Unassociated Document


    
      

    


     

     

    WASTE
      WATER
FACILITIES
      AND
      SOLID
      WASTE FACILITIES

     

    LOAN
      AGREEMENT

     

    Between

     

    OHIO
      WATER
      DEVELOPMENT AUTHORITY

     

    and

     

    FIRSTENERGY
      NUCLEAR
      GENERATION CORP.

     

    Dated
      as of December
      1, 2005

     

    


     

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    

      


      TABLE
        OF
        CONTENTS

      


      
        	I.      	
                Background,
                  Representations and Findings.

              


      

                                                                                                           
        Page


      
        	II.             	
                Completion
                  of
                  the Project.

              


      

       

      
        
          	
                      Section
                    2.1

                	
                  Acquisition,
                    Construction and Installation

                	
                  6

                
	
                      Section
                    2.2

                	
                  Plans
                    and
                    Specifications

                	
                  6

                


        

      

       

        	III.     	
                Refunding
                  the
                  Refunded Bonds.

              


      

      


      
        	
                                
                  Section 3.1

              	
                Issuance
                  of
                  Bonds

              	
                7

              
	
                                
                  Section 3.2

              	
                Investment
                  of
                  Fund Moneys

              	
                7

              


      

      


      
        	IV.      	
                Loan
                  and
                  Repayment.

              


      

      


      
        	
                         
                  Section 4.1

              	
                Amount
                  and
                  Source of Loan

              	
                8

              
	
                      Section
                  4.2

              	
                Repayment
                  of
                  Loan

              	
                8
                  

              
	
                         
                  Section 4.3

              	
                The
                  Note

              	
                8

              
	
                         
                  Section 4.4

              	
                Acceleration
                  of Payment to Redeem Bonds

              	
                9

              
	
                         
                  Section 4.5

              	
                No
                  Defense or
                  Set-Off

              	
                9

              
	
                         
                  Section 4.6

              	
                Assignment
                  of
                  Issuer’s Rights

              	
                9

              
	
                         
                  Section 4.7

              	
                Credit
                  Facility; Conversion

              	
                9

              


      

      


      
        	V.                
                	
                Covenants
                  of
                  the Company.

              


      

      


      
        	
                       Section
                  5.1

              	
                Maintenance
                  and Operation of Project

              	
                10

              
	
                          
                  Section 5.2

              	
                Corporate
                  Existence

              	
                11

              
	
                                  
                  Section 5.3

              	
                Payment
                  of
                  Trustee’s Compensation and Expenses

              	
                11

              
	
                                  
                  Section 5.4

              	
                Payment
                  of
                  Issuer’s Expenses

              	
                11

              
	
                                  
                  Section 5.5

              	
                Indemnity
                  Against Claims

              	
                11

              
	
                                  
                  Section 5.6

              	
                Limitation
                  of
                  Liability of the Issuer

              	
                12

              
	
                                   Section
                  5.7

              	
                Insurance

              	
                12

              
	
                                   Section
                  5.8

              	
                Default,
                  etc.

              	
                12

              
	
                                  
                  Section 5.9

              	
                Deficiencies
                  in Revenues

              	
                12

              
	
                                  
                  Section 5.10

              	
                Rebate
                  Fund

              	
                13

              
	
                                   Section
                  5.11

              	
                Assignment
                  of
                  Agreement in Whole or in Part by Company

              	
                13

              
	
                                  
                  Section 5.12

              	
                Assignment
                  of
                  Agreement in Whole by Company

              	
                13

              


      

      


      VI.     Miscellaneous.

      


      
        	
                                 
                  Section 6.1

              	
                Notices

              	
                14

              
	
                                 
                  Section 6.2

              	
                Assignments

              	
                14

              
	
                                 
                  Section 6.3

              	
                Illegal,
                  etc.
                  Provisions Disregarded

              	
                15

              
	
                                 
                  Section 6.4

              	
                Applicable
                  Law

              	
                15

              
	
                                 
                  Section 6.5

              	
                Amendments

              	
                15

              
	
                                 
                  Section 6.6

              	
                Term
                  of
                  Agreement

              	
                15

              


      

       

        	
                         
                  EXECUTION

              	 	
                16

              


      

      


      EXHIBIT
        A - Project
        Description

      


      EXHIBIT
        B - Form of
        Company Note

      


    


    
      
        
           i

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          


        

      

    



    WASTE
      WATER
      FACILITIES and SOLID WASTE FACILITIES LOAN AGREEMENT, dated as of December
      1,
      2005 (the “Agreement”) between the OHIO WATER DEVELOPMENT AUTHORITY (the
“Issuer”) and FIRSTENERGY NUCLEAR GENERATION CORP. (the “Company”).

     

    I.
      Background,
      Representations and Findings.

     

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

     

    Under
      the Act, the
      Issuer may make loans to private corporations for the acquisition or
      construction of waste water facilities and solid waste facilities by such
      corporations or to assist in the refinancing of such facilities. The Issuer
      has
      heretofore authorized the issuance of several issues of revenue bonds of the
      State of Ohio, including the Refunded Bonds, as hereinafter defined, currently
      outstanding in the aggregate principal amount of $99,100,000, and loaned the
      proceeds thereof to Ohio Edison Company (“OE”), an Ohio corporation, and
      Pennsylvania Power Company (“Penn”), a Pennsylvania corporation (collectively,
      the “Companies”) in order to assist the Companies in financing or refinancing a
      portion of the cost of acquiring, constructing and installing certain waste
      water facilities and solid waste facilities generally described in Exhibit
      A to
      this Agreement (the “Project”). The Companies are affiliates of FirstEnergy
      Corp. (“FirstEnergy”) and are planning to transfer their respective ownership
      interests in the Project as part of the planned FirstEnergy Intra-System
      Generation Asset Transfers described in a Form 8-K dated May 19, 2005 of
      FirstEnergy and the respective Companies filed with the Securities and Exchange
      Commission, and in connection therewith FirstEnergy and the Companies have
      requested that the Issuer authorize the refunding of a corresponding portion
      of
      the outstanding aggregate principal amount of the Issuer’s $13,300,000 State of
      Ohio Pollution Control Revenue Bonds, Series 1988 (Pennsylvania Power Company
      Project) (the “1988 Penn Bonds”), $5,800,000 State of Ohio Pollution Control
      Revenue Refunding Bonds, Series 1997 (Pennsylvania Power Company Project) (the
      “1997 Bonds”), $5,200,000 State of Ohio Pollution Control Revenue Refunding
      Bonds, Series 1999-A (Pennsylvania Power Company Project) (the “1999 Penn
      Bonds”), $30,000,000 State of Ohio Pollution Control Revenue Refunding Bonds,
      Series 1999-B (Ohio Edison Company Project) (the “1999 OE Bonds”) and
      $44,800,000 State of Ohio Pollution Control Revenue Refunding Bonds, Series
      2000-A (Ohio Edison Company Project) (the “2000 Bonds”, and together with the
      1988 Penn Bonds, the 1997 Bonds, the 1999 Penn Bonds and the 1999 OE Bonds,
      the
“Refunded Bonds”) through the issuance of revenue refunding bonds to assist the
      Company, an Affiliate (as defined in the Indenture identified in Section 3.1
      hereof) of the Companies and FirstEnergy, in the refunding of the Refunded
      Bonds. 

     

    The
      1988 Penn Bonds
      were issued under and pursuant to a Trust Indenture dated as of May 1, 1988
      (the
“1988 Bonds Indenture”) between the Issuer and Pittsburgh National Bank, (the
      trustee thereunder is now J.P. Morgan Trust Company, National Association (the
      “1988 Bonds Trustee”)), the proceeds of which were loaned by the Issuer to Penn
      pursuant to a Waste Water Facilities and Solid Waste Facilities Loan Agreement
      dated as of May 1, 1988 (the “1988 Bonds Agreement”) between the Issuer and Penn
      to assist Penn in the financing of a portion of the cost of acquiring,
      constructing and installing the Project.

     

    The
      1997 Bonds were
      issued under and pursuant to a Trust Indenture dated as of June 1, 1997
      (the “1997 Bonds Indenture”) between the Issuer and PNC Bank, National
      Association (the trustee thereunder is now J.P. Morgan Trust Company, National
      Association (the “1997 Bonds Trustee”)), the proceeds of which were loaned by
      the Issuer to Penn pursuant to a Waste Water Facilities and Solid Waste
      Facilities Loan Agreement dated as of June 1, 1997 (the “1997 Bonds Agreement”)
      between the Issuer and Penn for the purpose of refunding the Issuer’s State of
      Ohio Pollution Control Revenue Bonds, 1988 Series B (Pennsylvania Power Company
      Project) (the “1988 Bonds”) originally issued under and pursuant to a Trust
      Indenture dated as of September 1, 1988 (the “1988 Bonds Indenture”) between the
      Issuer and the trustee thereunder, the proceeds of which were loaned by the
      Issuer to Penn pursuant to a Waste Water Facilities and Solid Waste Facilities
      Loan Agreement dated as of May 1, 1988 (the “1988 Bonds Agreement”) between the
      Issuer and Penn to assist Penn in the financing of a portion of the cost of
      acquiring, constructing and installing the Project.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
      1999 Penn Bonds
      were issued under and pursuant to a Trust Indenture dated as of December 1,
      1999 (as amended, the “1999 Penn Bonds Indenture”), between the Issuer and Chase
      Manhattan Trust Company, National Association (the trustee thereunder is now
      J.P. Morgan Trust Company, National Association (the “1999 Penn Bonds
      Trustee”)), the proceeds of which were loaned by the Issuer to Penn pursuant to
      a Waste Water Facilities and Solid Waste Facilities Loan Agreement dated as
      of
      December 1, 1999 (the “1999 Penn Bonds Agreement”) between the Issuer and Penn
      for the purpose of refunding the Issuer’s State of Ohio Pollution Control
      Revenue Bonds, 1990 Series A (Pennsylvania Power Company Project) (the “1990
      Bonds”) originally issued under and pursuant to a Trust Indenture dated as of
      January 15, 1990 (the “1990 Bonds Indenture”, and together with the 1984 Bonds
      Indenture, the 1988 Bonds Indenture and the Refunded Bonds Indenture, the “Prior
      Bonds Indenture”) between the Issuer and the trustee thereunder, the proceeds of
      which were loaned by the Issuer to Penn pursuant to a Waste Water Facilities
      and
      Solid Waste Facilities Loan Agreement dated as of January 15, 1990 (the “1990
      Bonds Agreement”) between the Issuer and Penn to assist Penn in the financing of
      a portion of the cost of acquiring, constructing and installing the
      Project.

     

    The
      1999 OE Bonds
      were issued under and pursuant to a Trust Indenture dated as of December 1,
      1999
      (the “1999 OE Bonds Indenture”) between the Issuer and the trustee thereunder,
      currently J.P. Morgan Trust Company, National Association (the “1999 OE Bonds
      Trustee”), the proceeds of which were loaned by the Issuer to OE pursuant to a
      Waste Water Facilities and Solid Waste Facilities Loan Agreement dated as of
      December 1, 1999 (the “1999 OE Bonds Agreement”) between the Issuer and OE for
      the purpose of refunding the Issuer’s State of Ohio Pollution Control Revenue
      Bonds, 1990 Series A (Ohio Edison Company Project) (the “1990 OE Bonds”)
      originally issued under and pursuant to a Trust Indenture dated as of January
      15, 1990 (the “1990 OE Indenture”) between the Issuer and the trustee
      thereunder, the proceeds of which were loaned by the Issuer to OE pursuant
      to a
      Waste Water Facilities and Solid Waste Facilities Loan Agreement dated as of
      January 15, 1990 (the “1990 OE Agreement”) between the Issuer and OE to assist
      OE in the financing of a portion of the cost of acquiring, constructing and
      installing the Project.

     

    The
      2000 Bonds were
      issued under and pursuant to a Trust Indenture dated as of April 1, 2000 (the
      “2000 Bonds Indenture”, and together with the 1988 Penn Bonds Indenture, the
      1997 Bonds Indenture, the 1999 Penn Bonds Indenture and the 1999 OE Bonds
      Indenture, the “Refunded Bonds Indenture”) between the Issuer and the trustee
      thereunder, currently The Bank of New York (the “2000 Bonds Trustee”, and
      together with the 1988 Penn Bonds Trustee, the 1997 Bonds Trustee, the 1999
      Penn
      Bonds Trustee and the 1999 OE Bonds Trustee, the “Refunded Bonds Trustee”), the
      proceeds of which were loaned by the Issuer to OE pursuant to a Waste Water
      Facilities and Solid Waste Facilities Loan Agreement dated as of April 1, 2000
      (the “2000 Bonds Agreement”, and together with the 1988 Penn Bonds Agreement,
      the 1997 Bonds Agreement, the 1999 Penn Bonds Agreement and the 1999 OE Bonds
      Agreement, the “Refunded Bonds Agreement”) between the Issuer and OE for the
      purpose of refunding the Issuer’s State of Ohio Pollution Control Revenue Bonds,
      1988 Series A (Ohio Edison Company Project) (the “1988 OE Bonds”, and together
      with the 1988 Bonds, the 1988 Penn Bonds, the 1990 Bonds and the 1990 OE Bonds,
      the “Original Bonds”, and the Original Bonds, together with the Refunded Bonds,
      the “Prior Bonds”)) originally issued under and pursuant to a Trust Indenture
      dated as of May 1, 1988 (the “1988 OE Indenture”) between the Issuer and the
      trustee thereunder, the proceeds of which were loaned by the Issuer to OE
      pursuant to a Waste Water Facilities and Solid Waste Facilities Loan Agreement
      dated as of May 1, 1988 (the “1988 OE Agreement”, and together with the 1988
      Bonds Agreement, the 1990 Bonds Agreement and the 1990 OE Bonds Agreement,
      the
“Original Bonds Agreement”, and the Original Bonds Agreements, together with the
      Refunded Bonds Agreement, the “Prior Bonds Agreement”) between the Issuer and OE
      to assist OE in the financing of a portion of the cost of acquiring,
      constructing and installing the Project.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    The
      Issuer and the
      Company intend that the Project will constitute “waste water facilities” and
“solid waste facilities” within the meaning of the Act and qualified facilities
      for purposes of Section 103(b)(4) of the Internal Revenue Code of 1954, as
      amended and as in effect prior to passage of the Tax Reform Act of 1986 (the
      “1954 Code”), so that interest on the bonds issued by the Issuer to finance or
      refinance the Project, including the Refunded Bonds, will not be included in
      gross income under the Code (as defined herein). The Issuer has agreed to issue,
      sell and deliver the State of Ohio Pollution Control Revenue Refunding Bonds,
      Series 2005-A (FirstEnergy Nuclear Generation Corp. Project) in the aggregate
      principal amount of $99,100,000 (the “Bonds”) and to lend the proceeds to be
      derived from the sale thereof to the Company, to assist in the refunding of
      the
      Refunded Bonds, on the terms and conditions set forth in the subsequent sections
      of this Agreement.

     

    1.2  
      Company
      Representations.
      The Company
      represents that:

     

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

     

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

     

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

     

    (d)  
      Substantially
      all
      (at least 95%) of the proceeds of the Original Bonds were used to provide
“pollution control facilities” and “sewage and solid waste disposal facilities”
within the meaning of Sections 103(b)(4)(E) and (F) of the 1954 Code and the
      original use of which facilities commenced with the Companies, the construction
      of which facilities began before and was completed after September 26, 1985,
      and
      which facilities were described in an inducement resolution adopted by the
      Issuer before September 26, 1985. All of the proceeds of the Original Bonds
      have
      been spent for the Project or to pay costs of issuance of the Original Bonds.
      All of such pollution control facilities and sewage and solid waste disposal
      facilities consist either of land or of property of a character subject to
      the
      allowance for depreciation provided in Section 167 of the Code.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (g)  
      The
      1988 Penn Bonds were issued on May 25, 1988; the 1988 OE Bonds were issued
      on
      June 8, 1988; the 1988 Bonds were issued on September 21, 1988; the 1990 Bonds
      and the 1990 OE Bonds were issued on February 13, 1990; the 1997 Bonds were
      issued on July 2, 1997; the 1999 Penn Bonds were issued on December 9, 1999;
      the
      1999 OE Bonds were issued on December 3, 1999; and the 2000 Bonds were issued
      on
      April 3, 2000.

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

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

     

    (n)  
      The
      proceeds derived from the sale of the Bonds (other than any accrued interest
      thereon) will be, and the proceeds derived from the sale of the 1997 Bonds,
      the
      1999 Penn Bonds, the 1999 OE Bonds and the 2000 Bonds (other than accrued
      interest thereon) were, used exclusively to refund the principal of the Refunded
      Bonds and the 1988 Bonds, 1990 Bonds, the 1990 OE Bonds and the 1988 OE Bonds,
      respectively. The principal amount of the Bonds does not, and the principal
      amount of the 1997 Bonds, the 1999 Penn Bonds, the 1999 OE Bonds and the 2000
      Bonds did not, exceed the principal amount of the Refunded Bonds and the 1988
      Bonds, the 1990 Bonds, the 1990 OE Bonds and the 1988 OE Bonds, respectively.
      The redemption of the outstanding principal amount of the Refunded Bonds with
      such proceeds of the Bonds will, and the redemption of the outstanding principal
      amount of the 1988 Bonds, the 1990 Bonds, the 1990 OE Bonds and the 1988 OE
      Bonds with such proceeds of the 1997 Bonds, the 1999 Penn Bonds, the 1999 OE
      Bonds and the 2000 Bonds did, occur not later than 90 days after the date of
      issuance of the Bonds and the 1997 Bonds, the 1999 Penn Bonds, the 1999 OE
      Bonds
      and the 2000 Bonds, respectively. All earnings derived from the investment
      of
      such proceeds of the Bonds will be, and all earnings derived from the investment
      of such proceeds of the 1997 Bonds, the 1999 Penn Bonds, the 1999 OE Bonds
      and
      the 2000 Bonds were, fully needed and used on such respective redemption dates
      to pay a portion of any redemption premium and interest accrued and payable
      on
      the Refunded Bonds and the 1988 Bonds, the 1990 Bonds, the 1990 OE Bonds and
      the
      1988 OE Bonds, respectively.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    (d)  
      The
      Issuer adopted the resolution authorizing the 1988 Penn Bonds on April 28,
      1988;
      the 1988 OE Bonds on April 28, 1988; the 1988 Bonds on August 25, 1988; the
      1990
      Bonds on January 25, 1990; the 1997 Bonds on May 29, 1997; the 1999 Penn Bonds
      on September 30, 1999; the 1999 OE Bonds on September 30, 1999; the 2000 Bonds
      on February 24, 2000; and the Bonds on July 28, 2005 and August 25,
      2005.

     

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

     

     II.  
       Completion of the Project.

     

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

     

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

     

    
      
        
        

      

      
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    III.  
      Refunding the Refunded Bonds.

     

    3.1
Issuance
      of
      Bonds.
      In order to assist
      the Company in the refunding of the Refunded Bonds, the Issuer, concurrently
      with the execution hereof, will issue, sell and deliver the Bonds. The proceeds
      of the Bonds shall be loaned to the Company in accordance with Section 4.1.
      The
      Bonds will be issued under and pursuant to the Trust Indenture (as amended
      from
      time to time, the “Indenture”) dated as of December 1, 2005 between the Issuer
      and J.P. Morgan Trust Company, National Association, as trustee (in that
      capacity, the “Trustee”), and will be issued in the aggregate principal amount,
      will bear interest, will mature and will be subject to redemption as set forth
      therein. The Company hereby approves the terms and conditions of the Indenture
      and the Bonds, and the terms and conditions under which the Bonds have been
      issued, sold and delivered.

     

    The
      proceeds from
      the sale of the Bonds (other than any accrued interest) shall be loaned to
      the
      Company to assist the Company in refunding the Refunded Bonds. Those proceeds
      shall be delivered to the respective Escrow Trustees, as defined and provided
      in
      the Indenture, to be held, together with any interest earnings thereon, in
      trust, as provided in the respective Escrow Agreements (as defined in the
      Indenture) for the purpose of paying, together with any moneys provided by
      the
      Company or the Companies, all of the remaining principal, redemption premium
      and
      interest due on the Refunded Bonds to the dates of their redemption or purchase
      and cancellation, all as set forth and provided for in the respective Escrow
      Agreements. 

     

    The
      Company
      acknowledges that the proceeds of the Bonds will be insufficient to pay the
      full
      costs of refunding the Refunded Bonds and that the Issuer has made no
      representation or warranty with respect to the sufficiency thereof. The Company
      further acknowledges that it and the Companies are (and will remain after the
      issuance of the Bonds) obligated to, and hereby confirms that it and the
      Companies will, pay, all costs of the refunding of the Refunded Bonds, whether
      by redemption or by purchase and cancellation.

     

    The
      Company, on
      behalf of and at the direction of the Companies, hereby requests that the Issuer
      notify the respective Refunded Bonds Trustee, pursuant to the respective
      Refunded Bonds Indenture and the respective Escrow Agreement, that the entire
      outstanding principal amount of the Refunded Bonds are to be redeemed or
      purchased for cancellation, all as set forth and provided for in the respective
      Escrow Agreements. The Issuer acknowledges and confirms that the respective
      Refunded Bonds Trustees have been so notified, all as set forth and provided
      for
      in the respective Escrow Agreements.

     

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

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

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

     

    IV. 
 Loan
      and Repayment.

     

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

     

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

     

    4.3 
      The
      Note.
      Concurrently with
      the issuance by the Issuer of the Bonds, the Company will execute and deliver
      to
      the Trustee a debt instrument of the Company, which debt instrument shall be
      in
      the form of a nonnegotiable promissory note (the “Note”), which Note shall be in
      substantially the form of the Waste Water Facilities and Solid Waste Facilities
      Note, Series 2005-A, attached hereto as Exhibit B. The Note shall:

     

    (a)  
      be
      payable to the Trustee;

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    V.
 
Covenants
      of the Company.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    VI.  
      Miscellaneous.

     

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

     

    The
      Issuer               -   
      Ohio
      Water Development Authority

       
      480 South High Street

    Columbus,
      Ohio
      43215

    Attention:
      Executive
      Director

    


    The
      Company            -   
       FirstEnergy
      Nuclear
      Generation Corp.

    76
      South Main
      Street

    Akron,
      Ohio
      44308

    Attention:
      Secretary

    


    The
      Trustee               -    
      J.P.
      Morgan Trust Company, National Association

       
      250 West Huron Road, Suite 220

       
      Cleveland, Ohio 44113

       
      Attention: Corporate Trust Department

     

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

     

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

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

     


    
      
         

        
        

      

      
        15

        
          

        

      

      
        
        

      

    


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

     

     

    
      
        	 	 	 
	 	OHIO
                WATER
                DEVELOPMENT AUTHORITY
	 
 	 
 	 
 
	 	By:  	 
	 	
                
Executive
                Director
	 	
              


      

      
        	 	 	 
	 	FIRSTENERGY
                NUCLEAR GENERATION CORP.
	 
 	 
 	 
 
	 	By:  	 
	 	
                

                Assistant Treasurer
	 	 


      




    
      
        
          


        

        
        

      

      
        16

        
          

        

      

      
        
        

        
           

        

      

    


    EXHIBIT
      A

     

    PROJECT
      DESCRIPTION

     

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

     

    1.                   
      Cooling
      Tower
      System

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    


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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    natural
      draft
      cooling tower

    circulating
      water
      pump house

    circulating
      water
      pumps

    circulating
      water
      pipe

    offshore
      intake
      structures

    intake
      tunnel

    discharge
      tunnel

    discharge
      diffuser
      structure

    hypochlorite
      generation subsystem

    hypochlorite
      generation building

    dechlorination
      subsystem

    acid
      storage
      building and equipment

    monitors

    related
      civil,
      mechanical and electrical auxiliaries

     

    2.                    
      Waste
      Water
      Runoff System

     

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

     

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

     

    The
      scope of
      equipment included in this system includes:

     

    catch
      basins

    yard
      waste water
      drain pipe

    retention-settling
      ponds with cutoff dikes

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.                    
      Chemical
      and Oily
      Waste System

     

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

     

    Water
      Treatment
      Waste:

     

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

     

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

     

    System
      Flush
      Waste:

     

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

     

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

     

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

     

    Oily
      Waste:

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    Water
      Treatment
      Waste

     

    waste
      neutralizing
      sump

    acid
      feed tank and
      pump

    caustic
      feed tank
      and pump

    sludge
      lagoons

    pipes
      and
      valves

    controls
      and
      instrumentation

    water
      treatment
      building portion

     

    System
      Flush
      Waste

     

    chemical
      cleaning
      waste lagoon

    550
      feet temporary
      waste pipe

    related
      support
      equipment

     

    Oily
      Waste

     

    oil
      interceptor-separator

    curbs
      and
      drains

    pipe
      and
      valves

    related
      support
      equipment

     

    4.                    Sanitary
      Waste
      System

     

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

     

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

     

    sanitary
      drains

    sumps
      and
      pumps

    holdup
      basins

    pump
      station

    control
      building

     

    5.                    
      Condensate
      Demineralizer Resin Regeneration System

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    acid
      tank

    caustic
      tank

    caustic
      dilution
      water heater

    resin
      separation and
      anion regeneration vessel

    cation
      regeneration
      vessel

    control
      panel with
      controls

    allocated
      portion of
      enclosure building, including

    turbine
      subbasement

    related
      pumps,
      piping, valves, electrical and

    mechanical
      support
      equipment

     

    6.                    
      Liquid
      Radwaste
      System

     

    6.1    
      Overview

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6.2    
      System
      Description

     

    High-Purity/Low-Conductivity
      Wastewater Subsystem:

     

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

     

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

     

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

     

    Chemical
      Waste
      Subsystem:

     

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

     

    Detergent-Drains
      Subsystem:

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    6.3    
      Equipment
      Listing

     

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

     

    waste
      collector
      tanks

    waste
      collector
      filter

    radwaste
      demineralizer

    waste
      sample
      tanks

    floor
      drain
      filter

    floor
      drain
      demineralizer

    floor
      drain sample
      tanks

    chemical
      waste
      tanks

    evaporators

    chemical
      waste
      distillate tanks

    concentrated
      waste
      tank

    detergent
      drain
      tanks

    detergent
      drain
      filters

    condensate
      filter
      backwash receiving tanks

    condensate
      backwash
      settling tanks

    RWCU
      filter
      demineralizer backwash receiving tanks

    RWCU
      filter
      demineralizer backwash settling tanks

    spent
      resin
      tanks

    fuel
      pool filter
      demineralizer backwash settling tanks

    equipment
      drains

    chemical
      drains

    detergent
      drains

    radiation
      monitors

    controls
      and
      instrumentation

    radwaste
      building
      portion (51.8% based on volume) for

    LRW
      including all
      support services

    intermediate
      building portion for LRW

    auxiliary
      building
      portion for LRW

    related
      electrical,
      mechanical and structural auxiliaries

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    7. Solid
      Radwaste
      System

     

    7.l    
      Overview

     

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

     

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

     

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

     

    7.2    
      System
      Description

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    7.3    
      Equipment
      Listing

     

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

     

    cement
      handling
      equipment

    sodium
      silicate
      handling equipment

    waste/cement
      mixing
      pumps

    waste
      mixing/dewatering tanks

    waste
      dewatering
      pumps

    waste
      feed
      pumps

    fill
      ports

    drum
      capper

    hot
      air
      dryer

    decontamination
      station

    decontamination
      facility

    overhead
      bridge
      crane

    transfer
      cart

    hydraulic
      compactor

    solidified
      waste
      storage vault

    interim
      disposal and
      storage facility and related equipment

    low
      level compacted
      waste storage area

    radiation
      monitors

    controls
      and
      instrumentation

    intermediate
      building portion for SRW

    radwaste
      building
      portion (48.2% based on volume) for

    SRW,
      including
      services and support equipment

    related
      electrical,
      mechanical and civil support

     

    8.                   
      Spent
      Fuel
      Handling Facility

     

    8.1    
      Design
      Basis

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    8.2    
      Components
      and
      Equipment

     

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

     

    spent
      fuel handling
      and storage equipment

    production-related
      equipment for new fuel loading and

    1
      core
      offload

    dual
      function
      equipment for spent fuel and production-

    related
      functions

     

    8.3    
      Spent
      Fuel
      Handling and Storage Equipment

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

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

     

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

     

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

     

    8.4    
      Production
      Related Fuel Handling Equipment:

     

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

     

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

     

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

     

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

     

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

     

    control
      rod drives
      decontamination equipment

     

    8.5    
      Dual
      Function Equipment

     

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

     

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

     

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

     

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

     

    
       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

                             
        

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

    

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

     

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

     

    8.6    
      Cost
      Allocation Methodology

     

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

     

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

     

    2
      spent fuel storage
      pools

    spent
      fuel storage
      racks

    spent
      fuel transfer
      canals

    spent
      fuel cask
      pool

    spent
      fuel cask
      decontamination equipment

    spent
      fuel cask
      loading bay

    spent
      fuel cask
      bridge crane and hoist

    related
      electrical,
      mechanical and structural auxiliaries

     

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

     

    reactor
      building
      fuel pool and attached piping

    reactor
      building
      fuel handling equipment

    2
      new fuel storage
      pits and racks

    new
      fuel truck
      bay

    residual
      heat
      removal system

    control
      rod drives
      decontamination equipment

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    



    EXHIBIT
      B

     

    FORM
      OF COMPANY
      NOTE

     

    FIRSTENERGY
      NUCLEAR
      GENERATION CORP.

     

    WASTE
      WATER
      FACILITIES AND SOLID WASTE FACILITIES
      NOTE

     

    SERIES
      2005-A

     

    FIRSTENERGY
      NUCLEAR
      GENERATION CORP. (the “Company”), an Ohio corporation, for value received,
      promises to pay to J.P. Morgan Trust Company, National Association (the
“Trustee”), as Trustee under the Trust Indenture dated as of December 1, 2005
      (the “Indenture”) of the Ohio Water Development Authority (the “Issuer”), the
      principal sum of $99,100,000 on December 1, 2033 and to pay (i) interest thereon
      from the date hereof until the payment of said principal sum has been made
      or
      provided for at a rate or rates at all times equal to the interest rate or
      rates
      from time to time borne by the Issuer’s State of Ohio Pollution Control Revenue
      Refunding Bonds, Series 2005-A (FirstEnergy Nuclear Generation Corp. Project)
      (the “Bonds”) and payable on each date that interest is payable on the Bonds,
      and (ii) interest on overdue principal, and to the extent permitted by law,
      on
      overdue interest, at the rate or rates borne by the Bonds.

     

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

     

    This
      Note is issued
      pursuant to a certain Waste Water Facilities and Solid Waste Facilities Loan
      Agreement (the “Agreement”) dated as of December 1, 2005 between the Issuer and
      the Company relating to the refunding of certain obligations of the Issuer
      previously issued to assist certain affiliates of the Company in the financing
      of a portion of the cost of acquiring, constructing and installing certain
      waste
      water facilities and solid waste facilities described in Exhibit A to the
      Agreement (the “Project”). The obligations of the Company to make the payments
      required hereunder shall be absolute and unconditional without defense or
      set-off by reason of any default by the Issuer under the Agreement or under
      any
      other agreement between the Company and the Issuer or by a Credit Facility
      Issuer, if any, under a Credit Facility, if any, or for any other reason,
      including without limitation, loss or impairment of investments in the Bond
      Fund, any acts or circumstances that may constitute failure of consideration,
      destruction of or damage to the Project, commercial frustration of purpose,
      or
      failure of the Issuer to perform and observe any agreement, whether express
      or
      implied, or any duty, liability or obligation arising out of or connected with
      the Agreement, it being the intention of the Company and the Issuer that the
      payments hereunder will be paid in full when due without any delay or diminution
      whatsoever.

     

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

     

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        B-2

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        B-3

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        B-4

        
          

        

      

      
        
        

      

    

     

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

     

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

     

     

    
      	 	 	 
	 Dated: 
              December __, 2005	FIRSTENERGY
              NUCLEAR GENERATION CORP.
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
Assistant
              Treasurer
	 	
            


    

     

     

    
      
        
        

      

      
        B-5