Document:

Form of Series Supplement

 Exhibit 4.2 
 FORM OF SERIES SUPPLEMENT 
  
  
  
 PE ENVIRONMENTAL FUNDING LLC, 
 Issuer 
 and 
 U.S. BANK NATIONAL ASSOCIATION, 
 Indenture Trustee

  
  
 SERIES SUPPLEMENT 
 Dated as of [            ], 20[    ] 
  
  
  

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page
	SECTION 1.	  	Definitions	  	2
			
	SECTION 2.	  	Designation; Series Issuance Dates	  	3
			
	SECTION 3.	  	Initial Principal Amount; Bond Rate; Expected Final Payment Date; Final Maturity Date	  	3
			
	SECTION 4.	  	Payment Dates; Expected Sinking Fund Schedule for Principal; Interest; Required Capital Amount; Required Reserve Amount	  	4
			
	SECTION 5.	  	Authorized Initial Denominations	  	5
			
	SECTION 6.	  	Redemption	  	5
			
	SECTION 7.	  	Accounts, Disbursements and Releases	  	5
			
	SECTION 8.	  	Credit Enhancement	  	6
			
	SECTION 9.	  	Delivery and Payment for the Series B Environmental Control Bonds; Form of the Series B Environmental Control Bonds	  	6
			
	SECTION 10.	  	Adjustment Dates	  	7
			
	SECTION 11.	  	Confirmation of Indenture	  	7
			
	SECTION 12.	  	Counterparts	  	7
			
	SECTION 13.	  	Governing Law	  	7
			
	SECTION 14.	  	Issuer Obligation	  	7
			
	Schedule A	  	Expected Sinking Fund Schedule	  	
			
	Exhibit A	  	Form of Environmental Control Bonds	  	
			
	Appendix A-1	  	Supplemental Master Definitions	  	

 SERIES SUPPLEMENT dated as of
[            ], 20[__] as amended, restated, supplemented or otherwise modified from time to time, this “Supplement”), by and between PE ENVIRONMENTAL FUNDING LLC, a
Delaware limited liability company (the “Issuer”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association (the “Indenture Trustee”), as Indenture Trustee under the Indenture dated as of April 11,
2007 between the Issuer and the Indenture Trustee (as amended, restated, supplemented or otherwise modified from time to time, the “Indenture”). 
 PRELIMINARY STATEMENT 
 Section 9.01 of the Indenture provides, among other
things, that the Issuer and the Indenture Trustee may at any time and from time to time enter into one or more indentures supplemental to the Indenture for the purposes of authorizing the issuance by the Issuer of a Series of Environmental Control
Bonds and specifying the terms thereof. The Issuer has duly authorized the execution and delivery of this Supplement and the creation of a Series of Environmental Control Bonds with an initial aggregate principal amount of
$[            ] to be known as the Issuer’s Senior Secured ROC Bonds, Environmental Control Series B (the “Series B Environmental Control Bonds”). All acts and
all things necessary to make the Series B Environmental Control Bonds, when duly executed by the Issuer and authenticated by the Indenture Trustee as provided in the Indenture and this Supplement and issued by the Issuer, the valid, binding and
legal obligations of the Issuer and to make this Supplement a valid and enforceable supplement to the Indenture have been done, performed and fulfilled and the execution and delivery hereof have been in all respects duly and lawfully authorized. The
Issuer and the Indenture Trustee are executing and delivering this Supplement in order to provide for the Series B Environmental Control Bonds. 
 GRANTING CLAUSE 
 The Issuer hereby Grants to the Indenture Trustee, on the date
hereof, as trustee for the benefit of (i) the Holders of the Series B Environmental Control Bonds and (ii) the Indenture Trustee all of the Issuer’s right, title and interest (whether now owned or hereinafter acquired or arising) in,
to and under (a) the Environmental Control Property transferred by the Seller to the Issuer on the date hereof pursuant to the Sale Agreement and all proceeds thereof, (b) to the extent related to the Series B Environmental Control Bonds,
the Sale Agreement, (c) the Bill of Sale delivered by the Seller pursuant to the Sale Agreement on the date hereof, (d) to the extent related to the Series B Environmental Control Bonds, the Servicing Agreement, (e) to the extent
related to the Series B Environmental Control Bonds, the Issuer Administration Agreement, (f) the Collection Account for the Series B Environmental Control Bonds and all subaccounts thereof and all cash, securities, instruments, investment
property or other assets deposited in or credited to such Collection Account or any subaccount thereof from time to time or purchased with funds therefrom, (g) all other property related to the Series B Environmental Control Bonds of whatever
kind owned from time to time by the Issuer including all accounts, accounts receivable, investment property and chattel paper, (h) to the extent payable to the Collection Account for the Series B Environmental Control Bonds, all present and
future claims, demands, causes and chooses in action in respect of any or all of the foregoing and (i) to the extent payable to the Collection Account for the Series B Environmental Control Bonds, all payments on or under and all proceeds of
every kind and nature whatsoever in respect of any or

  

 1 

 
all of the foregoing, including all proceeds of the conversion, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts, accounts receivable, general
intangibles, notes, drafts, acceptances, chattel paper, documents, money, investment property, letters of credit, letter of credit rights, checks, deposit accounts, insurance proceeds, condemnation awards, rights to payment of any and every kind,
and other forms of obligations and receivables, instruments and other property which at any time constitute all or part of or are included in the proceeds of any of the foregoing (collectively, the “Series B Collateral”); provided
(A) that the following shall not be subject to the lien of the Indenture: (i) cash or other property distributed to the Issuer from the Collection Account in accordance with the provisions of the Indenture, and (ii) proceeds from the
sale of the Series B Environmental Control Bonds required to pay the purchase price of the Environmental Control Property pursuant to the Sale Agreement, as the case may be, and the costs of the issuance of the Environmental Control Bonds as set
forth in the flow of funds memorandum delivered on the date hereof (together with any interest earnings thereon) and (B) that this Grant shall be limited only to the Issuer’s right, title and interest as related to Environmental Control
Property transferred on the date hereof and the Series B Environmental Control Bonds and not to any Additional Issuance, including another issuance of Environmental Control Bonds. 
 To have and to hold in trust to secure the payment of principal of and premium, if any, and interest on, and any other amounts owing in
respect of, the Series B Environmental Control Bonds, including all amounts payable to the Indenture Trustee under the Indenture and the other Basic Documents equally and ratably without prejudice, preference, priority or distinction, except as
expressly provided in this Indenture and to secure performance by the Issuer of all of the Issuer’s obligations under this Indenture with respect to the Series B Environmental Control Bonds, all as provided in the Indenture. 
 The Indenture Trustee, as trustee on behalf of the Holders of the Environmental Control Bonds, acknowledges such Grant, accepts the trusts
hereunder in accordance with the provisions hereof and agrees to perform its duties required in the Indenture and in this Supplement. 
 SECTION 1. Definitions. 
 All terms used in this Supplement that are not defined herein are used as defined in
the Indenture, including Appendix A thereto, and Appendix A-1 hereto. To the extent there is a conflict between the definitions in Appendix A and Appendix A-1, the definitions in Appendix A-1 shall control. In addition, the following definitions
shall apply with respect to the Series B Environmental Control Bonds: 
 “Adjustment Date” has the meaning set
forth in Section 10 of this Supplement. 
 “Bond Rate” has the meaning set forth in Section 3 of this
Supplement. 
 “Expected Final Payment Date” means, with respect to any Tranche of the Series B Environmental
Control Bonds, the expected final payment date therefor, as specified in Section 3 of this Supplement. 
 “Expected
Sinking Fund Schedule” means Schedule A to this Supplement. 
  

 2 

 “Final Maturity Date” means, with respect to any Tranche of the Series B
Environmental Control Bonds, the final maturity date therefor, as specified in Section 3 of this Supplement. 
 “Interest Accrual Period” means, with respect to any Payment Date, the period from and including the preceding Payment Date (or, in the case of the first Payment Date, from and including the Series Issuance Date) to and
excluding such Payment Date. 
 “Monthly True-Up Adjustment Date” has the meaning set forth in Section 10
of this Supplement. 
 “Payment Date” has the meaning set forth in Section 4(a) of this Supplement.

 “Quarterly True-Up Adjustment Date” has the meaning set forth in Section 10 of this Supplement.

 “Record Date” shall mean, with respect to any Payment Date, the close of business on the Business Day prior
to such Payment Date. 
 “Required Capital Amount” has the meaning set forth in Section 4(d) of this
Supplement. 
 “Required Reserve Amount” has the meaning set forth in Section 4(e) of this Supplement.

 “Semi-Annual True-Up Adjustment Date” has the meaning set forth in Section 10 of this Supplement.

 “Series Issuance Date” has the meaning set forth in Section 2(b) of this Supplement. 
 “Series Termination Date” is the final Final Maturity Date set forth in Section 3 of this Supplement. 
 SECTION 2. Designation; Series Issuance Dates. 
 (a) Designation. The Series B Environmental Control Bonds shall be designated generally as the Issuer’s Senior Secured ROC Bonds, Environmental Control Series B [and further denominated as
Tranches A-_ through A-_]. 
 (b) Series Issuance Date. The Series B Environmental Control Bonds that are authenticated
and delivered by the Indenture Trustee to or upon the order of the Issuer on [            ], 20[__] (the “Series Issuance Date”) shall have as their date of authentication
[            ], 20[__]. Each other Series B Environmental Control Bond shall be dated the date of its authentication. 
 SECTION 3. Initial Principal Amount; Bond Rate; Expected Final Payment Date; Final Maturity Date. 
  

 3 

 The Environmental Control Bonds of each Tranche of the Series B Environmental Control Bonds
shall have the initial principal amounts, bear interest at the rates per annum and shall have Expected Final Payment Dates and Final Maturity Dates as set forth below: 
  

									
	 Tranche
	  	Initial Principal
Amount	  	Bond Rate	  	Expected Final
Payment Date	  	Final Maturity
Date
	    A-	  		  		  		  	
	     A-
	  		  		  		  	

 SECTION 4. Payment Dates; Expected Sinking Fund Schedule for Principal; Interest;
Required Capital Amount; Required Reserve Amount. 
 (a) Payment Dates. The Payment Dates for each Tranche of the
Series B Environmental Control Bonds are January 15 and July 15 of each year or, if any such date is not a Business Day, the next succeeding Business Day, commencing on
[            ] 15, 20[    ] and continuing until the earlier of repayment of such Tranche in full and the applicable Final Maturity Date. 
 (b) Expected Sinking Fund Schedule for Principal. Unless an Event of Default shall have occurred and be continuing and the unpaid
principal amount of all Series of Environmental Control Bonds has been declared to be due and payable together with accrued and unpaid interest thereon, on each Payment Date, the Indenture Trustee shall distribute to the Series B Environmental
Control Bondholders of record as of the related Record Date amounts payable in respect of the Series B Environmental Control Bonds pursuant to Section 8.02(e) of the Indenture as principal, in accordance with the Expected Sinking Fund Schedule.
To the extent that more than one Tranche of the Series B Environmental Control Bonds is to receive payments of principal in accordance with the Expected Sinking Fund Schedule on any Payment Date, such amounts will be allocated in a sequential
manner, to the extent funds are available, as follows: (i) to the holders of the Series B Environmental Control Bonds, Tranche A-1, until this Tranche is retired in full; [(ii) to the holders of the Series B Environmental Control
Bonds, Tranche A-2, until this Tranche is retired in full; (iii) to the holders of the Series B Environmental Control Bonds, Tranche A-3, until this Tranche is retired in full; and (iv) to the holders of the Series B
Environmental Control Bonds, Tranche A-4, until this Tranche if retired in full]; provided, however, that other than in the event of an acceleration upon an Event of Default in no event shall a principal payment pursuant to this
Section 4(b) on any Tranche on a Payment Date be greater than the amount that reduces the Outstanding Amount of such Tranche of Series B Environmental Control Bonds to the amount specified in the Expected Sinking Fund Schedule which is attached
as Schedule A hereto for such Tranche and Payment Date. If an Event of Default shall have occurred and be continuing and the unpaid principal amount of all Series of Environmental Control Bonds has been declared to be due and payable together
with accrued and unpaid interest thereon, principal payments on each Tranche of Series B Environmental Control Bonds will be made on a pro rata basis based on the respective Tranche Principal Balances for each such Tranche as of the prior Payment
Date. Not later than each Schedule Revision Date, the Issuer shall deliver to the Indenture Trustee a replacement Schedule A hereto, adjusted to reflect the event giving rise to such Schedule Revision Date and setting forth the Expected Sinking
Fund Schedule for each Payment Date. 
  

 4 

 (c) Interest. On each Payment Date after the initial Payment Date, interest will be
payable on the Series B Environmental Control Bonds in an amount equal to the number of days (determined on the basis of a 360-day year of twelve 30-day months) from and including the preceding Payment Date to, but excluding, the current Payment
Date, divided by 360, times the product of: (i) the applicable Bond Rate times (ii) the Outstanding Amount of the related Tranche of Series B Environmental Control Bonds as of the close of business on the preceding Payment Date after
giving effect to all payments of principal made to the Holders of the related Tranche of Series B Environmental Control Bonds on such preceding Payment Date. 
 With respect to the initial Payment Date, interest will be payable in an amount equal to the number of days (determined on the basis of a 360-day year of twelve 30-day months) from and including the
Series Issuance Date to, but excluding, the initial Payment Date, divided by 360, times the product of: (a) the applicable Bond Rate times (b) the original principal amount of the related Tranche of Series B Environmental Control Bonds as
of the Series Issuance Date. 
 (d) Required Capital Amount. The Required Capital Amount for the Series B Environmental
Control Bonds shall be equal to [            ]% of the initial principal amount thereof, or $[            ].

 (e) Required Reserve Amount. The Required Reserve Amount for the Series B Environmental Control Bonds shall be equal
to $[            ]. 
 SECTION 5. Authorized Initial
Denominations. 
 The Series B Environmental Control Bonds shall be issuable in the Authorized Initial Denominations.

 SECTION 6. Redemption. 
 The Series B Environmental Control Bonds shall not be subject to mandatory or optional redemption. 
 SECTION 7. Accounts, Disbursements and Releases. 
 (a) In addition to the
subaccounts set forth under Section 8.02(a) of the Indenture, the Collection Account for the Series B Environmental Control Bonds shall include a reserve subaccount (a “Reserve Account”). 
 (b) Notwithstanding anything contained in the Indenture to the contrary, the Indenture Trustee shall deposit in the Excess Funds Subaccount
for the Series B Environmental Control Bonds the Seller’s share of: 
 (i) any interest earnings from
amounts on deposit in the Project Fund; and 
 (ii) to the extent Net Proceeds are not needed to pay costs of the
Project and related Environmental Control Costs, any Net Proceeds remaining in the Project Fund upon completion of the Project. 
  

 5 

 (c) As it applies to the Series B Environmental Control Bonds only, Section 8.02(e) of
the Indenture is hereby amended as follows: 
 (i) After clause (vii) of Section 8.02(e), insert the
following: 
 “(viii) any amount necessary to replenish any shortfalls in the Reserve Account below the Required Reserve
Amount shall be allocated to the Reserve Account.” 
 (ii) Existing clauses (viii), (ix), (x) and
(xi) of Section 8.02(e) shall be renumbered as clauses (ix), (x), (xi) and (xii) respectively. 
 (d) As it
applies to the Series B Environmental Control Bonds only, Section 8.02(g) of the Indenture is hereby amended to read in its entirety as follows: 
 “(g) If, on any Payment Date with respect to all Outstanding Tranches of the Bonds, funds on deposit in the General Subaccount are insufficient to make the payments and allocations contemplated by
subclauses (e)(i) through (xii) above, for the Bonds, the Indenture Trustee shall, at the direction of the Servicer, draw from amounts on deposit in the following Subaccounts in the following order up to the amount of such shortfall, in order
to make such payments and allocations: 
 (i) from the Excess Funds Subaccount, Pro Rata, for payments and
allocations contemplated by subclauses (e)(i) through (ix); 
 (iii) from the Capital Subaccount, Pro Rata, for
payments and allocations contemplated by subclauses (e)(i) through (vii); and 
 (ii) from the Reserve Account,
Pro Rata, for payments and allocations contemplated by subclauses (e)(i) through (vii). 
 SECTION 8. Credit Enhancement.

 The Reserve Account will provide credit enhancement for the Series B Environmental Control Bonds. 
 SECTION 9. Delivery and Payment for the Series B Environmental Control Bonds; Form of the Series B Environmental Control Bonds.

 The Indenture Trustee shall deliver the Series B Environmental Control Bonds to the Issuer when authenticated in accordance
with Section 2.02 of the Indenture. The Series B Environmental Control Bonds of each Tranche shall be in the form of Exhibit A hereto. 
  

 6 

 SECTION 10. Adjustment Dates. 
 The following table summarizes the adjustment frequency of the Environmental Control Charges with respect to the Series B Environmental
Control Bonds: 
  

			
	 	  	 Adjustment Dates

	Semi-Annual True-Up Adjustments	  	January 15, July 15
	Monthly True-Up Adjustments	  	The fifteenth day of each calendar month
	Quarterly True-Up Adjustments	  	January 15, April 15, July 15, October 15

 The first Semi-Annual True-Up Adjustment will become effective on
[            ] 15, 20[            ]. 
 SECTION 11. Confirmation of Indenture. 
 As supplemented by this
Supplement, the Indenture is in all respects ratified and confirmed and the Indenture, as so supplemented by this Supplement, shall be read, taken, and construed as one and the same instrument. 
 SECTION 12. Counterparts. 
 This Supplement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same
instrument. 
 SECTION 13. Governing Law. 
 This Supplement shall be construed in accordance with the laws of the State of New York without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws. 
 SECTION 14. Issuer Obligation. 
 No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the
Environmental Control Bonds or under this Supplement or any certificate or other writing delivered in connection herewith or therewith, against (i) any owner of a beneficial interest in the Issuer or (ii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee, any holder of a beneficial interest in the Issuer or the Indenture Trustee or of any successor or assign of the Indenture Trustee, except as any such Person may have expressly agreed (it
being understood that none of the Indenture Trustee’s obligations are in its individual capacity). 
  

 7 

 IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this Supplement to be
duly executed by their respective officers thereunto duly authorized as of the first day of the month and year first above written. 
  

			
	PE ENVIRONMENTAL FUNDING LLC, as Issuer,
		
	by:	 	 
		 	Name:
		 	Title:

 Series Supplement Signature Page 
  

 8 

			
	U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity but solely as Indenture Trustee on behalf of the Environmental Control Bondholders,
		
	by:	 	 
		 	Name:
		 	Title:

 Series Supplement Signature Page 
  

 9 

 SCHEDULE A 
 EXPECTED SINKING FUND SCHEDULE 
  

					
	 Payment Date
	  	Tranche A-1	  	[Tranche A-2]
	 Tranche Size
	  		  	
	 [            ]
	  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
	 Total Payments:
	  		  	

  

 10 

 EXHIBIT A 
 FORM OF ENVIRONMENTAL CONTROL BONDS 
  

			
	 REGISTERED
	 	$[            ]
	 No.             
	 	

 SEE REVERSE FOR CERTAIN DEFINITIONS 
 CUSIP NO.              
 THE PRINCIPAL OF THIS SERIES B, TRANCHE [ ] ENVIRONMENTAL CONTROL BOND (“TRANCHE
[            ] ENVIRONMENTAL CONTROL BOND”) WILL BE PAID IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS TRANCHE [ ] ENVIRONMENTAL
CONTROL BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THE HOLDER OF THIS TRANCHE [    ] ENVIRONMENTAL CONTROL BOND HEREBY COVENANTS AND AGREES THAT PRIOR TO THE DATE WHICH IS ONE YEAR AND ONE DAY AFTER
THE TERMINATION OF THE INDENTURE, IT WILL NOT INSTITUTE AGAINST, OR JOIN ANY OTHER PERSON IN INSTITUTING AGAINST, THE ISSUER OR ANY OF ITS MANAGERS OR MEMBERS ANY BANKRUPTCY, REORGANIZATION, ARRANGEMENT, INSOLVENCY OR LIQUIDATION PROCEEDINGS OR
OTHER PROCEEDING UNDER ANY UNITED STATES FEDERAL OR STATE BANKRUPTCY OR SIMILAR LAW IN CONNECTION WITH ANY OBLIGATIONS RELATING TO THE ENVIRONMENTAL CONTROL BONDS, THE INDENTURE OR ANY OF THE BASIC DOCUMENTS, SUBJECT TO THE RIGHT OF A CIRCUIT COURT
OF THE STATE OF WEST VIRGINIA TO ORDER SEQUESTRATION AND PAYMENT OF REVENUES ARISING WITH RESPECT TO THE ENVIRONMENTAL CONTROL PROPERTY. TRANSFERS OF THIS GLOBAL ENVIRONMENTAL CONTROL BOND SHALL BE LIMITED TO TRANSFERS IN THE CLEARING AGENCY OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL ENVIRONMENTAL CONTROL BOND SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE. 
 PE ENVIRONMENTAL FUNDING LLC 
 ENVIRONMENTAL CONTROL BONDS, SERIES B, TRANCHE [ ] 
  

							
	Bond
Rate	  	Initial Principal
Amount	 	Expected Final
Payment Date	 	Final Maturity
Date
	[            ]%	  	$[            ]	 	[        ], [        ]	 	[        ], [        ]

  

 A-1 

 PE Environmental Funding LLC, a limited liability company organized and existing under the
laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to Cede & Co., the Registered Holder hereof, or registered assigns, the Initial Principal Amount shown above in
semi-annual installments on the Payment Dates (as defined below) and in the amounts specified on the reverse hereof or, if less, the amounts determined pursuant to Section 8.02(e) of the Indenture, in each year, commencing on
[                ] and ending on or before the Final Maturity Date, to pay the entire unpaid principal hereof on the Final Maturity Date and to pay interest, at the Bond
Rate shown above, on each January 15 and July 15 or if any such day is not a Business Day, the next succeeding Business Day (each a “Payment Date”), commencing on
[            ] 15, 20[__] and continuing until the earlier of the payment of the principal hereof and the Final Maturity Date, on the principal amount of this Tranche
[            ] Environmental Control Bond outstanding on such Payment Date, after giving effect to any payment of principal made on such Payment Date. Interest on this Tranche
[            ] Environmental Control Bond will accrue for each Payment Date from and including the most recent Payment Date on which interest has been paid to but excluding such Payment
Date or, if no interest has yet been paid, from [            ], 20[    ]. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Such
principal of and interest on this Tranche [            ] Environmental Control Bond shall be paid in the manner specified on the reverse hereof. 
 The principal of and interest on this Tranche [        ] Environmental Control Bond are payable in
such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Tranche
[            ] Environmental Control Bond shall be applied first to interest due and payable on this Tranche [            ]
Environmental Control Bond as provided above and then to the unpaid principal of and premium, if any, on this Tranche [            ] Environmental Control Bond, all in the manner set forth
in Section 8.02(e) of the Indenture. 
 Reference is made to the further provisions of this Tranche
[            ] Environmental Control Bond set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Tranche
[            ] Environmental Control Bond. 
 Unless the certificate
of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual signature, this Tranche [            ] Environmental Control Bond shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. 
  

 A-2 

 IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in
facsimile, by an Authorized Officer of the Issuer. 
 Date: 
  

			
	PE ENVIRONMENTAL FUNDING LLC
		
	By:	 	 
		 	Name:
		 	Title:

  

 A-3 

 INDENTURE TRUSTEE’S CERTIFICATE OF AUTHENTICATION 
 Dated:                      
 This is one of the Tranche [        ] Environmental Control Bonds of the Series B Environmental
Control Bonds, designated above and referred to in the within-mentioned Indenture. 
  

			
	U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity but solely as Indenture Trustee on behalf of the Environmental Control Bondholders,
		
	By:	 	 
		 	Authorized Signatory

  

 A-4 

 [REVERSE OF ENVIRONMENTAL CONTROL BOND] 
 This Series B, Tranche [            ] Environmental Control Bond is one of a
duly authorized issue of Environmental Control Bonds of the Issuer, designated as its Environmental Control Bonds (herein called the “Environmental Control Bonds”), issued and to be issued in one or more Series, which Series are issuable
in one or more Tranches, and this Series B Environmental Control Bond, in which this Tranche [            ] Environmental Control Bond represents an interest, consists of
[            ] Tranches, including the Tranche [ ] Environmental Control Bonds (herein called the “Tranche [ ] Environmental Control Bonds”), all issued and to be issued under an
indenture dated as of April 11, 2007, and a series supplement thereto dated as of [            ], 20[    ] (such series supplement, as supplemented or amended, the
“Supplement” and, collectively with such indenture, as supplemented or amended, the “Indenture”), each between the Issuer and U.S. Bank National Association, as Indenture Trustee (the “Indenture Trustee”, which term
includes any successor Indenture Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the related Series Collateral property pledged, the nature and extent of the
security, the respective rights, obligations and immunities thereunder of the Issuer, the Indenture Trustee and the Holders of the Environmental Control Bonds and the terms and conditions under which additional Environmental Control Bonds may be
issued. All terms used in this Tranche [            ] Environmental Control Bond that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in
the Indenture. 
 The Tranche [        ] Environmental Control Bonds, the other Tranches
of Series B Environmental Control Bonds and any other Series of Environmental Control Bonds issued by the Issuer are and will be equally and ratably secured by the related Series Collateral pledged as security therefor as provided in the Indenture.

 The principal of this Tranche [            ] Environmental
Control Bond shall be payable in installments on each Payment Date specified in the Expected Sinking Fund Schedule only to the extent that amounts in the related Collection Account are available therefor, and only until the outstanding principal
balance thereof on such Payment Date (after giving effect to all payments of principal, if any, made on such Payment Date) has been reduced to the principal balance specified in the Expected Sinking Fund Schedule which is attached to the Supplement
as Schedule A, unless payable earlier because an Event of Default (other than an Event of Default under Section 5.01(vi) of the Indenture) shall have occurred and be continuing and the Indenture Trustee or the Holders of Environmental Control
Bonds representing not less than a majority of the Outstanding Amount of the Environmental Control Bonds of all Series have declared the Environmental Control Bonds to be immediately due and payable in accordance with Section 5.02 of the
Indenture. However, actual principal payments may be made in lesser than expected amounts and at later than expected times as determined pursuant to Section 8.02(e) of the Indenture. The entire unpaid principal amount of this Tranche
[            ] Environmental Control Bond shall be due and payable on the Final Maturity Date hereof. Notwithstanding the foregoing, the entire unpaid principal amount of the Environmental
Control Bonds shall become immediately due and payable, if not then previously paid, after an Event of Default (other than an Event of Default under Section 5.01(vi) of the Indenture) shall have occurred and be continuing and the Indenture
Trustee or the Holders of the Environmental Control Bonds representing not less than a majority of the Outstanding Amount of the Environmental Control Bonds have declared the

  

 A-5 

 
Environmental Control Bonds to be immediately due and payable in the manner provided in Section 5.02 of the Indenture. All principal payments on the Tranche [ ] Environmental Control Bonds
shall be made pro rata to the Tranche [            ] Environmental Control Bondholders entitled thereto based on the respective principal amounts of such Bonds held by them. 
 Payments of interest on this Tranche [            ] Environmental Control Bond
due and payable on each Payment Date, together with the installment of principal or premium, if any, due on this Tranche [         ] Environmental Control Bond on such Payment Date shall be made by check
mailed first-class, postage prepaid, to the Person whose name appears as the Registered Holder of this Tranche [            ] Environmental Control Bond (or one or more Predecessor
Environmental Control Bonds) in the Bond Register as of the close of business on the applicable Record Date or Special Record Date or in such other manner as may be provided in the Indenture or the Supplement except that (i) upon application to
the Indenture Trustee by any Holder owning Environmental Control Bonds of any tranche in the principal amount of $10,000,000 or more not later than the applicable Record Date payment will be made by wire transfer to an account maintained by such
Holder; (ii) with respect to Environmental Control Bonds registered as of the close of business on the applicable Record Date or Special Record Date in the name of the nominee of the Clearing Agency, payments will be made by wire transfer in
immediately available funds to the account designated by such nominee; and (iii) with respect to the final installment of principal and premium, if any, payable with respect to such Environmental Control Bond on a Payment Date, such amounts
shall be payable as provided below. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears in the Bond Register as of the applicable Record Date or Special Record Date without requiring that this
Tranche [            ] Environmental Control Bond be submitted for notation of payment. Any reduction in the principal amount of this Tranche
[            ] Environmental Control Bond (or any one or more Predecessor Environmental Control Bonds) effected by any payments made on any Payment Date shall be binding upon all future
Holders of this Tranche [            ] Environmental Control Bond and of any Tranche [            ] Environmental Control Bond
issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal
amount of this Tranche [            ] Environmental Control Bond on a Payment Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, will notify the Person who was
the Registered Holder hereof as of the second preceding Record Date to such Payment Date by notice mailed no later than ten days prior to such final Payment Date and shall specify that such final installment will be payable to the Registered Holder
hereof as of the Record Date immediately preceding such final Payment Date and only upon presentation and surrender of this Tranche [            ] Environmental Control Bond and shall
specify the place where this Tranche [            ] Environmental Control Bond may be presented and surrendered for payment of such installment. 
 The Issuer shall pay interest on overdue installments of interest on this Tranche
[            ] Environmental Control Bond at the Tranche [        ] Bond Rate to the extent lawful in accordance with Section 2.08(c) of the
Indenture. 
 As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Tranche
[            ] Environmental Control Bond may be registered in the Bond Register upon surrender of this Tranche [            ]
Environmental Control Bond for registration of

  

 A-6 

 
transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Indenture
Trustee duly executed by the Holder hereof or his attorney duly authorized in writing, with such signature guaranteed by an Eligible Guarantor Institution, and thereupon one or more new Tranche [ ] Environmental Control Bonds of any Authorized
Initial Denominations and in the same aggregate initial principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Tranche
[            ] Environmental Control Bond, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with
any registration of transfer or exchange. 
 Each Tranche
[            ] Environmental Control Bondholder, by acceptance of a Tranche [            ] Environmental Control Bond, covenants
and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Tranche [ ] Environmental Control Bonds or under the Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) any owner of a beneficial interest in the Issuer or (ii) any partner, owner, beneficiary, agent, officer, director or employee of the Indenture Trustee, any holder of a beneficial
interest in the Issuer or the Indenture Trustee or of any successor or assign of the Indenture Trustee, except as any such Person may have expressly agreed (it being understood that all of the Indenture Trustee’s obligations are in its
individual capacity). 
 Prior to the due presentment for registration of transfer of this Tranche
[            ] Environmental Control Bond, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Tranche
[            ] Environmental Control Bond is registered (as of the day of determination) as the owner hereof for the purpose of receiving payments of principal of and premium, if any, and
interest on this Tranche [            ] Environmental Control Bond and for all other purposes whatsoever, whether or not this Tranche
[            ] Environmental Control Bond be overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall be affected by notice to the contrary. 
 The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations
of the Issuer and the rights of the Holders of the Environmental Control Bonds under the Indenture at any time by the Issuer with the consent of the Holders of Environmental Control Bonds representing a majority of the Outstanding Amount of all
Environmental Control Bonds at the time Outstanding of each Series or Tranche to be affected. The Indenture also contains provisions permitting the Holders of Environmental Control Bonds representing specified percentages of the Outstanding Amount
of the Environmental Control Bonds of all Series, on behalf of the Holders of all the Environmental Control Bonds, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Tranche [            ] Environmental Control Bond (or any one of more Predecessor Environmental Control Bonds) shall be
conclusive and binding upon such Holder and upon all future Holders of this Tranche [            ] Environmental Control Bond and of any Tranche
[            ] Environmental Control Bond issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made
upon this Tranche [            ] Environmental Control Bond. The Indenture also permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture
without the consent of Holders of the Environmental Control Bonds issued thereunder. 
  

 A-7 

 The term “Issuer” as used in this Tranche
[            ] Environmental Control Bond includes any successor to the Issuer under the Indenture. 
 The Issuer is permitted by the Indenture, under certain circumstances, to merge or consolidate, subject to the rights of the Indenture Trustee and the Holders of Environmental Control Bonds under the
Indenture. 
 This Tranche [ ] Environmental Control Bond is an Environmental Control Bond as such term is defined in the
Statute. Principal and interest due and payable on this Environmental Control Bond are payable from and secured primarily by environmental control property authorized by an order issued by the Public Service Commission of the State of West Virginia
pursuant to the Statute. Environmental control property includes the right to impose, charge, collect and receive certain non-bypassable charges (defined in the Statute as “environmental control charges”) to be included in electric utility
bills of all electric service retail customers of The Potomac Edison Company, a West Virginia electric utility doing business as Allegheny Power. 
 The Statute provides that the State of West Virginia pledges to and agrees with the Environmental Control Bondholders that the State of West Virginia will not take or permit any action that impairs the
value of the Environmental Control Property or, except as allowed under subsection (e) of W.Va Code §24-2-4e, reduce, alter or impair Environmental Control Charges that are imposed, collected and remitted for the benefit of the
Environmental Control Bondholders until any principal, interest and premium, if any, in respect of the Environmental Control Bonds, all financing costs and all amounts to be paid to any assignee or financing party under an ancillary agreement are
paid or performed in full. 
 The Tranche [ ] Environmental Control Bonds are issuable only in registered form in
Authorized Initial Denominations as provided in the Indenture and the Supplement, subject to certain limitations therein set forth. 
 This Tranche [            ] Environmental Control Bond, the Indenture and the Supplement shall be construed in accordance with the laws of the State of New York, without reference
to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws. 
 No reference herein to the Indenture and no provision of this Tranche [            ] Environmental Control Bond or of the Indenture shall alter
or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Tranche [            ] Environmental Control Bond at the times,
place, and rate, and in the coin or currency herein prescribed. 
  

 A-8 

 ASSIGNMENT 
 Social Security or taxpayer I.D. or other identifying number of assignee
                             
 FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
                                         
                   
                                         
                                         
                                         
                                         
                                         
            
 (name and address of assignee) 
 the within Tranche [            ] Environmental Control Bond and all rights thereunder, and
hereby irrevocably constitutes and appoints 
                                        
                                         
                                         
                                         
                                         
              attorney, to transfer said Tranche [            ] Environmental Control Bond on the books kept for
registration thereof, with full power of substitution in the premises. 
  

											
						
	Dated:	 	 	 		 		 	 	 	*
		 		 		 		 	Signature Guaranteed:	 	
					
	 	 		 		 	 	 	

  

	*	NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Tranche
[        ] Environmental Control Bond in every particular, without alteration, enlargement or any change whatsoever. 

  

 A-9 

 APPENDIX A-1 
 SUPPLEMENTAL MASTER DEFINITIONS 
  

 Appendix A-1Form of Sale Agreement

 Exhibit 10.1 
  
  
  
 FORM OF 
 ENVIRONMENTAL CONTROL PROPERTY 
 SALE AGREEMENT 
 between 
 PE ENVIRONMENTAL FUNDING LLC 
 Issuer 
 and 
 THE POTOMAC
EDISON COMPANY 
 Seller 
 Dated as of [                    ], 20[    ] 
  
  
  

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page
	 ARTICLE I Definitions
	  	3
			
	 Section 1.01.
	  	 Definitions
	  	3
	 Section 1.02.
	  	 Other Definitional Provisions
	  	3
		
	 ARTICLE II Conveyance of Environmental Control Property
	  	4
			
	 Section 2.01.
	  	 Conveyance of Environmental Control Property
	  	4
	 Section 2.02.
	  	 Conveyance of Subsequent Environmental Control Property
	  	5
	 Section 2.03.
	  	 Conditions to Conveyance of Environmental Control Property
	  	5
		
	 ARTICLE III Representations and Warranties of Seller
	  	6
			
	 Section 3.01.
	  	 Organization and Good Standing
	  	6
	 Section 3.02.
	  	 Due Qualification
	  	6
	 Section 3.03.
	  	 Power and Authority
	  	6
	 Section 3.04.
	  	 Binding Obligation
	  	6
	 Section 3.05.
	  	 No Violation
	  	7
	 Section 3.06.
	  	 No Proceedings
	  	7
	 Section 3.07.
	  	 Approvals
	  	7
	 Section 3.08.
	  	 The Environmental Control Property
	  	7
	 Section 3.09.
	  	 Solvency of Seller
	  	8
	 Section 3.10.
	  	 Irrevocable; Process Valid; No Litigation; Etc.
	  	8
	 Section 3.11.
	  	 Assumptions
	  	9
	 Section 3.12.
	  	 The Environmental Control Property Rights
	  	9
		
	 ARTICLE IV Covenants of the Seller
	  	10
			
	 Section 4.01.
	  	 Corporate Existence
	  	10
	 Section 4.02.
	  	 No Liens or Conveyances
	  	10
	 Section 4.03.
	  	 Delivery of Collections
	  	10
	 Section 4.04.
	  	 Notice of Liens
	  	11
	 Section 4.05.
	  	 Compliance with Law
	  	11
	 Section 4.06.
	  	 Use of Proceeds
	  	11
	 Section 4.07.
	  	 Covenants Related to Environmental Control Property
	  	11
	 Section 4.08.
	  	 Notice of Indemnification Events
	  	12
	 Section 4.09.
	  	 Protection of Title
	  	12
	 Section 4.10.
	  	 Taxes
	  	13
	 Section 4.11.
	  	 Notice of Breach
	  	13
	 Section 4.12.
	  	 Termination
	  	13
	 Section 4.13.
	  	 Third Parties
	  	13
	 Section 4.14.
	  	 Further Covenants
	  	13

  

 i 

					
	 ARTICLE V The Seller
	  	13
			
	 Section 5.01.
	  	 Liability of Seller; Indemnities
	  	13
	 Section 5.02.
	  	 Merger or Consolidation of, or Assumption of the Obligations of, Seller
	  	15
	 Section 5.03.
	  	 Limitation on Liability of Seller and Others
	  	16
	 Section 5.04.
	  	 Opinions of Counsel
	  	16
		
	 ARTICLE VI Miscellaneous Provisions
	  	17
			
	 Section 6.01.
	  	 Amendment
	  	17
	 Section 6.02.
	  	 Notices
	  	18
	 Section 6.03.
	  	 Assignment
	  	18
	 Section 6.04.
	  	 Limitations on Rights of Others
	  	18
	 Section 6.05.
	  	 Severability
	  	19
	 Section 6.06.
	  	 Separate Counterparts
	  	19
	 Section 6.07.
	  	 Headings
	  	19
	 Section 6.08.
	  	 GOVERNING LAW
	  	19
	 Section 6.09.
	  	 Assignment to Issuer and to Indenture Trustee
	  	19
	 Section 6.10.
	  	 Nonpetition Covenant
	  	19
	 Section 6.11.
	  	 Perfection
	  	19
	 Section 6.12.
	  	 Limitation of Liability
	  	20

  

			
	 Exhibit A
	  	 Form of Bill of Sale

	 Exhibit B
	  	 Pending Litigation

	 Appendix A
	  	 Master Definitions

	 Appendix A-1
	  	 Supplemental Master Definitions

  

 ii 

 ENVIRONMENTAL CONTROL PROPERTY SALE AGREEMENT dated as of
[                    ], 20[    ] (as amended, restated, supplemented or otherwise modified from time to time,
“this Agreement”), between PE ENVIRONMENTAL FUNDING LLC, a Delaware limited liability company (the “Issuer”), and THE POTOMAC EDISON COMPANY, a Maryland and Virginia corporation, and its successors in interest to
the extent permitted hereunder, as Seller (the “Seller”). 
 WHEREAS the Issuer desires to purchase from time
to time Environmental Control Property; and 
 WHEREAS the Seller is willing to sell Environmental Control Property to the
Issuer; and 
 WHEREAS the Issuer, in order to finance the purchase of the Environmental Control Property, will from time to
time issue Environmental Control Bonds under the Indenture; and 
 WHEREAS the Issuer, to secure its obligations under the
Environmental Control Bonds and the Indenture, will pledge its right, title and interest in the Environmental Control Property to the Indenture Trustee for the benefit of the Environmental Control Bondholders; and 
 WHEREAS the Issuer has determined that the transactions contemplated by the Basic Documents are in the best interest of the Issuer and its
creditors and represent a prudent and advisable course of action that does not impair the rights and interests of the Issuer’s creditors; and 
 WHEREAS the PSCWV or its attorney will enforce this Agreement pursuant to the Financing Order for the benefit of the Customers to the extent permitted by applicable Requirements of Law. 
 NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and intending to be legally bound hereby, the
parties hereto agree as follows: 
 ARTICLE I 
 Definitions 
 Section 1.01. Definitions. Capitalized terms used but
not otherwise defined herein have the meanings assigned to them in Appendix A and Appendix A-1 of this Agreement. To the extent there is a conflict between definitions included in Appendix A and Appendix A-1, the definitions in Appendix A-1 shall
control. 
 Section 1.02. Other Definitional Provisions. (a) The words “hereof”, “herein”,
“hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Section, Schedule and Exhibit references contained in this Agreement are
references to Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term “including” shall mean “including without limitation”. 
  

 3 

 (b) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. 
 ARTICLE II 
 Conveyance of Environmental Control Property 
 Section 2.01. Conveyance of Environmental Control Property. (a) In consideration of the Issuer’s delivery to or upon
the order of the Seller of $[            ], subject to the conditions specified in Section 2.03, the Seller, pursuant to a Bill of Sale, will irrevocably sell, transfer,
assign, set over and otherwise convey to the Issuer, without recourse (subject to the obligations herein), all right, title and interest of the Seller in and to the Environmental Control Property created pursuant to the Statute and in accordance
with the Financing Order (such sale, transfer, assignment, set over and conveyance of the Environmental Control Property will include, to the fullest extent permitted by the Statute, the assignment of all revenues, collections, claims, rights,
payments, money or proceeds of or arising from the Environmental Control Charges related to the Environmental Control Property, as the same may be adjusted from time to time). Such sale, transfer, assignment, set over and conveyance will be
expressly stated to be a sale and, pursuant to Section 24-2-4e(m)(1) of the Statute, shall be treated as an absolute transfer of all of the Seller’s right, title and interest (as in a true sale), and not as a pledge or other secured
transaction, of the Environmental Control Property. The Seller and the Issuer agree and confirm that after giving effect to the sale contemplated by such Bill of Sale, the Seller has no rights in the Environmental Control Property to which a
security interest of creditors of the Seller could attach because it has sold all rights in the Environmental Control Property to the Issuer pursuant to Section 24-2-4e(m)(1) of the Statute. If such sale, transfer, assignment, setting over and
conveyance is held by any court of competent jurisdiction not to be a true sale as provided in Section 24-2-4e(m)(1) of the Statute, then such sale, transfer, assignment, setting over and conveyance shall be treated as a pledge of the
Environmental Control Property and as the creation of a security interest (within the meaning of the Statute and the UCC) in the Environmental Control Property and, without prejudice to its position that it has absolutely transferred all of its
rights in the Environmental Control Property to the Issuer, the Seller hereby grants a security interest in the Environmental Control Property to the Issuer (and, to the extent necessary to qualify the grant as a security interest under the Statute
and the UCC, to the Indenture Trustee for the benefit of the Environmental Control Bondholders to secure the right of the Issuer under the Basic Documents to receive the Environmental Control Charges and all other Environmental Control Property).

 (b) Subject to the conditions specified in Section 2.03, the Issuer, pursuant to a Bill of Sale,
will purchase the Environmental Control Property from the Seller for the consideration set forth in paragraph (a) above. 
 (c) The Seller and the Issuer each acknowledge and agree that the purchase price for the Environmental Control Property sold pursuant to the Bill of Sale is equal to its fair market value at the time of
sale. 
  

 4 

 Section 2.02. Conveyance of Subsequent Environmental Control Property. The
Seller may from time to time offer to sell additional Environmental Control Property to the Issuer, subject to the conditions specified in Section 2.03. If any such offer is accepted by the Issuer, such Subsequent Environmental Control
Property shall be sold to the Issuer effective on the Subsequent Sale Date specified in the related Addition Notice, subject to the satisfaction or waiver of the conditions specified in Section 2.03. 
 Section 2.03. Conditions to Conveyance of Environmental Control Property. The Seller shall be permitted to sell Environmental
Control Property to the Issuer only upon the satisfaction or waiver of each of the following conditions: 
 (i)
on or prior to the 20[    ] Sale Date or Subsequent Sale Date, as applicable, the Seller shall have delivered to the Issuer a duly executed Bill of Sale identifying the Environmental Control Property to be conveyed on that
date; 
 (ii) as of the 20[    ] Sale Date or the Subsequent Sale Date, as applicable,
the Seller was not insolvent and will not have been made insolvent by such sale and the Seller is not aware of any pending insolvency with respect to itself; 
 (iii) as of the 20[    ] Sale Date or the Subsequent Sale Date, as applicable, no breach by the
Seller of its representations, warranties or covenants in this Agreement shall exist and no Servicer Default shall have occurred and be continuing; 
 (iv) as of the 20[    ] Sale Date or the Subsequent Sale Date, as applicable, (A) the Issuer shall have sufficient funds available to pay the purchase price for the
Environmental Control Property to be conveyed on such date and (B) all conditions to the issuance of one or more Series of Environmental Control Bonds intended to provide such funds set forth in the Indenture shall have been satisfied or
waived; 
 (v) on or prior to the 20[    ] Sale Date or the Subsequent Sale Date, as
applicable, the Seller shall have taken all action required to transfer to the Issuer ownership of the Environmental Control Property to be conveyed on such date, free and clear of all Liens other than Liens created pursuant to the Basic Documents;
and the Issuer or the Servicer, on behalf of the Issuer, shall have taken any action required for the Issuer to grant the Indenture Trustee a first priority perfected security interest in the Collateral and maintain such security interest as of such
date; 
 (vi) in the case of a sale of Subsequent Environmental Control Property only, on or prior to such
Subsequent Sale Date, the Seller shall have provided the Issuer and the Rating Agencies with a timely Addition Notice; 
 (vii) the Seller shall have delivered to the Rating Agencies and the Issuer (A) an Opinion of Counsel with respect to the transfer of the Environmental Control Property then being conveyed to the Issuer and (B) the Opinion of
Counsel required by Section 5.04(a); 
  

 5 

 (viii) the Seller shall have delivered to the Indenture Trustee and the
Issuer an Officers’ Certificate confirming the satisfaction of each condition precedent specified in this Section 2.03; and 
 (ix) the Seller shall have received the purchase price set forth in Section 2.01(a). 
 ARTICLE III 
 Representations and Warranties of Seller 
 As of the 20[    ] Sale Date and as of any Subsequent Sale Date, as applicable, the Seller makes the following
representations and warranties on which the Issuer has relied and will rely in acquiring Environmental Control Property. The Seller agrees and acknowledges that the following representations and warranties are also for the benefit of the Indenture
Trustee, as collateral assignee of the Issuer pursuant to the Indenture. The representations and warranties shall survive the sale of Environmental Control Property to the Issuer and the pledges and assignments thereof permitted hereby. 

Section 3.01. Organization and Good Standing. The Seller is a corporation duly organized, validly existing and in good
standing under the laws of the States of Maryland and Virginia, with corporate power and authority to own its properties and conduct its business as currently owned or conducted. 
 Section 3.02. Due Qualification. The Seller is duly qualified to do business as a foreign corporation in good standing, and has
obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business shall require such qualifications, licenses or approvals (except where the failure to so qualify or obtain
such licenses and approvals would not be reasonably likely to have a material adverse effect on the Seller’s business, operations, assets, revenues or properties). 
 Section 3.03. Power and Authority. The Seller has the corporate power and authority to execute and deliver this Agreement and to carry out its terms; the Seller has full corporate power and
authority to own the Environmental Control Property and sell and assign the Environmental Control Property, in the case of the 20[    ] Sale Date, and the Subsequent Environmental Control Property, in the case of each
Subsequent Sale Date, as applicable, and the Seller has duly authorized such sale and assignment to the Issuer by all necessary corporate action; and the execution, delivery and performance of this Agreement have been duly authorized by the Seller
by all necessary corporate action. 
 Section 3.04. Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of the Seller enforceable against the Seller in accordance with its terms, subject to bankruptcy, receivership, insolvency, fraudulent transfer, reorganization, moratorium or other laws relating to or affecting creditors’
rights generally from time to time in effect and to general principles of equity (regardless of whether considered in a proceeding in equity or at law). 
  

 6 

 Section 3.05. No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not conflict with, result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time) a default under, the articles of incorporation or
by-laws of the Seller, or any indenture, agreement or other instrument to which the Seller is a party or by which it shall be bound; nor result in the creation or imposition of any Lien upon any of its properties (other than under this Agreement)
pursuant to the terms of any such indenture, agreement or other instrument (other than may be granted under the Basic Documents or any Liens created by the Issuer pursuant to the Financing Order); nor, to the Seller’s knowledge, violate any
Requirements of Law applicable to the Seller of any Governmental Authority having jurisdiction over the Seller or its properties. 
 Section 3.06. No Proceedings. Except as described in Exhibit B, there are no proceedings or investigations pending or, to the Seller’s best knowledge, threatened, before any Governmental Authority having jurisdiction over
the Seller or its properties (i) asserting the invalidity of the Basic Documents, the Environmental Control Bonds, the Statute or the Financing Order, (ii) seeking to prevent the issuance of the Environmental Control Bonds or the
consummation of any of the transactions contemplated by the Basic Documents (iii) challenging the Seller’s treatment of the Environmental Control Bonds as debt of the Seller for federal and state tax purposes, or (iv) except as
described in Exhibit B, seeking any determination or ruling that could reasonably be expected to materially and adversely affect the performance by the Seller of its obligations under, or the validity or enforceability of, the Basic Documents, the
Environmental Control Bonds or the Financing Order. 
 Section 3.07. Approvals. Except for UCC filings or filings
under the Statute, no approval, authorization, consent, order or other action of, or filing with, any Governmental Authority is required in connection with the execution and delivery by the Seller of this Agreement, the performance by the Seller of
the transactions contemplated hereby or the fulfillment by the Seller of the terms hereof, except those that have been obtained or made. 
 Section 3.08. The Environmental Control Property. 
 (a)
All information provided by the Seller to the Issuer in writing with respect to the Environmental Control Property is correct in all material respects. 
 (b) The transfer, sale, assignment and conveyance of the Environmental Control Property constitutes a sale or other absolute transfer of all of the Seller’s right, title and interest in the
Environmental Control Property or the Subsequent Environmental Control Property, as the case may be, to the Issuer, and, upon the execution of this Agreement, Seller will have no right, title or interest in the Environmental Control Property or the
Subsequent Environmental Control Property, as the case may be, and the Environmental Control Property or the Subsequent Environmental Control Property, as the case may be, would not be part of the estate of the Seller as debtor in the event of a
filing of a bankruptcy petition. 
 (c) The Seller is the sole owner of the Environmental Control Property sold
to the Issuer on the 20[    ] Sale Date or Subsequent Sale Date, as applicable, and such sale has been made free and clear of all Liens other than Liens created by the Issuer pursuant to the Indenture. All actions or
filings, including filings with the Secretary of State of West Virginia under the Statute and UCC and with the Delaware Secretary of State under the Delaware UCC, necessary to give the Issuer a valid first priority perfected ownership interest in
the Environmental Control

  

 7 

 
Property and to grant the Indenture Trustee a first priority perfected ownership interest in the Environmental Control Property, free and clear of all Liens of the Seller or anyone claiming
through the Seller have been made, other than any such filings (except for filings with the Secretary of State of the State of West Virginia or Delaware, under the Statute and UCC, as applicable) the absence of which would not have a material
adverse impact on (i) the ability of the Servicer to collect Environmental Control Charges with respect to the Environmental Control Property or (ii) the rights of the Issuer with respect to the Environmental Control Property. 

Section 3.09. Solvency of Seller. 
 After giving effect to the sale of any Environmental Control Property hereunder, the Seller (i) is solvent and expects to remain solvent, (ii) is adequately capitalized to conduct its business
and affairs considering its size and the nature of its business and intended purposes, (iii) is not engaged in nor does it expect to engage in a business for which its remaining property represents an unreasonably small amount of capital,
(iv) reasonably believes that it will be able to pay its debts as they come due and (v) is able to pay its debts as they mature and does not intend to incur, or believe that it will incur, indebtedness that it will not be able to repay at
its maturity. 
 Section 3.10. Irrevocable; Process Valid; No Litigation; Etc. 
 (a) The Financing Order has been issued by the PSCWV in accordance with the Statute and in compliance with all applicable
Requirements of Law. The Financing Order became effective pursuant to the Statute, is in full force and effect and is final and nonappealable 
 (b) As of the date of issuance of any Series of Environmental Control Bonds, such Environmental Control Bonds are entitled to the protections provided by the Statute, the Financing Order is not subject to
impairment, and the rights to impose, collect and adjust the Environmental Control Charges are irrevocable and not subject to impairment or adjustment, except for the periodic True-Up Adjustments to the Environmental Control Charges provided for in
the Financing Order. 
 (c) Under the Statute, the State of West Virginia has pledged (the “State
Pledge”) that it will not take or permit any action that impairs the value of the Environmental Control Property or, except as allowed in connection with the True-Up Adjustments, reduce, alter or impair the Environmental Control Charges that
are imposed, collected or remitted for the benefit of the Environmental Control Bondholders, until any principal, interest and redemption premium in respect of the Environmental Control Bonds, all financing costs and all amounts to be paid under any
ancillary agreement are paid or performed in full, or other charges incurred or contracts to be performed in connection with the Environmental Control Bonds are paid or performed in full. 
 (d) Under the Contract Clauses of the Constitutions of the State of West Virginia and the United States, the State of West
Virginia could not, absent a demonstration that such action was necessary to serve a significant and legitimate public purpose, repeal or amend the Statute, nor could the State of West Virginia (or the PSCWV in exercising its legislative powers)
take any action or fail to take any action required by the State Pledge if the repeal or amendment, or the action or inaction, would substantially limit, alter, impair or reduce the value of the Environmental Control Property or the Environmental
Control Charges. 
  

 8 

 (e) Under applicable West Virginia constitutional principles relating to the
impairment of liens, the State of West Virginia could not enact legislation (other than a law passed by the State of West Virginia in the valid exercise of the state’s police power) that repeals the State Pledge or limits, alters, impairs or
reduces the value of the Environmental Control Property or the Environmental Control Charges so as to impair (i) the terms of the Indenture or the Environmental Control Bonds or (ii) the rights and remedies of the Environmental Control
Bondholders (or the Indenture Trustee acting on their behalf) prior to the time that the Environmental Control Bonds are fully paid and discharged if such action would prevent the payment of the Environmental Control Bonds or would significantly
affect the security for the Environmental Control Bonds. 
 (f) There is no order by any court providing for the
revocation, alteration, limitation or other impairment of the Statute, Financing Order, Environmental Control Property or Environmental Control Charges, or any rights arising under them, or that seeks to enjoin the performance of any obligations
under the Financing Order. 
 (g) No other approval, authorization, consent, order or other action of, or filing
with, any Governmental Authority is required in connection with the creation of the Environmental Control Property, except those that have been obtained or made. 
 (h) Except as described in Exhibit B, there are no proceedings or investigations challenging the Financing Order or the
Statute pending, or to the best of the Seller’s knowledge, threatened before any Governmental Authority having jurisdiction over the Seller or its properties. 
 (i) No failure on the 20[    ] Sale Date or any Subsequent Sale Date or any time thereafter to
satisfy any condition imposed by the Statute with respect to the recovery of Environmental Control Costs will have a material adverse affect on the creation or contribution hereunder of Environmental Control Property or the right to collect
Environmental Control Charges. 
 (j) The voters of the State of West Virginia have no right of referendum or
initiative to amend, repeal or revoke the Statute in a manner that would impair the security of the Environmental Control Bondholders. 
 Section 3.11. Assumptions. The assumptions used in calculating Environmental Control Charges are reasonable and made in good faith. 
 Section 3.12. The Environmental Control Property Rights. 
 (a) The Environmental Control Property constitutes an existing present property right that will continue to exist until the Environmental Control Bonds issued pursuant to the Financing Order and all Financing Costs of the Environmental
Control Bonds have been paid in full. 
  

 9 

 (b) The Environmental Control Property consists of (i) the rights and
interests of the Seller and the Issuer, as assignee of the Seller, including the right to impose, charge, collect and receive Environmental Control Charges in the amount necessary to provide for full payment and recovery of all Environmental Control
Costs and Financing Costs determined to be recoverable in the Financing Order, and any interest in such rights and interests; (ii) the right under the Financing Order to obtain True-Up Adjustments; and (iii) all revenues, receipts,
collections, rights to payment, payments, moneys, claims or other proceeds arising from the rights and interests described in clauses (i) and (ii) above. 
 (c) The Financing Order, including the right to collect Environmental Control Charges, has been declared to be irrevocable by
the PSCWV. 
 (d) The Environmental Control Property does not include any right to any revenues, collections,
claims, rights, payments, money or proceeds of or arising from certain tax charges. 
 ARTICLE IV 
 Covenants of the Seller 
 Section 4.01. Corporate Existence. Subject to Section 5.02, so long as Environmental Control Bonds of any Series remain Outstanding, except in the case of a merger, consolidation, division, asset disposition or other
similar transaction permitted under the terms of this Agreement, the Seller will keep in full force and effect its corporate existence and remain in good standing, in each case under the laws of the jurisdiction of its incorporation, and will obtain
and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement and each other instrument or agreement to which the Seller is a
party necessary to the proper administration of this Agreement and the transactions contemplated hereby. 
 Section 4.02.
No Liens or Conveyances. Except for the conveyances hereunder, the Seller will not sell, pledge, assign or transfer to any other Person, or grant, create, incur, assume or suffer to exist any Lien on, any of the Environmental Control
Property, whether now existing or hereafter created, or any interest therein. The Seller shall not at any time assert any Lien against or with respect to any Environmental Control Property, and shall defend the right, title and interest of the
Issuer and the Indenture Trustee, as collateral assignee of the Issuer, in, to and under the Environmental Control Property, whether now existing or hereafter created, against all claims of third parties claiming through or under the Seller.

 Section 4.03. Delivery of Collections. Subject to the terms of the Servicing Agreement, if the Seller receives
collections in respect of the Environmental Control Charges, or in respect of the Environmental Control Property or the proceeds thereof, the Seller agrees to pay the Servicer all estimated collections received by the Seller in respect thereof as
soon as practicable after receipt is known by the Seller, but in no event later than two Business Days after such receipt is known by the Seller, and the Seller shall reconcile such estimated collection amounts with the Servicer within 25 Business
Days after the estimated collections are paid to the Servicer. 
  

 10 

 Section 4.04. Notice of Liens. The Seller shall notify the Issuer and the
Indenture Trustee promptly after becoming aware of any Lien on any Environmental Control Property other than the conveyances hereunder or under the Transfer Agreement, the Indenture or the other Basic Documents. 
 Section 4.05. Compliance with Law. The Seller hereby agrees to comply with its organizational or governing documents and all
Requirements of Law applicable to the Seller, except to the extent that failure to so comply would not have a material adverse affect on the Issuer’s or the Indenture Trustee’s interests in the Environmental Control Property or under any
of the Basic Documents, the timing or amount of Environmental Control Charges payable by customers or the Seller’s performance of its obligations hereunder or under any of the other Basic Documents to which it is a party. 
 Section 4.06. Use of Proceeds. The Seller will use the proceeds of the sale of the Environmental Control Property in accordance
with the Financing Order. 
 Section 4.07. Covenants Related to Environmental Control Property. 
 (a) So long as Environmental Control Bonds of any Series remain Outstanding, the Seller shall treat the Environmental Control
Bonds as debt of the Seller for federal income tax purposes to the extent permitted by applicable Requirements of Law. 
 (b) So long as Environmental Control Bonds of any Series remain Outstanding, the Seller shall (i) treat the Environmental Control Bonds as the debt of the Issuer, except for financial accounting or tax purposes, (ii) clearly
disclose in its financial statements that it is not the owner of the Environmental Control Property and that the assets of the Issuer are not available to pay creditors of the Seller or any of its Affiliates, (iii) not own or purchase any
Environmental Control Bonds, and (iv) clearly disclose the effects of all transactions between the Seller and the Issuer in accordance with GAAP. 
 (c) The Seller agrees that upon the sale by the Seller of the Environmental Control Property to the Issuer pursuant to a Bill of Sale, (i) to the fullest extent permitted by applicable Requirements
of Law, the Issuer shall have all of the rights originally held by the Seller with respect to the Environmental Control Property, including the right to collect any amounts payable by any Customer or Third Party in respect of such Environmental
Control Property, notwithstanding any objection or direction to the contrary by the Seller and (ii) any payment by any Customer or Third Party to the Issuer shall discharge such Customer’s or such Third Party’s obligations in respect
of such Environmental Control Property to the extent of such payment, notwithstanding any objection or direction to the contrary by the Seller. 
 (d) So long as Environmental Control Bonds of any Series remain Outstanding, the Seller (i) in all proceedings relating directly or indirectly to the Environmental Control Property, will
affirmatively certify and confirm that it has sold all of its rights and interests in and to the Environmental Control Property (other than for financial accounting or tax purposes), (ii) shall not make any statement or reference in respect of
the Environmental Control Property that is inconsistent with the ownership thereof by the Issuer (other than for financial accounting or tax purposes), (iii) will not take any action in respect of the Environmental Control

  

 11 

 
Property except solely in its capacity as the Servicer thereof pursuant to the Servicing Agreement or as otherwise contemplated by the Basic Documents and (iv) will not sell Environmental
Control Property under a Subsequent Financing Order in connection with the issuance of additional series of Environmental Control Bonds unless the Rating Agency Condition has been satisfied. 
 Section 4.08. Notice of Indemnification Events. The Seller shall deliver to the Issuer and the Indenture Trustee promptly after
having obtained knowledge thereof, written notice in an Officers’ Certificate of any Indemnification Event or any event which, with the giving of notice or the passage of time, would become an Indemnification Event. 
 Section 4.09. Protection of Title. 
 (a) The Seller shall execute and file such filings, including filings with the PSCWV pursuant to the Statute and the Financing Order, and cause to be executed and filed such filings, all in such manner
and in such places as may be required by applicable Requirements of Law fully to preserve, maintain, and protect the interests of the Issuer, the Indenture Trustee and the Environmental Control Bondholders in the Environmental Control Property,
including all filings required under the Statute relating to the transfer of the ownership or security interest in the Environmental Control Property by the Seller to the Issuer. 
 (b) The Seller shall deliver (or cause to be delivered) to the Issuer file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing. 
 (c) The Seller agrees to take
such legal or administrative actions, including defending against or instituting and pursuing legal actions and appearing or testifying at hearings or similar proceedings, as may be reasonably necessary (i) to protect the Issuer, the Indenture
Trustee and the Environmental Control Bondholders from claims, state actions or other actions or proceedings of third parties which, if successfully pursued, would result in a breach of any representation or warranty set forth in Article III or
(ii) to block or overturn any attempts to cause a repeal of, modification of or supplement to the Statute or the Financing Order or the rights of holders of Environmental Control Property by legislative enactment or constitutional amendment
that would be materially adverse to the holders of Environmental Control Property. 
 (d) The Seller will
institute any action or proceeding necessary to compel performance by the PSCWV, the State of West Virginia or any of their respective agents of any of their obligations or duties under the Statute, any Financing Order or any Issuance Advice Letter.
The Seller will comply with all filing requirements, including any post closing filings, in accordance with the Financing Order. 
 The costs of
any action described in this Section 4.09 shall be payable from the Collection Account as an Operating Expense in accordance with Section 8.02(e) of the Indenture. The Seller’s obligations pursuant to this
Section 4.09 shall survive and continue notwithstanding that payment of such Operating Expense may be delayed pursuant to the terms of the Indenture it being understood that the Seller may be required initially to advance its own fund to
satisfy its obligations hereunder). 
  

 12 

 Section 4.10. Taxes. So long as Environmental Control Bonds of any Series remain
Outstanding, the Seller shall, and shall cause each of its subsidiaries to, pay all material taxes, including assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, business,
income or property before any penalty accrues thereon if the failure to pay any such taxes, assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a lien on the Environmental
Control Property; provided that no such tax need be paid if the Seller or one of its subsidiaries is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted and if the Seller or such subsidiary has
established appropriate reserves as shall be required in conformity with generally accepted accounting principles. 
 Section 4.11. Notice of Breach. Promptly after obtaining knowledge of any breach in any material respect of its representations and warranties in this Agreement, the Seller will notify the Issuer and the Rating Agencies of the
breach. 
 Section 4.12. Termination. Even if this Agreement or the Indenture is terminated, the Seller will not,
prior to the date which is one year and one day after the termination of the Indenture, petition or otherwise invoke or cause the Issuer to invoke the process of any court or Governmental Authority for the purpose of commencing or sustaining an
involuntary case against the Issuer or any substantial part of the Issuer’s property under any federal or state bankruptcy, insolvency or similar law, appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official, or ordering the winding up or liquidation of the Issuer’s affairs. 
 Section 4.13. Third
Parties. So long as Environmental Control Bonds of any Series remain Outstanding, the Seller shall not permit any Third Party to bill or collect Environmental Control Charges on behalf of the Issuer except (a) as a subcontractor under the
active supervision of the Servicer or (b) as required by applicable law or regulation and to the extent permitted by applicable law or regulation, after written notice of such arrangement is furnished to the Rating Agencies. 
 Section 4.14. Further Covenants. Upon the Issuer’s request, the Seller will execute and deliver such further instruments
and do such further acts as may be necessary to carry out more effectively the provisions and purposes of this Agreement. 
 ARTICLE V 
 The Seller 
 Section 5.01. Liability of Seller; Indemnities. 
 (a)
The Seller shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Seller under this Agreement. 
 (b) The Seller shall indemnify the Issuer and the Indenture Trustee, for itself and on behalf of the Environmental Control Bondholders and each of their respective affiliates, members, managers, officers,
directors, employees and agents, and defend and hold harmless

  

 13 

 
each such Person from and against, any and all taxes (other than any taxes imposed on Environmental Control Bondholders solely as a result of their ownership of Environmental Control Bonds) that
may at any time be imposed on or asserted against any such Person under existing law as of the 20[    ] Sale Date or Subsequent Sale Date as a result of (i) the sale and assignment of the Environmental Control
Property to the Issuer, (ii) the acquisition or holding of the Environmental Control Property by the Issuer or (iii) the issuance and sale of the Environmental Control Bonds by the Issuer, including any sales, gross receipts, general
corporation, single business, personal property, privilege, franchise or license taxes, but excluding any taxes imposed as a result of a failure of such person to withhold or remit taxes with respect to payments on any Environmental Control Bonds,
it being understood that the Environmental Control Bondholders shall be entitled to enforce their rights against the Seller under this Section 5.01(b) solely through a cause of action brought for their benefit by the Indenture Trustee.

 (c) The Seller shall indemnify the Issuer, the Indenture Trustee, for itself and on behalf of the
Environmental Control Bondholders, and each of their respective affiliates, members, managers, officers, directors, employees and agents, and defend and hold harmless each such Person from and against, (i) any and all amounts of principal of
and interest on the Environmental Control Bonds not paid when due or when scheduled to be paid in accordance with their terms, (ii) the amount of any deposits to the Issuer required to have been made in accordance with the terms of the Basic
Documents or any Financing Order which are not made when so required, and (iii) any and all other liabilities, obligations, losses, claims, damages, payment, costs or expenses incurred by any of these persons, in each case as a result of the
Seller’s breach of any of its representations, warranties or covenants contained in this Agreement; each of which the Seller will have a 30-day opportunity to cure upon notice from us of a material breach of a covenant. 
 (d) The Seller shall indemnify the Issuer, the Indenture Trustee, for itself and on behalf of the Environmental Control
Bondholders, and each of their respective affiliates, members, managers, officers, directors, employees and agents, and defend and hold harmless each such Person from and against, any and all Losses that may be imposed on, incurred by or asserted
against any such Person as a result of (x) the Seller’s willful misconduct, bad faith or negligence in the performance of its duties or observance of its covenants under this Agreement, (y) the Seller’s reckless disregard of its
obligations and duties under this Agreement or (z) the Seller’s breach of any of its representations or warranties contained in this Agreement (any event described in any of the foregoing clauses (x), (y) or (z), an
“Indemnification Event”). Amounts on deposit in the Excess Funds Subaccount, the Capital Subaccount and the Reserve Account shall not be available to satisfy any Losses for which indemnification is provided in this Agreement.

 (e) The Seller also will indemnify the PSCWV, for the benefit of Customers, for any and all Losses, including
but not limited to Losses in the form of higher Environmental Control Charges, that Customers may incur by reason of (i) any failure of the Seller’s representations or warranties in this Agreement or (ii) any breach of the
Seller’s covenants in this Agreement. 
  

 14 

 (f) The Seller shall indemnify the Indenture Trustee and its officers,
directors and agents for, and defend and hold harmless each such Person from and against, any and all Losses that may be imposed upon, incurred by or asserted against any such Person as a result of the acceptance or performance of the trusts and
duties contained herein and in the Basic Documents to which the Indenture Trustee is a party, except to the extent that any such Loss shall be due to the willful misconduct, bad faith or gross negligence of the Indenture Trustee. Such amounts shall
be deposited into the Collection Account and distributed in accordance with the Indenture. 
 (g) The
Seller’s indemnification obligations under Sections 5.01(b), (c), (d), (e) and (f) for events occurring prior to the removal or resignation of the Indenture Trustee or the termination of this Agreement shall survive the
resignation or removal of the Indenture Trustee or the termination of this Agreement and shall include reasonable fees and expenses of investigation and litigation (including the Indenture Trustee’s reasonable attorney’s fees and expenses)
and will rank in priority with other general, unsecured obligations of the Seller. Any amounts indemnified by the Seller pursuant to its obligations under Sections 5.01(b), (c), (d), (e) or (f) shall be deposited into the Collection
Account and distributed in accordance with the Indenture. The Seller shall not indemnify any party under this Section 5.01 for any changes in law after the 20[    ] Sale Date or the Subsequent Sale Date, as
applicable. 
 Section 5.02. Merger or Consolidation of, or Assumption of the Obligations of, Seller. Any Person
(a) into which the Seller may be merged or consolidated or which succeeds to all or any material part of the Seller’s electric distribution business, (b) which results from the division of the Seller into two or more Persons and which
succeeds to all or any material part of the Seller’s electric distribution business, (c) which may result from any merger or consolidation to which the Seller shall be a party and which succeeds to all or any material part of the
Seller’s electric distribution business, or (d) which may succeed to the properties and assets of the Seller substantially as a whole and which succeeds to all or any material part of the Seller’s electric distribution business, or
(e) which may otherwise succeed to all or any material part of the Seller’s electric distribution business, which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Seller under this
Agreement, shall be the successor to the Seller hereunder without the execution or filing of any document or any further act by any of the parties to this Agreement; provided, however, that (i) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Article III shall have been breached and no Servicer Default, and no event that, after notice or lapse of time, or both, would become a Servicer Default, shall have occurred and be
continuing, (ii) the Seller shall have delivered to the Issuer and the Indenture Trustee an Officers’ Certificate and an Opinion of Counsel each stating that such consolidation, merger or succession and such agreement of assumption comply
with this Section and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with, (iii) the Rating Agencies shall have received prior written notice of such transaction,
(iv) the Seller shall have delivered to the Issuer and the Indenture Trustee an Opinion of Counsel either (A) stating that, in the opinion of such counsel, all filings, including filings by the Seller with the PSCWV pursuant to the Statute
and UCC filings, have been executed and filed that are necessary fully to preserve and protect the interest of the Issuer in the Environmental Control Property and reciting the details of such filings or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such interests and (v) the Seller shall have delivered to the

  

 15 

 
Issuer and the Indenture Trustee an Opinion of Counsel from independent tax counsel stating to the effect that, for the federal income tax purposes, such consolidation, merger or succession to,
and assumption of, the obligations of the Seller will not result in a material adverse federal income tax consequence to the Issuer, the Seller, the Indenture Trustee or the Environmental Control Bondholders. Notwithstanding anything herein to the
contrary, the execution of the above described agreement of assumption and compliance with clauses (i), (ii), (iii) and (iv) above shall be conditions precedent to the consummation of any transaction referred to in clauses (a), (b), (c),
(d) or (e) above. 
 Section 5.03. Limitation on Liability of Seller and Others. The Seller and any
director or officer or agent of the Seller, or any employee of Allegheny Energy Service Corporation, may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person,
respecting any matters arising hereunder. Subject to Section 4.08, the Seller shall not be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its obligations under this Agreement, and that
in its opinion may involve it in any expense or liability. The Seller will not be liable for any Losses resulting solely from a downgrade in the ratings on the Environmental Control Bonds or any consequential, incidental or indirect damages,
including any loss of market value of the Environmental Control Bonds, resulting from any downgrade of the ratings of the Environmental Control Bonds. 
 Section 5.04. Opinions of Counsel. The Seller shall deliver to the Issuer and the Indenture Trustee: (a) promptly after the execution and delivery of this Agreement and of each amendment
hereto or to the Servicing Agreement and on each Subsequent Sale Date, an Opinion of Counsel either (i) to the effect that, in the opinion of such counsel, all filings, including filings with the PSCWV pursuant to the Statute, that are
necessary to fully preserve and protect the interests of the Issuer in the Environmental Control Property have been executed and filed, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are
given, or (ii) to the effect that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interest; and (b) within 90 days after the beginning of each calendar year beginning with the first calendar
year beginning more than three months after the 20[__] Sale Date, an Opinion of Counsel, dated as of a date during such 90-day period, either (i) to the effect that, in the opinion of such counsel, all filings with the PSCWV or otherwise
pursuant to the Statute, have been executed and filed that are necessary to preserve fully and protect fully the interest of the Issuer in the Environmental Control Property, and reciting the details of such filings or referring to prior Opinions of
Counsel in which such details are given, or (ii) to the effect that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interest. Each Opinion of Counsel referred to in clause (a) or
(b) above shall specify any action necessary (as of the date of such opinion) to be taken in the following year to preserve and protect such interest. 
  

 16 

 ARTICLE VI 
 Miscellaneous Provisions 
 Section 6.01. Amendment. 
 (a) Subject to Section 6.01(b) below, this Agreement may be amended by the Seller and the Issuer, with the prior
written consent of the Indenture Trustee and the satisfaction of the Rating Agency Condition. Promptly after the execution of any such amendment and consent, the Issuer shall furnish written notification of the substance of such amendment or consent
to each of the Rating Agencies. Prior to the execution of any amendment to this Agreement, the Issuer and the Indenture Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and the Opinion of Counsel referred to in Section 3.10 of the Servicing Agreement. Subject to paragraph (b) below, the Issuer and the Indenture Trustee may, but shall not be obligated to, enter
into any such amendment which affects their own rights, duties or immunities under this Agreement or otherwise. 
 (b) Notwithstanding anything to the contrary in Section 6.01(a), no amendment or modification of this Agreement shall be effective except upon satisfaction of the conditions precedent in this Section 6.01(b).

 (i) PSCWV Condition. At least 16 days prior to the effectiveness of any such amendment or
modification, and after obtaining the other necessary approvals set forth in Section 6.01(a), except for the consent of the Indenture Trustee and the Environmental Control Bondholders if the consent of the Environmental Control
Bondholders is required or sought by the Indenture Trustee in connection with such amendment or modification, the Issuer shall have delivered to the PSCWV’s executive director and general counsel written notification of any proposed amendment
or modification, which notification shall contain: 
 (A) a reference to Case Nos. 05-0402-E-CN and
05-0750-E-PC and any other case number under which a Financing Order has been issued; 
 (B) an Officer’s
Certificate stating that the proposed amendment or modification has been approved by all parties to this Agreement; and 
 (C) a statement identifying the person to whom the PSCWV is to address any response to the proposed amendment or to request additional time. 
 (ii) The PSCWV or its authorized representative shall, within 15 days of receiving the notification complying with
Section 6.01(b)(i) above, either: 
 (A) provide notice of its determination that the proposed
amendment or modification will not under any circumstances have the effect of increasing the ongoing qualified costs related to the Environmental Control Bonds, 
 (B) provide notice of its consent or lack of consent to the person specified in Section 6.01(b)(i)(C) above, or

  

 17 

 (C) be conclusively deemed to have consented to the proposed amendment or
modification, unless, within 15 days of receiving the notification complying with Section 6.01(b)(i) above, the PSCWV or its authorized representative delivers to the office of the person specified in Section 6.01(b)(i)(C)
above with a written statement requesting an additional amount of time not to exceed 15 days in which to consider whether to consent to the proposed amendment or modification. If the PSCWV or its authorized representative requests an extension of
time in the manner set forth in the preceding sentence, then the PSCWV shall either provide notice of its consent or lack of consent or notice of its determination that the proposed amendment or modification will not under any circumstances increase
ongoing qualified costs to the person specified in Section 6.01(b)(i)(C) above not later than the last day of such extension of time or be conclusively deemed to have consented to the proposed amendment or modification on the last day of
such extension of time. Any amendment or modification requiring the consent of the PSCWV shall become effective on the later of (i) the date proposed by the parties to such amendment or modification or (ii) the first day after the
expiration of the 15-day period provided for in this Section 6.01(b)(ii), or, if such period has been extended pursuant hereto, the first day after the expiration of such period as so extended. 
 (c) For the purpose of this Section 6.01, an “authorized representative” of the PSCWV means any person
authorized to act on behalf of the PSCWV, as evidenced by an Opinion of Counsel (which may be the general counsel) to the PSCWV. 
 Section 6.02. Notices. All demands, notices and communications upon or to the Seller, the Issuer, the Indenture Trustee, the Rating Agencies or the PSCWV under this Agreement shall be in
writing, delivered personally, via facsimile, reputable overnight courier or by certified mail, return-receipt requested, and shall be deemed to have been duly given upon receipt (a) in the case of the Seller, to The Potomac Edison Company, 800
Cabin Hill Drive, Greensburg, Pennsylvania 15601, Attention of Amanda J. Skov, Esq., (b) in the case of the Issuer, to PE Environmental Funding LLC, 2215-B Renaissance Drive, Suite #5, Las Vegas, Nevada 89119, Attention of Kristine Eppes,
(c) in the case of the Indenture Trustee, at the Corporate Trust Office, (d) in the case of Moody’s, to Moody’s Investors Service, Inc., Asset Finance Group, 99 Church Street, New York, New York 10007, (e) in the case of
Standard & Poor’s, to Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., 55 Water Street, 42nd Floor, New York, New York 10041-0003, Attention of ABS Surveillance Group – New Assets, (f) in the case of
Fitch, to Fitch Ratings, One State Street Plaza, New York, New York 10004, Attention of ABS Surveillance, and (g) in the case of the PSCWV, to Public Service Commission of West Virginia, 201 Brooks Street, P.O. Box 812, Charleston, West
Virginia 25325, Attention of Executive Secretary; or, as to each of the foregoing, at such other address as shall be designated by written notice to the other parties. 
 Section 6.03. Assignment. Notwithstanding anything to the contrary contained herein, except as provided in Section 5.02, this Agreement may not be assigned by the Seller. 
 Section 6.04. Limitations on Rights of Others. The provisions of this Agreement are solely for the benefit of the Seller, the
Issuer, the PSCWV and the Indenture Trustee, on behalf of itself and the Environmental Control Bondholders, and nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Collateral or under or in respect of this Agreement or any covenants, conditions or provisions contained herein. 
  

 18 

 Section 6.05. Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 
 Section 6.06.
Separate Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same
instrument. 
 Section 6.07. Headings. The headings of the various Articles and Sections herein are for convenience
of reference only and shall not define or limit any of the terms or provisions hereof. 
 Section 6.08. GOVERNING
LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WEST VIRGINIA, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS. 
 Section 6.09. Assignment to Issuer and to Indenture Trustee. 
 The Seller hereby acknowledges and consents to the mortgage, pledge, assignment and grant of a security interest by the Issuer to the
Indenture Trustee pursuant to the Indenture for the benefit of the Environmental Control Bondholders of all right, title and interest of the Issuer in, to and under the Environmental Control Property and the proceeds thereof and the assignment of
any or all of the Issuer’s rights hereunder to the Indenture Trustee. 
 Section 6.10. Nonpetition Covenant.
Notwithstanding any prior termination of this Agreement or the Indenture, but subject to a court of competent jurisdiction’s rights to order the sequestration and payment of Environmental Control Revenues arising with respect to the
Environmental Control Property upon application by the Issuer or the Indenture Trustee notwithstanding any bankruptcy, reorganization or other insolvency proceedings with respect to the debtor, pledgor or transferor of the Environmental Control
Property pursuant to Section 24-2-4e(k)(4) of the Statute, the Seller shall not, prior to the date which is one year and one day after the termination of the Indenture, petition or otherwise invoke or cause the Issuer to invoke the process of
any court or Governmental Authority for the purpose of commencing or sustaining an involuntary case against the Issuer under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Issuer or any substantial part of the property of the Issuer, or ordering the winding up or liquidation of the affairs of the Issuer. 
 Section 6.11. Perfection. In accordance with Section 24-2-4e(m) of the Statute, (i) upon the Financing Order creating
the Environmental Control Property becoming effective, (ii) the execution and delivery of this Agreement and the related Bill of Sale, (iii) the receipt of value and (iv) the filing of a financing statement with the office of the
Secretary of State of West Virginia, a transfer of an interest in the Environmental Control Property will be perfected as

  

 19 

 
against all third persons, including any judicial lien creditors, other than creditors holding a prior security interest, ownership interest or assignment in the Environmental Control Property
previously perfected in accordance with the relevant provisions of the Statute. 
 Section 6.12. Limitation of
Liability. It is expressly understood and agreed by the parties hereto that this Agreement is executed and delivered by U.S. Bank National Association, not individually or personally but solely as Indenture Trustee for the benefit of the
Environmental Control Bondholders, in the exercise of the powers and authority conferred and vested in it, and nothing herein contained shall be construed as creating any liability on U.S. Bank National Association, individually or personally, to
perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties who are signatories to this Agreement and by any Person claiming by, through or under such parties; provided,
however, that this provision shall not protect U.S. Bank National Association against any liability that would otherwise be imposed by reason of willful misconduct, bad faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations or duties under this Agreement. 
  

 20 

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

			
	PE ENVIRONMENTAL FUNDING LLC, Issuer
		
	by	 	 
		 	Title:
	
	THE POTOMAC EDISON COMPANY, Seller,
		
	by	 	 
		 	Title:

  

			
	Acknowledged and Accepted:
	
	 U.S. Bank National Association, not in its individual
capacity but solely as Indenture Trustee on behalf of
the Environmental Control Bondholders.

		
	by	 	 
		 	Title:

  

 21 

 EXHIBIT A 
 FORM OF BILL OF SALE 
 1. This Bill of Sale is being delivered pursuant to the
Environmental Control Property Sale Agreement, dated as of [                    ], 20[    ] (as amended, restated,
supplemented or otherwise modified from time to time, the “Sale Agreement”), between The Potomac Edison Company (the “Seller”) and PE Environmental Funding LLC (the “Issuer”) and is subject to all of the terms,
conditions and limitations contained in the Sale Agreement. All capitalized terms used but not defined herein have the respective meanings ascribed thereto in the Sale Agreement. 
 2. In consideration of the Issuer’s delivery to or upon the order of the Seller of
$[            ], the Seller does hereby irrevocably sell, transfer, assign, set over and otherwise convey to the Issuer, without recourse (subject to the obligations in the Sale
Agreement), all right, title and interest of the Seller in and to the Environmental Control Property created by the Statute and in accordance with the Financing Order related to the Senior Secured ROC Bonds, Environmental Control Series B and
identified on Schedule 1 hereto (the “Environmental Control Property”) (such sale, transfer, assignment, set over and conveyance of the Environmental Control Property includes, to the fullest extent permitted by the Statute, the assignment
of all revenues, collections, claims, rights, payments, money or proceeds of or arising from the Environmental Control Charges related to the Environmental Control Property, as the same may be adjusted from time to time). Such sale, transfer,
assignment, set over and conveyance is hereby expressly stated to be a sale and, pursuant to Section 24-2-4e(m)(1) of the Statute, shall be treated as an absolute transfer of all of the Seller’s right, title and interest (as in a true
sale), and not as a pledge or other secured transaction, of the Environmental Control Property. The Seller agrees and confirms that after giving effect to the sale contemplated hereby, it has no rights in the Environmental Control Property to which
a security interest of creditors of the Seller could attach because it has sold all rights in the Environmental Control Property to the Issuer pursuant to Section 24-2-4e(m)(1) of the Statute. 
 3. The Issuer does hereby purchase the Environmental Control Property from the Seller for the consideration set forth in paragraph 2 above.

 4. The Seller and the Issuer each acknowledge and agree that the purchase price for the Environmental Control Property sold
pursuant to this Bill of Sale and the Sale Agreement is equal to its fair market value at the time of sale. 
 5. The Seller
confirms that each of the representations and warranties on the part of the Seller contained in the Sale Agreement are true and correct in all respects on the date hereof as if made on the date hereof. 
 6. This Bill of Sale may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute but one and the same instrument. 
  

 22 

 7. This Bill of Sale shall be construed in accordance with the laws of the State of West
Virginia, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. 
  

 23 

 IN WITNESS WHEREOF, the Seller and the Issuer have duly executed this
Bill of Sale as of this [        ]th day of [            ], 20[    ]. 
  

			
	THE POTOMAC EDISON COMPANY,
		
	by	 	 
		 	Name:
		 	Title:
	
	PE ENVIRONMENTAL FUNDING LLC,
		
	by	 	 
		 	Name:
		 	Title:

  

 24 

 SCHEDULE 1 
 Environmental Control Property and the related Environmental Control Charges with respect to the Senior Secured ROC Bonds, Environmental Control Series B identified in the Pricing Advice Letter filed with
the PSCWV on [                    ], 20[    ]. 

 EXHIBIT B 
 PENDING LITIGATION 
 None. 

 APPENDIX A 
 MASTER DEFINITIONS 

 APPENDIX A-1 
 SUPPLEMENTAL MASTER DEFINITIONS

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00166-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00166-of-00352.parquet"}]]