Document:

EXHIBIT 10-24

		[Execution Copy]
	 

	 
		 
	 

	 
		TE FOSSIL SECURITY
		AGREEMENT
	 

	 
		SECURITY AGREEMENT, dated October 24, 2005
		(the “Agreement”), by and between FIRSTENERGY GENERATION CORP.
		(“Debtor”), an Ohio corporation and THE TOLEDO EDISON COMPANY
		(“Secured Party”), an Ohio corporation.
	 

	 
		BACKGROUND
	 

	 
		A. Debtor and Secured Party have entered
		into a certain Purchase and Sale Agreement, dated as of May 18, 2005
		(“Purchase Agreement”), pursuant to which Debtor has purchased from
		Secured Party certain Purchased Assets, as defined in the Purchase Agreement.
		Capitalized terms used herein shall have the meaning given to them in the
		Purchase Agreement unless otherwise defined herein. 
	 

	 
		B. As provided by the Purchase Agreement,
		Debtor has delivered to Secured Party a Secured Promissory Note, dated October
		24, 2005, in payment of the Purchase Price for the Purchased Assets.
	 

	 
		C. Debtor wishes to secure its obligations
		under the Secured Promissory Note by granting to Secured Party a security
		interest in the Purchased Assets.
	 

	 
		1. Grant of Security Interest. Debtor hereby conveys, assigns, transfers and grants
		to Secured Party a security interest in the Collateral (as defined in section
		3) to secure the Debtor’s performance of the obligations set forth in
		Section 4.
	 

	 
		2. Collateral. The
		collateral covered by this Agreement (“Collateral”) shall consist of
		the following:
	 

	 
			
				
				   
				

			 	
				
				  a.
				

			 	
				
				  Seller’s 100% undivided
				  ownership interest in Unit No. 1 of the Bay Shore Generating Station, Toledo,
				  Ohio;
				

			 

 

	 
			
				
				   
				

			 	
				
				  b.
				

			 	
				
				  Seller’s 100% undivided
				  ownership interest in Unit No. 2 of the Bay Shore Generating Station, Toledo,
				  Ohio;
				

			 

 

	 
			
				
				   
				

			 	
				
				  c.
				

			 	
				
				  Seller’s 100% undivided
				  ownership interest in Unit No. 3 of the Bay Shore Generating Station, Toledo,
				  Ohio;
				

			 

 

	 
			
				
				   
				

			 	
				
				  d.
				

			 	
				
				  Seller’s 100% undivided
				  ownership interest in Unit No. 4 of the Bay Shore Generating Station, Toledo,
				  Ohio;
				

			 

 

	 
			
				
				   
				

			 	
				
				  e.
				

			 	
				
				  Seller’s 100% undivided
				  ownership interests in the 17 MW Bay Shore Peaking Facility, Toledo,
				  Ohio;
				

			 

 

	 
			
				
				   
				

			 	
				
				  f.
				

			 	
				
				  Seller’s 100% undivided
				  ownership interests in the 42 MW Richland Peaking Facility, Defiance,
				  Ohio
				

			 

 

	 
			
				
				   
				

			 	
				
				  g.
				

			 	
				
				  Seller’s 100% undivided
				  ownership interests in the 18 MW Stryker Peaking Facility, Springfield, Ohio;
				  and
				

			 

 

	 
		 
	 

	 
		 
	 

	 
	 

	 

	 
			
				
				   
				

			 	
				
				  h.
				

			 	
				
				  All of Seller’s right, title
				  and interest in and to any and all contracts, fuel, spare parts, inventories,
				  equipment, supplies and other assets associated with or necessary for the
				  ownership or operation of the foregoing.
				

			 

 

	 
		3. Debtor’s Obligations Secured Hereby. This Agreement secures the obligations of the Debtor
		to make payment of principal and interest due on the Secured Promissory
		Note.
	 

	 
		4. Debtor’s Covenants. The Debtor agrees and covenants as follows:
	 

	 
		a. Further Encumbrances. Until the obligations secured under this Agreement and
		the Note shall have been repaid in full, the Debtor shall not grant a security
		interest in any of the Collateral other than to Secured Party or execute any
		financing statements covering any of the Collateral in favor of any person
		other than Secured Party without Secured Party’s prior written
		consent.
	 

	 
		b. Insurance on Collateral. The Collateral will be insured at the Debtor’s
		expense against all risks and in such amounts as commonly insured by owners of
		like property and to the extent Debtor can obtain such insurance at
		commercially reasonable rates and terms. The Debtor agrees to pay or cause to
		be paid, when due, all premiums for such insurance and all taxes, license fees
		and other charges in connection with the Collateral.
	 

	 
		c. Perfection of Security Interest. The Debtor shall execute and deliver such financing
		statements and other documents as Secured Party reasonably deems necessary to
		create, perfect and continue perfection of the security interest in the
		Collateral contemplated hereby.
	 

	 
		d. Fees and Costs.
		Upon any Event of Default, the Debtor shall pay all expenses, including
		reasonable attorneys’ fees, incurred by Secured Party in the preservation,
		realization, enforcement or exercise of any of Secured Party’s rights
		under this Agreement.
	 

	 
		5. Remedies of Default. Upon the occurrence of an Event of Default, Secured
		Party shall have all rights, privileges, powers and remedies provided by law,
		including, but not limited to, exercise of any or all of the remedies
		hereinafter set forth. Such rights, privileges, powers and remedies shall be
		cumulative, and no single or partial exercise of any of them shall preclude the
		further or other exercise of the same or any of them.
	 

	 
		a. Payment Under Note. Secured Party may declare the aggregate unpaid
		principal balance of the Secured Promissory Note together with all unpaid
		accrued interest thereon, to be immediately due and payable, and thereupon all
		such amounts shall be and become immediately due and payable to Secured
		Party.
	 

	 
		b. Possession of Collateral. Secured Party may take possession of any or all of the
		Collateral covered hereby.
	 

	 
		6. Power of Attorney. The Debtor hereby appoints Secured Party the
		attorney-in-fact of the Debtor to prepare, sign and file or record, for the
		Debtor in the Debtor’s name, any financing statements, applications for
		registration and other similar instruments and documents and to take any other
		action deemed by Secured Party necessary or desirable in order to perfect or
		continue perfection of the security interest of Secured Party hereunder, and to
		perform any obligations of the Debtor hereunder, at the Debtor’s expense,
		but without obligation to do so.
	 

	 
		 
	 

	 
		 
	 

	 
	 

	 

	 
		7. Successors and Assigns. This Agreement shall inure to the benefit of Secured
		Party and its successors and assigns, and shall be biding upon the Debtor and
		its successor and assigns.
	 

	 
		8. Presentment, etc. The Debtor hereby waives presentment, protest,, notice
		of protest, notice of dishonor and notice of nonpayment with respect to any
		proceeds to which Secured Party is entitled hereunder and any rights to direct
		the application of payments for security for indebtedness of the Debtor
		hereunder, or indebtedness of customers of the Debtor, and hereby waives any
		right to require proceedings against others or to require exhaustion of
		security.
	 

	 
		9. Notices. All
		notices and other communications hereunder shall be in writing and shall be
		deemed to have been duly given upon receipt if: (a) mailed by certified or
		registered mail, return receipt requested; (b) sent for overnight delivery
		by Federal Express or other express carrier, (c) sent via facsimile; or
		(d) delivered personally, addressed as follows or to such other address or
		addresses of which the respective party shall have notified the other.
	 

	 
		If to Secured Party:
	 

	 
		The Toledo Edison Company
	 

	 
		c/o FirstEnergy Corp.
	 

	 
		76 South Main Street
	 

	 
		Akron, Ohio 44308
	 

	 
		Attn: President
	 

	 
		Facsimile: (330) 384-3875
	 

	 
		 
	 

	 
		If to Debtor:
	 

	 
		FirstEnergy Generation Corp.
	 

	 
		c/o FirstEnergy Corp.
	 

	 
		76 South Main Street
	 

	 
		Akron, Ohio 44308
	 

	 
		Attn: President
	 

	 
		Facsimile: (330) 384-3875
	 

	 
		10. Reliance on Statement of a Secured Party. In performing any obligations hereunder or in
		responding to any notice provided hereunder, the Debtor shall be entitled to
		rely on any statement made by Secured Party or its agent unless the Debtor has
		actual knowledge that the party making such statement is exceeding his or its
		authority to act as the agent of Secured Party.
	 

	 
		11. Governing Law.
		This Agreement shall be governed by the substantive laws of the State of Ohio,
		without giving effect to any conflict of laws principles.
	 

	 
		12. Enforcement. If
		any portion of this Agreement be determined to be invalid or unenforceable, the
		remainder shall be valid and enforceable to the maximum extent possible with
		the same effect as if the invalid or unenforceable portion were omitted from
		this Agreement.
	 

	 
		13. Headings. The
		headings set forth in this Agreement are for the convenience of the parties and
		shall not by themselves determine the interpretation or construction of this
		Agreement.
	 

	 
		 
	 

	 
		 
	 

	 
	 

	 

	 
		IN WITNESS WHEREOF, the parties have
		executed this Agreement on the date set forth above.
	 

	 
		 
	 

	 
		 
	 

	 
			
				
				   
				

			 	
				
				   
				

			 	
				
				  DEBTOR:
				

			 
	 	 	 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  FIRSTENERGY GENERATION CORP.
				

			 
	
				
				

			 	
				
				   
				

			 	
				
				  By: 
				

			 	
				
				  
 /s/ Charles D. Lasky
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 

 

	 
		 
	 

	 
		 
	 

	 
			
				
				   
				

			 	
				
				   
				

			 	
				
				  SECURED PARTY:
				

			 
	 	 	 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  THE TOLEDO EDISON COMPANY
				

			 
	
				
				

			 	
				
				   
				

			 	
				
				  By: 
				

			 	
				
				  
 /s/ David W. WhiteheadEXHIBIT 10-25

[Execution Copy]

CEI NUCLEAR NOTE

 

	
                        $ 1,049,206,706.07
 	
                        December 16, 2005
 

FIRSTENERGY NUCLEAR GENERATION CORP., an Ohio corporation (the “Corporation”), for value received, hereby promises to pay to the order of THE CLEVELAND ELECTRIC ILLUMINATING COMPANY, an Ohio corporation, its successors and assigns (“Payee”), the principal amount of One Billion Forty-Nine Million Two Hundred Six Thousand Seven Hundred and Six Dollars and Seven Cents, ($1,049,206,706.07) and to pay interest (calculated on the basis of a 365-day year and charged on the basis of the actual number of days elapsed) on the unpaid balance of such principal amount at a rate per annum of 5.99% from the due date thereof until the obligation of the Corporation with respect to the payment thereof shall be discharged.

Interest on the outstanding principal amount of this Note shall be payable semi-annually in arrears, commencing on May 1, 2006, and on the 1st day of each May and November thereafter (the “Interest Payment Dates”). The principal balance of this Note, together with all accrued and unpaid interest thereon, on  shall be due and payable on November 1, 2025. 

Payments of principal and interest hereunder may be made either (a) in such coin or currency of the United States of America as at the time of payment shall be legal tender therein for the payment of public and private debts or (b) by way of the Corporation’s assumption of Payee’s liabilities and obligations under certain Pollution Control Revenue Bonds of the Payee as set forth and described in the Purchase Agreement referred to in Section 1 below.

SECTION 1. The Note; Definitions. As used herein, the term “Note” refers to this Secured Promissory Note of the Corporation, dated the date hereof, and originally issued, executed and delivered by the Corporation in the principal amount of One Billion Forty-Nine Million Two Hundred Six Thousand Seven Hundred and Six Dollars and Seven Cents, ($1,049,206,706.07) pursuant to and subject to the terms of the Purchase and Sale Agreement dated as of May 18, 2005, as supplemented pursuant to that certain Letter Agreement, dated as of the date hereof (the “Purchase Agreement”), between the Corporation and Payee. Unless the context otherwise requires, the term “holder” is used herein to mean the person named as Payee herein. Capitalized terms used in this Note and not otherwise
defined herein shall have the meanings set forth in the Purchase Agreement.

SECTION 2. Security. This Note is secured pursuant to the terms and provisions of a Security Agreement of even date herewith.

SECTION 3. Prepayments. The Corporation may, at its option and subject to the giving of notice as provided herein, at any time prepay this Note, without penalty, in whole or in part upon payment of the principal amount thereof, together with interest on the principal amount so prepaid accrued to the prepayment date.

SECTION 4. Amendments and Waivers. This Note may not be modified or amended, except upon the written consent of the holder of this Note, and no covenant, agreement or 

 

 

condition contained in this Note may be waived (either generally or in a particular instance and either retroactively or prospectively) without the written consent of the holder of this Note.

SECTION 5. Events of Default.

(a) Each of the following shall constitute an “Event of Default” hereunder:

(i) Failure by Corporation to pay the interest on, or principal of, this Note within thirty (30) days of the date due; or

(ii) Filing by Corporation of a voluntary petition in bankruptcy or a voluntary petition or any answer seeking arrangement or readjustment of its debts or for any other relief under the Bankruptcy Reform Act of 1994, as amended (“Bankruptcy Code”), or under any other existing or future federal or state insolvency act or law, or any formal written consent to, approval of, or acquiescence in, any such petition or proceeding by Corporation, the application by Corporation for, or the appointment by consent or acquiescence of, a receiver or trustee of Corporation or for all or a substantial part of its property; the making by Corporation of an assignment for the benefit of creditors; or

(iii) Filing of any involuntary petition against Corporation in bankruptcy or seeking arrangement or readjustment of its debts or for any other relief under the Bankruptcy Code, or under any other existing or future federal or state insolvency act or law; or the involuntary appointment of a receiver or trustee of Corporation, or for all or a substantial part of the property of Corporation; and the continuance of any of such events for a period of ninety (90) days undismissed or undischarged; or

(iv) In the event that Debtor shall fail to perform any term, covenant or agreement, in any material respect, under the Purchase Agreement or the Security Agreement, each of even date herewith, between Corporation and Payee or under this Note.

(b) Upon the occurrence of an Event of Default, then, and in such event, Payee may declare this Note to be due and payable, whereupon the entire unpaid balance of principal, together with all accrued interest thereon, shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything herein to the contrary notwithstanding.

SECTION 6. Extension of Maturity. Should the principal of, or interest on, this Note become due and payable on other than a business day, the maturity thereof shall be extended to the next succeeding business day, and, in the case of principal, or an installment of principal, interest shall be payable thereon at the rate per annum herein specified during such extension. The term “business day” shall mean any day that is not a Saturday, Sunday or legal holiday in the State of Ohio.

SECTION 7. Governing Law. This Note shall be governed by, and construed in accordance with, the laws of the State of Ohio without regard to its rules or principles relating to conflicts of laws.

(signature page follows)

 

 

IN WITNESS WHEREOF, the Corporation has caused this Note to be executed on the date first set forth above.

 

	
                         
 	
                         
 	
                        FIRSTENERGY NUCLEAR GENERATION CORP.
 
	
                          
 	
                         
 	
                        By: 
 	
                        
 /s/ Richard H. Marsh

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