Disclosure Documents, any Applicable Law, or (iii) any such indenture, mortgage,
lease or other agreement or instrument that materially adversely affects, or in
the future is likely to materially adversely affect, the business, operations,
affairs, condition, properties or assets of FirstEnergy, or its ability to
perform its obligations under this Agreement or any Related
Document.






















 

(c) Governmental
Actions. No Governmental Action
is or will be required in connection with the execution, delivery or performance
by FirstEnergy of, or the consummation by FirstEnergy of the transactions
contemplated by, this Agreement or any Related Document to which it is, or is to
become, a party, except such Governmental Actions as have been duly obtained,
given or accomplished. No Governmental Action by any Governmental Authority
relating to the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, the Trust Indenture Act of 1939, as amended, the Federal
Power Act, the Atomic Energy Act, the Nuclear Waste Act, the Public Utility
Holding Company Act of 1935, the Ohio Public Utility Act, energy or nuclear
matters, public utilities, the environment or health and safety matters is or
will be required in connection with the participation by the Fronting Bank in
the consummation of the transactions contemplated by this Agreement and the
Related Documents, or will be required to be obtained by any of such Persons
during the term of this Agreement, except such Governmental Actions (i) as have
been duly obtained, given or accomplished or (ii) as may be required by
Applicable Law not now in effect. None of the Governmental Actions referred to
in the first sentence of this subsection (d) or in clause (i) of the second
sentence of this subsection (d) are the subject of appeal or reconsideration or
other review, and the time in which to make an appeal or request the review or
reconsideration of any such Governmental Action has expired with any appeal or
request for review or reconsideration not having been taken or
made.

 

(d) Execution
and Delivery. This Agreement and any
Related Document to which FirstEnergy is a party have been duly executed and
delivered by FirstEnergy, and this Agreement and each such Related Document is
the legal, valid and binding obligation of FirstEnergy enforceable in accordance
with its respective terms, subject, however, to the application by a court of
general principles of equity and to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally.

 

(e) Full
Force and Effect.  The Credit
Agreement and each Related Document is in full force and effect. FirstEnergy has
duly and punctually performed and observed all the terms, covenants and
conditions contained in each such Related Document on its part to be performed
or observed, and no Default or Event of Default has occurred and is
continuing.

 

(f) Material
Adverse Change. Since December 31,
2005, there has been no material adverse change in the ability of FirstEnergy to
perform its obligations under this Agreement, the Credit Agreement or any
Related Document to which it is a party.

 

(g) Litigation. There is no pending
or threatened action, investigation or proceeding (including, without
limitation, any proceeding relating to or arising out of Environmental Laws)
before any court, governmental agency or arbitrator against or affecting
FirstEnergy or any of its Subsidiaries which purports to affect the legality,
validity or enforceability of this Agreement, the Credit Agreement or any
Related Document.






















 

(h) Accuracy
of Information. No exhibit,
schedule, report or other written information provided by or on behalf of
FirstEnergy or its agents to the Fronting Bank in connection with the
negotiation, execution and closing of this Agreement knowingly contained when
made any material misstatement of fact or knowingly omitted to state any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances under which they were made.

 

(i) Taxability. The performance of
this Agreement and the transactions contemplated herein will not affect the
status of the interest on the Bonds as exempt from Federal income
tax.

 

(j)  No
Material Misstatements. The reports,
financial statements and other written information furnished by or on behalf of
FirstEnergy to the Fronting Bank pursuant to or in connection with this
Agreement and the transactions contemplated hereby do not contain and will not
contain, when taken as a whole, any untrue statement of a material fact and do
not omit and will not omit, when taken as a whole, to state any fact necessary
to make the statements therein, in the light of the circumstances under which
they were or will be made, not misleading in any material respect. 

 

SECTION
4.02. Representations and Warranties of the Company. The Company hereby
represents and warrants as of (i) the date hereof, (ii) the Date of Issuance,
(iii) the date of any Drawing under the Letter of Credit, and (iv) the date of
any amendment, modification or extension of the Letter of Credit, as
follows:

 

(a) Corporate
Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Ohio, is duly qualified to do business as a foreign
corporation in and is in good standing under the laws of the Commonwealth of
Pennsylvania and each other state in which the ownership of its properties or
the conduct of its business makes such qualification necessary except where the
failure to be so qualified would not have a Material Adverse Effect with respect
to the Company, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.

 

(b) Corporate
Authorization. The execution,
delivery and performance by the Company of this Agreement and each Related
Document are within the Company’s corporate powers, have been duly authorized by
all necessary corporate action on the part of the Company and did not, do not,
and will not, require the consent or approval of the Company shareholders, or
any trustee or holder of any Debt or other obligation of the Company, other than
such consents and approvals as have been, or on or before the Date of Issuance,
will have been, duly obtained, given or accomplished.






















 

(c) No
Violation, Etc. Neither the
execution, delivery or performance by the Company of this Agreement or any
Related Document nor the consummation by the Company of the transactions
contemplated hereby, nor compliance by the Company with the provisions hereof,
conflicts or will conflict with, or results or will result in a breach or
contravention of any of the provisions of the Company’s Organizational Documents
or any Applicable Law, or any indenture, mortgage, lease or any other agreement
or instrument to which it or any of its Affiliates is party or by which its
property or the property of any of its Affiliates is bound, or results or will
result in the creation or imposition of any Lien upon any of its property or the
property of any of its Affiliates. There is no provision of (i) any of the
Company’s Organizational Documents, (ii) except as disclosed in the Disclosure
Documents, any Applicable Law, or (iii) any such indenture, mortgage, lease or
other agreement or instrument that has, or in the future is likely to have, a
Materially Adversely Effect.

 

(d) Governmental
Actions. No Governmental Action
is or will be required in connection with the execution, delivery or performance
by the Company of, or the consummation by the Company of the transactions
contemplated by, this Agreement or any Related Document to which it is, or is to
become, a party, except such Governmental Actions as have been duly obtained,
given or accomplished. No Governmental Action by any Governmental Authority
relating to the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, the Trust Indenture Act of 1939, as amended, the Federal
Power Act, the Atomic Energy Act, the Nuclear Waste Act, the Public Utility
Holding Company Act of 1935, the Ohio Public Utility Act, energy or nuclear
matters, public utilities, the environment or health and safety matters is or
will be required in connection with the participation by the Fronting Bank in
the consummation of the transactions contemplated by this Agreement and the
Related Documents, or will be required to be obtained by any of such Persons
during the term of this Agreement, except such Governmental Actions (i) as have
been duly obtained, given or accomplished or (ii) as may be required by
Applicable Law not now in effect. None of the Governmental Actions referred to
in the first sentence of this subsection (d) or in clause (i) of the second
sentence of this subsection (d) are the subject of appeal or reconsideration or
other review, and the time in which to make an appeal or request the review or
reconsideration of any such Governmental Action has expired with any appeal or
request for review or reconsideration not having been taken or
made.

 

(e) Execution
and Delivery. This Agreement and any
Related Document to which the Company is a party have been duly executed and
delivered by the Company, and this Agreement and each such Related Document is
the legal, valid and binding obligation of the Company enforceable in accordance
with its respective terms.

 

(f) Full
Force and Effect.  The Credit
Agreement and each Related Document is in full force and effect. The Company has
duly and punctually performed and observed all the terms, covenants and
conditions contained in each such Related Document on its part to be performed
or observed, and no Default or Event of Default has occurred and is
continuing.






















 

(g) Bonds
Validly Issued. The Bonds have been
duly authorized, authenticated and issued and delivered, and are the legal,
valid and binding obligations of the Issuer, and are not in
default.

 

(h) Material
Adverse Change. Since December 31,
2005, there has been no material adverse change in the Company’s properties or
business or results of operations, or in the prospects of the Company and its
Subsidiaries, or in the ability of the Company to perform its obligations under
this Agreement or any Related Document to which it is a party.

 

(i) Litigation. There is no pending
or threatened action, investigation or proceeding (including, without
limitation, any proceeding relating to or arising out of Environmental Laws)
before any court, governmental agency or arbitrator against or affecting the
Company or any of its Subsidiaries which (i) purports to affect the legality,
validity or enforceability of this Agreement or any Related Document or (ii) may
have a Material Adverse Effect with respect to the Company except (with respect
to this clause (ii) only) as is disclosed in the Disclosure
Documents.

 

(j) Taxes. The Company and
each of its Subsidiaries have filed all tax returns (Federal, state and local)
required to be filed and paid all taxes shown thereon to be due, including
interest and penalties, or provided adequate reserves for payment thereof other
than such taxes that the Company or such Subsidiary is contesting in good faith
by appropriate legal proceedings.

 

(k) Environmental. Except as otherwise
disclosed in the Disclosure Documents or otherwise to the Fronting Bank by the
Company in writing, (i) facilities and property (including underlying
groundwater) owned or leased by the Company or any of its Subsidiaries have
been, and continue to be, owned or leased by it and its Subsidiaries in
compliance with all Environmental Laws, except for such failures to comply which
would not give rise to any potential material liability of the Company or any of
its Subsidiaries; and (ii) there have been no past, and, to the Company’s actual
knowledge, there are no pending or threatened (A) claims, complaints or notices
for information received by the Company or any of its Subsidiaries with respect
to any alleged violation of any Environmental Law, or (B) complaints or notices
to the Company or any of its Subsidiaries regarding potential material liability
under any Environmental Law, except for such alleged violations which would not
give rise to any potential material liability of the Company or any of its
Subsidiaries.

 

(l) Title to
Real Property. The Company and each
of its Subsidiaries has good and marketable title to all of the real property it
purports to own, free and clear of Liens other than Permitted
Liens.

 

(m) ERISA. (i) No Termination
Event has occurred nor is reasonably expected to occur with respect to any
Plan.






















 

(ii) Schedule B
(Actuarial Information) to the 2003 annual report (Form 5500 Series) with
respect to each Plan, copies of which have been filed with the Internal Revenue
Service and furnished to the Fronting Bank, is complete and accurate and fairly
presents the funding status of such Plan, and since the date of such Schedule B
there has been no material adverse change in such funding status.

 

(iii) Neither the Company
nor any of its Affiliates has incurred nor reasonably expects to incur any
withdrawal liability under ERISA to any Multiemployer Plan.

 

(n) Official
Statement. Except for
information contained in the Official Statement furnished in writing by or on
behalf of the Issuer, the Trustee, the Tender Agent, the Paying Agent, the
Underwriters, the Remarketing Agent or the Fronting Bank specifically for
inclusion therein, the Official Statement and any supplement or “sticker”
thereto are accurate in all material respects for the purposes for which their
use shall be authorized; and the Official Statement and any such supplement or
“sticker”, when read together with the statement that it supplements or amends,
does not, as of its date, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements made therein,
in the light of the circumstances under which they are or were made, not
misleading.

 

(o) Accuracy
of Information. No exhibit,
schedule, report or other written information provided by or on behalf of the
Company or its agents to the Fronting Bank in connection with the negotiation,
execution and closing of this Agreement and the Custodian Agreement (including,
without limitation, the Official Statement) knowingly contained when made any
material misstatement of fact or knowingly omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances under which they were made.

 

(p) Margin
Stock; Investment Company. No proceeds of the
Bonds or of the Letter of Credit will be used in violation of, or in any manner
that would result in a violation by any party hereto of, Regulations T, U or X
promulgated by the Board of Governors of the Federal Reserve System or any
successor regulations. The Company (i) is not an “investment
company” within the meaning
ascribed to that term in the Investment Company Act of 1940 and (ii) is not
engaged in the business of extending credit for the purpose of buying or
carrying margin stock.

 

(q) Taxability. The performance of
this Agreement and the transactions contemplated herein will not affect the
status of the interest on the Bonds as exempt from Federal income
tax.






















 

(r) Solvency. (i) The fair salable
value of the Company’s assets will exceed the amount that will be required to be
paid on or in respect of the probable liability on the Company’s existing debts
and other liabilities (including contingent liabilities) as they mature; (ii)
the Company’s assets do not constitute unreasonably small capital to carry out
its business as now conducted or as proposed to be conducted; (iii) the Company
does not intend to incur debt beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be received by it
and the amounts to be payable on or in respect of its obligations); and (iv) the
Company does not believe that final judgments against it in actions for money
damages presently pending will be rendered at a time when, or in an amount such
that, it will be unable to satisfy any such judgments promptly in accordance
with their terms (taking into account the maximum reasonable amount of such
judgments in any such actions and the earliest reasonable time at which such
judgments might be rendered). The Company’s cash flow, after taking into account
all other anticipated uses of its cash (including the payments on or in respect
of debt referred to in clause (iii) above), will at all times be sufficient to
pay all such judgments promptly in accordance with their terms.

 

(s) No
Material Misstatements. The reports,
financial statements and other written information furnished by or on behalf of
the Company to the Fronting Bank pursuant to or in connection with this
Agreement and the transactions contemplated hereby do not contain and will not
contain, when taken as a whole, any untrue statement of a material fact and do
not omit and will not omit, when taken as a whole, to state any fact necessary
to make the statements therein, in the light of the circumstances under which
they were or will be made, not misleading in any material respect. 

 

(t) Utility
Regulation. Pursuant to the
Public Utility Holding Company Act of 2005, the Company will be subject to the
jurisdiction of the FERC as a “public utility” within the meaning of the Federal
Power Act, as amended (“FPA”), and subject to
FERC regulation, including such regulations as the FERC may adopt relating to
accounting, cost allocation, record keeping another rules governing transactions
between holding companies and their service companies. The Company is also
subject to the limited jurisdiction of any State commission with jurisdiction to
regulate a public utility company in the Company's holding company system, with
respect to access to the books and records of the Company. The Company has
obtained blanket authority from the FERC under Section 204 of the FPA, and/or is
exempt from any requirement to obtain FERC approval, to issue securities and
assume liabilities, and such authorization and/or exemption remains in full
force and effect. No further regulatory authorizations from either the FERC or
any State commission are required for this transaction.






















 

ARTICLE
V

 

COVENANTS


 

SECTION
5.01. Affirmative Covenants of the Company. So long as a drawing
is available under the Letter of Credit or the Credit Parties shall have any
obligation to pay any amount to the Fronting Bank with respect to the Letter of
Credit under the Credit Agreement or hereunder, the Company will, unless the
Fronting Bank shall otherwise consent in writing:

 

(a) Preservation
of Corporate Existence, Etc. Without limiting the
rights of the Company under Section 5.02(f) hereof, (i) preserve and maintain
its corporate existence in the state of its incorporation and qualify and remain
qualified as a foreign corporation in each jurisdiction in which such
qualification is reasonably necessary in view of its business and operations or
the ownership of its properties and (ii) preserve, renew and keep in full force
and effect the rights, privileges, licenses, permits and franchises necessary or
desirable in the normal conduct of its business.

 

(b) Compliance
with Laws, Payment of Taxes, Etc. Comply, and cause
each of its Subsidiaries to comply, in all respects with all Applicable Laws of
any Governmental Authority, the noncompliance with which in such respect could
reasonably be expected to have a Material Adverse Effect with respect to the
Company, such compliance to include, without limitation, paying before the same
become delinquent all taxes, assessments and governmental charges imposed upon
it or upon its property, except to the extent compliance with any of the
foregoing is then being contested is good faith.

 

(c) Maintenance
of Insurance, Etc. Maintain insurance
with responsible and reputable insurance companies or associations or through
its own program of self-insurance in such amounts and covering such risks as is
usually carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which the Company operates and furnish
to the Fronting Bank, within a reasonable time after written request therefor,
such information as to the insurance carried as the Fronting Bank may reasonably
request.






















 

(d) Visitation
Rights. At any reasonable
time and from time to time as the Fronting Bank may reasonably request, permit
the Fronting Bank or any agents or representatives thereof to examine and make
copies of and abstracts from the records and books of account of, and visit the
properties of, the Company and any of its Subsidiaries, and to discuss the
affairs, finances and accounts of the Company and any of its Subsidiaries with
any of their respective officers or directors and with their independent public
accountants; provided,
however, that the Company
reserves the right to restrict access to any of its generating facilities in
accordance with reasonably adopted procedures relating to safety and security.
The Fronting Bank agrees to use reasonable efforts to ensure that any
information concerning the Company or any of its Subsidiaries obtained by the
Fronting Bank pursuant to this Section which is not contained in a report or
other document filed with the Securities and Exchange Commission, distributed by
the Company to its security holders or otherwise generally available to the
public, will, to the extent permitted by law and except as may be required by
valid subpoena or in the normal course of the Fronting Bank’s business
operations (which shall include, without limitation, providing such information
to regulatory authorities and such Fronting Bank’s sharing of its liability
under the Letters of Credit with other banks), be treated confidentially by the
Fronting Bank and will not be distributed or otherwise made available by the
Fronting Bank to any Person, other than (i) the Fronting Bank’s affiliates,
employees, authorized agents or representatives, (ii) to legal counsel,
accountants, and other professional advisors to the Fronting Bank or to
prospective assignees and participants pursuant to Section 7.09, (iii) to its
direct or indirect contractual counterparties in swap agreements or to legal
counsel, accountants and other professional advisors to such counterparties, and
(iv) to rating agencies if requested or required by such agencies in connection
with a rating relating to the Letter of Credit issued hereunder; provided that, for purposes
of the foregoing clauses (ii), (iii) and (iv), prior to any such disclosure to
any such Person, such Person shall agree to preserve the confidentiality of any
confidential information relating to the Company or any of its Subsidiaries
received by it from the Fronting Bank.

 

(e) Keeping
of Books; Access to Information on Remarketing Agent and Tender
Agent. Keep, and cause each
of its Subsidiaries to keep, proper books of record and account in which entries
shall be made of all financial transactions and the assets and business of the
Company and such Subsidiary in accordance with generally accepted accounting
principles, consistently applied except to the extent described therein, and to
the extent permitted under the terms of the Indenture and reasonably requested
by the Fronting Bank, inspect, and provide access to information received by the
Company with respect to any inspection of, the books and records of the
Remarketing Agent and the Tender Agent.

 

(f) Maintenance
of Properties. Maintain and
preserve, and cause each of its Subsidiaries to maintain and preserve all of its
properties which are used or which are useful in the conduct of its business in
good working order and condition, ordinary wear and tear excepted (it being
understood that this covenant relates only to the good working order and
condition of such properties and shall not be construed as a covenant of the
Company or any of its Subsidiaries not to dispose of such properties by sale,
lease, transfer or otherwise).






















 

(g) Reporting
Requirements. Furnish, or cause to
be furnished, to the Fronting Bank, the following:

 

(i) as soon as possible
and in any event within five Business Days after the occurrence of each Default
or Event of Default, the statement of an authorized officer of the Company
setting forth details of such Default or Event of Default and the action which
the Credit Parties have taken and propose to take with respect
thereto;

 

(ii)  promptly and in any
event within two Business Days after receipt thereof, copies of each written
notice received by the Company from the Trustee, the Paying Agent, the
Underwriters, the Remarketing Agent or the Tender Agent pursuant to any of the
Related Documents; and

 

(iii) promptly and in any
event within two Business Days after the Trustee resigns as trustee under the
Indenture, notice of such resignation.

 

(h) Transactions
with Affiliates. Conduct, and cause
each of its Subsidiaries to conduct, all transactions with any of its Affiliates
on terms that are fair and reasonable and no less favorable to the Company or
such Subsidiary than it would obtain in a comparable arm’s-length transaction
with a Person not an Affiliate; provided,
however, that any transaction
with any Affiliate of the Company which transaction (or any plan that involves
such transaction) has been approved by the Public Utilities Commission of Ohio,
the Pennsylvania Public Utility Commission, the FERC or the Securities and
Exchange Commission, as the case may be, shall not be subject to this
Section.

 

(i) Environmental
Laws.  (i) Comply with,
cause each of its Subsidiaries to comply with, and insure compliance by all
tenants and subtenants, if any, with, all Environmental Laws and obtain and
comply with and maintain, cause each of its Subsidiaries to obtain and comply
with and maintain, and insure that all tenants and subtenants obtain and comply
with and maintain, any and all licenses, approvals, registrations or permits
required by Environmental Laws, except to the extent that failure to do so would
not have a material adverse effect on the business, condition (financial or
otherwise), operations, performance, properties or prospects of the Company or
any of its Subsidiaries.

 

(ii) Conduct and
complete, and cause each of its Subsidiaries to conduct and complete, all
investigations, studies, sampling, and testing and remedial, removal and other
actions required under Environmental Laws and promptly comply with, and cause
each of its Subsidiaries to promptly comply with, all lawful orders and
directives of all Governmental Authorities respecting Environmental Laws, except
to the extent that the same are being contested in good faith by appropriate
proceedings and the pendency of such proceedings would not have a material
adverse effect on the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Company or any of its
Subsidiaries.

 

(iii) Defend, indemnify
and hold harmless the Fronting Bank, the Fronting Bank and each Bank, and their
respective employees, agents, officers, directors and affiliates from and
against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or unknown,
contingent or otherwise, arising out of or in any way relating to the violation
of or noncompliance with any Environmental Laws applicable to the real property
owned or operated by the Company or any of its Subsidiaries, or any orders,
requirements or demands of Governmental Authorities relating thereto, including,
without limitation, attorney’s and consultant’s fees, investigation and
laboratory fees, court costs and litigation expenses, except to the extent that
any of the foregoing arise out of the gross negligence or willful misconduct of
the party seeking indemnification therefor.






















 

(j) Redemption
or Defeasance of Bonds.
Use its best efforts
to cause the Trustee, upon redemption or defeasance of all of the Bonds pursuant
to the Indenture, to surrender the Letter of Credit to the Fronting Bank for
cancellation.

 

(k) Registration
of Bonds. Cause all Bonds
which it acquires, or which it has had acquired for its account, to be
registered forthwith in accordance with the Indenture and the Custodian
Agreement in the name of the Company or its nominee (the name of any such
nominee to be disclosed to the Trustee and the Fronting Bank).

 

(l) Related
Documents. Perform and comply
in all material respects with each of the provisions of each Related Document to
which it is a party.

 

(m) Use of
Letter of Credit. Cause the Letter
of Credit to be used in support of the payment of principal, and interest on the
principal amount, of the Bonds. 

 

SECTION
5.02. Negative Covenants of the Company. So long as a drawing
is available under the Letter of Credit or the Credit Parties shall have any
obligation to pay any amount to the Fronting Bank with respect to the Letter of
Credit under the Credit Agreement or hereunder, the Company will not, without
the written consent of the Fronting Bank:

 

(a) Liens,
Etc. Except as permitted
in Section 5.02(b) and (c), create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any Lien upon or with respect to any
of its properties, in each case to secure or provide for the payment of Debt,
other than the following Liens (“Permitted Liens”) (i) Liens consisting of (A)
pledges or deposits in the ordinary course of business to secure obligations
under worker’s compensation laws or similar legislation, (B) deposits in the
ordinary course of business to secure, or in lieu of, surety, appeal, or customs
bonds to which the Company or any of its Subsidiaries is a party, (C) pledges or
deposits in the ordinary course of business to secure performance in connection
with bids, tenders or contracts (other than contracts for the payment of money),
or (D) materialmen’s, mechanics’, carriers’, workers’, repairmen’s or other like
Liens incurred in the ordinary course of business for sums not yet due or
currently being contested in good faith by appropriate proceedings diligently
conducted, or deposits to obtain in the release of such Liens; (ii) purchase
money liens or purchase money security interests upon or in any property
acquired or held by the Company or any of its Subsidiaries in the ordinary
course of business to secure the purchase price of such property or to secure
indebtedness incurred solely for the purpose of financing the acquisition of
such property; (iii) Liens existing on the property of any Person at the time
that such Person becomes a direct or indirect Subsidiary of the Company;
provided
that such Liens were
not created to secure the acquisition of such Person; (iv) Liens created to
secure Debt in respect of First Mortgage Bonds; provided,
however, that the principal
amount of Debt secured by the Liens described in this clause (iv) shall not at
any time exceed the depreciated book value of the property subject to such
Liens; (v) Liens in existence on the date of this Agreement; and (vi) Liens
created for the sole purpose of extending, renewing or replacing in whole or in
part Debt secured by any Lien referred to in the foregoing clauses (i) through
(v); provided,
however, that the principal
amount of Debt secured thereby shall not exceed the principal amount of Debt so
secured at the time of such extension, renewal or replacement, and that such
extension, renewal or replacement, as the case may be, shall be limited to all
or a part of the property or Debt that secured the Lien so extended, renewed or
replaced (and any improvements on such property). Notwithstanding the foregoing,
this subsection (a) shall have no force or effect if and for so long as the
Obligations are secured by First Mortgage Bonds and/or cash collateral in an
aggregate principal amount at least equal to the sum of (x) the Available Amount
and (y) the aggregate outstanding principal amount of all unreimbursed Drawings
and Advances with respect to the Letter of Credit.






















 

(b) Cash
Collateral. Create or suffer to
exist, or permit any of its Subsidiaries to create or suffer to exist, any lien,
security interest, other charge or encumbrance, or any other type of
preferential arrangement upon or with respect to its Cash and Cash Equivalents
or marketable securities, in each case to secure or provide for the payment of
Debt, in an amount in excess of $100,000,000 in the aggregate, unless,
on
or prior to the date thereof, the Company shall have (i) pursuant to
documentation satisfactory to the Fronting Bank, equally and ratably secured the
obligations of the Company under this agreement by a preferential arrangement
with respect to such Cash and Cash Equivalents and marketable securities of a
similar type acceptable to the Fronting Bank in its sole discretion, and (ii)
caused the creditor or creditors, as the case may be, in respect of such Debt to
have entered into an intercreditor agreement in form, scope and substance
satisfactory to the Fronting Bank. Notwithstanding the foregoing, this
subsection (b) shall have no force or effect if and for so long as the
Obligations are secured by First Mortgage Bonds and/or cash collateral in an
aggregate principal amount at least equal to the sum of (x) the Available Amount
and (y) the aggregate outstanding principal amount of all unreimbursed Drawings
and Advances with respect to the Letter of Credit.

 

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






















 

(d) Certain
Amendments. Amend or modify, or
enter into or consent to any amendment or modification of: (i) any of its
Organizational Documents (including the provisions thereof restricting the
payment of dividends), (ii) its accounting policies, (iii) any First Mortgage
Bond Indenture (including the provisions thereof restricting the payment of
dividends), or (iv) any Related Document, in each case in any manner adverse to
the interests of the Fronting Bank in its reasonable judgment and, with respect
to the Indenture and the Loan Agreement, except in compliance with Section
15.01, 15.02 and 15.03 of the Indenture; provided, however, that any amendment
or modification of any Related Document that assigns or otherwise transfers the
Company’s rights or obligations thereunder to any other Person shall require the
prior written consent of the Fronting Bank.

 

(e) Compliance
with ERISA. (i) Enter into any
“prohibited transaction” (as defined in Section 4975 of the Code, as amended,
and in ERISA) involving any Plan which may result in any liability of the
Company to any Person which (in the reasonable opinion of the Fronting Bank) is
material to the financial position or operations of the Company or (ii) allow or
suffer to exist any other event or condition known to the Company which results
in any liability of the Company to the PBGC which (in the reasonable opinion of
the Fronting Bank) is material to the financial position or operations of the
Company. For purposes of this Section 5.02(d), “liability” shall not include
termination insurance premiums payable under Section 4007 of ERISA.

 

(f) Mergers,
Etc. Merge, consolidate
or amalgamate, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or (except as permitted by Section 5.02(g)) convey,
sell, lease, assign, transfer or otherwise dispose of, all or substantially all
of its property, business or assets, or permit any of its Subsidiaries to do so,
except that:

 

(i) any Subsidiary of
the Company may be merged or consolidated with or into the Company (provided
that the Company shall be the continuing or surviving corporation) or with or
into any one or more wholly-owned Subsidiaries of the Company (provided that such
wholly-owned Subsidiary or Subsidiaries shall be the continuing or surviving
corporation); and 

 

(ii) any wholly-owned
Subsidiary of the Company may sell, lease, transfer or otherwise dispose of any
or all of its assets (upon voluntary liquidation or otherwise) to the Company or
any other wholly-owned Subsidiary of the Company;

 

provided,
that, in any such case,
after giving effect thereto: (x) no Default or Event of Default shall have
occurred and be continuing and (y) in the case of any merger or consolidation to
which the Company is a party, the corporation formed by such consolidation or
into which the Company shall be merged shall assume the Company’s obligations
under this Agreement in a written document satisfactory in form and substance to
the Fronting Bank.






















 

(g) Sale of
Assets, etc.  Sell, lease,
transfer, enter into any sale and leaseback agreement involving or otherwise
dispose of (including by the Company to any affiliate of the Company), or permit
any of its Subsidiaries to sell, lease, transfer, enter into any sale and
leaseback agreement involving or otherwise dispose of, whether in one or a
series of transactions, more than 15% (determined at the time of each such sale,
lease, transfer, agreement or disposition) of the aggregate Fixed Assets of the
Company and its Subsidiaries; provided,
however, that the Company
may consummate the transactions contemplated by the Transition Plan
Order.

 

(h) Change
in Nature of Business. Have as its
principal business any business other than the unregulated production,
generation and sale of electricity to Affiliates and other Persons, all in
compliance with all Applicable Law; and it will only conduct such a business in
a manner to ensure its continued operation as an unregulated producer, generator
and supplier of electricity and related activities. For purposes hereof,
“unregulated” shall mean unregulated by a public utility commission or similar
agency of any State.

 

(i) Investments,
Loans, Advances, Guarantees and Acquisitions. Purchase, hold or
acquire (including, without limitation, pursuant to any merger) any capital
stock, evidences of indebtedness or other securities (including, without
limitation, any option, warrant or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, Guarantee any obligations
of, or make or permit to exist any investment or any other interest in, any
other Person, or purchase or otherwise acquire (in one transaction or a series
of transactions (including, without limitation, pursuant to any merger)) any
assets of any other Person constituting a business unit, or permit any of its
Subsidiaries to do so, except:

 

(i) Permitted
Investments;

 

(ii) investments and
Guarantees existing on the date hereof and set forth in Schedule
5.02(i);

 

(iii) investments made by
the Company in the equity securities or other ownership interests of any of its
Subsidiaries and made by any such Subsidiary in the equity securities or other
ownership interests of any other such Subsidiary;

 

(iv) loans or advances
made by the Company to any of its Affiliates and made by any such Subsidiary to
the Company or any other Affiliate of the Company, in each case in the ordinary
course of business;

 

(v) acquisitions made by
the Company from any of its Subsidiaries or made by any such Subsidiary from the
Company or any other such Subsidiary;

 

(vi) any transaction
permitted by Section 5.02(f); and






















 

(vii) if at the time
thereof and immediately after giving effect thereto no Default or Event of
Default shall have occurred and be continuing, other investments, loans,
advances, Guarantees and acquisitions, provided that the sum of (A)
the aggregate consideration paid by the Company or any of its Subsidiaries in
connection with all such acquisitions, (B) the aggregate amount of all such
other investments, loans and advances outstanding and (C) the amount of
obligations and liabilities outstanding in the aggregate that is Guaranteed
pursuant to all such other Guarantees, shall not exceed $5,000,000 at any
time.

 

(j) Restricted
Payments. If any Default or
Event of Default has occurred and is continuing, declare or make, or agree to
pay for or make, directly or indirectly, any Restricted Payment, or permit any
of its Subsidiaries to do so, except that (i) the
Company may declare and pay dividends or other distributions with respect to its
equity interests payable solely in additional equity interests, and (ii) any
Subsidiary of the Company may declare and pay dividends or other distributions
with respect to its equity interests to the Company or any Subsidiary of the
Company.

 

(k) No
Action on Bonds. The Company shall
not cause, nor shall it consent to, or instruct any other Person to cause, (i)
any redemption or defeasance of all or any portion of the Bonds pursuant to the
Indenture, (ii) any termination of the Letter of Credit or (iii) any conversion
of the Interest Rate Mode applicable to the Bonds; provided that the Company may
cause, instruct and direct the Issuer to cause, instruct and direct the Trustee,
and the Issuer may cause, instruct and direct the Trustee, to, and the Trustee
may, conditionally call all of the Bonds for optional redemption on any date on
which the Bonds can be optionally redeemed pursuant to Section 4.01(c)(i) of the
Indenture pursuant to such notices and instructions in form and substance
reasonably acceptable to the Fronting Bank.

 

SECTION
5.03. Financial Covenant of the Company. So long as a Drawing
is available under the Letter of Credit or the Company shall have any obligation
to pay any amount to the Fronting Bank with respect to the Letter of Credit
under the Credit Agreement or any Company shall have any obligations under any
Guaranty Agreement:

 

(a) Debt to
Capitalization Ratio. The Company shall
maintain a Debt to Capitalization Ratio of no more than 0.65 to 1.00 (determined
as of the last day of each fiscal quarter).






















 

ARTICLE
VI

 

EVENTS OF
DEFAULT

 

SECTION
6.01. Events of Default. The occurrence of
any of the following events (whether voluntary or involuntary) shall be an
“Event of
Default”
hereunder:

 

(a) Any “Event of
Default” under and as defined in the Credit Agreement shall have occurred and be
continuing; or

 

(b) Any Credit Party
shall fail to pay any amount of principal, interest, fees or other amounts
payable under any Credit Document when due; or

 

(c) Any representation
or warranty made, or deemed made, by any Credit Party herein or by any Credit
Party (or any of its officers) in connection with this Agreement, any other
Credit Document or any of the Related Documents or any document delivered
pursuant hereto or thereto shall prove to have been incorrect in any material
respect when made or deemed made; or

 

(d) The Company shall
fail to perform or observe any term, covenant or agreement contained in clause
(i) of Section 5.01(a) or Section 5.02 or Section 5.03.

 

(e) Any Credit Party
shall fail to perform or observe any other term, covenant or agreement contained
in this Agreement or any material term, covenant or agreement contained in any
of the Related Documents on its part to be performed or observed and, in any
such case, such failure shall continue for 30 days after written notice thereof
from the Fronting Bank to FirstEnergy or the Company, as the case may be;
or

 

(f) The Company or any
of its Subsidiaries shall fail to make when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) any payment on any Debt
(other than the Debt represented by this Agreement, and the Credit Agreement
with respect to the Letter of Credit or the Bonds) the aggregate principal
amount of which is greater than $50,000,000, or to make when due any payment of
any interest or premium thereon, and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt; or any other event or condition shall occur and shall
continue after the applicable grace period, if any, specified in any agreement
or instrument relating to any such Debt, if the effect thereof is to accelerate,
or to permit the acceleration of (other than by a specified mandatory redemption
provision in connection with pollution control bonds unrelated to any default or
event of default with respect thereto) the maturity of any such Debt; or any
such Debt shall be declared due and payable, or required to be prepaid (other
than by a regularly scheduled required prepayment or a specified mandatory
redemption provision in connection with pollution control bonds unrelated to any
default or event of default with respect thereof) prior to the stated maturity
thereof; or






















 

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

 

(h) Any judgment or
order for the payment of money exceeding any applicable insurance coverage by
more than $50,000,000 shall be rendered against the Company or any of its
Subsidiaries and either (i) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order or (ii) there shall be any period of 30
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect;
or

 

(i) Any Termination
Event with respect to a Plan shall have occurred, and, 30 days after notice
thereof shall have been given to the Company by the Fronting Bank, (i) such
Termination Event (if correctable) shall not have been corrected and (ii) the
then Unfunded Vested Liabilities of such Plan exceed $10,000,000 (or in the case
of a Termination Event involving the withdrawal of a “substantial employer” (as
defined in Section 4001(a)(2) of ERISA), the withdrawing employer’s
proportionate share of such excess shall exceed such amount); or 

 

(j) The Company or any
member of the Controlled Group as employer under a Multiemployer Plan shall have
made a complete or partial withdrawal from such Multiemployer Plan and the Plan
sponsor of such Multiemployer Plan shall have notified such withdrawing employer
that such employer has incurred a withdrawal liability in an amount exceeding
$10,000,000; or 

 

(k) Any “Event of
Default” under and as defined in the Indenture shall have occurred and be
continuing; or






















(l) Any approval or
order of any Governmental Authority related to any Credit Document or any
Related Document shall be (i) rescinded, revoked or set aside or otherwise cease
to remain in full force and effect, or (ii) modified in any manner that, in
the opinion of the Fronting Bank, could reasonably be expected to have a
Material Adverse Effect with respect to any
Credit Party; or

 

(m) Any change in
Applicable Law or any Governmental Action shall occur which has the effect of
making the transactions contemplated by the Credit Documents or the Related
Documents unauthorized, illegal or otherwise contrary to Applicable Law;
or

 

(n) Any provision of
this Agreement, or any material provision of any Related Document to which any
Credit Party is a party, shall at any time for any reason cease to be valid and
binding on such Credit Party other than in accordance with the terms of such
Related Document, or shall be declared to be null and void, or the validity or
enforceability thereof shall be denied or contested by such Credit Party, or a
proceeding shall be commenced by any Governmental Authority having jurisdiction
over such Credit Party seeking to establish the invalidity or unenforceability
thereof and such Credit Party shall fail diligently or successfully to defend
such proceeding; or

 

(o) The Custodian
Agreement after delivery under Article III hereof shall for any reason, except
to the extent permitted by the terms thereof, fail or cease to create valid and
perfected Liens (to the extent purported to be granted by the Custodian
Agreement and subject to the exceptions permitted thereunder) in any of the
collateral purported to be covered thereby, provided,
that such failure or
cessation relating to any non-material portion of such collateral shall not
constitute an Event of Default hereunder unless the same shall not have been
corrected within 30 days after the Company becomes aware thereof; or


 

(p) A Change in Control
(Company) shall occur.

 

SECTION
6.02. Upon an Event of Default. If any Event of
Default shall have occurred and be continuing, the Fronting Bank may (i) by
notice to the Credit Parties, declare the obligation of the Fronting Bank to
issue the Letter of Credit to be terminated, whereupon the same shall forthwith
terminate, (ii) give notice to the Trustee (A) directing a mandatory purchase of
the Bonds as provided in Section 5.01(b)(iii) of the Indenture and/or (B) as
provided in Section 11.02 of the Indenture to declare the principal of all
Pledged Bonds then outstanding to be immediately due and payable, and (iii) in
addition to other rights and remedies provided for herein or in the Custodian
Agreement or otherwise available to any of them, as holder of the Pledged Bonds
or otherwise, exercise all the rights and remedies of a secured party on default
under the Uniform Commercial Code in effect in the State of New York at that
time, provided
that, if an Event of
Default described in Section 6.01(g) shall have occurred or an Event of Default
described in Section 6.01(a) shall have occurred by virtue of an event of
default under Section 6.01(f) of the Credit Agreement, then, automatically, (x)
the obligation of the Fronting Bank to issue the Letter of Credit shall
terminate, (y) all amounts payable hereunder or under any other Credit Document
or in respect hereof or thereof and any Advance, all interest thereon and all
amounts payable under the Credit Agreement with respect to the Letter of Credit
shall become and be forthwith due and payable, without presentment, demand,
protest, or further notice of any kind, all of which are hereby expressly waived
by the Credit Parties and (z) the Fronting Bank shall give the notice to the
Trustee referred to in clauses (ii) above (iii). The remedies set forth
hereunder shall not limit the application or exercise of any remedy set forth
under the Credit Agreement.

 

 




















 


 



 

ARTICLE
XII

 

MISCELLANEOUS

 

SECTION
7.01. Amendments, Etc. No amendment or
waiver of any provision of any Credit Document, nor consent to any departure by
any Credit Party therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Fronting Bank, FirstEnergy and the Company
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.

 

SECTION
7.02. Notices, Etc. All notices and
other communications provided for hereunder or under any other Credit Document
shall be in writing (including telegraphic communication) and mailed,
telecopied, telegraphed or delivered as follows:

 

 


	 FirstEnergy
      and the Company:	 
	 	 
	 	 FirstEnergy
      Corp.
       FirstEnergy
      Generation Corp.

       76 South
      Main Street

       Akron,
      Ohio 44308 

       Attention:
      Treasurer

       Telecopy
      No.: (330) 384-3772

	 	 
	 The Fronting
      Bank:	 
	 	 Barclays Bank
      PLC 
       200 Park
      Avenue, 4th
      Floor

       New
      York, New York 10166

       Attention:
      David E. Barton

       Telecopy
      No.: (212) 412-7511 

	 	 
	 	 with a copy
      to:
	 	 
	 	
       Barclays Bank
      PLC 

       c/o Barclays
      Capital Services, LLC

       200 Cedar
      Knolls Road

       Whippany, NJ
      07981

       Attention:
      Dawn Townsend 

       Telecopy No.:
      (973) 576-3017




 

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






















 

SECTION
7.03. No Waiver; Remedies. No failure on the part
of the Fronting Bank to exercise, and no delay in exercising, any right
hereunder or under any other Credit Document or the Credit Agreement shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder or thereunder preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.

 

SECTION
7.04. Set-off. (a) Upon the
occurrence and during the continuance of any Event of Default, the Fronting Bank
is hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by the Fronting Bank to or for the credit or the account of any
Credit Party against any and all of the obligations of the Credit Parties now or
hereafter existing under any Credit Document, irrespective of whether or not the
Fronting Bank shall have made any demand hereunder and although such obligations
may be contingent or unmatured.

 

(b) The Fronting Bank
agrees promptly to notify the Credit Parties after any such set-off and
application referred to in subsection (a) above; provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of the Fronting Bank under this Section 7.04 are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which the Fronting Bank may have.

 

SECTION
7.05. Indemnification. The Credit Parties
hereby indemnify and hold the Fronting Bank harmless from and against any and
all claims, damages, losses, liabilities, costs and expenses which such party
may incur or which may be claimed against such party by any Person:

 

(a) by reason of any
inaccuracy or alleged inaccuracy in any material respect, or any untrue
statement or alleged untrue statement of any material fact, contained in the
Official Statement or any amendment or supplement thereto, except to the extent
contained in or arising from information in the Official Statement (or any
amendment or supplement thereto) supplied in writing by and describing the
Fronting Bank; or by reason of the omission or alleged omission to state therein
a material fact necessary to make such statements, in the light of the
circumstances under which they were made, not misleading; or

 

(b) by reason of or in
connection with the execution, delivery or performance of this Agreement, the
other Credit Documents or the Related Documents, or any transaction contemplated
by this Agreement, the other Credit Documents or the Related Documents, other
than as specified in subsection (c) below; or






















 

(c) by reason of or in
connection with the execution and delivery or transfer of, or payment or failure
to make payment under, the Letter of Credit; provided,
however, that the Credit
Parties shall not be required to indemnify any such party pursuant to this
Section 7.05(c) for any claims, damages, losses, liabilities, costs or expenses
to the extent caused by (i) the Fronting Bank’s willful misconduct or gross
negligence in determining whether documents presented under the Letter of Credit
comply with terms of the Letter of Credit or (ii) the Fronting Bank’s willful or
grossly negligent failure to make lawful payment under the Letter of Credit
after the presentation to it by the Trustee or the Tender Agent under the
Indenture of a certificate strictly complying with the terms and conditions of
the Letter of Credit.

 

Nothing in this
Section 7.05 is intended to limit the Credit Parties’s obligations contained in
Article II. Without prejudice to the survival of any other obligation of
the Credit Parties hereunder or under any other Credit Document, the indemnities
and obligations of the Credit Parties contained in this Section 7.05 shall
survive the payment in full of amounts payable pursuant to Article II and the
termination of the Letter of Credit.

 

SECTION
7.06. Liability of the Fronting Bank. Each Credit Party
assumes all risks of the acts or omissions of the Trustee, the Tender Agent, the
Paying Agent and any other beneficiary or transferee of the Letter of Credit
with respect to its use of the Letter of Credit. None of the Fronting Bank nor
any of its respective officers or directors shall be liable or responsible for:
(a) the use which may be made of the Letter of Credit or any acts or omissions
of the Trustee, the Tender Agent, the Paying Agent and any other beneficiary or
transferee in connection therewith; (b) the validity, sufficiency or genuineness
of documents, or of any endorsement thereon, even if such documents should prove
to be in any or all respects invalid, insufficient, fraudulent or forged; (c)
payment by the Fronting Bank against presentation of documents which do not
comply with the terms of the Letter of Credit, including failure of any
documents to bear any reference or adequate reference to the Letter of Credit;
or (d) any other circumstances whatsoever in making or failing to make payment
under the Letter of Credit, except that the Credit Parties shall have a claim
against the Fronting Bank and the Fronting Bank shall be liable to the Credit
Parties, to the extent of any direct, as opposed to consequential, damages
suffered by the Credit Parties which the Credit Parties prove were caused by (i)
the Fronting Bank’s willful misconduct or gross negligence in determining
whether documents presented under the Letter of Credit are genuine or comply
with the terms of the Letter of Credit or (ii) the Fronting Bank’s willful or
grossly negligent failure, as determined by a court of competent jurisdiction,
to make lawful payment under the Letter of Credit after the presentation to it
by the Trustee or the Paying Agent under the Indenture of a certificate strictly
complying with the terms and conditions of the Letter of Credit. In furtherance
and not in limitation of the foregoing, the Fronting Bank may accept original or
facsimile (including telecopy) certificates presented under the Letter of Credit
that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the
contrary.






















 

SECTION
7.07. Costs, Expenses and Taxes. The Credit Parties
agree to pay on demand all costs and expenses in connection with the
preparation, issuance, delivery, filing, recording, and administration of this
Agreement, the Letter of Credit, the other Credit Documents and any other
documents which may be delivered in connection with the Credit Documents,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Fronting Bank incurred in connection with the preparation and
negotiation of this Agreement, the Letter of Credit, the other Credit Documents
and any document delivered in connection therewith and all costs and expenses
incurred by the Fronting Bank (including reasonable fees and out-of-pocket
expenses of counsel) in connection with (i) the transfer, drawing upon, change
in terms, maintenance, renewal or cancellation of the Letter of Credit, (ii) any
and all amounts which the Fronting Bank has paid relative to the Fronting Bank’s
curing of any Event of Default resulting from the acts or omissions of any
Credit Party under this Agreement, any other Credit Document or any Related
Document, (iii) the enforcement of, or protection of rights under, this
Agreement, any other Credit Document or any Related Document (whether through
negotiations, legal proceedings or otherwise), (iv) any action or proceeding
relating to a court order, injunction, or other process or decree restraining or
seeking to restrain the Fronting Bank from paying any amount under the Letter of
Credit or (v) any waivers or consents or amendments to or in respect of this
Agreement, the Letter of Credit or any other Credit Document requested any
Credit Party. In addition, the Credit Parties shall pay any and all stamp and
other taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Agreement, the Letter of
Credit, any other Credit Documents or any of such other documents (“Other
Taxes”), and agrees to
save the Fronting Bank harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such Other
Taxes.

 

SECTION
7.08. Binding Effect. This Agreement
shall become effective when it shall have been executed and delivered by
FirstEnergy, the Company and the Fronting Bank and thereafter shall (a) be
binding upon FirstEnergy, the Company and their respective successors and
assigns, and (b) inure to the benefit of and be enforceable by the Fronting Bank
and each of its successors, transferees and assigns; provided that,
neither FirstEnergy nor the
Company may assign all or any part of its rights or obligations under any Credit
Document without the prior written consent of the Fronting Bank.

 

SECTION
7.09. Assignments and Participation. The Fronting Bank
may assign its rights and obligations under this Agreement in the same manner as
is permitted with respect to the assignment of the Credit Agreement as set forth
in Section 8.08 of the Credit Agreement. The Fronting Bank may sell
participations in its rights and obligations under this Agreement in the same
manner as is permitted with respect to the sale of participations in the Credit
Agreement as set forth in Section 8.08 of the Credit Agreement. Nothing
contained in this Section 7.09 shall be construed to relieve the Fronting Bank
of any of its obligations under the Letter of Credit.






















 

SECTION
7.10. Severability. Any provision of
this Agreement which is prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, unenforceability or non-authorization without invalidating the
remaining provisions hereof or affecting the validity, enforceability or
legality of such provision in any other jurisdiction.

 

SECTION
7.11. GOVERNING LAW. THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.

 

SECTION
7.12. Headings. Section headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.

 

SECTION
7.13. Submission To Jurisdiction; Waivers. Each Credit Party
hereby irrevocably and unconditionally:

 

(a) submits for itself
and its property in any legal action or proceeding relating to this Agreement
and the other Related Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate courts
from any thereof;

 

(b) consents that any
such action or proceeding may be brought in such courts and waives any objection
that it may now or hereafter have to the venue of any such action or proceeding
in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;

 

(c) agrees that service
of process in any such action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to the parties at their address set forth in
Section 7.02 or at such other address of which the Fronting Bank shall have
been notified pursuant thereto; and

 

(d) agrees that nothing
herein shall affect the right to effect service of process in any other manner
permitted by law or shall limit the right to sue in any other
jurisdiction.

 

This Section 7.13
shall not be construed to confer a benefit upon, or grant a right or privilege
to, any Person other than the parties hereto.






















 

SECTION
7.14. Acknowledgments. Each Credit Party
hereby acknowledges:

 

(a) it has been advised
by counsel in the negotiation, execution and delivery of this Agreement, the
other Credit Documents and other Related Documents;

 

(b) the Fronting Bank
has no fiduciary relationship to any Credit Party, and the relationship between
Fronting Bank, on the one hand, and any Credit Party on the other hand, is
solely that of debtor and creditor; and

 

(c) no joint venture
exists between any Credit Party and the Fronting Bank.

 

SECTION
7.15. WAIVERS OF JURY TRIAL. FIRSTENERGY,
THE COMPANY AND THE FRONTING BANK HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE,
TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY RELATED DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN. THIS SECTION
7.15 SHALL NOT BE CONSTRUED TO CONFER A BENEFIT UPON, OR GRANT A RIGHT OR
PRIVILEGE TO, ANY PERSON OTHER THAN THE PARTIES HERETO.

 

SECTION
7.16. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. 

 

SECTION
7.17. “Reimbursement Agreement” for Purposes of
Indenture. This Agreement and/or the
Credit Agreement (to the extent of obligations of FirstEnergy thereunder with
respect to the Letter of Credit), as the context may require, shall be deemed to
be a “Reimbursement Agreement” for the purpose of the Indenture.

 

SECTION
7.18. USA
PATRIOT Act. The Fronting Bank
hereby notifies each Credit Party that pursuant to the requirements of the USA
PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Act”), it is required to obtain, verify and record information that
identifies each Credit Party, which information includes the name and address of
each Credit Party and other information that will allow the Fronting Bank to
identify such Credit Party in accordance with the Act.






















 

ARTICLE
XIII

 

GUARANTY

 

SECTION
8.01. Guaranty; Limitation of Liability .

 

(a) The Company hereby
absolutely, unconditionally and irrevocably guarantees (the “Guaranty”) the punctual
payment when due, whether at scheduled maturity or on any date of a required
prepayment or by acceleration, demand or otherwise, of all payment, performance
and other obligations of FirstEnergy now or hereafter existing under or in
respect of the Credit Agreement and the other Credit Documents (including,
without limitation, the Reimbursement Obligations and any extensions,
modifications, substitutions, amendments or renewals of any or all of the
Reimbursement Obligations) solely with respect to the Letter of Credit, whether
direct or indirect, absolute or contingent, and whether for principal, interest,
reimbursement obligations, premiums, fees, indemnities, contract causes of
action, costs, expenses or otherwise, including, without limitation, (i) the
obligation of FirstEnergy to pay principal, interest, letter of credit fees,
charges, expenses, fees, attorneys’ fees and disbursements, indemnities and
other amounts payable by FirstEnergy under the Credit Agreement or any Credit
Document with respect to the Letter of Credit, (ii) the obligation of
FirstEnergy to reimburse any amount in respect of any drawing under the Letter
of Credit and (iii) any liability of FirstEnergy on any claim relating to the
Letter of Credit, whether or not the right of any creditor to payment in respect
of such claim is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, disputed, undisputed, legal, equitable, secured or
unsecured, and whether or not such claim is discharged, stayed or otherwise
affected by any proceeding (such obligations being the “Guaranteed
Obligations”), and agrees to
pay any and all expenses (including, without limitation, fees and expenses of
counsel) incurred by the Administrative Agent or any Bank under (and as defined
in) the Credit Agreement or the Fronting Bank (each a “Beneficiary”) in enforcing any
rights under this Guaranty or, to the extent related to the Letter of Credit,
any other Credit Document. Without limiting the generality of the foregoing, the
Company’s liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by FirstEnergy to any Beneficiary under
or in respect of the Credit Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving FirstEnergy. The Company hereby
agrees that this Guaranty is an absolute, irrevocable and unconditional guaranty
of payment and is not a guaranty of collection. This Guaranty is a continuing
guaranty.

 

(b) The Company, and by
its acceptance of this Guaranty, the Fronting Bank hereby confirms that it is
the intention of all such Persons that this Guaranty and the Guaranteed
Obligations of the Company hereunder not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law (as hereinafter defined), the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
foreign, federal or state law to the extent applicable to this Guaranty and the
Guaranteed Obligations. To effectuate the foregoing intention, the Fronting Bank
and the Company hereby irrevocably agree that the Guaranteed Obligations at any
time shall be limited to the maximum amount as will result in the Guaranteed
Obligations not constituting a fraudulent transfer or conveyance. For purposes
hereof, “Bankruptcy
Law” means any
proceeding of the type referred to in Section 6.01(g) of this Agreement or Title
11, U.S. Code, or any similar foreign, federal or state law for the relief of
debtors.






















 

SECTION
8.02. Guaranty Absolute.
The Company
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with the terms of the Credit Documents, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such terms
or the rights of any Beneficiary with respect thereto. The obligations of the
Company under or in respect of this Guaranty are independent of the Guaranteed
Obligations or any other obligations of FirstEnergy under or in respect of the
Credit Documents, and a separate action or actions may be brought and prosecuted
against the Company to enforce this Guaranty, irrespective of whether any action
is brought against FirstEnergy or whether FirstEnergy is joined in any such
action or actions. The liability of the Company under this Guaranty shall be
irrevocable, absolute and unconditional irrespective of, and the Company hereby
irrevocably waives any defenses it may now have or hereafter acquire in any way
relating to, any or all of the following:

 

(a) any lack of validity
or enforceability of any Credit Document or any agreement or instrument relating
thereto;

 

(b) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Guaranteed Obligations or any other obligations of FirstEnergy under or in
respect of the Credit Documents, or any other amendment or waiver of or any
consent to departure from any Credit Document, including, without limitation,
any increase in the Guaranteed Obligations resulting from the extension of
additional credit to FirstEnergy or any of its Subsidiaries or
otherwise;

 

(c) any taking,
exchange, release or non-perfection of any collateral, or any taking, release or
amendment or waiver of, or consent to departure from, any other guaranty, for
all or any of the Guaranteed Obligations;

 

(d) any manner of
application of any collateral, or proceeds thereof, to all or any of the
Guaranteed Obligations, or any manner of sale or other disposition of any
collateral for all or any of the Guaranteed Obligations or any other assets of
FirstEnergy or any of its Subsidiaries;

 

(e) any change,
restructuring or termination of the corporate structure or existence of
FirstEnergy or any of its Subsidiaries;

 

(f) any failure of any
Beneficiary to disclose to the Company any information relating to the business,
condition (financial or otherwise), operations, performance, properties or
prospects of FirstEnergy now or hereafter known to such Beneficiary (the Company
waiving any duty on the part of Beneficiaries to disclose such
information);

 

(g) the failure of any
other Person to execute or deliver this Guaranty or any other guaranty or
agreement or the release or reduction of liability of the Company or other
guarantor or surety with respect to the Guaranteed Obligations; or

 

(h) any other
circumstance (including, without limitation, any statute of limitations) or any
existence of or reliance on any representation by any Beneficiary that might
otherwise constitute a defense available to, or a discharge of, the Company or
any other guarantor or surety.






















 

This Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Guaranteed Obligations is rescinded or must otherwise
be returned by any Beneficiary or any other Person upon the
insolvency, bankruptcy or reorganization of the Company, FirstEnergy or
otherwise, all as though such payment had not been made.

 

SECTION
8.03. Waivers and Acknowledgments .

 

(a) The Company hereby
unconditionally and irrevocably waives promptness, diligence, notice of
acceptance, presentment, demand for performance, notice of nonperformance,
default, acceleration, protest or dishonor and any other notice with respect to
any of the Guaranteed Obligations and this Guaranty and any requirement that any
Beneficiary protect, secure, perfect or insure any Lien or any property subject
thereto or exhaust any right or take any action against FirstEnergy or any other
Person or any collateral.

 

(b) The Company hereby
unconditionally and irrevocably waives any right to revoke this Guaranty and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.

 

(c) The Company hereby
unconditionally and irrevocably waives (i) any defense arising by reason of any
claim or defense based upon an election of remedies by any Beneficiary that in
any manner impairs, reduces, releases or otherwise adversely affects the
subrogation, reimbursement, exoneration, contribution or indemnification rights
of the Company or other rights of the Company to proceed against FirstEnergy,
any other guarantor or any other Person or any collateral and (ii) any defense
based on any right of set-off or counterclaim against or in respect of the
Guaranteed Obligations.

 

(d) The Company hereby
unconditionally and irrevocably waives any duty on the part of any Beneficiary
to disclose to the Company any matter, fact or thing relating to the business,
condition (financial or otherwise), operations, performance, properties or
prospects of FirstEnergy or any of its Subsidiaries now or hereafter known by
such Beneficiary.

 

(e) The Company
acknowledges that it will receive substantial direct and indirect benefits from
the financing arrangements contemplated by the Credit
Documents and that the waivers set forth in Section 8.02 and this Section 8.03
are knowingly made in contemplation of such benefits.






















 

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

 

SECTION
8.05. Subordination.
If any Default shall
have occurred and be continuing, the Company agrees to subordinate any and all
debts, liabilities and other obligations owed to the Company by FirstEnergy (the
“Subordinated
Obligations”) to the Guaranteed
Obligations to the extent and in the manner hereinafter set forth in this
Section 8.05:

 

(a) Prohibited
Payments, Etc. Except during the
continuance of an Default (including the commencement and continuation of any
proceeding under any Bankruptcy Law relating to FirstEnergy), the Company may
receive regularly scheduled payments from FirstEnergy on account of the
Subordinated Obligations. After the occurrence and during the continuance of any
Default (including the commencement and continuation of any proceeding under any
Bankruptcy Law relating to FirstEnergy), however, unless the Fronting Bank
otherwise agrees, the Company shall not demand, accept or take any action to
collect any payment on account of the Subordinated Obligations.






















 

(b) Prior Payment of
Guaranteed Obligations. In any proceeding
under any Bankruptcy Law relating to FirstEnergy, the Company agrees that the
Beneficiaries shall be entitled to receive payment in full in cash of all
Guaranteed Obligations (including all interest and expenses accruing after the
commencement of a proceeding under any Bankruptcy Law, whether or not
constituting an allowed claim in such proceeding (“Post
Petition Interest”)) before the
Company receives payment of any Subordinated Obligations. 

 

(c) Turn-Over. After the
occurrence and during the continuance of any Default (including the commencement
and continuation of any proceeding under any Bankruptcy Law relating to
FirstEnergy), the Company shall, if the Fronting Bank so requests, collect,
enforce and receive payments on account of the Subordinated Obligations as
trustee for the Beneficiaries and deliver such payments to the Fronting Bank on
account of the Guaranteed Obligations (including all Post Petition Interest),
together with any necessary endorsements or other instruments of transfer, but
without reducing or affecting in any manner the liability of the Company under
the other provisions of this Guaranty.

 

(d) Fronting Bank
Authorization. After the
occurrence and during the continuance of any Default (including the commencement
and continuation of any proceeding under any Bankruptcy Law relating to any
other FirstEnergy), the Fronting Bank is authorized and empowered (but without
any obligation to so do), in its discretion, (i) in the name of the Company, to
collect and enforce, and to submit claims in respect of, Subordinated
Obligations and to apply any amounts received thereon to the Guaranteed
Obligations (including any and all Post Petition Interest), and (ii) to require
the Company (A) to collect and enforce, and to submit claims in respect of,
Subordinated Obligations and (B) to pay any amounts received on such obligations
to the Fronting Bank for application to the Guaranteed Obligations (including
any and all Post Petition Interest).

 




 

 

 




















 

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

 


	 	 	 
	 	FIRSTENERGY
      CORP.
	 
 	 
 	 
 
	 	 	 
	 	By:  	 
	 	
      

      Name:
	 	Title: 



 

 


	 	 	 
	 	
      FIRSTENERGY
      GENERATION CORP.

	 
 	 
 	 
 
	 	 	 
	 	By:  	 
	 	
      

      Name:
	 	Title:



 

 

 
	 	 	 
	 	
      BARCLAYS
      BANK PLC, acting through its

	 
 	 
 	
       New
      York Branch,

       as
      Fronting Bank 

	 	 	 
	 	 By:	 
	 	
      

       Name:
	 	 Title: 



 

 


	  Signature Page to Supplemental
      Letter of Credit Agreement
	
       OHIO AIR QUALITY DEVELOPMENT AUTHORITY

	
       
	
       STATE OF OHIO POLLUTION CONTROL

	
       
	
       REVENUE REFUNDING BONDS SERIES 2006-A

	
       
	
       (FirstEnergy Generation Corp.
Project)