B-1
                                 LOAN AGREEMENT


                                     between


                     OHIO AIR QUALITY DEVELOPMENT AUTHORITY


                                       and


                      THE CINCINNATI GAS & ELECTRIC COMPANY




                                   $12,100,000
                                  State of Ohio
                      Air Quality Development Revenue Bonds
                                  2001 Series A
                 (The Cincinnati Gas & Electric Company Project)



                                      Dated

                                      as of

                                 August 1, 2001


                                      INDEX

                   (This Index is not a part of the Agreement
                but rather is for convenience of reference only.)
                                                                                                               Page

Preambles......................................................................1

                                                      ARTICLE I
                                                     DEFINITIONS

Section 1.1   Use of Defined Terms............................................ 2
Section 1.2   Definitions..................................................... 2
Section 1.3   Interpretation.................................................. 6
Section 1.4   Captions and Headings........................................... 6

                                            ARTICLE II
                                          REPRESENTATIONS

Section 2.1   Representations of the Authority................................ 7
Section 2.2   No Warranty by Authority of Condition or Suitability
               of the Project................................................. 7
Section 2.3   Representations and Covenants of the Company.................... 7

                                            ARTICLE III
                                    COMPLETION OF THE PROJECT;
                                       ISSUANCE OF THE BONDS

Section 3.1   Acquisition, Construction and Installation......................10
Section 3.2   Project Description.............................................10
Section 3.3   Issuance of the Bonds; Application of Proceeds..................11
Section 3.4   Disbursements from the Project Fund.............................11
Section 3.5   Company Required to Pay Costs in Event Project
               Fund Insufficient..............................................13
Section 3.6   Completion Date.................................................13
Section 3.7   Investment of Fund Moneys.......................................13
Section 3.8   Agreement as to Ownership of Project............................14
Section 3.9   Use of Project..................................................14
Section 3.10  Rebate Fund.....................................................14

                                            ARTICLE IV
                                 LOAN BY AUTHORITY; LOAN PAYMENTS;
                             ADDITIONAL PAYMENTS; AND CREDIT FACILITY

Section 4.1   Loan Repayment..................................................15
Section 4.2   Additional Payments.............................................15
Section 4.3   Place of Payments...............................................16
Section 4.4   Obligations Unconditional.......................................16
Section 4.5   Assignment of Revenues and Agreement ...........................16
Section 4.6   Credit Facility.................................................16
Section 4.7   Company's Option to Elect Rate Periods; Changes in the
               Auction Date and Length of Auction Periods.....................16
Section 4.8   Company's Obligation to Purchase Bonds .........................16

                                             ARTICLE V
                                ADDITIONAL AGREEMENTS AND COVENANTS

Section 5.1   Right of Inspection ............................................17
Section 5.2   Maintenance.....................................................17
Section 5.3   Removal of Portions of the Project Facilities...................17
Section 5.4   Operation of Project Facilities.................................17
Section 5.5   Insurance.......................................................18
Section 5.6   Workers' Compensation Coverage..................................18
Section 5.7   Damage; Destruction and Eminent Domain..........................18
Section 5.8   Company to Maintain its Corporate Existence;
              Conditions Under Which Exceptions Permitted.....................18
Section 5.9   Indemnification.................................................18
Section 5.10  Company Not to Adversely Affect Exclusion  of Interest on Bonds
               From Gross Income For Federal Income Tax Purposes..............19
Section 5.11  Use of Project Facilities.......................................19
Section 5.12  Assignment of Agreement in Whole or in Part by Company..........19
Section 5.13  Assignment of Agreement in Whole by Company (Novation)..........20

                                            ARTICLE VI
                                            REDEMPTION

Section 6.1   Optional Redemption.............................................22
Section 6.2   Extraordinary Optional Redemption...............................22
Section 6.3   Mandatory Redemption............................................23
Section 6.4   Notice of Redemption............................................23
Section 6.5   Actions by Authority............................................24

                                            ARTICLE VII
                                  EVENTS OF DEFAULT AND REMEDIES

Section 7.1   Events of Default...............................................25
Section 7.2   Remedies on Default.............................................26
Section 7.3   No Remedy Exclusive.............................................26
Section 7.4   Agreement to Pay Attorneys' Fees and Expenses...................27
Section 7.5   No Waiver.......................................................27
Section 7.6   Notice of Default...............................................27

                                           ARTICLE VIII
                                           MISCELLANEOUS

Section 8.1   Term of Agreement...............................................28
Section 8.2   Amounts Remaining in Funds......................................28
Section 8.3   Notices.........................................................28
Section 8.4   Extent of Covenants of the Authority; No Personal Liability.....28
Section 8.5   Binding Effect..................................................28
Section 8.6   Amendments and Supplements......................................28
Section 8.7   References to Credit Facility...................................29
Section 8.8   Continuing Disclosure...........................................29
Section 8.9   Execution Counterparts..........................................29
Section 8.10  Severability....................................................29
Section 8.11  Governing Law...................................................29

Signatures     ...............................................................30

Exhibit A - DESCRIPTION OF AIR QUALITY FACILITIES AT WILLIAM H. ZIMMER
               ELECTRIC GENERATING STATION...................................A-1

Exhibit B - FORM OF DISBURSEMENT REQUEST.....................................B-1

Schedule I

                                 LOAN AGREEMENT


     THIS LOAN  AGREEMENT  is made and entered into as of August 1, 2001 between
the OHIO AIR QUALITY DEVELOPMENT AUTHORITY (the "Authority"), a body politic and
corporate  organized and existing  under the laws of the State of Ohio,  and THE
CINCINNATI  GAS &  ELECTRIC  COMPANY  (the  "Company"),  a  public  utility  and
corporation  duly organized and validly  existing under the laws of the State of
Ohio.  Capitalized  terms used in the following  recitals are used as defined in
Article I of this Agreement.

     Pursuant  to Section 13 of Article  VIII of the Ohio  Constitution  and the
Act, the  Authority has  determined to issue,  sell and deliver the Bonds and to
lend the proceeds  derived from the sale thereof to the Company to assist in the
financing of its portion of the costs of the Project as defined below.

     The Company and the Authority each have full right and lawful  authority to
enter into this  Agreement and to perform and observe the  provisions  hereof on
their respective parts to be performed and observed.

     NOW   THEREFORE,   in   consideration   of  the  premises  and  the  mutual
representations  and  agreements  hereinafter  contained,  the Authority and the
Company agree as follows  (provided  that any obligation of the Authority or the
State  created by or arising  out of this  Agreement  shall never  constitute  a
general  debt  of the  Authority  or the  State  or give  rise to any  pecuniary
liability  of the  Authority  or the State but shall be  payable  solely  out of
Revenues,  including the Loan  Payments  made  pursuant  hereto and moneys drawn
under any Credit Facility):

                                    ARTICLE I

                                   DEFINITIONS

     Section  1.1.  Use of Defined  Terms.  In  addition  to the words and terms
defined  elsewhere in this  Agreement or by reference to another  document,  the
words and terms set forth in Section  1.2 hereof  shall  have the  meanings  set
forth therein  unless the context or use clearly  indicates  another  meaning or
intent.  Such definitions  shall be equally  applicable to both the singular and
plural forms of any of the words and terms defined therein.

     Section 1.2. Definitions. As used herein:

     "Act" means  Chapter  3706,  Ohio Revised Code, as enacted and amended from
time to time pursuant to Section 13 of Article VIII of the Ohio Constitution.

     "Additional  Payments" means the amounts required to be paid by the Company
pursuant to the provisions of Section 4.2 hereof.

     "Administration  Expenses" means the compensation (which compensation shall
not be  greater  than that  typically  charged  in  similar  circumstances)  and
reimbursement of reasonable  expenses and advances  payable to the Trustee,  the
Registrar,  the Remarketing  Agent,  the  Broker-Dealer,  the Auction Agent, any
Paying Agent and any Authenticating Agent.

     "Agreement" means this Loan Agreement, as amended or supplemented from time
to time.

     "Air Quality  Facility" or "Air Quality  Facilities" means those facilities
which are air quality  facilities  as defined in Section  3706.01,  Ohio Revised
Code.

     "Alternate  Credit  Facility" means an Alternate Credit Facility as defined
in the Indenture.

     "Auction Agent" means an Auction Agent as defined in the Indenture.

     "Authenticating  Agent"  means the  Authenticating  Agent as defined in the
Indenture.

     "Authority  Fee" means the  aggregate  fee of $82,750 due to the  Authority
from the Company in connection with the issuance of the Bonds hereunder.

     "Authorized   Company   Representative"   means  the   Authorized   Company
Representative as defined in the Indenture.

     "Bond Fund" means the Bond Fund created in the Indenture.

     "Bond  Purchase  Fund"  means  the Bond  Purchase  Fund as  defined  in the
Indenture.

     "Bond Resolution"  means the resolution of the Authority  providing for the
issuance of the Bonds and approving  this  Agreement,  the Indenture and related
matters, as amended or supplemented from time to time.

     "Bond Service  Charges"  means,  for any period or time,  the principal of,
premium,  if any,  and  interest  due on the Bonds for that period or payable at
that  time  whether  due at  maturity  or upon  acceleration  or  redemption  or
otherwise.

     "Bonds" means the $12,100,000 Air Quality  Development  Revenue Bonds, 2001
Series  A  (The  Cincinnati  Gas &  Electric  Company  Project),  issued  by the
Authority pursuant to the Bond Resolution and the Indenture.

     "Bonds  Outstanding"  or  "Outstanding  Bonds" means  Outstanding  Bonds as
defined in the Indenture.

     "Code"  means the Internal  Revenue  Code of 1986,  as amended from time to
time.  References  to the  Code  and  Sections  of  the  Code  include  relevant
applicable  regulations  and proposed  regulations  thereunder and any successor
provisions  to those  Sections,  regulations  or  proposed  regulations  and, in
addition, all applicable official rulings and judicial  determinations under the
foregoing applicable to the Bonds.

     "Completion  Date" means the date of completion of the Project as set forth
in the  certificate  to be  furnished  by the  Company  pursuant  to Section 3.6
hereof.

     "Construction  Period"  means  the  period  between  the  beginning  of the
acquisition,  construction,  installation,  equipping  and  improvement  of  the
Project and the Completion Date.

     "Continuing Disclosure Agreement" means the Continuing Disclosure Agreement
as defined in the Indenture.

     "Conversion Date" means the Conversion Date as defined in the Indenture.

     "Credit Facility" means a Credit Facility as defined in the Indenture.

     "Credit  Facility  Account" means the Credit Facility Account as defined in
the Indenture.

     "Credit  Facility  Issuer" means a Credit Facility Issuer as defined in the
Indenture.

     "Eligible  Investments"  means  Eligible  Investments  as  defined  in  the
Indenture.

     "Engineer"  means an engineer  (who may be an  employee of the  Company) or
engineering  firm qualified to practice the profession of engineering  under the
laws of the State and who or which is acceptable to the Trustee.

     "EPA"  means  the  Environmental  Protection  Agency  of the  State and any
successor body, agency, commission or department.

     "Event of Default" means any of the events described as an Event of Default
in Section 7.1 hereof.

     "Force Majeure" means any of the causes,  circumstances or events described
as constituting Force Majeure in Section 7.1 hereof.

     "Government  Obligations"  means  Government  Obligations as defined in the
Indenture.

     "Holder"  or  "Holder  of a Bond"  means the Person in whose name a Bond is
registered on the Register.

     "Indenture"  means the Trust  Indenture,  dated as of the same date as this
Agreement,  between the  Authority and the Trustee,  as amended or  supplemented
from time to time.

     "Interest  Rate for  Advances"  means the interest rate per year payable on
the Bonds.

     "Investment  Grade Rating" means a long-term debt rating by a Rating Agency
that is included in one of the four highest debt rating categories of the Rating
Agency,  provided that such rating categories shall mean generic  categories and
without  regard to or other  qualifications  of ratings within each such generic
rating category such as "+", "-", "1", "2" or "3".

     "Loan"  means the loan by the  Authority  to the  Company  of the  proceeds
received from the sale of the Bonds.

     "Loan  Payment  Date" means any date on which any Bond Service  Charges are
due and payable.

     "Loan  Payments"  means the  amounts  required to be paid by the Company in
repayment of the Loan pursuant to Section 4.1 hereof.

     "Notice Address" means:

 (a)  As to the Authority:      Ohio Air Quality Development Authority
                                1901 LeVeque Tower
                                50 West Broad Street
                                Columbus, Ohio  43215
                                Attention:  Executive Director

 (b)  As to the Company:        The Cincinnati Gas & Electric Company
                                P. O. Box 960
                                Cincinnati, Ohio  45201
                                Attention:  Treasurer

 (c)  As to the Trustee:        U.S. Bank National Association
                                425 Walnut Street, 6th Floor
                                Mail Location 5125
                                Cincinnati, Ohio  45202
                                Attention:  Corporate Trust Department

or such additional or different address,  notice of which is given under Section
8.3 hereof.

     "Opinion of Bond Counsel" means a written opinion of nationally  recognized
bond  counsel  selected  by the  Company  and  acceptable  to the Trustee who is
experienced  in matters  relating to the exclusion from gross income for federal
income  tax  purposes  of  interest  on  obligations  issued by states and their
political  subdivisions.  Bond  Counsel  may be  counsel  to the  Trustee or the
Company.

     "Original  Purchaser"  means  the  Original  Purchaser  as  defined  in the
Indenture.

     "Paying Agent" means the Paying Agent as defined in the Indenture.

     "Person" or words importing persons mean firms, associations,  partnerships
(including  without  limitation,  general  and  limited  partnerships),  limited
liability entities, joint ventures,  societies,  estates, trusts,  corporations,
public or governmental bodies, other legal entities and natural persons.

     "Plant" means the William H. Zimmer Electric Generating Station.

     "Project  Costs"  means the costs of the Project  specified  in Section 3.4
hereof.

     "Project"  or  "Project  Facilities"  means the real,  personal or real and
personal property, including undivided or other interests therein, identified in
the Project Description.

     "Project  Description"  means the  description  of the  Project  Facilities
attached hereto as Exhibit A, as the same may be amended in accordance with this
Agreement.

     "Project Fund" means the Project Fund created in the Indenture.

     "Project  Purposes"  means  the  purposes  of  Air  Quality  Facilities  as
described in the Act and as particularly described in Exhibit A hereto.

     "Project Site" means the William H. Zimmer Electric  Generating  Station in
Clermont County, Ohio.

     "Rate Period" means a Rate Period as defined in the Indenture.

     "Rating  Agency"  means Moody's and S&P, as each of these terms are defined
in the Indenture.

     "Rebate Fund" means the Rebate Fund created in the Indenture.

     "Register"  means the books kept and  maintained for the  registration  and
transfer of Bonds pursuant to Section 3.05 of the Indenture.

     "Registrar" means the Registrar as defined in the Indenture.

     "Reimbursement Agreement" means a Reimbursement Agreement as defined in the
Indenture.

     "Remarketing   Agent"  means  the  Remarketing  Agent  as  defined  in  the
Indenture.

     "Restructuring  Transaction"  means the sale or  transfer by the Company of
some or all of its electric  generating  facilities  and  associated  assets and
liabilities, which sale or transfer includes the Plant, to an entity or entities
organized and existing  under the laws of one of the states of the United States
of America,  the District of Columbia or under the laws of the United  States of
America and qualified to do business in the State (the "GenCo") if such transfer
or sale is, in the sole  discretion  of the  Company,  necessary or desirable in
order to permit the Company or an  affiliate  of the  Company to provide  retail
electric service in the State or to comply with any law of the State relating to
electric utility restructuring.

     "Revenues" means (a) the Loan Payments, (b) all other moneys received or to
be received by the Authority  (excluding  the  Authority  Fee) or the Trustee in
respect of repayment of the Loan,  including without limitation,  all moneys and
investments  in the Bond Fund,  (c) any moneys and  investments  in the  Project
Fund, and (d) all income and profit from the investment of the foregoing moneys.
The term  "Revenues"  does not include any moneys or  investments  in the Rebate
Fund or the Bond Purchase Fund.

     "State" means the State of Ohio.

     "Term Rate Period" means a Term Rate Period as defined in the Indenture.

     "Trustee"  means  U.S.  Bank  National  Association,  Cincinnati,  Ohio,  a
national banking  association duly organized and validly existing under the laws
of the United  States of America,  until a successor  Trustee  shall have become
such pursuant to the  applicable  provisions of the  Indenture,  and  thereafter
"Trustee" shall mean the successor  Trustee.  "Principal  Office" of the Trustee
shall mean a corporate trust office of the Trustee,  which office at the date of
issuance of the Bonds is located at its Notice Address.

     "Unassigned  Authority  Rights" means all of the rights of the Authority to
receive Additional  Payments under Section 4.2 hereof, to inspection pursuant to
Section  5.1 hereof,  to be held  harmless  and  indemnified  under  Section 5.9
hereof,  to be reimbursed  for  attorney's  fees and expenses  under Section 7.4
hereof and to give or withhold  consent to amendments,  changes,  modifications,
alterations  and  termination of this Agreement under Section 8.6 hereof and its
right to enforce such rights.

     "Variable Rate" means a Variable Rate as defined in the Indenture.

     Section 1.3.  Interpretation.  Any  reference  herein to the State,  to the
Authority or to any member or officer of either  includes  entities or officials
succeeding to their respective functions, duties or responsibilities pursuant to
or by operation of law or lawfully performing their functions.

     Any reference to a section or provision of the Constitution of the State or
the Act, or to a section,  provision or chapter of the Ohio Revised  Code, or to
any statute of the United States of America, includes that section, provision or
chapter as amended, modified,  revised,  supplemented or superseded from time to
time;  provided,  that  no  amendment,  modification,  revision,  supplement  or
superseding  section,  provision or chapter shall be applicable solely by reason
of this  provision,  if it constitutes in any way an impairment of the rights or
obligations  of  the  Authority,  the  State,  the  Holders,  the  Trustee,  the
Registrar, an Auction Agent, an Authenticating Agent, a Paying Agent, the Credit
Facility Issuer, the Remarketing Agent, or the Company under this Agreement, the
Indenture or the Bonds.

     Unless the context indicates otherwise, words importing the singular number
include  the  plural  number,  and vice  versa;  the terms  "hereof",  "hereby",
"herein",  "hereto",  "hereunder" and similar terms refer to this Agreement; and
the term "hereafter"  means after, and the term "heretofore"  means before,  the
date of delivery of the Bonds. Words of any gender include the correlative words
of the other genders, unless the sense indicates otherwise.

     Section  1.4.  Captions  and  Headings.  The  captions and headings in this
Agreement  are used solely for  convenience  of reference  and in no way define,
limit or describe the scope or intent of any  Articles,  Sections,  subsections,
paragraphs or subparagraphs or clauses hereof.

                               (End of Article I)



                                   ARTICLE II

                                 REPRESENTATIONS


     Section 2.1.  Representations  of the Authority.  The Authority  represents
that: (a) it is a body politic and corporate duly organized and validly existing
under  the  laws of the  State;  (b) it has  duly  accomplished  all  conditions
necessary  to be  accomplished  by it prior to the  issuance and delivery of the
Bonds and the execution and delivery of this Agreement and the Indenture; (c) it
is not in violation  of or in conflict  with any  provisions  of the laws of the
State which would impair its ability to carry out its  obligations  contained in
this  Agreement  or the  Indenture;  (d)  it is  empowered  to  enter  into  the
transactions  contemplated by this Agreement and the Indenture;  (e) it has duly
authorized  the  execution,  delivery and  performance of this Agreement and the
Indenture;  (f) it will do all  things  in its  power in order to  maintain  its
existence or assure the assumption of its  obligations  under this Agreement and
the Indenture by any successor public body; and (g) following reasonable notice,
a public hearing was held on August 14, 2001 with respect to the issuance of the
Bonds as required by Section 147(f) of the Code.

     Section 2.2. No Warranty by Authority  of Condition or  Suitability  of the
Project.  The Authority makes no warranty,  either express or implied, as to the
suitability or utilization of the Project for the Project Purposes, or as to the
condition  of the  Project or that the  Project is or will be  suitable  for the
Company's purposes or needs.

     Section 2.3.  Representations  and  Covenants  of the Company.  The Company
represents that:

          (a) The Company has been duly  incorporated and is validly existing as
     a corporation in good standing under the laws of the State,  with power and
     authority  (corporate  and other) to own its  properties  and  conduct  its
     business,  to  execute  and  deliver  this  Agreement  and to  perform  its
     obligations under this Agreement;

          (b) This Agreement and the Continuing  Disclosure  Agreement have each
     been duly  authorized,  executed  and  delivered  by the  Company  and this
     Agreement and the Continuing  Disclosure  Agreement each constitute a valid
     and legally  binding  obligation of the Company,  enforceable in accordance
     with their terms,  subject, as to enforcement,  to bankruptcy,  insolvency,
     reorganization  and other  laws of  general  applicability  relating  to or
     affecting creditors' rights and to general equity principles;

          (c) The  execution,  delivery and  performance  by the Company of this
     Agreement and the Continuing  Disclosure  Agreement and the consummation of
     the  transactions  contemplated  hereby and  thereby  will not  violate any
     provision of law or regulation applicable to the Company, or of any writ or
     decree of any court or governmental instrumentality,  or of the Articles of
     Incorporation,  as amended,  or the  Regulations of the Company,  or of any
     mortgage, indenture,  contract, agreement or other undertaking to which the
     Company is a party or which purports to be binding upon the Company or upon
     any of its assets;

          (d)  The  acquisition,   construction,   installation,  equipping  and
     improvement  of the Project  were not  commenced  prior to the  adoption of
     Resolution  No.  99-39 of the  Authority  on July 13, 1999  evidencing  the
     intent of the  Authority  to issue the  Bonds;  however,  with  respect  to
     certain  costs of the  Project  that were paid or  incurred on and prior to
     such date,  such costs will not be  financed  with the net  proceeds of the
     Bonds  except to the extent that they (i) consist of costs paid on or after
     60 days prior to July 13, 1999 or (ii) consist,  in an amount not in excess
     of 20%  of  the  aggregate  issue  price  of  the  Bonds,  of  "preliminary
     expenditures"  within  the  meaning of Treas.  Reg.ss.1.150-2(f)(2),  which
     include  architectural,  engineering,  surveying,  soil testing and similar
     costs  that  were  incurred  prior  to   commencement   of  acquisition  or
     construction of the Project, other than land acquisition,  site preparation
     and similar costs incident to commencement of acquisition or  construction.
     Moreover,  no costs of the Project to be financed  with the net proceeds of
     the Bonds were originally  expended more than 3 years prior to the issuance
     date of the Bonds;

          (e) The Project to be acquired,  constructed,  equipped, installed and
     improved at the Project Site, as provided under this Agreement, constitutes
     Air  Quality  Facilities  under  the Act and is  consistent  with  and will
     further the  purposes of the Act and Section 13 of Article VIII of the Ohio
     Constitution  and will be located  entirely  within the State.  The Company
     will cause the Project to be operated and  maintained  in such manner as to
     conform to all applicable  zoning,  planning,  building,  environmental and
     other applicable  governmental  regulations and all permits,  variances and
     orders issued or granted pursuant thereto,  including the permit-to-install
     for each portion of the Project,  which permits,  variances and orders have
     not been withdrawn or otherwise  suspended,  and to be consistent  with the
     Act;

          (f) It is expected  that the  Project  will be utilized as Air Quality
     Facilities  under the Act  commencing  promptly as portions  thereof become
     available  for  utilization,  but in any event on or before the  Completion
     Date;

          (g) It  presently  intends  to use or  operate  or cause to be used or
     operated the Project in a manner consistent with the Project Purposes until
     the date on which the Bonds have been fully paid and knows of no reason why
     the Project will not be so operated.  The Company does not presently intend
     to sell or otherwise dispose of the Project or any portion thereof;

          (h) At least 95% of the net proceeds (as defined in Section 150 of the
     Code) of the Bonds will be used to provide  land or property of a character
     subject to the  allowance for  depreciation  for purposes of Section 167 of
     the Code.  The  Company  will not  request or  authorize  any  disbursement
     pursuant to Section 3.4 hereof,  which, if paid,  would result in less than
     95% of such net proceeds  being so used. The costs of issuance of the Bonds
     financed  with the proceeds of the Bonds will not exceed 2% of the proceeds
     of the Bonds  (within the meaning of Section  147(g) of the Code).  None of
     the proceeds of the Bonds will be used to provide working capital;

          (i) In  accordance  with  Section  147(b)  of the Code,  the  weighted
     average  maturity of the Bonds does not exceed 120% of the weighted average
     reasonably  expected  economic life of the facilities being financed by the
     Bonds;

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

          (k)  Less  than  25% of the net  proceeds  of the  Bonds  will be used
     directly or indirectly to acquire land or any interest therein, and none of
     such land is being or will be used for farming purposes;  no portion of the
     net proceeds of the Bonds will be used to acquire existing  property or any
     interest  therein unless the first use of such property or interest therein
     is pursuant to such acquisition;

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

          (m) The Bonds are not  "federally  guaranteed"  within the  meaning of
     Section 149(b) of the Code;

          (n) At least 95% of the  proceeds of the Bonds will be used to provide
     "solid waste disposal  facilities"  within the meaning of Section 142(a)(b)
     of the Code; and

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

                               (End of Article II)



                                   ARTICLE III

                           COMPLETION OF THE PROJECT;
                              ISSUANCE OF THE BONDS


     Section  3.1.  Acquisition,  Construction  and  Installation.  The  Company
represents  and agrees  that it (a) has  caused or will cause the  Project to be
acquired,  constructed  and installed on the Project Site in accordance with the
Project   Description  and  in  conformance  with  all  applicable,   valid  and
enforceable  (i) zoning,  planning,  building,  environmental  and other similar
regulations of all governmental authorities having jurisdiction over the Project
and (ii) permits,  variances and orders issued in respect of the Project by EPA,
noncompliance  with which would have a material  adverse effect on the Company's
ability to operate  and  maintain  the  Project  or to perform  its  obligations
hereunder, provided that the Company reserves the right to contest in good faith
any such regulations,  permits, variances or orders, (b) will use its reasonable
efforts  to  cause  the  acquisition,  construction  and  installation  of other
facilities and real and personal  property  deemed  necessary in connection with
the Project to the end that the Project will fulfill the Project  Purposes,  (c)
will pay all fees, costs and expenses incurred in such acquisition, construction
and  installation and (d) will use its reasonable  efforts to ask,  demand,  sue
for, levy,  recover and receive all such sums of money,  debts and other demands
whatsoever  which may be due, owing and payable under the terms of any contract,
order,  receipt,  writing and  instruction in connection  with the  acquisition,
construction and  installation of the Project,  and to enforce the provisions of
any contract,  agreement,  obligation,  bond or other performance  security with
respect  thereto;  provided  that in all  instances the Company shall retain the
option of settlement  of any dispute.  Any amounts  received in connection  with
actions taken under clause (d) of the  preceding  sentence,  after  deduction of
expenses  incurred  in such  recovery,  prior  to the  Completion  Date and full
disposition  of the  Project  Fund in  accordance  with this  Agreement  and the
Indenture, shall be paid into the Project Fund.

     It is understood  that the Project is that of the Company and any contracts
made  by the  Company  with  respect  thereto,  whether  acquisition  contracts,
installation  contracts or  otherwise,  or any work to be done by the Company on
the  Project  are made or done by the Company on its own behalf and not as agent
or contractor for the Authority.

     With knowledge of the provisions of the January 27, 1972 Executive Order of
the  Governor of Ohio,  relating to equal  employment  opportunity,  the Company
hereby makes the pledges and  commitments  enumerated in said order with respect
to the  construction and installation of the Project and to the extent that said
Executive Order is applicable,  agrees that the same  requirement and commitment
shall be included in all contracts and subcontracts awarded for the construction
and installation of the Project.

     All  laborers  and  mechanics  employed on the Project have been or will be
paid the  prevailing  rates of wages of laborers and  mechanics for the class of
work  called  for by the  Project,  which  wages were or will be  determined  in
accordance  with the  requirements  of Chapter  4115,  Ohio  Revised  Code,  for
determination  of prevailing  wage rates;  provided,  that should the Company or
other  nonpublic  user  of the  Project  undertake,  as  part  of  the  Project,
construction  to be performed by its regular  bargaining  unit employees who are
covered under a collective  bargaining agreement which was in existence prior to
the date of the commitment  instrument  undertaking to issue the Bonds, then, in
that event, the rate of pay provided under the collective  bargaining  agreement
may be paid to those employees.

     Section 3.2. Project  Description.  The Project  Description may be changed
from time to time by, or with the consent of, the Company provided that any such
change  shall also be filed with the  Authority  and  provided  further  that no
change in the Project  Description  shall materially  change the function of the
Project  Facilities  unless the Trustee  shall have  received (i) an  Engineer's
certificate  that such changes will not impair the  significance or character of
the Project  Facilities  as Air Quality  Facilities  and (ii) an Opinion of Bond
Counsel  or ruling of the  Internal  Revenue  Service  to the  effect  that such
amendment will not adversely  affect the exclusion of interest on the Bonds from
gross income for federal income tax purposes.

     Section 3.3. Issuance of Bonds;  Application of Proceeds.  To provide funds
to make the Loan to the  Company to assist the Company in the  financing  of its
portion of the costs of the Project,  the Authority will issue, sell and deliver
the Bonds to the Original  Purchaser.  The Bonds will be issued  pursuant to the
Indenture in the aggregate  principal  amount,  bearing  interest,  maturing and
being redeemable as set forth in the Indenture.  The Company hereby approves the
terms  and  conditions  of the  Indenture  and  the  Bonds,  and the  terms  and
conditions under which the Bonds will be issued, sold and delivered.

     The proceeds  from the sale of the Bonds (other than any accrued  interest)
shall be loaned to the  Company to assist the  Company in the  financing  of its
portion of the costs of the Project.  Those  proceeds  shall be deposited in the
Project Fund. Any accrued interest shall be deposited in the Bond Fund.  Pending
disbursement  pursuant to Section 3.4 hereof,  the  proceeds so deposited in the
Project Fund, together with any investment earnings thereon,  shall constitute a
part of the  Revenues  assigned by the  Authority to the payment of Bond Service
Charges as provided in the Indenture.

     Section 3.4.  Disbursements  from the Project Fund.  Disbursements from the
Project Fund shall be made only to  reimburse or pay the Company,  or any Person
designated by the Company, for the following Project Costs:

          (a) Costs incurred  directly or indirectly  for or in connection  with
     the acquisition,  construction,  equipping,  installation or improvement of
     the  Project,  including  but not  limited  to  those  costs  incurred  for
     preliminary  planning and studies,  architectural,  legal,  engineering and
     supervisory services, labor, services, materials, acquisition, construction
     and  installation,  recording of documents  and title work  relating to the
     Project Site.

          (b) Premiums  attributable  to all insurance  required to be taken out
     and maintained  during the Construction  Period with respect to the Project
     and the premium on each surety bond, if any,  required with respect to work
     on the Project.

          (c) Taxes,  assessments  and other  charges in respect of the  Project
     that may become due and  payable  during  the  Construction  Period for the
     Project.

          (d) Costs  incurred  directly or  indirectly in seeking to enforce any
     remedy  against any contractor or  subcontractor  in respect of any default
     under any contract relating to the Project.

          (e) Financial,  legal, accounting,  appraisal,  printing and engraving
     fees, charges and expenses, title insurance premiums, if any, and all other
     such  fees,   charges  and  expenses   incurred  in  connection   with  the
     authorization, sale, issuance and delivery of the Bonds and the preparation
     and delivery of the Agreement, the Indenture and other related documents.

          (f) Fees and expenses of the  Trustee,  Authenticating  Agent,  Paying
     Agent and Registrar (as such terms are defined in the Indenture), including
     reasonable counsel fees and expenses, properly incurred under the Indenture
     that may become due and payable during the Construction  Period,  including
     the initial or acceptance fee of the Trustee.

          (g)  Any  other  incidental  and  necessary  costs  including  without
     limitation  any  expenses,  fees and charges  relating to the  acquisition,
     construction or installation of the Project.

          (h) Payments made to the Rebate Fund.

          (i) Any other  expense  permissible,  in the opinion of Bond  Counsel,
     under the Act.

     Any  disbursements  from the Project Fund for the payment of Project  Costs
shall be made by the  Trustee  only  upon the  written  order of the  Authorized
Company  Representative.  Each such  written  order  shall be in the form of the
disbursement  request  attached  hereto as Exhibit B and shall be  consecutively
numbered.  In the case of any contract  providing for the retention of a portion
of the contract price,  there shall be paid initially from the Project Fund only
the net amount  remaining  after  deduction  of any such  portion,  and when the
amount of any such retention is due and payable, then such retention may be paid
from the Project Fund.

     In addition,  the Company shall not request or authorize any  disbursements
from the  Project  Fund prior to the  Completion  Date for a purpose or function
other than to provide  solid  waste  disposal  facilities  within the meaning of
Section 142(a)(6) of the Code, unless such disbursement would not result in more
than 5% of the net  proceeds of the Bonds  (including  those  amounts  disbursed
pursuant  to this  Section  3.4) being used  other than to provide  solid  waste
disposal facilities (treating issuance costs so paid as being used other than to
provide solid waste  disposal  facilities),  unless in connection  with any such
disbursement  request the Company  provides  the Trustee with an opinion of Bond
Counsel  or ruling of the  Internal  Revenue  Service  to the  effect  that such
disbursement  will not cause the  interest  on the Bonds to be  included  in the
gross income of the Holders for federal income tax purposes.

     Receipt of a disbursement  request, in the form of the disbursement request
attached  hereto as Exhibit B, shall be full  authorization  for the  Trustee to
make the disbursements  requested thereby,  and the Trustee shall be entitled to
rely  without  further  inquiry  on, and shall have no duty to check,  verify or
investigate,   the  statements  and  certifications  made  therein  or  included
therewith.

     Any moneys in the Project  Fund  remaining  after the  Completion  Date and
payment, or provision for payment, in full of the Project Costs at the direction
of the Authorized Company Representative  promptly shall be (a) used to acquire,
construct or install such additional real and personal  property  comprising Air
Quality  Facilities as defined in the Act for use in connection with the Project
as is designated by the Authorized  Company  Representative and the acquisition,
construction,  equipment,  installation and improvement of which will be such as
is  permitted  under  the Act,  (b) used for the  purchase  of Bonds in the open
market for the purpose of  cancellation  at prices not exceeding the fair market
value thereof plus accrued  interest to the date of payment  therefor,  (c) paid
into the Bond Fund to be applied to the payment of Bond  Service  Charges on the
Bonds or the  redemption  of the  Bonds,  or (d) used for a  combination  of the
foregoing as is provided in that  direction or for any other  purposes as are or
may be permitted  under the Act;  provided  that,  in all such cases,  (A) those
moneys  shall  be so used  or  applied  only  to the  extent  that  such  use or
application  will not, in the  opinion of Bond  Counsel or under a ruling of the
Internal Revenue Service,  adversely affect the exclusion of the interest on the
Bonds from the gross income of the Holders  thereof and (B) any money  remaining
in the Project Fund  following  completion  of the Project  shall be invested in
accordance with the Code in such manner as not to adversely affect the exclusion
of the interest on the Bonds from the gross income of the Holders thereof.

     Section  3.5.   Company  Required  to  Pay  Costs  in  Event  Project  Fund
Insufficient.  If  moneys  in the  Project  Fund are not  sufficient  to pay all
Project Costs, the Company,  nonetheless, will complete the Project or cause the
Project to be completed,  in order to fulfill the Project Purposes and shall pay
all such additional  Project Costs from its own funds.  The Company shall not be
entitled to any  reimbursement  for any such  additional  Project Costs from the
Authority,  the  Trustee or the  Holders  of any of the  Bonds,  nor shall it be
entitled to any abatement,  diminution or postponement of the Loan Payments. The
Authority  does not make any  representation  that the moneys which will be paid
into the Project Fund and which under the  provisions of this  Agreement will be
available for payment of Project Costs,  will be sufficient to pay all the costs
which will be incurred  in that  connection.  The  Company  agrees that if after
exhaustion  of the moneys in the Project Fund,  the Company  should pay pursuant
hereto any portion of the costs  listed in Section  3.4 hereof,  it shall not be
entitled  to any  reimbursement  therefor  from the State,  the  Authority,  the
Trustee or the Holders of any of the Bonds.

     Section 3.6.  Completion  Date.  The Company shall notify the Authority and
the Trustee of the  Completion  Date by a certificate  signed by the  Authorized
Company Representative stating:

          (a) the date on which the Project was substantially  completed and all
     other  facilities  necessary  in  connection  with the  Project  have  been
     acquired, constructed and installed,

          (b) that the acquisition, construction and installation of the Project
     and such other  facilities  have been  accomplished  in such a manner as to
     conform with all applicable,  legal and valid zoning,  planning,  building,
     environmental and other similar governmental regulations, so as not to have
     a material  adverse effect on the Company's  ability to operate the Project
     for the Project Purposes and perform its obligations hereunder,

          (c) that,  except as provided in clause (d) of this  Section  3.6, all
     costs of that  acquisition  and  installation  then and theretofore due and
     payable have been paid, and

          (d) the amount which the Trustee  shall retain in the Project Fund for
     the  payment  of  Project  Costs not yet due or for  liabilities  which the
     Company is contesting or which otherwise should be retained and the reasons
     such amount should be retained.

That  certificate  may state that it is given  without  prejudice  to any rights
against third parties which then exist or subsequently  may come into being. The
Authorized  Company   Representative  shall  include  with  that  certificate  a
statement  describing  the items of personal  property  comprising a part of the
Project. The certificate shall be delivered as promptly as practicable after the
occurrence of the events and  conditions  referred to in clauses (a) through (d)
of this Section.

     Section 3.7.  Investment of Fund Moneys. At the oral (confirmed promptly in
writing) or written request of the Company,  any moneys held as part of the Bond
Fund, the Project Fund or the Rebate Fund shall be invested or reinvested by the
Trustee in Eligible Investments; provided, that such moneys shall be invested or
reinvested by the Trustee only in Eligible  Investments  which shall mature,  or
which shall be subject to redemption by the holder thereof at the option of such
holder,  not later than the date upon which the moneys so invested are needed to
make  payments  from those  Funds.  The  Authority  and the Company  each hereby
covenants that it will restrict that investment and  reinvestment and the use of
the proceeds of the Bonds in such manner and to such  extent,  if any, as may be
necessary so that the Bonds will not  constitute  arbitrage  bonds under Section
148 of the Code.

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

     Section 3.8.  Agreement as to Ownership of Project.  The  Authority  agrees
that it shall not have any  interest in, title to or ownership of the Project or
the Project Site.

     Section 3.9. Use of Project.  The Authority does hereby  covenant and agree
that it will not take any  action,  or cause any action to be taken,  during the
term of this Agreement,  other than pursuant to Article VII of this Agreement or
Article VII of the Indenture,  to interfere with the Company's  ownership of the
Project or to prevent  the  Company  from having  possession,  custody,  use and
enjoyment of the  Project,  except such action as is requested by the Trustee in
enforcing any remedies available to it under this Agreement or the Indenture.

     Section 3.10.  Rebate Fund.  To the extent  required by Section 5.09 of the
Indenture,  within five days after the end of the fifth Bond Year (as defined in
the Indenture) and every fifth Bond Year thereafter,  and within five days after
payment in full of all outstanding Bonds, the Company shall calculate the amount
of Excess Earnings (as defined in the Indenture) as of the end of that Bond Year
or the date of such payment and shall notify the Trustee of that amount.  If the
amount then on deposit in the Rebate Fund  created  under the  Indenture is less
than the amount of Excess  Earnings  (computed by taking into account the amount
or amounts,  if any,  previously  paid to the United States  pursuant to Section
5.09 of the Indenture and this  Section),  the Company  shall,  within five days
after the date of the aforesaid  calculation,  pay to the Trustee for deposit in
the Rebate  Fund an amount  sufficient  to cause the  Rebate  Fund to contain an
amount equal to the Excess Earnings.  The obligation of the Company to make such
payments shall remain in effect and be binding upon the Company  notwithstanding
the release and  discharge of the  Indenture.  The Company shall obtain and keep
such records of the  computations  made pursuant to this Section as are required
under Section 148(f) of the Code.

                              (End of Article III)


                                   ARTICLE IV

                        LOAN BY AUTHORITY; LOAN PAYMENTS;
                    ADDITIONAL PAYMENTS; AND CREDIT FACILITY


     Section  4.1.  Loan  Repayment.  Upon  the  terms  and  conditions  of this
Agreement, the Authority agrees to make the Loan to the Company. The proceeds of
the Loan shall be deposited with the Trustee pursuant to Section 3.3 hereof.  In
consideration  of and in repayment of the Loan,  the Company shall make, as Loan
Payments,  to the  Trustee  for the  account of the  Authority,  payments  which
correspond,  as to time,  and are equal in amount,  to the Bond Service  Charges
payable on the Bonds.  All Loan  Payments  received by the Trustee shall be held
and  disbursed in  accordance  with the  provisions  of the  Indenture  and this
Agreement for application to the payment of Bond Service Charges.

     The  Company  shall be  entitled  to a  credit  against  the Loan  Payments
required to be made on any Loan  Payment  Date to the extent that the balance of
the Bond Fund is then in excess of amounts required (a) for the payment of Bonds
theretofore  matured or theretofore  called for redemption,  or to be called for
redemption  pursuant to Section  6.1 hereof (b) for the payment of interest  for
which  checks or drafts  have been  drawn and  mailed by the  Trustee  or Paying
Agent,  and (c) to be deposited in the Bond Fund by the  Indenture for use other
than for the payment of Bond Service Charges due on that Loan Payment Date.

     The  Company's  obligation  to make Loan  Payments  shall be reduced to the
extent of any  payments  made by any Credit  Facility  Issuer to the  Trustee in
respect of the principal of, premium,  if any, or interest on the Bonds when due
pursuant to any Credit Facility,  provided,  that the Credit Facility Issuer has
been  reimbursed  for  such  payments  in  accordance  with  the  terms  of  the
Reimbursement Agreement.

     Except for such interest of the Company as may hereafter  arise pursuant to
Section 8.2 hereof or Sections  5.07 or 5.08 of the  Indenture,  the Company and
the  Authority  each  acknowledge  that neither the  Company,  the State nor the
Authority has any interest in the Bond Fund or the Bond Purchase  Fund,  and any
moneys  deposited  therein shall be in the custody of and held by the Trustee in
trust for the benefit of the Holders.

     Section 4.2. Additional  Payments.  The Company shall pay to the Authority,
the Authority Fee and, as Additional Payments  hereunder,  any and all costs and
expenses incurred or to be paid by the Authority in connection with the issuance
and delivery of the Bonds or otherwise related to actions taken by the Authority
under this Agreement or the Indenture.

     The  Company  shall pay the  Administration  Expenses to the  Trustee,  the
Registrar,  the Remarketing  Agent,  the Auction Agent,  and any Paying Agent or
Authenticating Agent, as appropriate, as Additional Payments hereunder.

     The Company  may,  without  creating a default  hereunder,  contest in good
faith the  reasonableness  of any such cost or expense incurred or to be paid by
the Authority and any Administration  Expenses claimed to be due to the Trustee,
the Registrar, the Auction Agent, the Remarketing Agent, any Paying Agent or any
Authenticating Agent.

     In the event the Company should fail to pay any Loan  Payments,  Additional
Payments or  Administration  Expenses  when due,  the  payment in default  shall
continue as an  obligation of the Company until the amount in default shall have
been fully paid together with interest  thereon during the default period at the
Interest Rate for Advances.

     Section 4.3.  Place of Payments.  The Company  shall make all Loan Payments
directly to the Trustee at its Principal  Office.  Additional  Payments shall be
made directly to the person or entity to whom or to which they are due.

     Section 4.4. Obligations  Unconditional.  The obligations of the Company to
make Loan Payments, Additional Payments and any payments required of the Company
under Section 5.09 of the Indenture shall be absolute and unconditional, and the
Company  shall make such  payments  without  abatement,  diminution or deduction
regardless  of  any  cause  or  circumstances   whatsoever  including,   without
limitation,  any defense, set-off,  recoupment or counterclaim which the Company
may have or assert  against the  Authority,  the  Trustee,  the  Registrar,  the
Remarketing Agent, the Auction Agent, the Paying Agent or any other Person.

     Section 4.5. Assignment of Revenues and Agreement. To secure the payment of
Bond Service Charges, the Authority shall, by the Indenture,  (a) absolutely and
irrevocably  assign to the Trustee,  its  successors  in trust and its and their
assigns  forever,  (1) all right,  title and interest of the Authority in and to
all moneys and investments (including,  without limitation,  the proceeds of the
Credit  Facility) in the Credit Facility Account in the Bond Fund and (2) all of
the  Authority's  rights and  remedies  under  this  Agreement  (except  for the
Unassigned  Authority Rights), and (b) grant a security interest to the Trustee,
its successors in trust and its and their assigns forever,  in all of its rights
to and interest in the Revenues including, without limitation, all Loan Payments
and  other  amounts  receivable  by or on  behalf  of the  Authority  under  the
Agreement in respect of  repayment  of the Loan (other than the Credit  Facility
Account,  all moneys and  investments  therein  and the  proceeds  of the Credit
Facility).  The Company hereby agrees and consents to those assignments and that
grant of a security interest.

     Section 4.6.  Credit  Facility.  The Company may, but shall not be required
to, provide from time to time, a Credit Facility with respect to the Bonds.

     Section 4.7. Company's Option to Elect Rate Period;  Changes in the Auction
Date and  Length of Auction  Periods.  The  Company  shall  have,  and is hereby
granted, the option to elect to convert on any Conversion Date the interest rate
borne by the Bonds to another  Variable  Rate,  or to the  Auction  Rate,  to be
effective  for a Rate  Period  pursuant to the  provisions  of Article II of the
Indenture and subject to the terms and conditions  set forth  therein.  Prior to
conversion to an Auction Rate,  the Company  shall  designate an Auction  Agent;
until any such  designation is made any  references  herein to the Auction Agent
shall be  ineffective.  When the Bonds bear  interest  at an Auction  Rate,  the
Company  shall also have the option to direct the change of Auction Dates and/or
the length of Auction Rate Periods (as such terms are defined in the  Indenture)
in accordance  with the Indenture.  To exercise such options,  the Company shall
give the written notice required by the Indenture.

     Section 4.8.  Company's  Obligation to Purchase  Bonds.  The Company hereby
agrees to pay or cause to be paid to the  Trustee  or the  Paying  Agent,  on or
before  each  day on which  Bonds  may be or are  required  to be  tendered  for
purchase,  amounts  equal to the amounts to be paid by the Trustee or the Paying
Agent with respect to the Bonds  tendered for purchase on such dates pursuant to
Article IV of the  Indenture;  provided,  however,  that the  obligation  of the
Company  to make any such  payment  under this  Section  shall be reduced by the
amount  of  (A)  moneys  paid  by  the  Remarketing  Agent  as  proceeds  of the
remarketing of such Bonds by the Remarketing  Agent,  (B) moneys drawn under any
Credit  Facility,  for the purpose of paying such  purchase  price and (C) other
moneys made available by the Company, as set forth in Section 4.08(b)(ii) of the
Indenture.

                               (End of Article IV)


                                    ARTICLE V

                       ADDITIONAL AGREEMENTS AND COVENANTS


     Section 5.1.  Right of  Inspection.  The Company  agrees  that,  subject to
reasonable security and safety regulations and to reasonable  requirements as to
notice,  the Authority and the Trustee and their or any of their respective duly
authorized agents shall have the right at all reasonable times to enter upon the
Project Site to examine and inspect the Project.

     Section 5.2.  Maintenance.  The Company  shall use its best efforts to keep
and maintain the Project Facilities, including all appurtenances thereto and any
personal  property  therein  or  thereon,  in good  repair  and  good  operating
condition so that the Project Facilities will continue to constitute Air Quality
Facilities, for the purposes of the operation thereof as required by Section 5.4
hereof.

     So  long  as such  shall  not be in  violation  of the  Act or  impair  the
character  of the Project  Facilities  as Air Quality  Facilities,  and provided
there  is  continued   compliance   with  applicable  laws  and  regulations  of
governmental  entities having jurisdiction  thereof,  the Company shall have the
right to remodel the Project  Facilities or make  additions,  modifications  and
improvements thereto, from time to time as it, in its discretion, may deem to be
desirable for its uses and purposes,  the cost of which  remodeling,  additions,
modifications and improvements  shall be paid by the Company and the same shall,
when made, become a part of the Project Facilities.

     Section  5.3.  Removal of Portions of the Project  Facilities.  The Company
shall not be under any  obligation to renew,  repair or replace any  inadequate,
obsolete,  worn out,  unsuitable,  undesirable  or  unnecessary  portions of the
Project Facilities,  except that, subject to Section 5.4 hereof, it will use its
best efforts to ensure the continued  character of the Project Facilities as Air
Quality  Facilities.  The  Company  shall  have the  right  from time to time to
substitute  personal  property  or  fixtures  for any  portions  of the  Project
Facilities, provided that the personal property or fixtures so substituted shall
not impair the character of the Project  Facilities  as Air Quality  Facilities.
Any such substituted  property or fixtures shall, when so substituted,  become a
part of the Project Facilities.  The Company shall also have the right to remove
any portion of the Project Facilities,  without substitution therefor; provided,
that the  Company  shall  deliver  to the  Trustee  a  certificate  signed by an
Engineer  describing said portion of the Project Facilities and stating that the
removal of such  property  or  fixtures  will not impair  the  character  of the
Project Facilities as Air Quality Facilities.

     Section 5.4. Operation of Project Facilities.  The Company will, subject to
its obligations and rights to maintain, repair or remove portions of the Project
Facilities,  as provided in Sections 5.2 and 5.3 hereof, use its best efforts to
continue  operation of the Project  Facilities so long as and to the extent that
operation thereof is required to comply with laws or regulations of governmental
entities having jurisdiction thereof or unless the Authority shall have approved
the  discontinuance  of such operation (which approval shall not be unreasonably
withheld).  The  Company  agrees  that it will,  within  the  design  capacities
thereof,  use its best efforts to operate and maintain the Project Facilities in
accordance with all applicable,  valid and enforceable  rules and regulations of
governmental  entities having jurisdiction thereof;  provided,  that the Company
reserves the right to contest in good faith any such laws or regulations.

     Nothing in this  Agreement  shall  prevent or restrict the Company,  in its
sole  discretion,   at  any  time,  from   discontinuing  or  suspending  either
permanently or temporarily  its use of any facility of the Company served by the
Project  Facilities  and in the event such  discontinuance  or suspension  shall
render  unnecessary  the  continued  operation  of the Project  Facilities,  the
Company  shall  have the  right to  discontinue  the  operation  of the  Project
Facilities during the period of any such discontinuance or suspension.

     Section 5.5.  Insurance.  The Company shall cause the Project Facilities to
be kept insured  against fire or other  casualty to the extent that  property of
similar  character  is usually so insured by  companies  similarly  situated and
operating  like  properties,  to a  reasonable  amount  by  reputable  insurance
companies or, in lieu of or  supplementing  such  insurance in whole or in part,
adopt  some other  method or plan of  protection  against  loss by fire or other
casualty  at least  equal in  protection  to the  method  or plan of  protection
against  loss by fire or other  casualty of  companies  similarly  situated  and
operating  properties  subject to similar or greater fire or other hazards or on
which  properties an equal or higher  primary fire or other  casualty  insurance
rate has been set by reputable insurance companies.

     Section 5.6. Workers'  Compensation  Coverage.  Throughout the term of this
Agreement,  the Company  shall  comply,  or cause  compliance,  with  applicable
workers' compensation laws of the State.

     Section 5.7. Damage; Destruction and Eminent Domain. If, during the term of
this  Agreement,  the Project  Facilities or any portion thereof is destroyed or
damaged  in whole  or in part by fire or other  casualty,  or title  to,  or the
temporary use of, the Project  Facilities or any portion thereof shall have been
taken by the  exercise of the power of eminent  domain,  the Company  (unless it
shall have exercised its option to prepay the Loan Payments  pursuant to Section
6.2 hereof) shall promptly repair, rebuild or restore the portion of the Project
Facilities  so damaged,  destroyed or taken with such changes,  alterations  and
modifications (including the substitution and addition of other property) as may
be necessary or desirable  for the  administration  and operation of the Project
Facilities  as Air Quality  Facilities  and as shall not impair the character or
significance of the Project Facilities as furthering the purposes of the Act.

     Section 5.8. Company to Maintain its Corporate Existence;  Conditions Under
Which  Exceptions  Permitted.  The Company agrees that,  during the term of this
Agreement,  it will  maintain  its  corporate  existence,  will not  dissolve or
otherwise  dispose  of all or  substantially  all of its  assets  and  will  not
consolidate  with or merge into another  corporation or permit one or more other
corporations  to  consolidate  with or merge into it;  provided that the Company
may, without violating its agreement contained in this Section, consolidate with
or merge into another  corporation,  or permit one or more other corporations to
consolidate  with or merge  into it, or sell or  otherwise  transfer  to another
corporation all or substantially all of its assets as an entirety and thereafter
dissolve,  provided the surviving,  resulting or transferee corporation,  as the
case may be (if other than the Company), is a corporation organized and existing
under the laws of one of the states of the United States, and assumes in writing
all of the obligations of the Company herein,  and, if not an Ohio  corporation,
is qualified to do business in the State.

     If  consolidation,  merger or sale or other transfer is made as provided in
this Section,  the  provisions of this Section shall  continue in full force and
effect and no further  consolidation,  merger or sale or other transfer shall be
made except in compliance with the provisions of this Section.

     Section 5.9.  Indemnification.  The Company  releases the  Authority  from,
agrees that the Authority shall not be liable for, and indemnifies the Authority
against,  all liabilities,  claims,  costs and expenses imposed upon or asserted
against  the  Authority  on account  of: (a) any loss or damage to  property  or
injury to or death of or loss by any person that may be  occasioned by any cause
whatsoever pertaining to the construction, maintenance, operation and use of the
Project Facilities;  (b) any breach or default on the part of the Company in the
performance  of any covenant or agreement of the Company under this Agreement or
any related document,  or arising from any act or failure to act by the Company,
or any of its agents,  contractors,  servants,  employees or licensees;  (c) the
authorization,  issuance  and  sale  of the  Bonds,  and  the  provision  of any
information  furnished in connection therewith concerning the Project Facilities
or the Company (including,  without limitation, any information furnished by the
Company for inclusion in any certifications  made by the Authority under Section
3.4 hereof or for inclusion in, or as a basis for  preparation of, the Form 8038
information statement to be filed by the Authority;  and (d) any claim or action
or  proceeding  with  respect to the matters set forth in (a), (b) and (c) above
brought thereon.

     The  Company  agrees to  indemnify  the  Trustee,  the  Paying  Agent,  the
Remarketing  Agent,  the  Auction  Agent  and the  Registrar  (each  hereinafter
referred to in this section as an  "indemnified  party") for and to hold each of
them  harmless  against all  liabilities,  claims,  costs and expenses  incurred
without  negligence or willful  misconduct on the part of the indemnified party,
on account of any action taken or omitted to be taken by the  indemnified  party
in accordance  with the terms of this  Agreement,  the Bonds or the Indenture or
any action taken at the request of or with the consent of the Company, including
the costs and expenses of the indemnified  party in defending itself against any
such claim,  action or  proceeding  brought in  connection  with the exercise or
performance  of any of its powers or duties under this  Agreement,  the Bonds or
the Indenture.

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

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

     Section  5.10.  Company Not to  Adversely  Affect  Exclusion of Interest on
Bonds From Gross  Income For Federal  Income Tax  Purposes.  The Company  hereby
covenants and represents that it has taken and caused to be taken and shall take
and cause to be taken all actions that may be required of it for the interest on
the Bonds to be and remain  excluded  from the gross  income of the  Holders for
federal income tax purposes,  and that it has not taken or permitted to be taken
on its behalf, and covenants that it will not take, or permit to be taken on its
behalf,  any action which, if taken, would adversely affect that exclusion under
the provisions of the Code.

     Section 5.11. Use of Project Facilities.  The Authority agrees that it will
not take any action, or cause any action to be taken on its behalf, to interfere
with the Company's  ownership  interest in the Project or to prevent the Company
from having  possession,  custody,  use and  enjoyment of the Project other than
pursuant to Article VII of this Agreement or Article VII of the Indenture.

     Section 5.12.  Assignment of Agreement in Whole or in Part by Company. This
Agreement  may be  assigned  in  whole  or in part by the  Company  without  the
necessity  of  obtaining  the consent of either the  Authority  or the  Trustee,
subject, however, to each of the following conditions:

          (a) No assignment  (other than pursuant to Section 5.8 or Section 5.13
     hereof)  shall  relieve the Company from primary  liability  for any of its
     obligations hereunder,  and in the event of any such assignment the Company
     shall  continue  to remain  primarily  liable  for the  payment of the Loan
     Payments and Additional  Payments and for performance and observance of the
     agreements on its part herein provided to be performed and observed by it.

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

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

          (d) Any  assignment  from the  Company  shall  not  materially  impair
     fulfillment of the Project  Purposes to be accomplished by operation of the
     Project as herein provided.

     5.13 Assignment of Agreement in Whole by Company (Novation). In addition to
an assignment  contemplated by Sections 5.8 and 5.12 hereof,  this Agreement may
be  assigned  as a  whole  by the  Company,  subject,  however,  to  each of the
following conditions:

          (a) The Company's rights,  duties and obligations under this Agreement
     and all  related  documents  are  assigned  to, and assumed in full by, the
     assignee  either  (i) as of a date  the  Bonds  are  subject  to  mandatory
     purchase under Section 4.07 of the Indenture or (ii) as of a date specified
     by the Company in connection with a Restructuring  Transaction but, in such
     case,  only if the  assignee is the GenCo and the Company has  delivered to
     the  Authority  and the Trustee  written  evidence of an  Investment  Grade
     Rating (taking into account such  assignment to, and assumption in full by,
     the GenCo) with respect to the Bonds from each Rating Agency.

          (b) The  assignee  and the Company  shall  execute an  assignment  and
     assumption  agreement,  in form and substance reasonably  acceptable to the
     Company,  and  acknowledged and agreed to by the Authority and the Trustee,
     whereby the assignee shall confirm and acknowledge  that it has assumed all
     of the rights,  duties and  obligations of the Company under this Agreement
     and all related  documentation and agrees to be bound by and to perform and
     comply  with the terms and  provisions  of this  Agreement  and all related
     documentation as if it had originally  executed the same;  provided further
     that if there is more than one assignee,  such  assignment  and  assumption
     agreement shall be on a joint and several basis among all assignees.

          (c) The Company  shall furnish to the Authority and the Trustee (i) an
     opinion of Bond Counsel (as defined in the Indenture)  that such assignment
     is  authorized  or permitted by the Act and will not  adversely  affect the
     exclusion  from gross  income of interest on the Bonds,  (ii) an opinion of
     counsel to the assignee to the effect that such  assignment  and assumption
     agreement  has been duly  authorized  by the assignee and  constitutes  the
     legal,  valid and binding obligation of the assignee,  enforceable  against
     the assignee in accordance  with its terms,  subject to laws relating to or
     affecting  generally  the  enforcement  of  creditors'  rights,  including,
     without   limitation,   bankruptcy  and  insolvency  laws  and  to  general
     principles of equity  (regardless of whether  considered in a proceeding in
     equity  or at  law)  and  (iii)  a  certificate  of an  Authorized  Company
     Representative and an opinion of counsel to the Company,  each stating that
     such  transaction  complies with this Section 5.13 and that all  conditions
     precedent herein relating to such transaction have been complied with.

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

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

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

                               (End of Article V)


                                   ARTICLE VI

                                   REDEMPTION


     Section 6.1. Optional  Redemption.  Provided no Event of Default shall have
occurred and be  subsisting,  at any time and from time to time, the Company may
deliver  moneys to the  Trustee  in  addition  to Loan  Payments  or  Additional
Payments  required  to be made and  direct  the  Trustee  to use the  moneys  so
delivered for the purpose of calling Bonds for optional redemption in accordance
with  the  applicable   provisions  of  the  Indenture  providing  for  optional
redemption at the redemption price stated in the Indenture.  Pending application
for those  purposes,  any moneys so delivered  shall be held by the Trustee in a
special  account in the Bond Fund and delivery of those moneys shall not, except
as set forth in Section 4.1 hereof,  operate to abate or postpone  Loan Payments
or Additional  Payments  otherwise becoming due or to alter or suspend any other
obligations of the Company under this Agreement.

     Section 6.2.  Extraordinary  Optional  Redemption.  The Company shall have,
subject to the  conditions  hereinafter  imposed,  the option during a Term Rate
Period to direct the  redemption  of the Bonds in whole in  accordance  with the
applicable  provisions  of  the  Indenture  upon  the  occurrence  of any of the
following events:

          (a) The Project or the Plant shall have been  damaged or  destroyed to
     such an extent  that (1) the  Project  or the Plant  cannot  reasonably  be
     expected to be restored,  within a period of six consecutive months, to the
     condition thereof  immediately  preceding such damage or destruction or (2)
     the Company is  reasonably  expected to be prevented  from  carrying on its
     normal use and  operation  of the  Project or the Plant for a period of six
     consecutive months.

          (b) Title to, or the temporary  use of, all or a  significant  part of
     the Project or the Plant  shall have been taken  under the  exercise of the
     power of eminent domain to such an extent (1) that the Project or the Plant
     cannot  reasonably  be  expected  to be  restored  within a  period  of six
     consecutive months to a condition of usefulness comparable to that existing
     prior  to the  taking  or (2) the  Company  is  reasonably  expected  to be
     prevented  from  carrying on its normal use and operation of the Project or
     the Plant for a period of six consecutive months.

          (c) As a result of any changes in the  Constitution of the State,  the
     Constitution  of the United  States of America or any state or federal laws
     or as a result of legislative or  administrative  action  (whether state or
     federal)  or  by  final   decree,   judgment  or  order  of  any  court  or
     administrative  body (whether  state or federal)  entered after any contest
     thereof by the Authority or the Company in good faith, this Agreement shall
     have  become  void  or   unenforceable  or  impossible  of  performance  in
     accordance  with the intent and purpose of the parties as expressed in this
     Agreement.

          (d)  Unreasonable  burdens or  excessive  liabilities  shall have been
     imposed  upon the  Authority  or the Company with respect to the Project or
     the Plant or the operation  thereof,  including,  without  limitation,  the
     imposition of federal, state or other ad valorem, property, income or other
     taxes  other  than ad  valorem  taxes at the rates  presently  levied  upon
     privately  owned property used for the same general  purpose as the Project
     or the Plant.

          (e) Changes in the economic  availability of raw materials,  operating
     supplies,  energy  sources or supplies or  facilities  (including,  but not
     limited to,  facilities  in  connection  with the  disposal  of  industrial
     wastes)  necessary  for the  operation  of the Project or the Plant for the
     Project  Purposes occur or  technological  or other changes occur which the
     Company  cannot  reasonably  overcome or control and which in the Company's
     reasonable  judgment render the Project or the Plant uneconomic or obsolete
     for the Project Purposes.

          (f) Any court or administrative body shall enter a judgment,  order or
     decree, or shall take administrative action, requiring the Company to cease
     all or any substantial part of its operations  served by the Project or the
     Plant to such extent that the Company is or will be prevented from carrying
     on its normal  operations  at the  Project or the Plant for a period of six
     consecutive months.

          (g) The termination by the Company of operations at the Plant.

     The amount  payable  by the  Company  in the event of its  exercise  of the
option granted in this Section shall be the sum of the following:

               (i) An  amount  of money  which,  when  added to the  moneys  and
          investments  held to the credit of the Bond Fund,  will be  sufficient
          pursuant to the  provisions  of the  Indenture  to pay, at 100% of the
          principal amount thereof plus accrued interest to the redemption date,
          and  discharge,  all  Outstanding  Bonds  on the  earliest  applicable
          redemption date, that amount to be paid to the Trustee, plus

               (ii) An amount of money equal to the Additional Payments relating
          to those Bonds  accrued and to accrue until  actual final  payment and
          redemption of those Bonds, that amount or applicable  portions thereof
          to be paid to the Trustee or to the  Persons to whom those  Additional
          Payments are or will be due.

The requirement of (ii) above with respect to Additional  Payments to accrue may
be met if provisions  satisfactory to the Trustee and the Authority are made for
paying those amounts as they accrue.

     The  rights and  options  granted to the  Company  in this  Section  may be
exercised  whether or not the Company is in default  hereunder;  provided,  that
such default will not relieve the Company from  performing  those  actions which
are necessary to exercise any such right or option granted hereunder.

     Section 6.3. Mandatory Redemption. The Company shall deliver to the Trustee
the  moneys  needed  to  redeem  the  Bonds in  accordance  with  any  mandatory
redemption provisions relating thereto as may be set forth in Section 4.01(b) of
the Indenture.

     Section 6.4.  Notice of Redemption.  In order to exercise an option granted
in, or to  consummate  a  redemption  required  by, this Article VI, the Company
shall,  within 180 days  following  the event  authorizing  the exercise of such
option,  or at any time during the continuation of the condition  referred to in
paragraphs  (c), (d) or (e) of Section 6.2 hereof,  or at any time that optional
redemption of the Bonds is permitted  under the Indenture as provided in Section
6.1 hereof, or promptly upon the occurrence of a Determination of Taxability (as
defined in the Indenture),  give written notice to the Authority and the Trustee
that it is exercising its option to direct the redemption of Bonds,  or that the
redemption  thereof is required by Section  4.01(b) of the  Indenture due to the
occurrence of a Determination  of Taxability,  as the case may be, in accordance
with the Agreement  and the  Indenture,  and shall  specify  therein the date on
which such redemption is to be made,  which date shall not be more than 180 days
from the date  such  notice is  mailed.  The  Company  shall  make  arrangements
satisfactory  to the Trustee for the giving of the required notice of redemption
to the  Holders  of  the  Bonds,  in  which  arrangements  the  Authority  shall
cooperate.

     Section  6.5.  Actions by  Authority.  At the request of the Company or the
Trustee,  the Authority shall take all steps required of it under the applicable
provisions  of the  Indenture or the Bonds to effect the  redemption of all or a
portion of the Bonds pursuant to this Article VI.

                               (End of Article VI)



                                   ARTICLE VII

                         EVENTS OF DEFAULT AND REMEDIES


     Section 7.1. Events of Default.  Each of the following shall be an Event of
Default:

          (a) The  occurrence  of an event of default as defined in Section 7.01
     (a), (b), (c) or (d) of the Indenture;

          (b) The Company shall fail to observe and perform any other agreement,
     term or condition  contained in this Agreement,  other than such failure as
     will have  resulted in an event of default  described  in (a) above and the
     continuation  of that failure for a period of 90 days after notice  thereof
     shall have been given to the Company by the  Authority or the  Trustee,  or
     for such  longer  period as the  Authority  and the Trustee may agree to in
     writing; provided, that failure shall not constitute an Event of Default so
     long as the Company institutes curative action within the applicable period
     and diligently  pursues that action to completion within 150 days after the
     expiration  of initial  cure  period as  determined  above,  or within such
     longer period as the Authority and the Trustee may agree to in writing; and

          (c) By decree of a court of competent  jurisdiction  the Company shall
     be  adjudicated a bankrupt,  or an order shall be made approving a petition
     or answer filed seeking reorganization or readjustment of the Company under
     the federal bankruptcy laws or other law or statute of the United States of
     America  or of the state of  incorporation  of the  Company or of any other
     state, or, by order of such a court, a trustee in bankruptcy, a receiver or
     receivers shall be appointed of all or substantially all of the property of
     the Company,  and any such decree or order shall have continued unstayed on
     appeal or otherwise and in effect for a period of sixty (60) days; and

          (d) The Company shall file a petition in voluntary bankruptcy or shall
     make an  assignment  for the benefit of creditors  or shall  consent to the
     appointment  of a receiver or receivers of all or any part of its property,
     or shall file a petition seeking  reorganization or readjustment  under the
     Federal  bankruptcy  laws or other law or statute  of the United  States of
     America or any state thereof, or shall file a petition to take advantage of
     any debtors' act.

     Notwithstanding the foregoing,  if, by reason of Force Majeure, the Company
is unable to perform or observe any  agreement,  term or condition  hereof which
would give rise to an Event of Default under subsection (b) hereof,  the Company
shall  not be  deemed in  default  during  the  continuance  of such  inability.
However, the Company shall promptly give notice to the Trustee and the Authority
of the  existence of an event of Force Majeure and shall use its best efforts to
remove the effects  thereof;  provided  that the  settlement of strikes or other
industrial disturbances shall be entirely within its discretion.

     The term Force Majeure shall mean the following:

               (i)  acts  of  God;   strikes,   lockouts  or  other   industrial
          disturbances; acts of public enemies; orders or restraints of any kind
          of the  government  of the United States of America or of the State or
          any  of  their  departments,   agencies,   political  subdivisions  or
          officials,  or any civil or military authority;  insurrections;  civil
          disturbances;  riots; epidemics; landslides;  lightning;  earthquakes;
          fires;  hurricanes;   tornados;  storms;  droughts;  floods;  arrests;
          restraint of  government  and people;  explosions;  breakage,  nuclear
          accidents or other  malfunction or accident to facilities,  machinery,
          transmission  pipes or canals;  partial or entire failure of a utility
          serving  the  Project;  shortages  of labor,  materials,  supplies  or
          transportation; or

               (ii) any cause,  circumstance or event not reasonably  within the
          control of the Company.

     The  exercise  of  remedies  hereunder  shall be subject to any  applicable
limitations of federal  bankruptcy law affecting or precluding that  declaration
or exercise  during the pendency of or  immediately  following  any  bankruptcy,
liquidation or reorganization proceedings.

     Section 7.2.  Remedies on Default.  Whenever an Event of Default shall have
happened and be subsisting,  either or both of the following  remedial steps may
be taken:

          (a) The Authority or the Trustee may have access to, inspect,  examine
     and make copies of the books,  records,  accounts and financial data of the
     Company, only, however, insofar as they pertain to the Project; or

          (b) The  Authority  or the  Trustee  may  pursue all  remedies  now or
     hereafter  existing at law or in equity to recover all  amounts,  including
     all Loan Payments and Additional  Payments and under Section 4.9 hereof the
     purchase price of Bonds  tendered for purchase,  then due and thereafter to
     become  due  under  this  Agreement,  or to  enforce  the  performance  and
     observance  of any other  obligation or agreement of the Company under this
     Agreement.

Notwithstanding the foregoing,  the Authority shall not be obligated to take any
step  which in its  opinion  will or might  cause it to expend  time or money or
otherwise  incur  liability  unless and until a satisfactory  indemnity bond has
been  furnished  to the  Authority at no cost or expense to the  Authority.  Any
amounts  collected as Loan Payments or applicable to Loan Payments and any other
amounts which would be applicable to payment of Bond Service  Charges  collected
pursuant to action taken under this Section shall be paid into the Bond Fund and
applied  in  accordance  with  the  provisions  of  the  Indenture  or,  if  the
outstanding  Bonds  have  been  paid  and  discharged  in  accordance  with  the
provisions  of the  Indenture,  shall be paid as provided in Section 5.08 of the
Indenture for transfers of remaining amounts in the Bond Fund.

     The provisions of this Section are subject to the further  limitation  that
the rescission and annulment by the Trustee of its  declaration  that all of the
Bonds are  immediately  due and payable also shall  constitute a rescission  and
annulment of any  corresponding  declaration made pursuant to this Section and a
rescission  and annulment of the  consequences  of that  declaration  and of the
Event of Default with respect to which that declaration has been made,  provided
that no such  rescission and annulment  shall extend to or affect any subsequent
or other default or impair any right consequent thereon.

     Section 7.3. No Remedy  Exclusive.  No remedy conferred upon or reserved to
the  Authority  or the Trustee by this  Agreement is intended to be exclusive of
any other available remedy or remedies,  but each and every such remedy shall be
cumulative  and shall be in  addition  to every  other  remedy  given under this
Agreement,  or now or  hereafter  existing at law,  in equity or by statute.  No
delay or omission to exercise any right or power accruing upon any default shall
impair that right or power or shall be construed to be a waiver thereof, but any
such  right or power may be  exercised  from time to time and as often as may be
deemed  expedient.  In order to entitle the Authority or the Trustee to exercise
any remedy reserved to it in this Article, it shall not be necessary to give any
notice,  other than any notice required by law or for which express provision is
made herein.

     Section 7.4. Agreement to Pay Attorneys' Fees and Expenses.  If an Event of
Default  should occur and the  Authority or the Trustee  should incur  expenses,
including  attorneys' fees, in connection with the enforcement of this Agreement
or the collection of sums due hereunder,  the Company shall be required,  to the
extent  permitted  by law,  to  reimburse  the  Authority  and the  Trustee,  as
applicable, for the expenses so incurred upon demand.

     Section  7.5.  No Waiver.  No failure by the  Authority  or the  Trustee to
insist upon the strict  performance by the Company of any provision hereof shall
constitute a waiver of their right to strict  performance  and no express waiver
shall be deemed to apply to any other existing or subsequent right to remedy the
failure by the Company to observe or comply with any provision hereof.

     Section  7.6.  Notice of  Default.  The  Company  shall  notify the Trustee
immediately  if it  becomes  aware of the  occurrence  of any  Event of  Default
hereunder or of any fact, condition or event which, with the giving of notice or
passage of time or both, would become an Event of Default.

                              (End of Article VII)


                                  ARTICLE VIII

                                  MISCELLANEOUS


     Section 8.1. Term of Agreement.  This Agreement shall be and remain in full
force  and  effect  from  the date of  delivery  of the  Bonds  to the  Original
Purchaser until such time as (i) all of the Bonds shall have been fully paid (or
provision made for such payment) and the Indenture has been released pursuant to
Section 9.01  thereof and (ii) all other sums payable by the Company  under this
Agreement shall have been paid.

     Section  8.2.  Amounts  Remaining  in Funds.  Any  amounts in the Bond Fund
remaining  unclaimed  by the  Holders of Bonds for four years after the due date
thereof  (whether  at stated  maturity,  by  redemption,  upon  acceleration  or
otherwise), at the option of the Company, shall be deemed to belong to and shall
be paid, subject to Section 5.07 of the Indenture, at the written request of the
Company,  to the Company by the Trustee.  With respect to that  principal of and
any premium and interest on the Bonds to be paid from moneys paid to the Company
pursuant to the preceding  sentence,  the Holders of the Bonds entitled to those
moneys  shall  look  solely to the  Company  for the  payment  of those  moneys.
Further,  any amounts  remaining in the Bond Fund and any other special funds or
accounts created under this Agreement or the Indenture,  except the Rebate Fund,
after all of the Bonds  shall be deemed to have been paid and  discharged  under
the provisions of the Indenture and all other amounts  required to be paid under
this Agreement and the Indenture have been paid, shall be paid to the Company to
the extent that those  moneys are in excess of the amounts  necessary  to effect
the payment and discharge of the Outstanding Bonds.

     Section  8.3.  Notices.  All  notices,  certificates,   requests  or  other
communications  hereunder shall be in writing, except as provided in Section 3.4
hereof,  and shall be deemed to be sufficiently  given when mailed by registered
or certified mail,  postage  prepaid,  and addressed to the  appropriate  Notice
Address.  A  duplicate  copy of  each  notice,  certificate,  request  or  other
communication given hereunder to the Authority, the Company, any Credit Facility
Issuer or the  Trustee  shall  also be given to the  others.  The  Company,  the
Authority,  any  Credit  Facility  Issuer  and  the  Trustee,  by  notice  given
hereunder,  may designate any further or different addresses to which subsequent
notices, certificates, requests or other communications shall be sent.

     Section 8.4. Extent of Covenants of the Authority;  No Personal  Liability.
All covenants,  obligations  and  agreements of the Authority  contained in this
Agreement  or the  Indenture  shall be effective  to the extent  authorized  and
permitted by applicable law. No such covenant,  obligation or agreement shall be
deemed to be a  covenant,  obligation  or  agreement  of any  present  or future
member,  officer,  agent or employee of the Authority in other than his official
capacity,  and neither the members of the Authority  nor any official  executing
the Bonds shall be liable  personally on the Bonds or be subject to any personal
liability or  accountability  by reason of the issuance  thereof or by reason of
the  covenants,  obligations  or agreements  of the Authority  contained in this
Agreement or in the Indenture.

     Section 8.5.  Binding Effect.  This Agreement shall inure to the benefit of
and shall be  binding  in  accordance  with its terms  upon the  Authority,  the
Company and their respective permitted successors and assigns provided that this
Agreement may not be assigned by the Company (except as permitted under Sections
5.8, 5.12 or 5.13 hereof) and may not be assigned by the Authority except to (i)
the Trustee  pursuant to the  Indenture  or as  otherwise  may be  necessary  to
enforce or secure payment of Bond Service  Charges or (ii) any successor  public
body to the Authority.

     Section 8.6.  Amendments  and  Supplements.  Except as otherwise  expressly
provided in this Agreement or the  Indenture,  subsequent to the issuance of the
Bonds and prior to all  conditions  provided for in the Indenture for release of
the Indenture  having been met, this Agreement may not be  effectively  amended,
changed,  modified,  altered or terminated by the parties hereto except with the
consents  required by, and in accordance  with,  the provisions of Article XI of
the Indenture, as applicable.

     Section 8.7. References to Credit Facility. During such time or times as no
Credit  Facility  is in  effect,  and during  the  continuation  of any event of
default under the Indenture  due to a failure by the Credit  Facility  Issuer to
honor a drawing  by the  Trustee  under the  Credit  Facility  then in effect in
accordance  with the terms  thereof,  references  herein to the Credit  Facility
Issuer shall be ineffective.

     Section 8.8. Continuing  Disclosure.  The Authority hereby acknowledges the
entry by the Company into the Continuing  Disclosure  Agreement  under which the
Company has assumed  certain  obligations  for the benefit of the Holders of the
Bonds.  The  Company  agrees to perform  its  obligations  under the  Continuing
Disclosure Agreement.  The Company acknowledges and agrees that the Authority is
not an "obligated  person" (as defined in the Continuing  Disclosure  Agreement)
with respect to the Bonds and represents  that the Company is the only obligated
person with respect to the Bonds.  Notwithstanding  any other  provision of this
Agreement,  any  failure by the  Company  to comply  with any  provision  of the
Continuing Disclosure Agreement shall not be a failure or a default, or an Event
of Default, under this Agreement or the Indenture.

     Section 8.9. Execution Counterparts.  This Agreement may be executed in any
number of  counterparts,  each of which shall be regarded as an original and all
of which shall constitute but one and the same instrument.

     Section  8.10.  Severability.  If any provision of this  Agreement,  or any
covenant,  obligation or agreement  contained herein is determined by a judicial
or administrative  authority to be invalid or unenforceable,  that determination
shall not affect any other provision, covenant, obligation or agreement, each of
which shall be construed and enforced as if the invalid or unenforceable portion
were not contained herein. That invalidity or unenforceability  shall not affect
any  valid  and  enforceable  application  thereof,  and  each  such  provision,
covenant,  obligation or agreement  shall be deemed to be effective,  operative,
made,  entered  into or taken in the manner and to the full extent  permitted by
law.

     Section  8.11.  Governing  Law.  This  Agreement  shall be  deemed  to be a
contract made under the laws of the State and for all purposes shall be governed
by and construed in accordance with the laws of the State.

                              (End of Article VIII)



     IN  WITNESS  WHEREOF,  the  Authority  and the  Company  have  caused  this
Agreement  to be duly  executed in their  respective  names,  all as of the date
hereinbefore written.

                                      OHIO AIR QUALITY DEVELOPMENT
                                      AUTHORITY


                                      By:  /s/ Mark R. Shanahan
                                               Executive Director



                                      THE CINCINNATI GAS & ELECTRIC
                                      COMPANY


                                      By:  /s/ Lisa D. Gamblin
                                               Vice President and Treasurer

                                    EXHIBIT A

                      DESCRIPTION OF AIR QUALITY FACILITIES
                                       AT
                           WILLIAM H. ZIMMER ELECTRIC
                               GENERATING STATION

     The Project  consists of  modifications  to the scrubber,  de-watering  and
material handling process at the William H. Zimmer Generating  Station (Clermont
County,  Moscow,  Ohio) in order to convert and utilize the waste  byproduct  of
that scrubber process as synthetic gypsum.

     These  modifications  include  but are not  limited  to:  absorber  scoops,
absorber  reaction tank agitator  modifications,  absorber bleed pumps,  storage
tanks,   absorber   storage  transfer  pumps,   clarified   recycle  water  tank
modifications,   modified  filtrate  pump  system,   blow-down  tank  agitators,
oxidation air  compressors  with building,  sulfuric acid tank and feed systems,
transfer pumps, oxidation vessels and compressed air piping, sparge air headers,
oxidation vessel modifications and lining,  hydro-clone feed pumps,  hydro-clone
assemblies, hydro-clone distribution box, horizontal belt filters, vacuum filter
air  deck  blowers,  secondary  de-watering  building,  filtration  sump  pumps,
clarified underflow pumps,  chloride bleed pumps, chloride bleed tanks, load out
hoppers, belt scales, conveyor systems, barge haul system, operators cabs, truck
and  barge  loading   equipment  and  facilities,   river  cell  and  dock  line
improvements,  other  related  equipment  and  modifications  to  that  scrubber
process,  miscellaneous  anchors and foundations,  instrument air and compressed
air systems,  instrumentation  and controls,  power feeds and tower  structures,
wires, conduit, transformers,  switch gear, piping, pipe supports, pipe bridges,
trenching,  modifications  to existing  scrubber  liquid  storage  and  transfer
systems,  access  ways  and  equipment  maintenance  structures,   building  and
equipment  supports,  valves,  insulation,  lagging,  coatings  and paint,  heat
tracing,  HVAC  additions or  modifications,  service  water and filtered  water
piping,  safety  showers,  fire  protection  systems,  and the demolition of any
obsolete equipment necessary to convert the process.

                                    EXHIBIT B


                          FORM OF DISBURSEMENT REQUEST

                    STATEMENT NO. ___ REQUESTING DISBURSEMENT
                     OF FUNDS FROM PROJECT FUND PURSUANT TO
                   SECTION 3.4 OF THE LOAN AGREEMENT DATED AS
                       OF AUGUST 1, 2001 BETWEEN THE OHIO
                      AIR QUALITY DEVELOPMENT AUTHORITY AND
                      THE CINCINNATI GAS & ELECTRIC COMPANY


     Pursuant to Section 3.4 of the Loan Agreement (the "Agreement") between the
Ohio Air Quality Development  Authority (the "Authority") and The Cincinnati Gas
& Electric  Company (the "Company")  dated as of August 1, 2001, the undersigned
Authorized   Company   Representative   hereby  authorizes  U.S.  Bank  National
Association,  as trustee  (the  "Trustee"),  as  depository  of the Project Fund
created by the Indenture (the "Indenture") by and between the Authority and said
Trustee,  to pay to the Company out of the moneys deposited in said Project Fund
the aggregate sum of  $_______________ to pay the person(s) listed on Schedule I
which may include reimbursements to the Company, for the advances,  payments and
expenditures made by it in connection with the items listed in Schedule I, which
is incorporated herein by reference.

     The undersigned in connection with the foregoing  request for disbursements
from said Project Fund hereby certifies that:

     (a)  Each item is properly  payable out of the Project  Fund in  accordance
          with the terms and  conditions of the Agreement and none of such items
          for which  payment is  requested  has formed the basis for any payment
          heretofore made from said Project Fund.

     (b)  Each item for which payment is requested hereunder is or was necessary
          or  appropriate  in  connection  with the  acquisition,  construction,
          equipping,  installation or improvement of the Project,  as defined in
          the Indenture and Agreement,  or costs related thereto as permitted by
          the Agreement.

     (c)  This  document  evidences the approval of the  undersigned  Authorized
          Company Representative of each payment hereby authorized.

     (d)  Each item for which disbursement is requested hereunder,  and the cost
          for each item, is as described in the  information  statement filed by
          the Authority in connection with the issuance of the Bonds (as defined
          in the  Agreement),  as  required  by  Section  149(e) of the Code (as
          defined in the Agreement); provided that if the foregoing statement is
          not  true,  the  average  reasonably  expected  economic  life  of the
          facilities  which  have  been and will be paid for with  moneys in the
          Project  Fund is not less than 5/6ths of the  average  maturity of the
          Bonds.

                   This _______ day of _______________, ____.




                        Authorized Company Representative





                                   Schedule I


TO STATEMENT NO. ________________  REQUESTING DISBURSEMENT OF FUNDS FROM PROJECT
FUND  PURSUANT  TO  SECTION  3.4 OF LOAN  AGREEMENT  DATED AS OF AUGUST 1, 2001,
BETWEEN THE OHIO AIR QUALITY  DEVELOPMENT  AUTHORITY  AND THE  CINCINNATI  GAS &
ELECTRIC COMPANY.

PAYEE                               AMOUNT                              PURPOSE