Document:

Unassociated Document

    Exhibit
      10.3

     

    ADMINISTRATION
      AGREEMENT

     

    BETWEEN

     

    MP
      ENVIRONMENTAL FUNDING LLC

     

    AND

     

    ALLEGHENY
      ENERGY SERVICE CORPORATION

     

    THIS
      ADMINISTRATION AGREEMENT dated as of [_________] (as amended, restated,
      supplemented or otherwise modified from time to time, this “Administration
      Agreement”),
      between MP Environmental Funding LLC, a limited liability company formed
      under the laws of the State of Delaware (the “Company”),
      and
      Allegheny Energy Service Corporation, a corporation formed under the laws of
      the
      State of West Virginia (the “Administrator”).
      Capitalized terms used but not otherwise defined herein have the meanings
      assigned to such terms in Appendix A to this Administration
      Agreement.

     

    WITNESSETH:

     

      WHEREAS,
      the Administrator was created to perform certain management duties on behalf
      of
      Allegheny Energy, Inc. (the “System”),
      its
      utility subsidiary companies and its non-utility subsidiary companies (the
      “Subsidiaries”);
      and

     

      WHEREAS,
      the Administrator offers to provide a central organization to furnish to the
      System, the Subsidiaries and the Company certain advisory, supervisory and
      other
      services in accordance with current practices and procedures; and

     

      WHEREAS,
      the Company wishes to accept the offer proposed by the
      Administrator;

     

      NOW,
      THEREFORE, in consideration of the mutual covenants and agreements herein
      contained, and for other good and valuable consideration, the receipt of which
      is hereby acknowledged, the parties hereto, intending to be reasonably bound,
      hereby agree as follows:

     

    Section
      1.  Duties
      of Administrator; Management Services.
      The
      Administrator hereby offers to furnish to the Company the services detailed
      on
      Exhibit I attached hereto and made a part hereof.

     

    Section
      2.  Compensation.
      (a) For
      all services rendered for the Company by the Administrator pursuant to this
      Administration Agreement, as compensation for the performance of the
      Administrator’s obligations under this Administration Agreement (including the
      compensation of Persons serving as Managers), the Administrator shall be
      entitled to an annual fee (the “Administration
      Fee”),
      payable by the Company in arrears proportionately on each Payment Date. The
      Administration Fee shall not exceed $_________ in the aggregate annually. The
      Administrator’s compensation and other expenses, including any indemnities,
      payable hereunder shall be paid from the Collection Account pursuant to
      Section 8.02(e) of the Indenture, 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    and
      the Administrator shall have no recourse against
      the Company for payment of such amounts other than in accordance with
      Section 8.02 of the Indenture. For services rendered to one or more of the
      companies in the System, the applicable approved allocation factor will be
      used.

     

    (b)  The
      payment for services rendered by the Administrator to the System, the
      Subsidiaries and the Company shall cover all the costs and expenses of the
      Administrator doing business, excluding only a return for the use of equity
      capital, and each Subsidiary, the System and the Company shall pay its direct
      or
      fair proportionate share for such services.

     

    (c)  Payment
      shall be made by the Company to the Administrator on each Payment Date.

     

    (d)  Nothing
      herein shall be construed to release the officers and directors of the Company
      from the performance of their respective duties or limit the exercise of their
      powers as prescribed by applicable Requirements of Law or
      otherwise.

     

    Section
      3.  Terms
      of the Agreement; Resignation and Removal of Administrator.

     

    (a) This
      Administration Agreement shall continue in full force and effect until the
      payment in full of the Environmental Control Bonds and any Additional
      Securities, although the Company may terminate this Administration Agreement
      at
      any time with or without notice for any cause deemed by it to be sufficient,
      provided, however, that removal of the Administrator pursuant to this
Section 3
      shall be
      effective until (i) a Successor Administrator shall have been appointed by
      the
      Company and (ii) such Successor Administrator has agreed in writing to be bound
      by the terms of this Administration Agreement in the same manner as the
      Administrator is bound hereunder, and the PSCWV Condition set forth in Section
      7(b) of this Administration Agreement has been satisfied.

     

    (b)  The
      Administrator shall not resign from the obligations and duties imposed on it
      as
      Administrator under this Administration Agreement except upon a determination
      that the performance of its duties under this Administration Agreement shall
      no
      longer be permissible under applicable Requirements of Law. Notice of any such
      determination permitting the resignation of the Administrator shall be
      communicated to the Company, the PSCWV, the Indenture Trustee and each Rating
      Agency at the earliest practicable time (and, if such communication is not
      in
      writing, shall be confirmed in writing at the earliest practicable time), and
      any such determination shall be evidenced by an Opinion of Counsel to such
      effect delivered to the Company, the PSCWV and the Indenture Trustee
      concurrently with or promptly after such notice.

     

    (c)  Subject
      to satisfaction of the PSCWV Condition set forth in Section 7(b)
      of this
      Administration Agreement, the Administrator may be removed by the Indenture
      Trustee, as assignee of the Issuer, immediately upon written notice of
      termination to the Administrator if any of the following events shall
      occur.

     

    (i)  the
      Administrator defaults in the performance of any of its duties under this
      Administration Agreement and, after notice of such default, fails to cure such
      default within 30 days (or, if such default cannot be cured in such time, fails
      to give within 30 

     

    
      
        
        

      

      
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    days
      such assurance of cure as shall be reasonably
      satisfactory to the Company and the PSCWV); or

     

    (ii)  an
      Insolvency Event occurs with respect to the Administrator;

     

    The
      Administrator agrees that if an event specified in clause (ii) of this
Section 3(c)
      occurs,
      it shall give written notice thereof to the Company, the PSCWV and the Indenture
      Trustee within seven days after the occurrence of such event.

     

    (d)  No
      resignation or removal of the Administrator pursuant to this Section 3
      shall be
      effective until a Successor Administrator shall have been appointed by the
      Company, the Rating Agency Condition shall have been satisfied with respect
      to
      the proposed appointment, the PSCWV Condition set forth in Section 7(b)
      of this
      Administration Agreement has been satisfied, and such Successor Administrator
      shall have agreed in writing to be bound by the terms of this Administration
      Agreement in the same manner as the Administrator is bound
      hereunder.

     

    (e)  No
      Administrator default may be waived without satisfaction of the PSCWV Condition
      set forth in Section 7(b)
      of this
      Administration Agreement.

     

    Section
      4.  Action
      Upon Termination; Resignation or Removal.
      Promptly upon the effective date of termination of this Administration Agreement
      pursuant to Section 3(a),
      the
      resignation of the Administrator pursuant to Section 3(b)
      or the
      removal of the Administrator under Section 3(c),
      the
      Administrator shall be entitled to be paid all fees and reimbursable expenses
      accruing to it to the date of such termination, resignation or removal. The
      Administrator shall forthwith upon such termination pursuant to Section 3(a)
      deliver
      to the Company all property and documents of or relating to the Collateral
      then
      in the custody of the Administrator. In the event of the resignation of the
      Administrator pursuant to Section 3(b)
      or the
      removal of the Administrator under Section 3(c),
      the
      Administrator shall cooperate with the Company and take all reasonable steps
      requested to assist the Company in making an orderly transfer of the duties
      of
      the Administrator.

     

    Section
      5.  Enforcement
      by PSCWV.
      The
      Administrator acknowledges that the PSCWV has authority to enforce all
      provisions of this Administration Agreement for the benefit of Customers
      pursuant to the Financing Order to the extent permitted by applicable
      Requirements of Law. Notwithstanding anything to the contrary contained in
      this
      Administration Agreement, for the avoidance of doubt, any right, remedy or
      claim
      to which any Customer may be entitled pursuant to this Administration Agreement
      may be asserted or exercised only by the PSCWV for the benefit of such
      Customer.

     

    
      
        
        

      

      
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    Section
      6.  Indemnity.
      (a) The
      Company shall indemnify the Administrator, its shareholders, directors,
      officers, employees and Affiliates against all losses, claims, damages,
      penalties, judgments, liabilities and expenses (including, without limitation,
      all expenses of litigation or preparation therefor whether or not the
      Administrator is a party thereto) which any of them may pay or incur arising
      out
      of or relating to this Administration Agreement and the services called for
      herein; provided, however, that such indemnity shall not apply to any such
      loss,
      claim, damage, penalty, judgment, liability or expense resulting from the
      Administrator’s negligence or willful misconduct in the performance of its
      obligations hereunder.

     

    (b)  The
      Administrator shall indemnify the Company and the Indenture Trustee and their
      respective officers, officials, directors, managers and employees (each, an
      “Indemnified
      Party”)
      against all losses, claims, damages, penalties, judgments, liabilities and
      expenses (including, without limitation, all expenses of litigation or
      preparation therefor whether or not such Indemnified Party is a party thereto)
      which any of them may incur as a result of the Administrator’s gross negligence
      or willful misconduct in the performance of its obligations
      hereunder.

     

    Section
      7.  Amendment.
      (a) Subject
      to Section 7(b),
      this
      Administration Agreement may be amended by the Administrator and the Company,
      with the consent of the Indenture Trustee and the satisfaction of the Rating
      Agency Condition. Promptly after the execution of any such amendment and
      consent, the Company shall furnish written notification of the substance of
      such
      amendment and consent to each of the Rating Agencies. Prior to the execution
      of
      any amendment to this Administration Agreement, the Company 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
      Administration Agreement and the Opinion of Counsel referred to in
      Section 3.10 of the Servicing Agreement. Subject to Section 7(b),
      the
      Company and each Trustee may, but shall not be obligated to, enter into any
      such
      amendment which affects their own rights, duties or immunities under this
      Administration Agreement or otherwise.

     

    (b)  Notwithstanding
      anything to the contrary in Section 7(a),
      no
      amendment or modification of this Administration Agreement shall be effective
      unless the process set forth in this Section
      7(b)
      has been
      followed.

     

    (i)  The
      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 7(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 Company 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;

     

    
      
        
        

      

      
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    (B)  an
      Officers’ Certificate stating that the proposed amendment or modification has
      been approved by all parties to this Administration Agreement; and

     

    (C)  a
      statement identifying the person to whom the PSCWV or its authorized
      representative is to address any response to the proposed amendment or
      modification or to request additional time.

     

    (ii)  The
      PSCWV
      or its authorized representative shall, within 15 days of receiving the
      notification complying with Section
      7(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
      7(b)(i)(C)
      above,
      or

     

    (C)  be
      conclusively deemed to have consented to the proposed amendment or
      modification,

     

    unless,
      within 15 days of receiving the notification complying with Section
      7(b)(i)
      above,
      the PSCWV or its authorized representative delivers to the office of the person
      specified in Section
      7(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
      7(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
      7(b)(ii),
      or, if
      such period has been extended pursuant hereto, the first day after the
      expiration of such period as so extended.

     

    (iii)  Following
      the delivery of a notice to the PSCWV by the Company under Section
      7(b)(i)
      above,
      the Company shall have the right at any time to withdraw from the PSCWV further
      consideration of any notification of a proposed amendment or modification.
      Such
      withdrawal shall be evidenced by the prompt written notice thereof by the
      Company to the PSCWV, the Indenture Trustee and the Servicer.

     

    (c)  For
      the
      purpose of this Section 7,
      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.

     

    
      
        
        

      

      
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    Section
      8.  Successors
      and Assigns.
      This
      Administration Agreement may not be assigned by the Administrator unless such
      assignment is previously consented to in writing by the Company, the PSCWV
      and
      the Indenture Trustee and subject to satisfaction of the Rating Agency Condition
      in respect thereof. Any assignment with such consent and satisfaction, if
      accepted by the assignee, shall bind the assignee hereunder in the same manner
      as the Administrator is bound hereunder. Notwithstanding the foregoing, this
      Administration Agreement may be assigned by the Administrator without the
      consent of the Company, the PSCWV or the Indenture Trustee to a corporation
      or
      other organization that is a successor (by merger, consolidation or purchase
      of
      assets) to the Administrator or to any affiliate of the Administrator; provided
      that such successor corporation or other organization executes and delivers
      to
      the Company and the PSCWV a written agreement in which such corporation or
      other
      organization agrees to be bound hereunder by the terms of said assignment in
      the
      same manner as the Administrator is bound hereunder. Subject to the foregoing,
      this Administration Agreement shall bind any successors or assigns of the
      parties hereto.

     

    Section
      9.  Administrator
      as Independent Contractor.
      For all
      purposes of this Administration Agreement, the Administrator shall be an
      independent contractor and shall not be subject to the supervision of the
      Company with respect to the manner in which it accomplishes the performance
      of
      its obligations hereunder. Unless expressly authorized by the Company, the
      Administrator shall have no authority to act for or represent the Company in
      any
      way and shall not otherwise be deemed an agent of the Company.

     

    Section
      10.  No
      Joint Venture.
      Nothing
      contained in this Administration Agreement shall (a) constitute the
      Administrator and the Company as members of any partnership, joint venture,
      association, syndicate, unincorporated business or other separate entity,
      (b) be construed to impose any liability as such on any of them or
      (c) be deemed to confer on any of them any express, implied or apparent
      authority to incur any obligation or liability on behalf of the
      others.

     

    Section
      11.  Other
      Activities as Administrator.
      Nothing
      herein shall prevent the Administrator or its Affiliates from engaging in other
      businesses or, in its sole discretion, from acting in a similar capacity as
      an
      administrator for any other person or entity even though such person or entity
      may engage in business activities similar to those of the Company.

     

    Section
      12.  Assignment
      to Indenture Trustee.
      The
      Administrator hereby acknowledges and consents to the mortgage, pledge,
      assignment and grant of a security interest by the Company to the Indenture
      Trustee pursuant to the Indenture for the benefit of the Environmental Control
      Bondholders of any and all of the Company’s rights hereunder to the Indenture
      Trustee. 

     

    Section
      13.  Nonpetition
      Covenants.
      Notwithstanding any prior termination of this Administration Agreement or the
      Indenture, but subject to a court of competent jurisdiction’s rights, upon
      application by the Company or the Indenture Trustee, to order the sequestration
      and payment of Environmental Control Revenues arising with respect to the
      Transferred Environmental Control Property, notwithstanding any bankruptcy,
      reorganization or other insolvency proceedings with respect to the debtor,
      pledgor or transferor of the Transferred Environmental Control Property pursuant
      to Section 24-2-4e(k)(4) of the Statute, the Administrator shall not, prior
      to the date which is one year and one day after the termination of 

     

    
      
        
        

      

      
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    the
      Indenture, petition or otherwise invoke or cause
      the Company to invoke the process of any court or government authority for
      the
      purpose of commencing or sustaining a case against the Company under the federal
      or state bankruptcy, insolvency or similar law or appointing a receiver,
      liquidator, assignee, trustee, custodian, sequestrator or other similar official
      of the Company or any substantial part of the property of the Company, or
      ordering the winding up or liquidation of the affairs of the
      Company.

     

    Section
      14.  GOVERNING
      LAW.
      THIS
      ADMINISTRATION 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.

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the Company and the Administrator have caused this
      Administration Agreement to be signed by its duly authorized officers, effective
      as of the date first written above.

     

    
      	 	 	 
	 	MP
              ENVIRONMENTAL
              FUNDING LLC
	 
 	 
 	 
 
	 	By:  	 
	 	
              
                
                          
                  [Authorized Officer]

            

    

     

     

    Attest:

     

    
      	              
              	 	 
	
              Assistant
                Secretary

            	 	 

    

     

    
      
        	 	 	 
	 	ALLEGHENY
                ENERGY
                SERVICE CORPORATION
	 
 	 
 	 
 
	 	By:  	 
	 	
                
                  
                          
                    [Authorized Officer]

              

      

       

    

    
       

    

    Attest:

     

    
      	                
              	 	 
	
              Assistant
                Secretary

            	 	 

    

     

    
      
        
        

      

      
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    Exhibit I

     

    Duties
      of the Administrator

     

    In
      accordance with the terms and conditions of the Administration Agreement dated
      as of [_________] (as amended, restated, supplemented or otherwise modified
      from
      time to time, the “Administration
      Agreement”),
      the
      Administrator agrees to perform all its duties as Administrator under the
      Administration Agreement in accordance with the terms of the Administration
      Agreement and applicable Requirements of Law. In addition, the Administrator
      shall consult with the Company regarding the Company’s duties under the
      applicable Basic Documents. Unless otherwise notified in writing by the Company,
      the Administrator shall prepare for execution by the Company, or shall cause
      the
      preparation by other appropriate Persons of all such documents, reports,
      filings, instruments, certificates and opinions as it shall be the duty of
      the
      Company to prepare, file or deliver pursuant to any Basic Document.

     

    (a)  In
      furtherance of the foregoing, the Administrator shall take all appropriate
      action that it is the duty of the Company to take pursuant to the Indenture
      including, without limitation, such of the foregoing as are required with
      respect to the following matters under the Indenture:

     

    (1)  the
      preparation of or obtaining of the documents and instruments required for
      authentication of the Bonds, if any, and delivery of the same to the Indenture
      Trustee as specified in Sections 2.01, 2.02, 2.04, 2.06 and 2.10 of the
      Indenture;

     

    (2)  the
      duty
      to keep the Bond Register and to give the Indenture Trustee notice of any
      appointment of a new Bond Registrar and the location, or change in location,
      of
      the Bond Register as specified in Section 2.05 of the
      Indenture;

     

    (3)  the
      fixing or causing to be fixed of any special record date and the notification
      of
      each affected Bondholder with respect to special record dates, Payment Dates,
      and the amount of defaulted interest to be paid, if any as specified in
      Section 2.08(c) of the Indenture;

     

    (4)  the
      maintenance of an office or agency in the Borough of Manhattan, City of New
      York, where the Bonds may be surrendered for registration of transfer or
      exchange, and where notices and demands to or upon the Company in respect of
      the
      Bonds and the Indenture may be served as specified in Section 3.02 of the
      Indenture;

     

    (5)  the
      duty
      to cause newly appointed Paying Agents, if any, to deliver to the Indenture
      Trustee the instrument specified in the Indenture regarding funds held in trust
      as specified in Section 3.03 of the Indenture;

     

    (6)  the
      direction to Paying Agents to pay to the Indenture Trustee all sums held in
      trust by such Paying Agents as specified Section 3.03 of the
      Indenture;

     

    (7)  the
      preparation and filing of all documents and instruments necessary to maintain
      the Company’s existence, good standing, rights and franchises as a limited
      liability company under the laws of the State of Delaware (unless the Company
      becomes, or any successor Company under the Indenture is or becomes, organized
      under the laws of any other State or of the United States of America, in which
      case the Administrator will prepare and file all  

     

    
      
        
        

      

      
        Exh
          I-1

        
          

        

      

      
        
        

      

    

     

    documents
      and instruments necessary to maintain such
      Company’s existence, good standing, rights and franchises under the laws of such
      other jurisdiction), as specified in Section 3.04 of the
      Indenture;

     

    (8)  the
      obtaining and preservation of the Company’s qualification to do business in each
      jurisdiction in which such qualification is or shall be necessary to protect
      the
      validity and enforceability of the Indenture, the Bonds, the Collateral and
      each
      other instrument or agreement included in the Collateral, as specified in
      Section 3.04 of the Indenture;

     

    (9)  the
      preparation of all supplements and amendments to the Indenture, filings with
      the
      PSCWV and the Secretary of State of the State of West Virginia pursuant to
      the
      Statute, financing statements, continuation statements, instruments of further
      assurance and other instruments, in accordance with Section 3.05 of the
      Indenture, necessary to protect the Collateral;

     

    (10)  the
      preparation and filing of all documents required under the Statute relating
      to
      the security interest in the Transferred Environmental Control Property as
      specified in Section 3.05 of the Indenture;

     

    (11)  the
      obtaining of the Opinions of Counsel and the delivery of such Opinions of
      Counsel, in accordance with Section 3.06 of the Indenture, as to the
      Collateral, and the annual delivery of the Officers’ Certificate and certain
      other statements, in accordance with Section 3.09 of the Indenture, as to
      compliance with the Indenture;

     

    (12)  the
      identification to the Indenture Trustee in an Officer’s Certificate of any
      Person with whom the Company has contracted to perform its duties under the
      Indenture, as specified in Section 3.07(b) of the Indenture;

     

    (13)  the
      annual preparation and delivery of an Officer’s Certificate to the Indenture
      Trustee, Mon Power and the Rating Agencies as to compliance with conditions
      and
      covenants under the Indenture, as specified in Section 3.09 of the
      Indenture;

     

    (14)  the
      preparation and obtaining of documents and instruments required for the release
      of the Company from its obligations under the Indenture, as specified in
      Section 3.11(b) of the Indenture;

     

    (15)  the
      delivery of notice to the Indenture Trustee, Mon Power and the Rating Agencies
      of each Default or Event of Default, as specified in Section 3.17 of the
      Indenture;

     

    (16)  the
      taking of all lawful action to enforce the Company’s rights under the Transfer
      Agreement, the Sale Agreement and the Servicing Agreement and to compel and
      secure performance by the Transferor, the Seller and the Servicer, of each
      of
      their obligations to the Company or under the Transfer Agreement, the Sale
      Agreement or the Servicing Agreement, as applicable, as specified in
      Sections 3.20(a) of the Indenture;

     

    (17)  the
      taking of all lawful action that the Indenture Trustee may request following
      a
      default by any of the Transferor, the Seller or the Servicer, of any of their
      obligations to the Company under the Transfer Agreement, the Sale Agreement
      or
      the Servicing Agreement, as applicable, as specified in Section 3.20(f) of
      the Indenture;

     

    
      
        
        

      

      
        Exh
          I-2

        
          

        

      

      
        
        

      

    

     

    (18)  the
      delivery of notice to the Indenture Trustee and the Rating Agencies of a
      Servicer Default under the Servicing Agreement and the taking of all reasonable
      steps available to the Company to remedy such Servicer Default, as specified
      in
      Section 3.20(g) of the Indenture;

     

    (19)  the
      preparation of an Officers’ Certificate and an Independent Certificate relating
      to (i) the satisfaction and discharge of the Indenture under Section 4.01
      of the Indenture or (ii) the exercise of the Legal Defeasance Option or the
      Covenant Defeasance Option under Section 4.02 of the
      Indenture;

     

    (20)  the
      delivery to a Responsible Officer of the Indenture Trustee and the Rating
      Agencies, within five days after an Authorized Officer of the Company has
      knowledge of the occurrence thereof, written notice in the form of an Officers’
Certificate of any event which with the giving of notice and the lapse of time
      would become an Event of Default under clause (iv) of the definition of
“Event of Default” set forth in Section 5.01 of the Indenture, its status and
      what action the Company is taking or proposes to take with respect
      thereto;

     

    (21)  the
      furnishing to the Indenture Trustee of (i) each Record Date with respect to
      each Series and (ii) three months after the last Record Date with respect to
      each Series, the names and addresses of Environmental Control Bondholders during
      any period when the Indenture Trustee is not the Bond Registrar as specified
      in
      Section 7.01 of the Indenture; 

     

    (22)  to
      the
      extent not required to be performed by the Servicer, the preparation and, after
      execution by the Company, the filing with the Indenture Trustee of the annual
      reports and of the information, documents and other reports as specified in
      Section 7.03 of the Indenture;

     

    (23)  the
      notification of the Indenture Trustee if and when the Bonds are listed on any
      stock exchange as specified in Section 7.04 of the Indenture;

     

    (24)  the
      preparation, obtaining or filing of the instruments, opinions and certificates
      and other documents required for the release of Collateral as specified in
      Section 8.03 of the Indenture;

     

    (25)  the
      opening of one or more segregated trust accounts in the Indenture Trustee’s
      name, the preparation of Issuer Orders, and the obtaining of Opinions of Counsel
      and the taking of all other actions necessary with respect to investment and
      reinvestment of funds in the Collection Account as specified in Sections 8.02
      and 8.04 of the Indenture; 

     

    (26)  the
      preparation of Issuer Requests and Officers’ Certificates and the obtaining of
      Opinions of Counsel and Independent Certificates, if necessary, for the release
      of the Collateral as specified in Sections 8.03 and 8.04 of the
      Indenture;

     

    (27)  the
      preparation and delivery of Officers’ Certificates, Issuer Requests, Opinions of
      Counsel and Independent Certificates for the release of property from the lien
      of the Indenture as specified in Section 8.03(c) of the
      Indenture;

     

    (28)  the
      appointment of a firm of Independent certified public accountants of recognized
      national reputation for purposes of preparing and delivering the reports or
      certificates 

     

    
      
        
        

      

      
        Exh
          I-3

        
          

        

      

      
        
        

      

    

     

    of
      such accountants required by the Indenture and the
      related Series Supplements as specified in Section 8.05 of the
      Indenture;

     

    (29)  the
      preparation of Issuer Orders, the obtaining of Officers’ Certificates and
      Opinions of Counsel with respect to the execution of supplemental indentures
      as
      specified in Sections 9.01 and 9.02 of the Indenture;

     

    (30)  the
      preparation of new Bonds conforming to any supplemental indenture as specified
      in Section 9.04 of the Indenture;

     

    (31)  the
      preparation of all Officers’ Certificates, Opinions of Counsel and Independent
      Certificates with respect to any requests by the Company to the Indenture
      Trustee to take any action under the Indenture as specified in
      Section 11.01 of the Indenture; and

     

    (32)  the
      notification of the Indenture Trustee of any notice received by the Company
      from
      the Environmental Control Bondholders, and the delivery of any notices to
      relevant parties at the addresses specified in Section 11.04 of the
      Indenture.

     

    (b)  The
      Administrator shall also take all appropriate action that it is the duty of
      the
      Company to take pursuant to the Issuer LLC Agreement. 

     

    (c)  The
      Administrator shall also take all appropriate action that it is the duty of
      the
      Company to take pursuant to the Underwriting Agreement.

     

    (d)  In
      carrying out the foregoing duties or any of its other obligations under the
      Administration Agreement, the Administrator may enter into transactions with
      or
      otherwise deal with any of its Affiliates; provided, however, that the terms
      of
      any such transactions or dealings shall be, in the Administrator’s reasonable
      opinion, no less favorable to the Company than would be available from
      unaffiliated parties.

     

    (e)  With
      respect to matters that in the reasonable judgment of the Administrator are
      non-ministerial, the Administrator shall not take any action unless the
      Administrator shall have notified the Company of the proposed action and the
      Company shall have consented. For the purpose of the preceding sentence,
“non-ministerial matters” shall include, without limitation:

     

    (1)  the
      amendment of, or any supplement to, the Indenture; 

     

    (2)  the
      initiation of any action, claim or lawsuit by the Company and the compromise
      of
      any action, claim or lawsuit brought by or against the Company (other than
      in
      connection with the collection of the Environmental Control
      Charge);

     

    (3)  the
      amendment, change or modification of the Basic Documents; 

     

    (4)  the
      appointment of successor Bond Registrars, successor Paying Agents and successor
      Indenture Trustees pursuant to the Indenture or the appointment of successor
      Administrators or Successor Servicers, or the consent to the assignment by
      the
      Bond Registrar, Paying Agent or Indenture Trustee of its obligations under
      the
      Indenture; and

     

    
      
        
        

      

      
        Exh
          I-4

        
          

        

      

      
        
        

      

    

     

    (5)  the
      removal of the Indenture Trustee.

     

    (f)  Notwithstanding
      anything to the contrary in the Administration Agreement, the Administrator
      shall not be obligated to, and hereby agrees that it shall not, take any action
      that the Company directs the Administrator not to take on its
      behalf.

     

    (g)  The
      Administrator shall maintain appropriate books of account and records relating
      to services performed hereunder, which books of account and records shall be
      accessible for inspection by the Company and the Indenture Trustee at any time
      during normal business hours.

     

    (h)  During
      the term of the Administration Agreement, the Administrator shall make available
      to or provide the Company with such facilities as are necessary to conduct
      the
      business of the Company and to comply with the terms of the Basic Documents.
      Such facilities shall include office space to serve as the principal place
      of
      business of the Company. Initially such office space will be located at
      [address]. All facilities provided to the Company hereunder shall be provided
      without warranty of any kind.

     

    
      
        
        

      

      
        Exh
          I-5

        
          

        

      

      
        
        

      

    

     

    
      Table
        of Contents

       

    

    
      	 	 	 	 	 	 	
              Page

            	 
	 	 	 	 	 	 	 	 
	
              Section
                1.

            	 	 	
              Duties
                of Administrator; Management Services

            	 	 	
              1

            	 
	 	 	 	 	 	 	 	 
	
              Section
                2.

            	 	 	
              Compensation

            	 	 	
              1

            	 
	 	 	 	 	 	 	 	 
	
              Section
                3.

            	 	 	
              Terms
                of the Agreement; Resignation and Removal of
                Administrator

            	 	 	
              2

            	 
	 	 	 	 	 	 	 	 
	
              Section
                4.

            	 	 	
              Action
                Upon Termination; Resignation or Removal

            	 	 	
              3

            	 
	 	 	 	 	 	 	 	 
	
              Section
                5.

            	 	 	
              Enforcement
                by PSCWV

            	 	 	
              3

            	 
	 	 	 	 	 	 	 	 
	
              Section
                6.

            	 	 	
              Indemnity

            	 	 	
              4

            	 
	 	 	 	 	 	 	 	 
	
              Section
                7.

            	 	 	
              Amendment

            	 	 	
              4

            	 
	 	 	 	 	 	 	 	 
	
              Section
                8.

            	 	 	
              Successors
                and Assigns

            	 	 	
              6

            	 
	 	 	 	 	 	 	 	 
	
              Section
                9.

            	 	 	
              Administrator
                as Independent Contractor

            	 	 	
              6

            	 
	 	 	 	 	 	 	 	 
	
              Section
                10.

            	 	 	
              No
                Joint Venture

            	 	 	
              6

            	 
	 	 	 	 	 	 	 	 
	
              Section
                11.

            	 	 	
              Other
                Activities as Administrator

            	 	 	
              6

            	 
	 	 	 	 	 	 	 	 
	
              Section
                12.

            	 	 	
              Assignment
                to Indenture Trustee

            	 	 	
              6

            	 
	 	 	 	 	 	 	 	 
	
              Section
                13.

            	 	 	
              GOVERNING
                LAW

            	 	 	
              7

            	 
	 	 	 	 	 	 	 	 
	
              Appendix
                A

            	 	 	
              Master
                Definitions

            	 	 	 	 

    

     

    
      
        
        

      

      
        iUnassociated Document

    Exhibit
      10.5

    

    
      

      

    

     

    ENVIRONMENTAL
      CONTROL PROPERTY 

    TRANSFER
      AGREEMENT

     

    between

     

    MP
      RENAISSANCE FUNDING, LLC 

    Seller

     

    and

     

    MONONGAHELA
      POWER COMPANY 

    Transferor

     

    Dated
      as
      of [__________]

     

     

    
      

      

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF CONTENTS

    

      
        	 	 	 	 	 	 	
                Page

              	 
	 	 	 	 	 	 	 	 
	 	 	 	
                ARTICLE
                  I

              	 	 	 	 
	 	 	 	
                Definitions

              	 	 	 	 
	 	 	 	 	 	 	 	 
	
                Section
                  1.01.

              	 	 	
                Definitions

              	 	 	
                1

              	 
	
                Section
                  1.02.

              	 	 	
                Other
                  Definitional Provisions

              	 	 	
                2

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  II

              	 
	
                Conveyance
                  of Environmental Control Property

              	 
	 	 	 	 	 	 	 	 
	
                Section
                  2.01.

              	 	 	
                Conveyance
                  of Initial Environmental Control Property

              	 	 	
                2

              	 
	
                Section
                  2.02.

              	 	 	
                Conveyance
                  of Subsequent Environmental Control Property

              	 	 	
                2

              	 
	
                Section
                  2.03.

              	 	 	
                Conditions
                  to Conveyance of Environmental Control Property

              	 	 	
                2

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  III

              	 
	
                Representations
                  and Warranties of Transferor

              	 
	 	 	 	 	 	 	 	 
	
                Section
                  3.01.

              	 	 	
                Organization
                  and Good Standing

              	 	 	
                4

              	 
	
                Section
                  3.02.

              	 	 	
                Due
                  Qualification

              	 	 	
                4

              	 
	
                Section
                  3.03.

              	 	 	
                Power
                  and Authority

              	 	 	
                4

              	 
	
                Section
                  3.04.

              	 	 	
                Binding
                  Obligation

              	 	 	
                4

              	 
	
                Section
                  3.05.

              	 	 	
                No
                  Violation

              	 	 	
                4

              	 
	
                Section
                  3.06.

              	 	 	
                No
                  Proceedings

              	 	 	
                5

              	 
	
                Section
                  3.07.

              	 	 	
                Approvals

              	 	 	
                5

              	 
	
                Section
                  3.08.

              	 	 	
                The
                  Environmental Control Property

              	 	 	
                5

              	 
	
                Section
                  3.09.

              	 	 	
                Representations
                  and Warranties of Seller

              	 	 	
                8

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  IV

              	 
	
                Covenants
                  of the Transferor

              	 
	 	 	 	 	 	 	 	 
	
                Section
                  4.01.

              	 	 	
                Corporate
                  Existence

              	 	 	
                8

              	 
	
                Section
                  4.02.

              	 	 	
                No
                  Liens or Conveyances

              	 	 	
                8

              	 
	
                Section
                  4.03.

              	 	 	
                Delivery
                  of Collections

              	 	 	
                9

              	 
	
                Section
                  4.04.

              	 	 	
                Notice
                  of Liens

              	 	 	
                9

              	 
	
                Section
                  4.05.

              	 	 	
                Compliance
                  with Law

              	 	 	
                9

              	 
	
                Section
                  4.06.

              	 	 	
                Covenants
                  Related to Environmental Control Property

              	 	 	
                9

              	 
	
                Section
                  4.07.

              	 	 	
                Notice
                  of Indemnification Events

              	 	 	
                10

              	 
	
                Section
                  4.08.

              	 	 	
                Protection
                  of Title

              	 	 	
                10

              	 
	
                Section
                  4.09.

              	 	 	
                Taxes

              	 	 	
                10

              	 
	
                Section
                  4.10.

              	 	 	
                Third
                  Parties

              	 	 	
                11

              	 

      

       

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

       

      
        	
                ARTICLE
                  V

              	 
	
                The
                  Transferor

              	 
	 	 	 	 	 	 	 	 
	
                Section
                  5.01.

              	 	 	
                Liability
                  of Transferor; Indemnities

              	 	 	
                11

              	 
	
                Section
                  5.02.

              	 	 	
                Merger
                  or Consolidation of, or Assumption of the Obligations of,
                  Transferor

              	 	 	
                12

              	 
	
                Section
                  5.03.

              	 	 	
                Limitation
                  on Liability of Transferor and Others

              	 	 	
                13

              	 
	
                Section
                  5.04.

              	 	 	
                Opinions
                  of Counsel

              	 	 	
                13

              	 
	 	 	 	 	 	 	 	 
	
                ARTICLE
                  VI

              	 
	
                Miscellaneous
                  Provisions

              	 
	 	 	 	 	 	 	 	 
	
                Section
                  6.01.

              	 	 	
                Amendment

              	 	 	
                14

              	 
	
                Section
                  6.02.

              	 	 	
                Notices

              	 	 	
                14

              	 
	
                Section
                  6.03.

              	 	 	
                Assignment

              	 	 	
                16

              	 
	
                Section
                  6.04.

              	 	 	
                Limitations
                  on Rights of Others

              	 	 	
                16

              	 
	
                Section
                  6.05.

              	 	 	
                Severability

              	 	 	
                16

              	 
	
                Section
                  6.06.

              	 	 	
                Separate
                  Counterparts

              	 	 	
                16

              	 
	
                Section
                  6.07.

              	 	 	
                Headings

              	 	 	
                16

              	 
	
                Section
                  6.08.

              	 	 	
                Governing
                  Law

              	 	 	
                16

              	 
	
                Section
                  6.09.

              	 	 	
                Assignment
                  to Issuer and to Indenture Trustee

              	 	 	
                17

              	 
	
                Section
                  6.10.

              	 	 	
                Nonpetition
                  Covenant

              	 	 	
                17

              	 
	
                Section
                  6.11.

              	 	 	
                Perfection

              	 	 	
                17

              	 
	
                Section
                  6.12.

              	 	 	
                Limitation
                  of Liability

              	 	 	
                17

              	 
	 	 	 	
                 

              	 	 	 	 
	
                Exhibit
                  A

              	 	 	
                Pending
                  Litigation

              	 	 	 	 
	
                Appendix
                  A

              	 	 	
                Master
                  Definitions

              	 	 	 	 

      

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

    ENVIRONMENTAL
      CONTROL PROPERTY TRANSFER AGREEMENT dated as of [__________] (as amended,
      restated, supplemented or otherwise modified from time to time, “this
      Agreement”),
      between MP RENAISSANCE FUNDING, LLC, a Delaware limited liability company (the
      “Seller”),
      and
      MONONGAHELA POWER COMPANY, an Ohio corporation, and its successors in interest
      to the extent permitted hereunder, as Transferor (the “Transferor”).

     

    WHEREAS
      the Transferor desires to contribute from time to time Environmental Control
      Property created pursuant to the Statute and the Financing Order; and

     

    WHEREAS
      the Seller is willing to acquire the Environmental Control Property;
      and

     

    WHEREAS
      the Seller intends to sell the Transferred Environmental Control Property to
      the
      Issuer and the Issuer intends to purchase the Transferred Environmental Control
      Property from the Seller pursuant to the Sale Agreement; and

     

    WHEREAS
      the Issuer, in order to finance the purchase of the Transferred 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 Transferred
      Environmental Control Property to the Indenture Trustee for the benefit of
      the
      Environmental Control Bondholders; and

     

    WHEREAS
      the Seller has determined that the transactions contemplated by the Basic
      Documents are in the best interest of the Seller and its creditors and represent
      a prudent and advisable course of action that does not impair the rights and
      interests of the Seller’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 to this Agreement. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    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”.

     

    (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 Initial Environmental Control Property.
      (a)
      Subject
      to the conditions specified in Section 2.03,
      the
      Transferor hereby irrevocably contributes, sells, transfers, assigns, sets
      over
      and otherwise conveys to the Seller, without recourse (subject to the
      obligations herein), all right, title and interest of the Transferor in and
      to
      the Initial Environmental Control Property created pursuant to the Statute
      and
      in accordance with the Financing Order (such contribution, sale, transfer,
      assignment, set over and conveyance of the Initial 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
      Initial Environmental Control Property, as the same may be adjusted from time
      to
      time). Such contribution, sale, transfer, assignment, set over and conveyance
      is
      expressly an absolute transfer of all of the Transferor’s right, title and
      interest (as in a true sale), and not as a pledge or other secured transaction,
      of the Initial Environmental Control Property. The Transferor agrees and
      confirms that after giving effect to the contribution it has no rights in the
      Initial Environmental Control Property to which a security interest of creditors
      of the Transferor could attach because it has sold all rights in the Initial
      Environmental Control Property to the Seller pursuant to Section 24-2-4e(m)(1)
      of the Statute.

     

    (b)  In
      exchange for the contribution of the Initial Environmental Control Property
      from
      the Transferor, the Seller will distribute the net proceeds of the issuance
      and
      sale of the Environmental Control Bonds to the Transferor as a
      dividend.

     

    Section
      2.02.  Conveyance
      of Subsequent Environmental Control Property.
      The
      Transferor may from time to time offer to contribute or convey additional
      Environmental Control Property to the Seller, subject to the conditions
      specified in Section 2.03.
      Such
      Subsequent Environmental Control Property, if any, shall be contributed or
      conveyed to the Seller effective on the Subsequent Contribution 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
      Transferor shall be permitted to contribute and transfer Environmental Control
      

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Property
      to the Seller only upon the satisfaction or
      waiver of each of the following conditions:

     

    (i)  as
      of the
      Initial Contribution Date or the Subsequent Contribution Date, as applicable,
      the Transferor was not insolvent and will not have been made insolvent by such
      contribution and the Transferor is not aware of any pending insolvency with
      respect to itself;

     

    (ii)  as
      of the
      Initial Contribution Date or the Subsequent Contribution Date, as applicable,
      no
      breach by the Transferor of its representations, warranties or covenants in
      this
      Agreement shall exist; and no Servicer Default shall have occurred and be
      continuing;

     

    (iii)  as
      of the
      Initial Contribution Date or the Subsequent Contribution Date, as applicable,
      (A) the Issuer shall have sufficient funds available to pay the purchase
      price for the Transferred Environmental Control Property to be conveyed on
      such
      date pursuant to the Sale Agreement 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;

     

    (iv)  on
      or
      prior to the Initial Contribution Date or the Subsequent Contribution Date,
      as
      applicable, the Transferor shall have taken all action required to transfer
      to
      the Seller ownership of the Environmental Control Property to be conveyed on
      such date, free and clear of all Liens, other than Liens created by the Issuer
      under the Indenture, the Seller shall have taken any action required for the
      Seller to transfer to the Issuer ownership of the Transferred Environmental
      Control Property to be conveyed on such date, free and clear of all Liens,
      other
      than Liens created by the Issuer under the Indenture, 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;

     

    (v)  in
      the
      case of a conveyance of Subsequent Environmental Control Property only, on
      or
      prior to such Subsequent Contribution Date, the Transferor shall have provided
      the Seller, the Issuer and the Rating Agencies with a timely Addition
      Notice;

     

    (vi)  the
      Transferor shall have delivered to the Rating Agencies, the Seller and the
      Issuer (A) an Opinion of Counsel with respect to the transfer of the
      Environmental Control Property then being conveyed to the Seller and
      (B) the Opinion of Counsel required by Section 5.04(a);
      and

     

    (vii)  the
      Transferor shall have delivered to the Indenture Trustee, the Seller and the
      Issuer an Officers’ Certificate confirming the satisfaction of each condition
      precedent specified in this Section 2.03.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      III

    Representations
      and Warranties of Transferor

     

    As
      of the
      Initial Contribution Date, or as of any Subsequent Contribution Date, as
      applicable, the Transferor makes the following representations and warranties
      on
      which the Seller has relied and will rely in acquiring Environmental Control
      Property. The Transferor agrees and acknowledges that the following
      representations and warranties are also for the benefit of the Issuer, as
      assignee of the Seller pursuant to the Sale Agreement, and the Indenture
      Trustee, as collateral assignee of the Issuer pursuant to the Indenture. The
      representations and warranties shall survive the conveyance of Environmental
      Control Property to the Seller, the sale of the Transferred Environmental
      Control Property from the Seller to the Issuer pursuant to the Sale Agreement
      and the pledges and assignments thereof permitted hereby.

     

    Section
      3.01.  Organization
      and Good Standing.
      The
      Transferor is a corporation duly organized, validly existing and in good
      standing under the laws of the State of West 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
      Transferor 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 Transferor’s
      business, operations, assets, revenues or properties).

     

    Section
      3.03.  Power
      and Authority.
      The
      Transferor has the corporate power and authority to execute and deliver this
      Agreement and to carry out its terms; the Transferor has full corporate power
      and authority to own the Environmental Control Property and contribute, convey
      and assign the Initial Environmental Control Property, in the case of the
      Initial Contribution Date, and the Subsequent Environmental Control Property,
      in
      the case of each Subsequent Contribution Date, as applicable, and the Transferor
      has duly authorized such contribution, conveyance and assignment to the Seller
      by all necessary corporate action; and the execution, delivery and performance
      of this Agreement have been duly authorized by the Transferor by all necessary
      corporate action.

     

    Section
      3.04.  Binding
      Obligation.
      This
      Agreement constitutes a legal, valid and binding obligation of the Transferor
      enforceable against the Transferor in accordance with its terms subject to
      bankruptcy, receivership, insolvency, fraudulent transfer, reorganization,
      moratorium or other laws 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).

     

    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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    lapse
      of time) a default under, the articles of
      incorporation or by-laws of the Transferor, or any indenture, agreement or
      other
      instrument to which the Transferor 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; nor, to the Transferor’s knowledge, violate any
      Requirements of Law applicable to the Transferor of any Governmental Authority
      having jurisdiction over the Transferor or its properties.

     

    Section
      3.06.  No
      Proceedings.
      Except
      as described in Exhibit A, there are no proceedings or investigations pending
      or, to the Transferor’s best knowledge, threatened, before any Governmental
      Authority having jurisdiction over the Transferor 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 or the Environmental
      Control Bonds or (iii)  seeking any determination or ruling that could
      reasonably be expected to materially and adversely affect the performance by
      the
      Transferor 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 Transferor of
      this
      Agreement, the performance by the Transferor of the transactions contemplated
      hereby or the fulfillment by the Transferor of the terms hereof, except those
      that have been obtained or made.

     

    Section
      3.08.  The
      Environmental Control Property.
      (a) Information.
      All
      information provided by the Transferor to the Seller in writing with respect
      to
      the Environmental Control Property is correct in all material
      respects.

     

    (b)  Effect
      of Transfer.
      The
      transfers and assignments herein contemplated constitute absolute transfers
      of
      the Initial Environmental Control Property or the Subsequent Environmental
      Control Property, as the case may be, from the Transferor to the Seller, and
      the
      beneficial interest in and title to the Environmental Control Property would
      not
      be part of the debtor’s estate in the event of the filing of a bankruptcy
      petition by or against the Transferor under any bankruptcy law.

     

    (c)  Transfer
      Filings.
      

     

    (i)  The
      Transferor is the sole owner of the Environmental Control Property being
      contributed to the Seller on the Initial Contribution Date or Subsequent
      Contribution Date, as applicable.

     

    (ii)  The
      Environmental Control Property has been validly transferred to the Seller free
      and clear of all Liens other than Liens created by the Issuer under the
      Indenture.

     

    
      
        
        

      

      
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      (iii)  All
        filings, including filings with the Secretary of State of West Virginia under
        the Statute, necessary in any jurisdiction to give the Seller a valid ownership
        interest in the Environmental Control Property, free and clear of all Liens
        of
        the Transferor or anyone claiming through the Transferor, and to give the
        Seller
        a first priority perfected security interest in the Environmental Control
        Property have been made, other than any such filings (except for filings
        with
        the Secretary of State of the State of West Virginia, Delaware and Nevada,
        under
        the Statute and UCC, as applicable) the absence of which would not have a
        material adverse impact on (A) the ability of the Servicer to collect
        Environmental Control Charges with respect to the Environmental Control Property
        or (B) the rights of the Seller with respect to the Environmental Control
        Property.

    

     

    (d)  Irrevocable;
      Process Valid; No Litigation; Etc.
      

     

    (i)  The
      Financing Order has been issued by the PSCWV in accordance with the Statute,
      the
      Financing Order and the process by which it was issued comply with all
      applicable Requirements of Law, and Order is in full force and effect, final,
      and not subject to appeal by any Person.

     

    (ii)  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 and, accordingly, the provisions of the Financing Order relating to
      Environmental Control Property and Environmental Control Charges are not
      revocable by the PSCWV.

     

    (iii)  (A) 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 Environmental
      Control Property or, except as allowed in connection with the True-Up
      Adjustments, 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 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. (B) 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.
      (C) 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 (x) the terms of the Indenture
      or
      the Environmental 

     

    
      
        
        

      

      
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    Control
      Bonds or (y) 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.

     

    (iv)  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 the Environmental Control Charges or any rights arising under any of them
      or
      which seeks to enjoin the performance of any obligations under the Financing
      Order.

     

    (v)  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.

     

    (vi)  Except
      as
      described in Exhibit A, there are no proceedings or investigations challenging
      the Financing Order or the Statute pending, or to the best of the Transferor’s
      knowledge, threatened before any Governmental Authority having jurisdiction
      over
      the Transferor or its properties.

     

    (vii)  No
      failure on the Initial Contribution Date or any Subsequent Contribution 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.

     

    (viii)  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.

     

    (e)  Assumptions.
      The
      assumptions used in calculating Environmental Control Charges are reasonable
      and
      made in good faith.

     

    (f)  Creation
      of Environmental Control Property.
      

     

    (i)  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.

     

    (ii)  The
      Environmental Control Property consists of (A) the rights and interests of
      the Transferor, the Seller, as assignee of the Transferor, 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
      

     

    
      
        
        

      

      
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    Costs
      determined to be recoverable in the Financing
      Order, and any interest in such rights and interests; (B) the right under
      the Financing Order, to obtain True-Up Adjustments; and (C) all revenues,
      receipts, collections, rights to payment, payments, moneys, claims or other
      proceeds arising from the rights and interests described in clauses (A) and
      (B)
      above.

     

    (iii)  The
      Financing Order, including the right to collect Environmental Control Charges,
      has been declared to be irrevocable by the PSCWV.

     

    (g)  Solvency.
      After
      giving effect to the contribution of any Environmental Control Property
      hereunder, the Transferor (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 unreasonably small 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
      3.09.  Representations
      and Warranties of Seller.
      The
      representations and warranties made by the Seller under the Sale Agreement
      are
      true and correct in all material respects.

     

    ARTICLE
      IV

    Covenants
      of the Transferor

     

    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 Transferor 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 Transferor 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 Transferor 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 Transferor 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 Seller, the Issuer, as
      assignee of the Seller, and the Indenture Trustee, as collateral assignee of
      the
      Issuer, in, to and under the Environmental Control Property and the Transferred
      Environmental Control 

     

    
      
        
        

      

      
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    Property,
      as the case may be, whether now existing or hereafter created, against all
      claims of third parties claiming through or under the Transferor.

     

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

     

    Section
      4.04.  Notice
      of Liens.
      The
      Transferor 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 Sale Agreement, the Indenture or the other
      Basic Documents.

     

    Section
      4.05.  Compliance
      with Law.
      The
      Transferor hereby agrees to comply with its organizational or governing
      documents and all Requirements of Law applicable to the Transferor, except
      to
      the extent that failure to so comply would not have a material adverse affect
      on
      the Seller’s, the Issuer’s or the Indenture Trustee’s interests in the
      Environmental Control Property or the Transferred Environmental Control
      Property, as applicable, under any of the Basic Documents or the Transferor’s
      performance of its obligations hereunder or under any of the other Basic
      Documents to which it is a party.

     

    Section
      4.06.  Covenants
      Related to Environmental Control Property.
      (a)
      So long
      as Environmental Control Bonds of any Series remain Outstanding, the Transferor
      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 Transferor
      shall (i) 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 Transferor or any of its Affiliates
      and (ii) clearly disclose the effects of all transactions among the
      Transferor, the Seller and the Issuer in accordance with GAAP.

     

    (c)  The
      Transferor agrees that upon the conveyance by the Transferor of the
      Environmental Control Property to the Seller, (i) to the fullest extent
      permitted by applicable Requirements of Law, the Seller shall have all of the
      rights originally held by the Transferor 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 Transferor
      and
      (ii) any payment by any Customer or Third Party to the Seller 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 Transferor.

     

    
      
        
        

      

      
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    (d)  So
      long
      as Environmental Control Bonds of any Series remain Outstanding, (i) the
      Transferor shall not make any statement or reference in respect of the
      Environmental Control Property that is inconsistent with the ownership thereof
      by the Seller or, after the sale of the Transferred Environmental Control
      Property by the Seller to the Issuer, the Issuer and (ii) the Transferor
      shall not take any action in respect of the Environmental Control Property
      except solely in its capacity as the Servicer thereof pursuant to the Servicing
      Agreement or as otherwise contemplated by the Basic Documents.

     

    Section
      4.07.  Notice
      of Indemnification Events.
      The
      Transferor shall deliver to the Seller, 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
      4.08.  Protection
      of Title.
      The
      Transferor 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
      law fully to preserve, maintain, and protect the interests of the Seller 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 Transferor to the Seller. The Transferor
      shall deliver (or cause to be delivered) to the Seller file-stamped copies
      of,
      or filing receipts for, any document filed as provided above, as soon as
      available following such filing. The Transferor 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 Seller, 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.

     

    Section
      4.09.  Taxes.
      So long
      as Environmental Control Bonds of any Series remain Outstanding, the Transferor
      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
      Transferor or one of its subsidiaries is contesting the same in good faith
      by
      appropriate proceedings promptly instituted and diligently conducted and if
      the
      Transferor or such subsidiary has established appropriate reserves as shall
      be
      required in conformity with generally accepted accounting
      principles.

     

    
      
        
        

      

      
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    Section
      4.10.  Third
      Parties.
      So long
      as Environmental Control Bonds of any Series remain Outstanding, the Transferor
      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.

     

    ARTICLE
      V

    The
      Transferor

     

    Section
      5.01.  Liability
      of Transferor; Indemnities.
      (a)
      The
      Transferor shall be liable in accordance herewith only to the extent of the
      obligations specifically undertaken by the Transferor under this
      Agreement.

     

    (b)  The
      Transferor shall indemnify the Seller, the Issuer, the Indenture Trustee, for
      itself and on behalf of the Environmental Control Bondholders, and each of
      their
      respective members, managers, officers, directors and agents for, and defend
      and
      hold harmless 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 as a result of the acquisition or holding
      of the Environmental Control Property by the Seller or the Transferred
      Environmental Control Property by the Issuer or the issuance and sale by the
      Issuer of the Environmental Control Bonds, or any other transactions
      contemplated herein, including any sales, gross receipts, general corporation,
      tangible personal property, privilege or license taxes.

     

    (c)  The
      Transferor shall indemnify the Seller, the Issuer, the Indenture Trustee, on
      behalf of the Environmental Control Bondholders, and each of their respective
      members, managers, officers, directors, and agents for, and defend and hold
      harmless each such Person from and against, 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 and the amount of any
      deposits to the Issuer required to have been made in accordance with the terms
      of the Basic Documents which are not made when so required, in either case
      as a
      result of the Transferor’s breach of any of its representations, warranties or
      covenants contained in this Agreement.

     

    (d)  The
      Transferor shall indemnify the Seller, the Issuer, the Indenture Trustee, on
      behalf of the Environmental Control Bondholders, and each of their respective
      members, managers, officers, directors, 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 (i) the
      Transferor’s willful misconduct, bad faith or negligence in the performance of
      its duties or observance of its covenants under this Agreement, (ii) the
      Transferor’s reckless disregard of its obligations and duties under this
      Agreement or (iii) the Transferor’s breach of any of its representations or
      warranties contained in this Agreement (any event described in any of the
      foregoing clauses (i), (ii) or (iii), an “Indemnification
      Event”).
      Amounts on deposit in 

     

    
      
        
        

      

      
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    the
      Excess Funds Subaccount and the Capital
      Subaccount shall not be available to satisfy any Losses for which
      indemnification is provided in this Agreement.

     

    (e)  The
      Transferor 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 Transferor’s representations or warranties in this
      Agreement, (ii) any breach of the Transferor’s covenants in this Agreement,
      (iii) any failure of the Seller’s representations in the Sale Agreement or
      (iv) by breach of the Seller’s covenants in the Sale Agreement. The
      Transferor 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.

     

    (f)  The
      Transferor 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
      Transferor’s indemnification obligations under Section 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 reasonable attorney’s fees and expenses of the Indenture Trustee). Any
      amounts indemnified by the Transferor pursuant to its obligations under
Sections
      5.01(b), (c), (d) or (e)
      shall be
      deposited into the Collection Account and distributed in accordance with the
      Indenture. 

     

    Section
      5.02.  Merger
      or Consolidation of, or Assumption of the Obligations of,
      Transferor.
      Any
      Person (a) into which the Transferor may be merged or consolidated and
      which succeeds to all or any material part of the electric distribution business
      of the Transferor, (b) which results from the division of the Transferor
      into two or more Persons and which succeeds to all or any material part of
      the
      electric distribution business of the Transferor, (c) which may result from
      any merger or consolidation to which the Transferor shall be a party and which
      succeeds to all or any material part of the electric distribution business
      of
      the Transferor, (d) which may succeed to the properties and assets of the
      Transferor substantially as a whole and which succeeds to all or any material
      part of the electric distribution business of the Transferor or (e) which
      may otherwise succeed to all or any material part of the electric distribution
      business of the Transferor, which Person in any of the foregoing cases executes
      an agreement of assumption to perform every obligation of the Transferor under
      this Agreement, shall be the successor 

     

    
      
        
        

      

      
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    to
      the Transferor 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 Transferor shall have
      delivered to the Seller, 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 and
      (iv) the Transferor shall have delivered to the Seller, 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 Transferor 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 Seller
      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. 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 clause (a), (b), (c), (d) or (e) above.

     

    Section
      5.03.  Limitation
      on Liability of Transferor and Others.
      The
      Transferor and any director or officer or agent of the Transferor, 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
      Transferor 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.

     

    Section
      5.04.  Opinions
      of Counsel.
      The
      Transferor shall deliver to the Seller, 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
      Contribution 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 Seller 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 Initial Contribution 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 pursuant
      to the Statute, have been executed and filed that are necessary to preserve
      fully and protect fully the interest of the Seller in the Environmental Control
      Property, and reciting the details of such filings or referring to prior
      Opinions of Counsel 

     

    
      
        
        

      

      
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    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.

     

    ARTICLE
      VI

    Miscellaneous
      Provisions

     

    Section
      6.01.  Amendment.

     

    (a)  Subject
      to Section
      6.01(b)
      below,
      this Agreement may be amended by the Transferor and the Seller, 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 Transferor 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
      Officers’ Certificate stating that the proposed amendment or modification has
      been approved by all parties to this Agreement; and

     

    
      
        
        

      

      
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    (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

     

    (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 Transferor, 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
      Transferor, to Monongahela Power Company, 1310 Fairmont Avenue, Fairmont, West
      Virginia 26554, Attention of [__________], (b) in the case of the Seller,
      to MP Renaissance Funding, 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    LLC,
      [2325B Renaissance Drive, Las Vegas, Nevada 89119], Attention of
      [__________], (c) in the case of the Issuer, to MP Environmental Funding
      LLC, [2325B Renaissance Drive, Las Vegas, Nevada 89119], Attention of
      [__________], (d) in the case of the Indenture Trustee, at the Corporate
      Trust Office, (e) in the case of Moody’s, to Moody’s Investors Service, Inc.,[
      ABS Monitoring Department], 99 Church Street, New York, New York 10007,
      (f) in the case of Standard & Poor’s, to Standard & Poor’s Ratings
      Services, a division of The McGraw-Hill Companies, Inc., 55 Water Street, New
      York, New York 10041, Attention of [Asset Backed Surveillance Department],
      (g) in the case of Fitch, to Fitch, Inc., One State Street Plaza, New York,
      New York 10004, Attention of ABS Surveillance, and (h) in the case of the PSCWV,
      to 201 Brooks Street, P.O. Box 812, Charleston, West Virginia 25325, Attention
      of [___________]; 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 Transferor.

     

    Section
      6.04.  Limitations
      on Rights of Others.
      The
      provisions of this Agreement are solely for the benefit of the Transferor,
      the
      Seller, PSCWV, the Issuer 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.

     

    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.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    Section
      6.09.  Assignment
      to Issuer and to Indenture Trustee.
      (a)
      The
      Transferor hereby acknowledges and consents to the sale, transfer, assignment
      and conveyance of all right, title and interest of the Seller in, to and under
      the Transferred Environmental Control Property and the proceeds thereof and
      the
      assignment of any or all of the Seller’s rights hereunder to the Issuer pursuant
      to the Sale Agreement.

     

    (b)  The
      Transferor hereby acknowledges and consents to the mortgage, pledge, assignment
      and grant of a security interest by the Issuer (as assignee of the Seller)
      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 Transferred Environmental Control Property and the proceeds
      thereof and the assignment of any or all of the Issuer’s rights under the Sale
      Agreement 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 Transferor 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 Seller or the Issuer to invoke the process of any court or government
      authority for the purpose of commencing or sustaining a case against the Seller
      or 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 Seller or the Issuer or any substantial part
      of
      the property of the Seller or the Issuer, or ordering the winding up or
      liquidation of the affairs of the Seller or 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 (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 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 [__________], 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
      [__________], individually or personally, to perform any covenant either
      expressed or implied contained herein, all such liability, if any, being
      expressly waived 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    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 [__________] 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.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

     

    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.

     

     

    MP
      RENAISSANCE FUNDING, LLC, Seller,

     

    by:_________________________________

             
      Title:

     

     

    MONONGAHELA
      POWER COMPANY, Transferor,

     

    by:_________________________________

             
      Title:

     

     

    Acknowledged
      and Accepted:

     

    MP
      ENVIRONMENTAL FUNDING LLC, as Issuer of the Environmental Control
      Bonds,

     

    by:_________________________________

             
      Title:

     

     

    [__________],
      not in its individual capacity but solely as Indenture Trustee on behalf of
      the
      Environmental Control Bondholders,

     

    by:_________________________________

             
      Title:

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    PENDING
      LITIGATION

    

    

    

    None.

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