Exhibit B-2(b)(1)
COUNTERPART NO.
SECOND AMENDED AND RESTATED
NUCLEAR MATERIAL LEASE AGREEMENT
Dated as of , 1998
-------
between
TMI-1 FUEL CORP.,
as Lessor
and
PENNSYLVANIA ELECTRIC COMPANY
as Lessee
AS OF THE DATE OF THIS SECOND AMENDED AND RESTATED LEASE AGREEMENT, THE LESSOR
UNDER THIS SECOND AMENDED AND RESTATED LEASE AGREEMENT (THE "LESSOR") HAS
GRANTED TO THE SECURED PARTIES, AS DEFINED HEREIN, A SECURITY INTEREST IN THIS
SECOND AMENDED AND RESTATED LEASE AGREEMENT AND IN ALL OF THE LESSOR'S RIGHTS
AND INTERESTS UNDER THIS SECOND AMENDED AND RESTATED LEASE AGREEMENT, INCLUDING,
WITHOUT LIMITATION, ALL OF THE LESSOR'S RIGHTS TO AND INTERESTS IN NUCLEAR
MATERIAL AS DEFINED IN THIS SECOND AMENDED AND RESTATED LEASE AGREEMENT.
THIS SECOND AMENDED AND RESTATED LEASE AGREEMENT HAS BEEN MANUALLY EXECUTED IN
EIGHTEEN (18) COUNTERPARTS, NUMBERED CONSECUTIVELY FROM 1 TO 18. NO SECURITY
INTEREST IN THIS SECOND AMENDED AND RESTATED LEASE AGREEMENT OR IN ANY OF THE
LESSOR'S RIGHTS AND INTERESTS UNDER THIS SECOND AMENDED AND RESTATED LEASE
AGREEMENT MAY BE PERFECTED BY THE POSSESSION OF ANY SUCH COUNTERPART OTHER THAN
COUNTERPART NO. 1.
TABLE OF CONTENTS
1 Definitions
2 Notices
3 Title to Remain in the Lessor; Quiet Enjoyment; Fuel Management
Location
4 Agreement for Lease of Nuclear Material
5 Orders for Nuclear Material and Services; Assigned Agreements
6 Leasing Records; Payment of Costs of Lessor
7 No Warranties or Representation by Lessor
8 Lease Term; Early Termination; Termination of Leasing Record
9 Payment of Rent; Payments with Respect to the Lessor's
Financing Costs
10 Compliance with Laws; Restricted Use of Nuclear Material;
Assignments; Permitted Liens; Spent Fuel
11 Permitted Contests
12 Insurance; Compliance with Insurance Requirements
13 Indemnity
14 Casualty and Other Events
15 Nuclear Material to Remain Personal Property
16 Events of Default
17 Rights of the Lessor Upon Default of the Lessee
18 Termination After Certain Events
19 Investment Tax Credit
20 Certificates; Information; Financial Statements
21 Obligation of the Lessee to Pay Rent
22 Miscellaneous
SECOND AMENDED AND RESTATED NUCLEAR MATERIAL LEASE AGREEMENT
SECOND AMENDED AND RESTATED LEASE AGREEMENT (this "Lease Agreement")
dated as of the---- day of------ , 1998, by and between TMI-1 FUEL CORP., a
Delaware corporation (herein called the "Lessor"), and PENNSYLVANIA ELECTRIC
COMPANY, a Pennsylvania corporation (herein called the "Lessee").
RECITALS
A. The Lessor and Lessee entered into a Nuclear Material Lease
Agreement dated as of August 1, 1991 ("Original Lease") to provide for the lease
of Nuclear Material to the Lessee;
B. The Original Lease provided for the Lessor to enter into
certain loan agreements and ancillary documents with The Prudential Insurance
Company of America and certain affiliates thereof ("Prudential") to provide
financing from Prudential for the acquisition of Nuclear Material under the
Original Lease;
C. Such loan arrangements with Prudential were terminated and
Lessor entered into a new credit agreement and related instruments pursuant to
which a bank syndicate for which Union Bank of Switzerland, New York Branch
("UBS") acted as agent to provide financing for the acquisition of Nuclear
Material being leased hereunder;
▇. ▇▇▇▇▇▇ and Lessee entered into an Amended and Restated
Nuclear Material Lease Agreement, dated as of November 17, 1995 ("Amended and
Restated Lease") to reflect the necessary modifications consistent with the
establishment of the credit facility with UBS;
E. Concurrent with the execution and delivery hereof, such
credit agreements with UBS are being terminated and Lessor is entering into a
new credit agreement and related instruments to which a bank syndicate for which
The First National Bank of Chicago and PNC Bank, National Association, will act
as agents to provide financing for the acquisition of the Nuclear Material being
leased hereunder;
F. Accordingly, the Lessor and the Lessee desire to enter into
this Second Amended and Restated Lease Agreement in order to reflect necessary
modifications consistent with establishment of such new credit facility and
other modifications thereof in certain other respects, which agreement shall
supercede the Original Lease and the Amended and Restated Lease;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and intending to be legally bound hereby, the parties covenant
and agree as follows:
1. Definitions. Except as otherwise provided herein, capitalized
terms used in this Lease Agreement (including the Exhibits) shall have the
respective meanings set forth in Appendix A.
2. Notices. Any notice, demand or other communication which by any
provision of this Lease Agreement is required or permitted to be given shall be
deemed to have been delivered if in writing and actually delivered by mail,
courier, telex or facsimile to the following addresses:
(i) If to the Lessor, TMI-1 Fuel Corp., c/o United States
Trust Company of New York, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Trust and Agency Division, telecopy number
▇▇▇-▇▇▇-▇▇▇▇, or at such other address as the Lessor may have furnished to
the Lessee and the Secured Parties in writing; or
(ii) If to the Lessee, Pennsylvania Electric Company c/o GPU
Service, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: Vice President and Treasurer, telecopy number ▇▇▇-▇▇▇-▇▇▇▇, or
at such other address as the Lessee may have furnished the Lessor and the
Secured Parties in writing; or
(iii) except as provided in the following sentence or as
otherwise requested in writing by any Secured Party, any notice, demand or
communication which by any provision of this Lease Agreement is required
or permitted to be given to the Secured Parties shall be deemed to have
been delivered to all the Secured Parties if a single copy thereof is
delivered to --------------, Attention: ---------------------------------
----------facsimile number (---) ---------- ; or at such other address as
either may have furnished the Lessor and the Lessee in writing. Any
Leasing Record or invoice of a Manufacturer or other Person performing
services covering the Nuclear Material which is required to be delivered
to the Secured Parties pursuant to Section 6(c)(ii) of this Lease
Agreement and any Rent Due and SCV Confirmation Schedule which is required
to be delivered to the Secured Parties pursuant to Sections 8(g) or 9(d)
of this Lease Agreement shall be deemed to have been delivered to all the
Secured Parties if a single copy thereof is delivered to -------------
at the address indicated in this Section 2(iii).
1. Title to Remain in the Lessor; Quiet Enjoyment; Fuel
Management; Location.
(a) The Lessor and the Lessee hereby acknowledge that this
Lease Agreement is a lease and is intended to provide for the obligations of the
Lessee to pay installments of Rent as the same become due; that, subject to the
provisions of Section 10(h), the Lessor has title to and is the owner of the
Nuclear Material; and that the relationship between the Lessor and the Lessee
shall always be only that of lessor and lessee.
(b) The Lessor (including its successors and assigns) agrees
and covenants that, so long as the Lessee makes timely payments of Rent and
fully performs all other obligations to be performed by the Lessee under this
Lease Agreement, the Lessor (including its successors and assigns) shall not
hinder or interfere with the Lessee's peaceable and quiet enjoyment of the
possession and use of the Nuclear Material, for the term or terms herein
provided, subject, however, to the terms of this Lease Agreement.
(c) So long as no Lease Event of Default shall have occurred
and be continuing and the Lessor shall not have elected to exercise any of its
remedies under Section 17 hereof, the Lessee shall have the right to engage in
Fuel Management. The Lessee is hereby designated the agent of the Lessor in all
dealings with Manufacturers and any regulatory agency having jurisdiction over
the ownership or possession of the Nuclear Material for so long as the Lessee
shall have the right to engage in Fuel Management. As such agent of the Lessor,
the Lessee agrees to make, or cause to be made, all filings and to obtain all
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consents and permits required as a result of the Lessor's ownership and
leasing of the Nuclear Material.
(d) The Lessee covenants to the Lessor that the location of
Nuclear Material will be limited to: (w) any Manufacturer's facility, (x)
transit between one Manufacturer's facility and another Manufacturer's facility
or the site of the Generating Facility, (y) the site of the Generating Facility
and (z) the Generating Facility. Each assembly of the Nuclear Material will be
located during its Heat Production and "cooling-off" stage at the Generating
Facility or the site of the Generating Facility.
4. Agreement for Lease of Nuclear Material. From and after the
Closing, the Lessor shall lease to the Lessee and the Lessee shall lease from
the Lessor such Nuclear Material as may be from time to time mutually agreed
upon, provided that the total Stipulated Casualty Value of all Nuclear Material
leased under this Lease Agreement shall not exceed at any one time $25,000,000
in the aggregate or such other amount as the Lessor and the Lessee may agree to
in writing (the "Maximum Stipulated Casualty Value"). The Lessor and the Lessee
shall evidence their agreement to lease particular Nuclear Material in
accordance with the terms and provisions of this Lease Agreement by signing and
delivering to each other, from time to time, Leasing Records, substantially in
the forms of Exhibit A or Exhibit B, as applicable, prepared by the Lessee,
covering such Nuclear Material. Nothing contained herein shall be deemed to
prohibit the Lessee from leasing from other lessors or otherwise obtaining other
nuclear material for use in the Generating Facility, subject to the provisions
with respect to intermingling of fuel assemblies or sub-assemblies with other
fuel assemblies or sub-assemblies contained in Section 6 hereof.
5. Orders for Nuclear Material and Services; Assigned Agreements.
(a) The Nuclear Material Contracts listed in Exhibit C hereto,
relating, among other things, to the purchase of, and services to be performed
with respect to, Nuclear Material were entered into by the Lessee prior to the
date of this Lease Agreement, and, except as otherwise indicated on Exhibit C,
the interests of the Lessee under such Nuclear Material Contracts have been
assigned to the Lessor under an Assignment Agreement substantially in the form
of Exhibit D. Any further Nuclear Material Contracts which the Lessee deems
necessary or desirable may be negotiated by the Lessee and executed by the
Lessee in its own name or, where authorized by the Lessor, as agent for the
Lessor.
(b) So long as no Lease Event of Default shall have occurred
and be continuing, and subject to the approval of the Lessor and to the
limitation on the Maximum Stipulated Casualty Value of the Nuclear Material set
forth in Section 4, the interests of the Lessee under any further Nuclear
Material Contracts (whether executed and delivered before or after the date of
this Lease Agreement) pursuant to which the Lessee desires the Lessor to
purchase Nuclear Material or have services performed on any Nuclear Material on
behalf of the Lessee may be assigned to the Lessor under an Assignment Agreement
substantially in the form of Exhibit D, with such changes to Exhibit 2 to
Exhibit D as the Secured Parties may consent to in writing, which consent shall
not be unreasonably withheld. The Lessee shall use its best efforts to cause the
other parties to such agreements to consent to each such assignment. Upon each
such assignment and the obtaining of such consents with respect to any Nuclear
Material Contract, the Lessor, subject to the limitation on the Maximum
Stipulated Casualty Value of the Nuclear Material set forth in Section 4, shall
make all payments which are required under such Assigned Agreements for the
purchase of Nuclear Material or for services to be performed on the Nuclear
Material in accordance with the procedures set forth in Section 6.
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(c) So long as no Lease Event of Default shall have occurred
and be continuing, the Lessor hereby authorizes the Lessee, at the Lessee's own
cost and expense, to assert all rights and claims and to bring suits, actions
and proceedings, in its own name or in the name of the Lessor, in respect of any
Manufacturer's warranties or undertakings, express or implied, relating to any
portion of the Nuclear Material and to retain the proceeds of any such suits,
actions and proceedings.
6. Leasing Records; Payment of Costs of Lessor.
(a) Interim Leasing Records. An Interim Leasing Record shall be
prepared by the Lessee, shall be dated the date that the Lessor first makes
any payment with respect to the Acquisition Cost of any Nuclear Material and
shall set forth a full description of such Nuclear Material, the Acquisition
Cost and location thereof, and such other details with respect to such
Nuclear Material upon which the parties may agree. During the period of
preparation and processing or reprocessing of Nuclear Material subject to an
Interim Leasing Record, if the Lessor shall make any further payment or
payments or if the Lessor shall receive any payment or payments representing
a credit against the Acquisition Cost previously paid with respect to such
Nuclear Material, a supplemental Interim Leasing Record dated the date that
the Lessor makes each such further payment or the date of receipt of any such
credit shall be signed by the Lessor and the Lessee to record the revised
Acquisition Cost, after giving effect to any such payments or credits with
respect to such Nuclear Material, any change in location and such additional
details upon which the parties may agree.
(b) Final Leasing Records. For Nuclear Material previously
covered by an Interim Leasing Record, the Final Leasing Record shall be prepared
by the Lessee, shall be dated the first day of the month following the date of
installation of such Nuclear Material in the Generating Facility, unless such
date is the first day of a month, in which case the Final Leasing Record shall
be dated such date. For Nuclear Material not previously covered by an Interim
Leasing Record, the Final Leasing Record shall be dated the date that the Lessor
first makes any payment with respect to the Acquisition Cost of such Nuclear
Material. A Final Leasing Record shall set forth a full description of such
Nuclear Material, the Acquisition Cost thereof, the BTU Charge, the location,
and such other details with respect to such Nuclear Material upon which the
parties may agree.
(c) Payment of Nuclear Material Costs.
(i) On the Closing, the Lessor shall pay UBS pursuant to
Section 5.02 of the UBS Credit Agreement the principal amount of all loans
outstanding thereunder together with accrued interest thereon to the extent
not paid previously, and related costs and expenses in connection therewith.
(ii) From time to time after the Closing, invoices of
Manufacturers, or of other Persons performing services, covering Nuclear
Material shall be forwarded to the Lessor in care of the Lessee at the
Lessee's address. Upon receipt by the Lessee of an invoice covering
Nuclear Material, the Lessee shall review such invoice and, upon the
Lessee's approval thereof, the Lessee shall forward such invoice endorsed
with the Lessee's approval to the Lessor, together with a Leasing Record
completed and signed by a Lessee Representative covering such Nuclear
Material. The Lessee's invoice for any cost incurred by it and includable
in the Acquisition Cost of any Nuclear Material shall be forwarded to the
Lessor and to the Secured Parties, together with a Leasing Record
completed and signed by a Lessee Representative covering such costs. After
receipt
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of such invoice and Leasing Record, in form and substance satisfactory to
the Lessor, the Lessor, subject to the limitation on Maximum Stipulated
Casualty Value of the Nuclear Material set forth in Section 4, shall pay
such invoice as provided therein or in the related purchase agreement and
shall execute the Leasing Record and return a copy of such Leasing Record
to the Lessee and the Secured Parties. The Leasing Record shall be dated
as provided for in this Lease Agreement. In the event that the Acquisition
Cost of the Nuclear Material covered by any Leasing Record has been paid
or incurred by the Lessee, the Lessor, subject to the limitation on
Maximum Stipulated Casualty Value of the Nuclear Material set forth in
Section 4 shall promptly reimburse the Lessee for the amount of the
Acquisition Cost paid or incurred by the Lessee.
(iii) The Lessee shall: (A) pay all costs and expenses of
freight, packing, insurance, handling, storage, shipment and delivery of
the Nuclear Material to the extent that the same have not been included in
the Acquisition Cost, and (B) at its own cost and expense, furnish such
labor, equipment and other facilities and supplies, if any, as may be
required to install and erect the Nuclear Material to the extent that the
cost and expense thereof have not been included in the Acquisition Cost.
Such installation and erection shall be in accordance with the
specifications and requirements of each Manufacturer. The Lessor shall not
be liable to the Lessee for any failure or delay in obtaining Nuclear
Material or making delivery thereof.
(d) Intermingling of Fuel Assemblies. Subject to the
provisions of Section 10(h) hereof, the Nuclear Material shall be owned
exclusively by the Lessor and leased to the Lessee under this Lease Agreement.
Prior to the fabrication of Nuclear Material into a completed fuel assembly or
sub-assembly or while such Nuclear Material is being reprocessed, the Lessee
will cause or permit such Nuclear Material to be fabricated or assembled only
into fuel assemblies or sub-assemblies owned by the Lessor and leased under this
Lease Agreement. However, fuel assemblies or sub-assemblies owned by the Lessor
and leased to the Lessee hereunder may be intermingled in the Generating
Facility with fuel assemblies or sub-assemblies not owned by the Lessor and
leased to the Lessee under this Lease Agreement, provided that such assemblies
or sub-assemblies owned by the Lessor shall be readily identifiable by serial
number or other distinguishing marks.
7. No Warranties or Representation by Lessor. THE NUCLEAR MATERIAL IS LEASED
AS-IS, WHERE-IS, IN THE CONDITION THEREOF AND SUBJECT TO THE RIGHTS OF ANY
PARTIES IN POSSESSION THEREOF, THE STATE OF THE TITLE THERETO, THE RIGHTS OF
OWNERSHIP THEREIN AND TO ALL APPLICABLE LAWS, RULES, REGULATIONS, ORDERS,
WRITS, INJUNCTIONS, DECREES, CONSENTS, APPROVALS, EXEMPTIONS, AUTHORIZATIONS,
LICENSES AND WITHHOLDING OF OBJECTIONS OF ANY GOVERNMENTAL OR PUBLIC BODY OR
AUTHORITY AND ALL OTHER REQUIREMENTS HAVING THE FORCE OF LAW APPLICABLE AT
ANY TIME TO ANY OF THE NUCLEAR MATERIALS OR ANY ACT OR TRANSACTION WITH
RESPECT THERETO OR PURSUANT TO THIS LEASE AGREEMENT, IN EACH CASE AS IN
EXISTENCE WHEN THE SAME FIRST BECOMES SUBJECT TO THIS LEASE AGREEMENT,
WITHOUT REPRESENTATIONS OR WARRANTIES OF ANY KIND BY THE LESSOR OR ANY
SECURED PARTY OR ANY PERSON ACTING ON BEHALF OF THE LESSOR OR ANY SECURED
PARTY. THE LESSEE ACKNOWLEDGES AND AGREES THAT NEITHER THE LESSOR NOR ANY
SECURED PARTY NOR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS AND EMPLOYEES,
NOR ANY COMPANY, PERSON OR FIRM CONTROLLING, CONTROLLED BY OR UNDER COMMON
CONTROL WITH ANY OF THEM NOR ANY OTHER PERSON ACTING ON BEHALF OF THE LESSOR
OR ANY SECURED PARTY HAS HAD AT ANY TIME PHYSICAL POSSESSION OF ANY PORTION
OF THE NUCLEAR MATERIAL, HAS MADE ANY INSPECTION THEREOF, HAS GIVEN ANY
ADVICE TO THE LESSEE OR HAS MADE ANY RECOMMENDATION TO THE LESSEE WITH
RESPECT TO THE
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CHOICE OF THE SUPPLIER, VENDOR OR PROCESSOR OF THE NUCLEAR MATERIAL OR WITH
RESPECT TO THE PROCESSING, MILLING, CONVERSION, ENRICHMENT, FABRICATION,
CONTAINERIZATION, TRANSPORTATION, UTILIZATION, STORAGE OR REPROCESSING OF THE
SAME. THE LESSEE ALSO ACKNOWLEDGES AND AGREES THAT NEITHER THE LESSOR NOR ANY
SECURED PARTY NOR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS AND EMPLOYEES,
NOR ANY COMPANY, PERSON OR FIRM CONTROLLING, CONTROLLED BY OR UNDER COMMON
CONTROL WITH ANY OF THEM, NOR ANYONE ACTING ON BEHALF OF THE LESSOR OR ANY
SECURED PARTY HAS MADE ANY WARRANTY OR OTHER REPRESENTATION, EXPRESS OR
IMPLIED, THAT THE NUCLEAR MATERIAL LEASED OR TO BE LEASED UNDER THIS LEASE
AGREEMENT (a) WILL NOT RESULT IN INJURY OR DAMAGE TO PERSONS OR PROPERTY, (b)
WILL BE USEABLE BY THE LESSEE OR WILL ACCOMPLISH THE RESULTS WHICH THE LESSEE
INTENDS FOR SUCH NUCLEAR MATERIAL OR (c) IS SAFE IN ANY MANNER OR RESPECT.
THE LESSEE ALSO ACKNOWLEDGES AND AGREES THAT NEITHER THE LESSOR NOR ANY
SECURED PARTY NOR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS AND EMPLOYEES,
NOR ANY COMPANY, PERSON OR FIRM CONTROLLING, CONTROLLED BY OR UNDER COMMON
CONTROL WITH ANY OF THEM, AND ANYONE ACTING ON BEHALF OF ANY OF THEM IS A
MANUFACTURER OR ENGAGED IN THE SALE OR DISTRIBUTION OF NUCLEAR MATERIAL AND
THAT NONE OF THE FOREGOING PERSONS HAS MADE OR DOES HEREBY MAKE ANY
REPRESENTATION, WARRANTY OR COVENANT, EXPRESS OR IMPLIED, WITH RESPECT TO THE
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, CONDITION, QUALITY,
USEABILITY, DURABILITY, SUITABILITY OR CONSEQUENCES OF USE OR MISUSE OF THE
NUCLEAR MATERIAL IN ANY RESPECT OR IN CONNECTION WITH OR FOR THE PURPOSES OR
USES OF THE LESSEE, OR ANY OTHER REPRESENTATION OR WARRANTY OF ANY KIND OR
CHARACTER WHATSOEVER, EXPRESS OR IMPLIED.
8. Lease Term; Early Termination; Termination of Leasing Record.
(a) The Lessor hereby leases to the Lessee, and the Lessee
hereby leases from the Lessor, the Nuclear Material for the term provided in
this Lease Agreement and subject to the terms and provisions hereof.
(b) This Lease Agreement shall become effective at 12:01 A.M.,
Eastern time, on the Closing, and, unless earlier terminated as provided in
Sections 8(c), 17 or 18, the term of this Lease Agreement shall end at the close
of business on the later of (i) the date on which there is no outstanding
principal of, or interest or premium, if any, on any of the Outstandings or (ii)
the Termination Date but in each case in no event later than November 17, 2015.
(c) In the event that during the term of this Lease Agreement,
the then effective Termination Date is not extended pursuant to Section 5.01 of
the Credit Agreement, the Lessee shall have the option, exercisable at any time
beginning 180 days before such Termination Date upon written notice to the
Lessor and the Secured Parties prior to such Termination Date to purchase all
(but not less than all) of the Nuclear Material and any spent fuel related
thereto for which title has not been transferred to the Lessee for a purchase
price equal to the Stipulated Casualty Value of such Nuclear Material at the
time of such purchase plus the Termination Rent. If the Lessee exercises such
purchase option, the purchase of the Nuclear Material shall occur on such date,
on or prior to such Termination Date, as may be agreed upon by the Lessor and
the Lessee and of which the Lessee has given the Secured Parties prior written
notice. Upon receipt of payment of the purchase price, the Lessor shall deliver
to the Lessee a ▇▇▇▇▇▇'▇ ▇▇▇▇ of Sale, substantially in the form of Exhibit E,
transferring all right, title, interest and claim of the Lessor to the Nuclear
Material and any spent fuel related thereto for which title has not already been
transferred to the Lessee, to the Lessee or the Lessee's designee, free and
clear of all Liens created by the Collateral Agreements, together with such
documents, if any, as may be required to evidence the release of such Liens. The
later of (i) the date on which there is no outstanding principal of, or
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interest or premium, if any, on any of the Outstandings or (ii) the date of any
sale by the Lessor of all of the Nuclear Material as provided in this Section
8(c) shall constitute the Termination Settlement Date, and this Lease Agreement
shall terminate as of such date.
(d) In the event that during the term of this Lease Agreement
the then effective Termination Date is not extended pursuant to Section 5.01 of
the Credit Agreement and the Lessee shall not have exercised its option to
purchase pursuant to Section 8(c), the Lessee shall attempt to sell, or if no
sale is possible, to otherwise convey, on behalf of the Lessor, ownership of the
Nuclear Material to a third party not disqualified by any applicable statute,
law, regulation or agreement from acquiring such Nuclear Material, and, upon
prior written notice to the Lessor and the Secured Parties of the terms and date
of such sale, the Lessor shall furnish title papers as may be necessary to
effect such sale or conveyance on an as-is, where-is, non-installment, cash sale
basis, without recourse to or warranty or agreement of any kind by the Lessor.
The proceeds of such sale or conveyance shall be paid to the Lessor, and any
amount so paid shall constitute a credit against the amount of the Stipulated
Casualty Value payable by the Lessee under Section 8(e); provided, however, that
any proceeds of such sale or conveyance in excess of the amount payable by the
Lessee under Section 8(e) shall be retained by the Lessee.
(e) On the Termination Date unless the Lessee shall have
exercised its purchase option set forth in Section 8(c) and paid the Lessor the
purchase price of the Nuclear Material as provided therein, the Lessee shall pay
to the Lessor an amount equal to the sum of (i) the Stipulated Casualty Value of
all Nuclear Material leased under this Lease Agreement as of such Termination
Date and of all Nuclear Material sold or conveyed pursuant to Section 8(d) (less
any credit provided in Section 8(d)), and (ii) the Termination Rent as of such
Termination Date. Upon receipt of such payment, the Lessor shall deliver to the
Lessee or any designee of the Lessee a ▇▇▇▇▇▇'▇ ▇▇▇▇ of Sale, substantially in
the form of Exhibit E, transferring all right, title, interest and claim of the
Lessor to the Nuclear Material and any spent fuel relating thereto for which
title has not been transferred to the Lessee to the Lessee or the Lessee's
designee, free and clear of all Liens created by the Collateral Agreements,
together with such documents, if any, as may be required to evidence the release
of such Liens.
(f) In the event that during the term of this Lease Agreement,
the then effective Termination Date is not extended pursuant to Section 5.01 of
the Credit Agreement, all obligations of the Lessor and Lessee under this Lease
Agreement with respect to the Nuclear Material, including the obligation of the
Lessee to pay Basic Rent and the obligation of the Lessor to acquire and pay for
the Nuclear Material and to lease the same to the Lessee shall terminate on the
date on which the Lessor receives the payment specified in Section 8(c) or
Section 8(e).
(g) The Lessee shall deliver to the Lessor and to the Secured
Parties a Rent Due and SCV Confirmation Schedule in the form of Exhibit F within
thirty (30) days following the date on which any Nuclear Material or spent fuel
resulting from the Nuclear Material is removed from the reactor of the
Generating Facility for purposes of "cooling-off" preliminary to reprocessing or
permanent on-site safe storage and/or off-site disposal. If the Lessee elects
within thirty (30) days following the receipt by the Lessor of such Rent Due and
SCV Confirmation Schedule to extend the lease term for the purposes of
reprocessing any such Nuclear Material, then the Lessor and the Lessee shall
enter into an Interim Leasing Record with respect to such Nuclear Material in
its then condition. In all other cases, the Final Leasing Record with respect to
any such Nuclear Material or spent fuel resulting from such Nuclear Material
shall be
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terminated and the Lessee shall immediately pay to the Lessor all amounts,
including the Stipulated Casualty Value, if any, with respect to such Nuclear
Material or spent fuel resulting from such Nuclear Material, and, upon receipt
thereof, the Lessor shall deliver to the Lessee or to any designee of the Lessee
a ▇▇▇▇▇▇'▇ ▇▇▇▇ of Sale, substantially in the form of Exhibit E, transferring
all right, title, interest and claim of the Lessor to such Nuclear Material or
spent fuel resulting from such Nuclear Material for which title has not already
been transferred to the Lessee or the Lessee's designee, free and clear of all
Liens created by the Collateral Agreements, together with such documents, if
any, as may be required to evidence the release of such Liens.
9. Payment of Rent; Payments with Respect to the Lessor's Financing Costs.
(a) Basic Rent. The Lessee shall pay Basic Rent monthly in
arrears on the first day of the next succeeding month. If such first day of the
month is not a Business Day, then payment shall be made on the next succeeding
Business Day.
(b) Additional Rent. In addition to the Basic Rent, the Lessee
will also pay from time to time as provided in this Lease Agreement or on demand
of the Lessor, all Additional Rent on the due date thereof. In the event of any
failure by the Lessee to pay any Additional Rent, the Lessor shall have all the
rights, powers and remedies as in the case of failure to pay Basic Rent.
(c) Prepayments of Basic Rent. The Lessee may prepay Basic
Rent at any time. Such payment shall be credited against subsequent amounts owed
by the Lessee on account of Basic Rent.
(d) Wire Payment Procedure for Paying Basic Rent. All payments
of Rent and other payments to be made by the Lessee to the Lessor pursuant to
this Lease Agreement shall be paid to the Lessor (or, at the Lessor's request,
to the Secured Parties) in lawful money of the United States in Collected Funds
by wire transfer pursuant to Section 3.03 of the Credit Agreement. The Lessee
shall furnish to the Lessor and the Secured Parties each month during the term
of the Lease Agreement a summary of the rental calculations for such month
covering all outstanding Leasing Records. On each Basic Rent Payment Date, the
Lessee shall deliver to the Lessor and the Secured Parties a signed and
completed Rent Due and SCV Confirmation Schedule. The Lessee shall be
responsible for the accuracy of the matters contained in all such schedules
delivered by the Lessee pursuant to the provisions of this Lease Agreement.
10. Compliance with Laws; Restricted Use of Nuclear Material; Assignments;
Permitted Liens; Spent Fuel.
(a) Compliance with Legal Requirements. Subject to the
provisions of Section 11 hereof, the Lessee agrees to comply with all Legal
Requirements.
(b) Recording of Title. The Lessee shall promptly and duly
execute, deliver, file and record all such further counterparts of this Lease
Agreement or such certificates, Bills of Sale, financing and continuation
statements and other instruments as may be reasonably requested by the Lessor
and take such further actions as the Lessor shall from time to time reasonably
request, in order to establish, perfect and maintain the rights and remedies
created or intended to be created in favor of the Lessor and the Secured Parties
under this Lease Agreement and the Lessor's title to and interest in the Nuclear
Material as against the Lessee or any third party in any applicable
jurisdiction.
8
(c) Exclusive Use of Nuclear Material. So long as no Lease
Event Default shall have occurred and be continuing, the Lessee may use the
Nuclear Material in the regular course of its business or in the business of any
subsidiary or affiliate of the Lessee, and, subject to Section 3(d) and upon
thirty (30) days' prior notice in writing to the Lessor and the Secured Parties,
or upon such shorter prior notice in writing promptly given upon the Lessee's
receipt of notice from any Manufacturer that the Nuclear Material is to be
moved, and at the Lessee's sole expense (without limiting the Lessee's rights to
request payment by the Lessor of such expense as provided in Section 6 hereof)
move such Nuclear Material to any jurisdiction approved in writing by the Lessor
in the contiguous forty-eight (48) states of the United States of America and
the District of Columbia for the purpose of having services performed on such
Nuclear Material in connection with any stage of the Nuclear Material Cycle
other than Heat Production and the "cooling off" stage, provided that (i) no
such movement of the Nuclear Material shall materially reduce the then fair
market value of such Nuclear Material, (ii) such Nuclear Material shall be and
remain the property of the Lessor, subject to this Lease Agreement, and (iii)
all Legal Requirements (including, without limitation, all necessary government
consents, permits and approvals) shall have been met or obtained by the Lessee,
on its own behalf and on behalf of the Lessor, and all necessary recordings,
filings and registrations or recordings, filings and registrations which the
Lessor shall reasonably consider advisable shall have been duly made in order to
protect the validity and effectiveness of this Lease Agreement and the security
interest created in the Security Agreement. At least once each year, or more
frequently if the Lessor reasonably so requests, the Lessee shall advise the
Lessor and the Secured Parties in writing where all Nuclear Material as of such
date is located. The Lessee shall maintain and make available to the Lessor for
examination upon reasonable notice complete and adequate records pertaining to
receipt, possession, use, location, movement, physical inventories and any other
information reasonably requested by the Lessor with respect to the Nuclear
Material.
(d) Additional Lessee Covenants. The Lessee agrees to use
every reasonable precaution to prevent loss or damage to the Nuclear Material.
All individuals handling or operating Nuclear Material in the possession of the
Lessee shall be conclusively presumed not to be agents of the Lessor. The Lessee
shall cooperate fully with the Lessor and all insurance companies and
governmental agencies providing insurance under Section 12 hereof in the
investigation and defense of any claims or suits arising from the licensing,
acquisition, storage, containerization, transportation, blending, transfer,
consumption, leasing, insuring, operating, disposing, fabricating and
reprocessing of the Nuclear Material. To the extent required by any applicable
law or regulation, the Lessee shall attach to the Nuclear Material the form of
required notice to protect or disclose the ownership of the Lessor or that the
Nuclear Material is leased. So long as no Lease Event of Default shall have
occurred and be continuing, the Lessor will assign or otherwise make available
to the Lessee all of its rights under any Manufacturer's warranty on Nuclear
Material. The Lessee shall pay all costs, expenses, fees and charges, except
Acquisition Costs, incurred by the Lessee in connection with the use and
operation of the Nuclear Material during the term of the lease of such Nuclear
Material. The Lessee hereby assumes all risks of loss or damage of Nuclear
Material however caused and shall, at its own expense, keep the Nuclear Material
in good operating condition and repair, reasonable wear and tear, obsolescence
and exhaustion excepted.
(e) Assignment by Lessor. Except as otherwise herein provided,
the Lessor may not, without the prior written consent of the Lessee, sell,
assign, transfer or convey the Nuclear Material or any interest therein or in
the Lease Agreement, or grant to any party a security interest in, or create a
9
lien or encumbrance upon, all or any part of its right, title and interest in
this Lease Agreement and in any Nuclear Material. After receipt by the Lessee of
written notice from the Lessor of any assignment by the Lessor of Rents or other
sums payable by the Lessee under this Lease Agreement, the Lessee shall make
such payments as directed in such notice of assignment, and such payments shall
discharge the obligations of the Lessee hereunder to the extent of such
payments. The Lessee hereby consents to the security interest and other rights
and interests granted to the Secured Parties under the Security Agreement, dated
as of the date first above written.
(f) Liens; Permitted Liens. The Lessee will not directly or
indirectly create or permit to be created or to remain and will discharge any
Lien with respect to the Nuclear Material or any portion thereof, or upon the
Lessee's leasehold interest therein, or upon the Basic Rent, Additional Rent, or
any other sum payable under this Lease Agreement, other than Permitted Liens.
(g) Assignment by Lessee. Notwithstanding any provision of
this Lease Agreement to the contrary, subject to applicable laws and regulations
and so long as no Lease Event of Default shall have occurred and be continuing,
the Lessee may sublease the Nuclear Material provided that (i) the Lessee has
given prior written notice of such sublease to the Lessor, (ii) such sublease is
not inconsistent with, and is expressly subject to, this Lease Agreement and
(iii) such sublease does not in any way limit or affect the Lessee's duties and
obligations under this Lease Agreement.
(h) Transfer of Title to Manufacturers. The parties recognize
that, during the processing and reprocessing of Nuclear Material before and
after its utilization in the Generating Facility for the production of power,
the Manufacturer performing services on the Nuclear Material may require that
title thereto be transferred to such Manufacturer and/or that the Nuclear
Material be commingled with other nuclear material, with an obligation for the
Manufacturer, upon completion of the services, to reconvey a specified amount of
nuclear material. The standard enrichment contracts of the Department of Energy
contain such provisions. Therefore, the parties agree that (i) Nuclear Material
may become subject to such a contract provision and that the action contemplated
by such a provision may be taken, notwithstanding any provision of this Lease
Agreement to the contrary, (ii) as between the Lessor and the Lessee, such
Nuclear Material shall be deemed to remain leased under this Lease Agreement
while title thereto is in the Manufacturer, and (iii) the nuclear material
exchanged by the Manufacturer upon completion of its services shall be
automatically leased under this Lease Agreement in substitution for the Nuclear
Material originally delivered to the Manufacturer.
(i) Substitution of Nuclear Material. The Lessee shall be
permitted to exchange Nuclear Material for other Nuclear Material of equal or
greater fair market value provided that the Lessor receives title to such
substituted Nuclear Material free and clear of any Lien other than such Liens as
may be created by the Security Agreement or permitted under Section 10(h). Any
additional costs incurred in order to effect such an exchange shall be paid by
the Lessor in accordance with the procedures set forth in Section 6(c) and shall
be added to the Acquisition Cost of the Nuclear Material. A supplemental Leasing
Record dated the date that the Lessor makes such further payment shall be signed
by the Lessor and the Lessee to record the revised Acquisition Cost and shall
include a full description of the substituted Nuclear Material, notice of any
change in location and such additional details upon which the parties may agree.
(j) Spent Fuel. Without the consent of the Lessor, the Lessee
shall not permit any Nuclear Material, which shall have been removed from a
Generating Facility for the purpose of "cooling-off," storage, repair or
10
reprocessing to be removed from the site of the Generating Facility unless (i)
the new site of such Nuclear Material is a facility maintaining liability
insurance and indemnification fully insuring and indemnifying the Lessor, the
Lessee and the Secured Parties under the Atomic Energy Act and any other
applicable law, rule or regulation, and (ii) except if the lease term is
extended pursuant to the second sentence of Section 8(g), the lease of such
Nuclear Material shall, concurrently with its removal from the Generating
Facility, be terminated by the Lessee pursuant to the provisions of Section 8 or
18 hereof, as applicable, with the Lessee acquiring the ownership thereof
pursuant to Section 8(e), 8(g) or Section 18(c), as applicable.
11. Permitted Contests. The Lessee at its expense may, in its own
name or, if necessary and permitted, in the name of the Lessor (and, if
necessary but not so permitted, the Lessee may require the Lessor to) contest
after prior notice to the Lessor, by appropriate legal or administrative
proceedings conducted in good faith and with due diligence, the amount, validity
or application, in whole or in part, of any Imposition or Lien therefor, or any
Legal Requirements or Insurance Requirements, or any matter underlying Lessee's
indemnity obligations under Section 13 hereof, or any other Lien or contract or
agreement referred to in Section 10(f) hereof; provided that (i) in the case of
an unpaid Imposition or Lien therefor, such proceedings shall suspend the
collection of such Imposition or the enforcement of such Lien against the
Lessor, (ii) neither the Lessee's use of the Nuclear Material or any portion
thereof nor the taking of any step necessary or proper with respect to such
Nuclear Material in any stage of the Nuclear Material Cycle nor the performance
of any other act required to be performed by the Lessee under this Lease
Agreement would be enjoined, prevented or otherwise interfered with, (iii) the
Lessor would not be subject to any additional civil liability (other than
interest which the Lessee agrees to pay) or any criminal liability for failure
to pay any such Imposition or to comply with any such Legal Requirements or
Insurance Requirements or any such other Lien, contract or agreement, and (iv)
the Lessee shall have set aside on its books adequate reserves (in accordance
with generally accepted accounting principles) and shall have furnished such
security, if any, as may be required in the proceedings or reasonably requested
by the Lessor. The Lessee will pay, and save the Lessor, the Owner Trustee, U.S.
Trust and the Secured Parties harmless against, all losses, judgments, decrees
and costs, including attorneys' fees and expenses, in connection with any such
contest and will, promptly after the determination of such contest, pay and
discharge the amounts which shall be levied, assessed or imposed or determined
to be payable, together with all penalties, fines, interest, costs and expenses
incurred in connection with such contest. All rights and indemnification
obligations under this Section 11 and each other indemnification obligation in
favor of the Lessor, the Owner Trustee, U.S. Trust and the Secured Parties under
this Lease Agreement shall survive any termination of this Lease Agreement or of
the lease of any Nuclear Material hereunder.
12. Insurance; Compliance with Insurance Requirements. The Lessee
shall comply with all Insurance Requirements and with all Legal Requirements
pertaining to insurance. Without limiting the foregoing:
(a) Liability and Casualty Insurance. The Lessee shall, at its
own cost and expense, procure and maintain, or cause to be procured and
maintained, liability insurance and indemnification with respect to the Nuclear
Material insuring and indemnifying the Lessor, the Owner Trustee, U.S. Trust,
the Lessee, and the Secured Parties to the full extent required or available,
whichever may be greater, under the Atomic Energy Act or under any other
applicable law, rule or regulation. In the event the provisions of the Atomic
Energy Act with respect to liability insurance and the indemnification of
owners,
11
licensees and operators of Nuclear Material or any other provisions of the
Atomic Energy Act which benefit the Lessor, the Owner Trustee, U.S. Trust or the
Secured Parties shall change, then the Lessee shall use its best efforts to
obtain equivalent insurance and indemnification agreements from the Nuclear
Regulatory Commission or from such other public and/or private sources from
which such coverage is available. The Lessee shall also, at its own cost and
expense, procure and maintain, or cause to be procured and maintained, physical
damage insurance with respect to the Nuclear Material insuring the Lessor, the
Owner Trustee, U.S. Trust and the Secured Parties against loss or damage to the
Nuclear Material in a manner which is consistent at all times with current
prudent utility industry practice in the United States; provided, however, that
the Lessee shall in any event maintain physical damage insurance coverage for
its Three Mile Island Unit 1 nuclear generating station site, including the
Nuclear Material, in an amount not less than $1.11 billion. Such liability and
physical damage insurance and indemnification agreements may be subject to
deductible amounts which do not exceed in the aggregate $5,000,000, and the
Lessee may self-insure with respect to such liability and physical damage
insurance and indemnification agreements to the extent of $5,000,000, provided
that such deductible amounts and such self-insurance are permitted under all
applicable law, rules and regulations.
(b) Third Parties; Insurance Requirements. The Lessee shall
use its best efforts to provide that the Nuclear Material, while in the
possession of third parties, is covered for liability insurance and
indemnification to the maximum extent available, and for physical damage
insurance in an amount not less than the Stipulated Casualty Value of such
Nuclear Material. To the extent that any such third party is maintaining such
insurance coverage for the Nuclear Material, the Lessee shall have no obligation
to do so under this Lease Agreement.
(c) Named Insureds; Loss Payees. The Lessee shall provide for
the Lessor, the Owner Trustee, U.S. Trust and the Collateral Agent to be named
additional insureds where possible, and, with respect to physical damage
coverage, named loss payees to the full extent of their interests in all
insurance policies and indemnification agreements relating to the Nuclear
Material required under this Section. All such policies and, where possible,
indemnification agreements, shall provide for at least ten (10) days' prior
written notice to the Lessor, the Owner Trustee, U.S. Trust and the Collateral
Agent of any cancellation or material alteration of such policies.
(d) Insurance Certificates. The Lessee shall, upon request of
the Lessor, the Owner Trustee, U.S. Trust or the Collateral Agent, provide the
Lessor, the Owner Trustee, U.S. Trust or the Collateral Agent, as the case may
be, with copies of the policies or insurance certificates in respect of the
insurance procured pursuant to the provisions of this Section and shall advise
the Lessor, the Owner Trustee, U.S. Trust and the Collateral Agent of all
expirations and renewals of policies and all notices issued by the insurers with
respect to such policies. Within a six-month period from the execution of this
Lease Agreement and at yearly intervals thereafter, the Lessee shall furnish to
the Lessor, the Owner Trustee, U.S. Trust and the Collateral Agent a certificate
as to the insurance coverage provided pursuant to this Section and shall further
give notice as to any material change in the nature or availability of such
coverage, including any material change whatsoever in the provisions of the
Atomic Energy Act or any other applicable law, rule or regulation with respect
to liability insurance and indemnification, or, immediately after the Lessee
becomes aware, or should reasonably be expected to become aware, of any material
change in the application, interpretation or enforcement thereof. The Lessor,
the Owner Trustee, U.S. Trust or the Collateral Agent shall be under no duty to
examine such insurance policies or indemnification agreements or to advise the
Lessee in case the Lessee is not in compliance with any Insurance Requirements.
12
13. Indemnity. Without limitation of any other provision of this
Lease Agreement, including Section 11, the Lessee agrees to indemnify and hold
harmless each of the Lessor, the Owner Trustee, U.S. Trust and the Secured
Parties and all companies, persons or firms controlling, controlled by, or under
common control with any of them and the respective shareholders, directors,
officers and employees of the foregoing against any and all claims, demands and
liabilities of whatever nature and all costs, losses, damages, obligations,
penalties, causes of action, judgments and expenses (including attorneys' fees
and expenses) directly or indirectly relating to or in any way arising out of:
(a) defects in title to Nuclear Material upon acquisition by
the Lessor or in ownership of and interest in the Nuclear Material (the term
"Nuclear Material" when used in this Section 13 shall include, in addition to
all other Nuclear Material, nuclear material the lease of which has been
terminated and which is in storage, or is being transported to storage, and
which has not been sold or disposed of by the Lessor to the Lessee or to a third
party);
(b) the ownership, licensing, ordering, rejection, use,
nonuse, misuse, possession, control, installation, acquisition, storage,
containerization, transportation, blending, transfer, consumption, leasing,
insuring, operating, disposing, fabricating, channelling, refining, milling,
enriching, conversion, cooling, processing, condition, operation, inspection,
repair and reprocessing of the Nuclear Material, or resulting from the condition
of the environment including the adjoining and/or underlying land, water,
buildings, streets or ways, except to the extent that such costs are included in
the Acquisition Cost of such Nuclear Material within the limits specified in
Section 4 (or within any change of such limits agreed to in writing by the
Lessor and the Lessee) and except for any general administrative expenses of the
Secured Parties and of their representatives;
(c) the assertion of any claim or demand based upon any
infringement or alleged infringement of any patent or other right, by or in
respect of any Nuclear Material; provided, however, that the Lessor shall have
made available to the Lessee all of the Lessor's rights under any similar
indemnification from the Manufacturer of such Nuclear Material under any Nuclear
Material Contract;
(d) all federal, state, county, municipal, foreign or other
fees and taxes of whatever nature including, but not limited to, license,
qualification, franchise, sales, use, business, gross receipts, ad valorem,
property, excise, and occupation fees and taxes and penalties and interest
thereon, whether assessed, levied against or payable by the Lessor or any
Secured Party or to which the Lessor or any Secured Party is subject with
respect to the Nuclear Material or the Lessor's or any Secured Party's ownership
thereof or interest therein or the licensing, ordering, ownership, use,
possession, control, acquisition, storage, containerization, transportation,
blending, milling, enriching, transfer, consumption, leasing, insuring,
operating, disposing, fabricating, channelling, refining, conversion, cooling
and reprocessing of Nuclear Material or measured in any way by the value thereof
or by the business of investment in, financing of or ownership by the Lessor or
any Secured Party with respect thereto; provided, however, that the Lessee shall
not be obligated to indemnify any Secured Party for any taxes, whether federal,
state or local, based on or measured by net income of any Secured Party where
taxable income is computed in substantially the same manner as taxable income is
computed under the Code;
13
(e) any injury to or disease, sickness or death of persons or
loss of or damage to property occurring through or resulting from any Nuclear
Incident involving or connected in any way with the Nuclear Material or any
portion thereof;
(f) any violation, or alleged violation, of this Lease
Agreement by the Lessee or of any contracts or agreements to which the Lessee is
a party or by which it is bound or any laws, rules, regulations, orders, writs,
injunctions, decrees, consents, approvals, exemptions, authorizations, licenses
and withholdings of objection, of any governmental or public body or authority
and all other requirements having the force of law applicable at any time to the
Nuclear Material or any action or transaction by the Lessee with respect thereto
or pursuant to this Lease Agreement;
(g) performance of any labor or service or the furnishing of
any materials in respect of the Nuclear Material or any portion thereof, except
to the extent that such costs are included in the Acquisition Cost of such
Nuclear Material within the limits specified in Section 4 (or within any change
of such limits agreed to in writing by the Lessor and the Lessee); or
(h) liabilities based upon a theory of strict liability in
tort, negligence or willful acts to the extent that such liabilities relate to
the Nuclear Material or any action or transaction with respect thereto or
pursuant to this Lease Agreement.
The Lessee shall, upon demand, reimburse the Lessor, the Owner Trustee, U.S.
Trust, the Secured Parties or other indemnified parties, as the case may be, for
any sum or sums expended with respect to any of the foregoing or advance such
amount, upon request by the Lessor, the Owner Trustee, U.S. Trust, the Secured
Parties or such other party for payment thereof. With respect solely to the
Lessor, the amount of any payment obligation of the Lessee under this Section 13
shall be determined on a net, after-tax basis, taking into account any tax
benefit to the Lessor. Notwithstanding the foregoing, the Lessee shall not
indemnify or hold harmless the Lessor, the Owner Trustee, U.S. Trust, the
Secured Parties or other indemnified parties for (i) any claims, demands,
liabilities, costs or expenses which arise, result from or relate to obligations
of such party as an insurer under contracts or agreements of insurance or
reinsurance or (ii) any liability arising from the willful misconduct or gross
negligence of the Lessor, the Owner Trustee, U.S. Trust, the Secured Parties or
other indemnified parties; provided, however, that the Lessee shall in any event
indemnify and hold harmless the Lessor, the Owner Trustee, U.S. Trust, the
Secured Parties and other indemnified parties for that part of any such
liability to which the Lessee has contributed. Without limiting any of the
foregoing provisions of this Section 13, to the extent that the Lessee in fact
indemnifies the Lessor, the Owner Trustee, U.S. Trust, the Secured Parties or
such other party under this indemnity provision, the Lessee shall be subrogated
to the rights of the Lessor, the Owner Trustee, U.S. Trust, the Secured Parties
and such other party in the affected transaction and shall have a right to
determine the settlement of claims with respect to such transaction, provided
that any such rights to which the Lessee shall be subrogated shall be
subordinate and subject in right of payment to the prior payment in full of all
liabilities to the Lessor, the Owner Trustee, U.S. Trust, the Secured Parties or
other indemnified parties of the person or entity in respect of which such
rights exist. The Lessor shall claim, on a timely basis, any refund to which it
may be entitled with respect to any fees or taxes for which the Lessor has
sought indemnification from the Lessee under Section 13(d), shall take all steps
necessary to prosecute diligently such claim and shall pay over to the Lessee
any refund (together with any interest received thereon) recovered by the Lessor
with respect to such fees or taxes as soon as practicable following receipt
thereof, provided that the Lessee shall have
14
previously indemnified the Lessor with respect to such fees or taxes. The Owner
Trustee, U.S. Trust and the Secured Parties, at the expense of the Lessee, (i)
shall cooperate with the Lessee in such manner as the Lessee shall reasonably
request in order to claim, on a timely basis, any refund to which the Owner
Trustee, U.S. Trust or the Secured Parties may be entitled with respect to any
fees or taxes for which the Lessee has indemnified the Owner Trustee, U.S. Trust
or any Secured Party or for which the Lessee has an obligation to indemnify the
Owner Trustee, U.S. Trust or the Secured Parties under Section 13(d) (provided
that the Lessee is not in default of such obligation) if such cooperation is
necessary in order to claim such refund, (ii) shall take all steps which the
Lessee shall reasonably request which are necessary to prosecute such claim, and
(iii) shall pay over to the Lessee any refund (together with any interest
received thereon) recovered by the Owner Trustee, U.S. Trust or any Secured
Party with respect to such fees or taxes as soon as practicable following
receipt thereof, provided that the Lessee shall have previously indemnified the
Owner Trustee, U.S. Trust or such Secured Party with respect to such fees or
taxes. All rights and indemnification obligations under this Section 13, and
each other indemnification obligation in favor of the Lessor, the Owner Trustee,
U.S. Trust and the Secured Parties under this Agreement, shall survive any
termination of this Lease Agreement or of the lease of any Nuclear Material
hereunder.
14. Casualty and Other Events. Upon the occurrence of any one or more of the
following events:
(a) the loss, destruction or damage beyond repair of any
Nuclear Material, or
(b) the commandeering, condemnation, attachment or loss of use
to the Lessee of any Nuclear Material by reason of the act of any third party or
governmental instrumentality or the deprivation or loss of use to the Lessee of
any Nuclear Material for any other reason, other than by reason of a Lease Event
of Default, for a period exceeding ninety (90) days; or
(c) a determination by the Lessee in its sole discretion that
any Nuclear Material is no longer useful to the Lessee, provided, however, that
(i) no Lease Event of Default has occurred and is continuing, and (ii) no such
determination may be made by the Lessee with respect to any Nuclear Material
prior to ---------- --;
Then, in any such case, the Lessee promptly shall give written
notice to the Lessor and the Secured Parties of any such event, and upon the
earlier of (i) ten (10) days following receipt of any insurance or other
proceeds paid with respect to the foregoing or (ii) one hundred and twenty (120)
days after the occurrence of any such event, the Lessee shall pay to the Lessor
an amount equal to the then Stipulated Casualty Value of such Nuclear Material,
together with any Basic Rent and Additional Rent then due with respect to such
Nuclear Material. The lease of such Nuclear Material hereunder and the
obligation of the Lessee to pay Basic Rent and Additional Rent with respect to
such Nuclear Material shall continue until the day on which the Lessor receives
payment of such Stipulated Casualty Value, Basic Rent and Additional Rent. Upon
the giving of written notice of the occurrence of such an event, the Lessee
shall promptly use its best efforts to sell, or, if no sale is possible, to
otherwise convey, on behalf of the Lessor, ownership of such Nuclear Material to
a third party not disqualified by any applicable statute, law, regulation or
agreement from acquiring such Nuclear Material, and the Lessor shall furnish
title papers as may be necessary to effect such sale or conveyance on an as-is,
where-is, non-installment, cash sale basis without recourse to or warranty or
agreement of any kind by the Lessor. Any such sale or conveyance shall be
effected on or
15
before the date one hundred and twenty (120) days after the date of the
occurrence of such event. The proceeds of such sale or conveyance shall be paid
to the Lessor, and any amount so paid shall constitute a credit against the
amount of the Stipulated Casualty Value payable by the Lessee under this Section
14.
15. Nuclear Material to Remain Personal Property. It is expressly understood
and agreed that the Nuclear Material shall be and remain personal property
notwithstanding the manner in which it may be attached or affixed to realty
and notwithstanding any law or custom or the provisions of any lease,
mortgage or other instrument applicable to any such realty. The Lessee agrees
to indemnify the Lessor and the Secured Parties against, and to hold the
Lessor and the Secured Parties harmless from, all losses, costs and expenses
(including reasonable attorneys' fees and expenses) resulting from any of the
Nuclear Material becoming part of any realty. Upon termination of the lease
of any Nuclear Material, any costs of removal, transportation, storage and
delivery of such Nuclear Material shall be paid by the Lessee. The Lessor and
the Secured Parties shall not be liable for any physical damage caused to any
realty or any building by reason of the removal of the Nuclear Material
therefrom.
16. Events of Default. Each of the following events of default by the Lessee
shall constitute a "Lease Event of Default" and give rise to the rights on
the part of the Lessor described in Section 17 hereof:
(i) Default in the payment of Basic Rent or Additional
Rent, if any, on the date on which such payment is due and the continuance
of such default for five (5) days;
(ii) Default in the payment of Termination Rent;
(iii) The Lessee shall fail to maintain liability and
casualty insurance pursuant to its obligations under Section 12(a) of this
Lease Agreement;
(iv) The Lessee shall fail to perform its obligations to
purchase Nuclear Material pursuant to Section 8(e) of this Lease
Agreement;
(v) Any representation or warranty or statement made by
the Lessee (or any of its officers) herein or in connection with this
Lease Agreement shall prove to be incorrect or misleading in any material
respect when made;
(vi) Default in the payment or performance of any other
material liability or obligation or covenant of the Lessee to the Lessor,
and the continuance of such default for thirty (30) days after written
notice to the Lessee sent by registered or certified mail;
(vii) The Lessee suspends or discontinues its business
operations or becomes insolvent (however such insolvency may be evidenced)
or admits insolvency or bankruptcy or its inability to pay its debts as
they mature, makes an assignment for the benefit of creditors or applies
for or consents to the appointment of a trustee or receiver for the Lessee
or for the major part of its property;
(viii) The institution of bankruptcy, reorganization,
liquidation or receivership proceedings for relief under any bankruptcy
16
law or similar law for the relief of debtors by or against the Lessee and,
if instituted against the Lessee, its consent thereto or the pendency of
such proceedings for sixty (60) days;
(ix) An event of default (the effect of which is to
permit the holder or holders of any instrument, or the trustee or agent on
behalf of such holder or holders, to cause the indebtedness evidenced by
such instrument to become due prior to its stated maturity) shall occur
under the provisions of any instrument evidencing indebtedness for
borrowed money of the Lessee in a principal amount equal to at least
$20,000,000 or if any obligation of the Lessee for the payment of such
indebtedness shall become or be declared to be due and payable prior to
its stated maturity, or shall not be paid when due and is not paid within
the applicable cure period, if any, provided for the payment of such
indebtedness under such instrument;
(x) An event of default shall occur under the provisions
of any Basic Document and such default shall have continued beyond any
applicable cure period.
(xi) A final judgment in an amount in excess of
$20,000,000 is rendered against the Lessee, and within thirty (30) days
after the entry thereof, such judgment is not discharged or execution
thereof stayed pending appeal, or within thirty (30) days after the
expiration of any such stay, such judgment is not discharged; or
(xii) Other than pursuant to a condemnation proceeding,
any court, governmental officer or agency shall, under color of legal
authority, take and hold possession of any substantial part of the
property or assets of the Lessee.
17. Rights of the Lessor Upon Default of the Lessee. Upon the occurrence of
any Lease Event of Default, the Lessor may, in its discretion, and shall, at the
direction of the Secured Parties, do one or more of the following:
(a) Terminate the lease term of any or all Nuclear Material
upon five (5) days written notice to the Lessee sent by registered or certified
mail;
(b) Whether or not any lease of any Nuclear Material is
terminated, and, subject to any applicable law or regulation, take immediate
possession of any or all Nuclear Material or cause such Nuclear Material to be
taken from the possession of the Lessee, and/or take immediate possession of and
remove other property of the Lessor in the possession of the Lessee, wherever
situated and for such purpose enter upon any premises without liability for so
doing or require the Lessee, at the Lessee's expense, to deliver the Nuclear
Material, properly containerized and insulated for shipping to the Lessor or to
such other person as the Lessor may designate, in which case the risk of loss
shall be upon the Lessee until such delivery is made;
(c) Whether or not any action has been taken under (a) or (b)
above, and subject to any applicable law or regulation, sell any Nuclear
Material (with or without the concurrence and whether or not at the request of
the Lessee) at public or private sale, and the Lessee shall be liable for and
shall promptly pay to the Lessor all unpaid Rent to the date of receipt by the
Lessor of the proceeds of such sale plus any deficiency between the net proceeds
of such sale and the Stipulated Casualty Value of such Nuclear Material at the
17
time of such payment by the Lessee; provided, however, that any proceeds of such
sale in excess of the sum of such unpaid Rent, the Stipulated Casualty Value of
such Nuclear Material and all other amounts payable by the Lessee under this
Section 17 shall be received for the benefit of, and shall be paid over to the
Lessee, as soon as practicable after receipt thereof;
(d) Subject to any applicable law or regulation, sell in a
commercially reasonable manner, dispose of, hold, use, operate, remove, lease or
keep idle any Nuclear Material as the Lessor in its sole discretion may
determine, without any obligation to account to the Lessee with respect to such
action or inaction or for any proceeds thereof, except that the net proceeds of
any such selling, disposing of, holding, using, operating or leasing shall be
credited by the Lessor against any Rent accruing after the Lessor shall have
declared this Lease Agreement as to any or all of the Nuclear Material to be in
default pursuant to this Section; provided, however, that any net proceeds of
any such selling, disposing of, holding, using, operating or leasing in excess
of the sum of any such accrued Rent and all other amounts payable by the Lessee
under this Section 17 shall be received for the benefit of, and shall be paid
over to the Lessee, as soon as practicable after receipt thereof;
(e) Terminate this Lease Agreement as to any or all of the
Nuclear Material or exercise any other right or remedy which may be available
under applicable law or proceed by appropriate court action to enforce the terms
hereof or to recover damages for the breach hereof. If the Lessee fails to
deliver, promptly after written request, the Nuclear Material pursuant to (b),
above, subject to reasonable wear and tear, obsolescence and exhaustion, in good
operating condition and repair, or converts or destroys any Nuclear Material,
the Lessee shall be liable to the Lessor for all Rent then due and payable on
the Nuclear Material, all other amounts then due and payable under this Lease
Agreement, the then Stipulated Casualty Value of such Nuclear Material, plus any
loss, damage and expense (including without limitation reasonable attorneys'
fees and expenses) sustained by the Lessor by reason of such Lease Event of
Default and the exercise of the Lessor's remedies with respect thereto,
including any costs incurred under the Credit Agreement and the Security
Agreement, and any other amounts owed to the Secured Parties with respect to the
Notes. If, upon the occurrence of a Lease Event of Default, the Lessee delivers
Nuclear Material to the Lessor or to such other person as the Lessor may
designate, or if the Lessor repossesses or causes Nuclear Material to be
repossessed on its behalf, the Lessee shall be liable for and the Lessor may
recover from the Lessee all Rent on the Nuclear Material due and payable to the
date of such delivery or repossession, all other amounts due and payable under
this Lease Agreement, plus any loss, damage and expense (including without
limitation reasonable attorneys' fees and expenses) sustained by the Lessor by
reason of such Lease Event of Default and the exercise of the Lessor's remedies
with respect thereto. No remedy referred to in this Section 17 is intended to be
exclusive, but each shall be cumulative and in addition to any other remedy
referred to above or otherwise available to the Lessor at law or in equity and
the exercise in whole or in part by the Lessor of any one or more of such
remedies shall not preclude the simultaneous or later exercise by the Lessor of
any or all such other remedies. No waiver by the Lessor of any Lease Event of
Default shall in any way be, or be construed to be, a waiver of any future or
subsequent Lease Event of Default.
18. Termination After Certain Events.
(a) This Lease Agreement may terminate as provided in Section
18(b) below prior to the expiration of its term in connection with any of the
following "Terminating Events":
18
(i) The Lessor shall have given notice that the Lessor
is not satisfied with any change in the insurers, coverage, amount or
terms of any insurance policy or indemnity agreement required to be
obtained and maintained by the Lessee pursuant to Section 12;
(ii) There shall occur the revocation or material
adverse modification of any authorization, consent, exemption or approval
theretofore obtained from any regulatory body or governmental authority
necessary for the carrying out of the intent and purposes of this Lease
Agreement or the actions or transactions contemplated hereby, and the
effectiveness of any such revocation or material adverse modification
shall not be stayed pending any appeal thereof;
(iii) A Nuclear Incident involving or connected in any
way with the Nuclear Material shall have occurred, and the Lessor shall
have given notice to the Lessee that the Lessor believes such Nuclear
Incident may give rise to an aggregate liability, or to damage,
destruction or personal injury in excess of $20,000,000;
(iv) There shall have occurred a Deemed Loss Event;
(v) Any change in, or new interpretation by a
governmental authority having jurisdiction relating to, the ▇▇▇▇▇-▇▇▇▇▇▇▇▇
Act, as amended, or the Atomic Energy Act, or the regulations of the
Nuclear Regulatory Commission thereunder, in each case as in effect on the
date of this Lease Agreement, shall have been adopted, and the Lessor
shall have given notice to the Lessee that, in the opinion of independent
counsel selected by the Lessor and reasonably satisfactory to the Lessee
and the Secured Parties as a result of such change or new interpretation
the Lessor is prohibited from asserting any material right, protection or
defense available under applicable law as of the date of this Lease
Agreement with respect to civil or criminal actions brought in connection
with a Nuclear Incident;
(vi) Any law or regulation or interpretation (judicial,
regulatory or otherwise) of any law or regulation shall be adopted or
enforced by any Court or governmental authority, and as a result of such
adoption or enforcement, approval of the transactions contemplated by this
Lease Agreement shall be required and shall not have been obtained within
any applicable grace period after such adoption or enforcement or as a
result of which adoption or enforcement this Lease Agreement or any
transaction contemplated hereby, including any payments to be made by the
Lessee or the ownership of the Nuclear Material by the Lessor, shall be or
become unlawful, or the performance of this Lease Agreement shall be
rendered impracticable in any material way; or
(vii) Any governmental licenses, approvals or consents
with respect to the Generating Facility, without which the Generating
Facility cannot continue to operate, shall have been revoked and the
Lessee shall not have, in good faith, within one hundred and eighty (180)
days of such revocation, represented in writing to the Lessor that the
Lessee has made a good faith determination that such Generating Facility
will return to operation within twenty-four (24) months of such
revocation, or for any other reason the Generating Facility shall cease to
be operated for a period of twenty-four (24) consecutive months.
(b) Upon the happening of any of the Terminating Events listed
in Section 18(a), Lessor and/or the Secured Parties may, at their option,
terminate this Lease Agreement, such termination to be effective upon delivery
of the Notice contemplated by paragraph (d)(ii) below, except with respect to
19
obligations and liabilities of the Lessee, actual or contingent, which arose
under the Lease Agreement on or prior to the date of termination and except for
the Lessee's obligations set forth in Sections 10, 12 and 13, and in this
Section 18, all of which obligations will continue until the delivery of
documentation by the Lessor and the payment by the Lessee provided for below,
and except that after such delivery and payment, the Lessee's obligations under
Section 13 shall continue as therein set forth as shall all of Lessee's
indemnification obligations set forth in other sections of this Lease Agreement.
(c) Upon any such termination, the entire interest of the
Lessor in the Nuclear Material and any spent fuel relating thereto for which
title has not been transferred to the Lessee shall automatically transfer to and
be vested in the Lessee, without the necessity of any action by either the
Lessor or the Lessee, provided, however, that if the Lessor shall have
theretofore approved in writing such Person and the terms of such transfer, the
entire interest of the Lessor in such Nuclear Material and any spent fuel
relating thereto for which title has not been transferred to the Lessee shall,
upon such termination, automatically transfer to and be vested in any Person
designated by the Lessee.
(d) Promptly after either party shall learn of the happening
of any Terminating Event, such party shall give notice of the same to the other
party and to the Secured Parties.
(ii) If the Lessor and/or Secured Parties elect to
terminate the Lease Agreement, they shall give notice to the Lessee and the
Secured Parties or the Lessor, as the case may be, which notice shall (x)
acknowledge that the Lease Agreement has terminated, subject to the continuing
obligations of the Lessee mentioned above, and that title to and ownership of
such Nuclear Material and any spent fuel relating thereto for which title has
not been transferred to the Lessee has transferred to and vested in the Lessee
or such other Person, and (y) specify a Termination Settlement Date occurring
one hundred and fifty (150) days after the giving of such notice. After such
termination of this Lease Agreement and until such Termination Settlement Date,
the Lessee shall continue to pay Basic Rent and Additional Rent. On such
Termination Settlement Date, the Lessee shall be obligated to pay to the Lessor
as the purchase price for the Nuclear Material an amount equal to the sum of (x)
Stipulated Casualty Value of the Nuclear Material as of the Termination
Settlement Date and (y) the Termination Rent on the Termination Settlement Date.
The Lessor shall be obligated to deliver to the Lessee a ▇▇▇▇▇▇'▇ ▇▇▇▇ of Sale,
substantially in the form of Exhibit E, on an as-is, where-is, non-installment,
cash sale basis, without recourse to or warranty or agreement of any kind by the
Lessor acknowledging the transfer and vesting of title and ownership of the
Nuclear Material and any spent fuel relating thereto for which title has not
been transferred to the Lessee, in accordance with paragraph (c) above and
confirming that upon payment by the Lessee of the amounts set forth in the
immediately preceding sentence, the Nuclear Material is free and clear of the
Liens created by the Collateral Agreements, together with such documents, if
any, as may be required to evidence the release of such Liens.
19. Investment Tax Credit. To the extent that the Lessee determines the Nuclear
Material is or becomes eligible for any investment or similar credit under the
Code as now or hereafter in effect, the Lessee shall request in writing that the
Lessor elect to treat the Lessee as having acquired such Nuclear Material, and,
if permitted to do so under the Code and under any other applicable law, rule or
regulation, the Lessor, pursuant to such request of the Lessee, shall provide
the Lessee with an appropriate investment credit election and the Lessee shall
consent to such election. A condition to the Lessor's making such election will
be the provision by the Lessee of a report or statement with respect to all
Nuclear Material as to which the investment credit election is applicable. Such
report or statement shall contain such information and be in such form as may be
required for Internal Revenue Service reporting purposes. The Lessee shall
indemnify and hold harmless the Lessor and any affiliates with respect to any
adverse tax consequence, other than the loss of the credit, which may result
from such election including, but not limited to, any increase in the Lessor's
income taxes due to any required reduction of the Lessor's tax basis below the
Lessor's cost of the Nuclear Material, and the Lessee agrees to pay to or on
behalf of the Lessor, or otherwise make available to the Lessor, funds
sufficient to put the Lessor in the same after-tax position (other than by
reason of the loss of the investment credit) the Lessor would have been in if
such election had not been made.
20. Certificates; Information; Financial Statements.
(a) The Lessee will from time to time deliver to the Lessor
and the Secured Parties, promptly upon reasonable request (i) a statement
executed by any Vice President, Treasurer or Assistant Treasurer or any other
assistant officer of the Lessee, certifying the dates to which the sums payable
hereunder have been paid, that this Lease Agreement is unmodified and in full
effect (or, if there have been modifications, that this Lease Agreement is in
full effect as modified, and identifying such modifications) and that no Lease
Event of Default or Terminating Event has occurred and is continuing (or
specifying the nature and period of existence of any thereof and what action the
Lessee is taking or proposes to take with respect thereto), (ii) such
information with respect to the Nuclear Material as the Lessor or the Secured
Parties may reasonably request, and (iii) such information with respect to the
Lessee's operations, business, property, assets, financial condition or
litigation as the Lessor or any assignee of the Lessor or the Secured Parties
may reasonably request.
(b) The Lessee will deliver to the Lessor and the Secured
Parties:
(i) Quarterly Financial Statements. As soon as
practicable and in any event within ninety (90) days after the end of each
fiscal quarter (other than the last fiscal quarter in each fiscal year),
three (3) copies of a balance sheet of the Lessee (consolidated and
consolidating if the Lessee has any subsidiaries) as of the end of such
quarter and of statements of income and cash flows of the Lessee
(consolidated and consolidating if the Lessee has any subsidiaries) for
such quarter, setting forth in each case corresponding figures in
comparative form for the corresponding period of the preceding fiscal
year, each certified as true and correct by the chief accounting officer
thereof; provided, however, that delivery pursuant to clause (iii) below
of copies of the Lessee's Quarterly Report on Form 10-Q for such quarter
containing such financial statements filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements of this
clause (i);
(ii) Annual Financial Statements. As soon as practicable
and in any event within one hundred and twenty (120) days after the end of
each fiscal year, three (3) copies of an annual report of the Lessee
consisting of its financial statements, including a balance sheet as of
the end of such fiscal year (consolidated and consolidating if the Lessee
has any subsidiaries) and statements of income and cash flows for the year
then ended (consolidated and consolidating if the Lessee has any
subsidiaries), setting forth corresponding figures in comparative form for
the preceding fiscal year, with all notes thereto, all in reasonable
detail and certified by independent public accountants of recognized
standing
21
selected by the Lessee (only with respect to the consolidated financial
statements, if applicable); provided, however, that delivery pursuant to
clause (iii) below of copies of the Lessee's Annual Report on Form 10-K
for such fiscal year containing such financial statements filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this clause (ii); and
(iii) SEC Reports, etc. With reasonable promptness,
copies of all notices, reports or materials filed by the Lessee with the
Securities and Exchange Commission (or any governmental body or agency
succeeding to the functions of the Securities and Exchange Commission)
under the Securities Act of 1933, as amended, other than Registration
Statements on Form S-8 or any amendments thereto, or the Securities
Exchange Act of 1934, as amended, other than Annual Reports on Form 10-K,
and including without limitation, all Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Together with each delivery of financial statements required by clause (b)(i)
above, the Lessee will deliver to the Lessor and the Secured Parties an
Officer's Certificate stating that the Lessee is in compliance with the terms of
this Lease Agreement and stating that there exists no Lease Event of Default, or
Terminating Event or, if any Lease Event of Default, or Terminating Event
exists, specifying the nature and period of existence thereof and what action
the Lessee proposes to take with respect thereto. The Lessee also covenants that
promptly upon the obtaining of knowledge of a Lease Event of Default by the
chief executive officer, principal financial officer or principal accounting
officer of the Lessee, it will deliver to the Lessor and the Secured Parties an
Officer's Certificate specifying the nature and period of existence thereof and
what action the Lessee proposes to take with respect thereto.
21. Obligation of the Lessee to Pay Rent. The Lessee's obligation to pay, as
the same becomes due, Basic Rent, Additional Rent, Termination Rent, and all
other amounts payable hereunder shall, subject to the covenant of the Lessor
contained in Section 3 hereof, be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which the Lessee may have
against the Lessor or anyone else for any reason whatsoever, (ii) any defect in
the title, compliance with specifications, condition, design, operation or
fitness for use of, or any damage to or loss or destruction of, any Nuclear
Material, or (iii) any interruption or cessation in the use or possession of any
Nuclear Material by the Lessee for any reason whatsoever. The Lessee hereby
waives, to the extent permitted by applicable law, any and all rights which it
may now have or which at any time hereafter may be conferred upon it, by statute
or otherwise, to terminate, cancel, quit or surrender this Lease Agreement
except in accordance with its express terms. Each payment of Rent and each other
payment made by the Lessee shall be final, and the Lessee will not seek to
recover all or any part of such payment from the Lessor for any reason
whatsoever.
22. Miscellaneous.
(a) Successors and Assigns. This Lease Agreement shall be
binding upon the Lessee and the Lessor and their respective successors and
assigns and shall inure to the benefit of the Lessee and the Lessor and their
respective successors and assigns.
(b) Waiver. Neither party shall by act, delay, omission or
otherwise be deemed to have waived any of its rights or remedies hereunder
unless
22
such waiver is given in writing. A waiver on one occasion shall not be
construed as a waiver on any other occasion.
(c) Entire Agreement. This Lease Agreement, together with the
written instruments provided for or contemplated hereby, the other Basic
Documents and other written agreements between the parties dated as of the date
hereof, constitute the entire agreement between the parties with respect to the
leasing of Nuclear Material, and no representations, warranties, promises,
guaranties or agreements, oral or written, express or implied, have been made by
either party or by any one else with respect to this Lease Agreement or the
Nuclear Material, except as may be expressly provided for herein or therein. Any
change or modification of this Lease Agreement must be in writing and duly
executed by the parties.
(d) Descriptive Headings. The captions in this Lease Agreement
are for convenience of reference only and shall not be deemed to affect the
meaning or construction of any of the provisions.
(e) Severability. Any provision of this Lease Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the Lessee hereby waives any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.
(f) Governing Law. This Lease Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
be governed by the law of the Commonwealth of Pennsylvania.
23
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this
Lease Agreement to be executed and delivered by their duly authorized officers
as of the day and year first above written.
TMI-1 FUEL CORP.
Lessor
ATTEST
By:
-------------------------------- ----------------------------
(Assistant) Secretary Name:
----------------------------
Title:
----------------------------
PENNSYLVANIA ELECTRIC COMPANY
Lessee
ATTEST
By:
-------------------------------- ----------------------------
(Assistant) Secretary Name:▇. ▇. ▇▇▇▇▇▇
----------------------------
Title: Vice President
----------------------------
24
STATE OF )
----------------
COUNTY OF ) SS:
--------------
On this day of , 1998, before me personally
----- ------------
appeared , to me personally known, who, being by me duly sworn, says that he is
of TMI-1 Fuel Corp. and that said instrument was signed on behalf of said
corporation by authority of its Board of Directors, and he acknowledged that the
execution of the foregoing instrument was the free act and deed of said
corporation.
-----------------------
Notary Public
My commission Expires:
STATE OF )
---------------
COUNTY OF ) SS:
--------------
On this day of , 1998, before me personally
---- -------------
appeared ▇. ▇. ▇▇▇▇▇▇, to me personally known, who, being by me duly sworn, says
that he is a Vice President of Pennsylvania Electric Company and that said
instrument was signed on behalf of said corporation by authority of its Board of
Directors, and he acknowledged that the execution of the foregoing instrument
was the free act and deed of said corporation.
-----------------------
Notary Public
My commission Expires:
25
ATTACHMENTS
Appendix A -- Definitions
Exhibit A -- Form of Interim Leasing Record
Exhibit B -- Form of Final Leasing Record
Exhibit C -- Nuclear Material Contracts
Exhibit D -- Form of Assignment Agreement and Consent
Exhibit E -- Form of ▇▇▇▇▇▇'▇ ▇▇▇▇ of Sale
Exhibit F -- Form of Rent Due and SCV Confirmation Schedule
26
APPENDIX A
DEFINITIONS
As used in the Basic Documents (as defined below), the
following terms shall have the following meanings (such definitions to be
applicable to both singular and plural forms of the terms defined), except as
otherwise specifically defined therein:
"Acquisition Cost" means the purchase price of any Nuclear
Material, any progress payments made thereon, costs of milling, conversion,
enrichment, fabrication, installation, delivery, redelivery, containerization,
storage, reprocessing, any other costs incurred by the Company in acquiring the
Nuclear Material (less any discounts or credits actually utilized by the
Company), plus in any case (i) any allowance for funds used during construction
(including any income tax component associated with such allowance) with respect
to Nuclear Material purchased by the Company, (ii) at the option of the Lessee,
any Rent relating to costs incurred in the ordinary course of operations but
excluding Rent relating to extraordinary costs, including without limitation,
indemnification payments, payable by the lessee to the Company with respect to
any Nuclear Material prior to the installation of such Nuclear Material for
operation in the Generating Facility, (iii) any sales, excise or other taxes or
charges payable by the Company with respect to any such payment for such Nuclear
Material, (iv) at the option of the Lessee, any Monthly Financing Charge payable
by the Lessee to the Company with respect to Nuclear Material during any period
in which such Nuclear Material is subject to an Interim Leasing Record, but
excluding any interest charges or penalties for late payment by the Company of
the purchase price or any portion thereof, if such late payment results from the
negligence of the Company, (v) such other costs with respect to any Nuclear
Material as may be agreed by the Company and the Lessee and approved by the
Administrative Agent, in each case in writing, and, in the case of any Nuclear
Material removed from the Generating Facility for the purpose of "cooling off'
and repair or reprocessing, shall include the Stipulated Casualty Value thereof
at the time of such removal, if any, and (vi) at the option of the Lessee, any
Financing Costs. Any amount realized by the Company from the disposition of the
by-products (including, but not limited to, plutonium) of Nuclear Material
specified in a Leasing Record during the repair or reprocessing of such Nuclear
Material while leased hereunder shall be credited against the Acquisition Cost
of such Nuclear Material.
"Additional Rent" shall mean all legal, accounting,
administrative and other operating expenses and taxes incurred by the Company to
the extent not paid as part of Basic Rent (including, without limitation, any
Cancellation Fees and all other liabilities incurred or owed by the Company
pursuant to the Basic Documents) and all amounts (other than Basic Rent) that
the Lessee agrees to pay under the Lease Agreement (including, without
limitation, indemnification payable under the Lease Agreement, general and
administrative expenses of the Company, and, to the extent not included in
Acquisition Cost, Financing Costs) and interest at the rate incurred by the
Company or any Secured Party as a result of any delay in payment by the Lessee
to meet obligations that would have been satisfied out of prompt payment by the
Lessee, and the amount of any and all other costs, losses, damages, interest,
taxes, deficiencies, liabilities, obligations, actions, judgments, suits,
claims, fees (including, without limitation, attorneys' fees and disbursements)
and expenses, of every kind, nature, character and description, direct or
indirect, that may be imposed on or incurred by the Company as a result of,
arising from or relating to, in any manner whatsoever, one or more Basic
Documents, or any other document referred to therein, or the transactions
contemplated thereby or the enforcement thereof.
27
For purposes of calculating the interest incurred by the Company or any Secured
Party as a result of any such delay, it shall be assumed that the Company or any
Secured Party, as applicable, incurred interest at the Credit Agreement Default
Rate.
"Administrative Agent" shall have the meaning specified
therefor in the first paragraph of the Credit Agreement.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such Person. For purposes of this definition, the term "control," as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.
"Aggregate Monthly Rent Component" shall mean the sum of the
Monthly Rent Components for all items of Nuclear Material which are installed in
the Generating Facility during the relevant period.
"Arranging Agent" shall have the meaning specified therefor in
the first paragraph of the Credit Agreement.
"Assigned Agreement" means a Nuclear Material Contract which
has been assigned to the Company in the manner specified in Section 5 of the
Lease Agreement pursuant to a duly executed and delivered Assignment Agreement.
The term Assigned Agreement shall include a Partially Assigned Agreement.
"Assignment Agreement" means an assignment agreement
substantially in the form of Exhibit D to the Lease Agreement.
"Atomic Energy Act" means the Atomic Energy Act of 1954, as
from time to time amended.
"Banks" shall have the meaning specified therefor in Section
1.02 of the Credit Agreement.
"Basic Documents" means the Lease Agreement, the Credit
Agreement, the Security Agreement, the Commercial Paper, the Notes, the Letter
Agreement, the Dealer Agreements, the Assigned Agreements, the Assignment
Agreements, the Trust Agreement, the Depositary Agreement, each ▇▇▇▇ of Sale,
each Leasing Record, each SCV Confirmation Schedule, and other agreements
related or incidental thereto which are identified in writing by the Company,
the Lessee and the Secured Parties as one of the "Basic Documents," in each
case, as such documents may be amended from time to time.
"Basic Rent" means, for any Basic Rent Period, the sum of (a)
that portion of the Monthly Financing Charge not allocated to Acquisition Cost
pursuant to the Lease Agreement plus (b) the Aggregate Monthly Rent Component as
shown on a Rent Due and SCV Confirmation Schedule for such Basic Rent Period.
"Basic Rent Payment Date" means, for any Basic Rent Period,
the first Business Day of the next succeeding calendar month following such
Basic Rent Period.
"Basic Rent Period" means each calendar month or portion
thereof commencing on, in the case of the first such period, the effective date
of the Lease Agreement, and in the case of each succeeding period, the first day
28
following the immediately preceding Basic Rent Period, and ending on the
earliest of (i) the last day of any calendar month or (ii) the Termination
Settlement Date.
"BTU Charge" means the dollar amount set forth in the BTU
Charge Agreement which is used to calculate the Monthly Rent Component. The BTU
Charge initially set forth for any Nuclear Material in any Final Leasing Record
shall be the amount agreed upon by the Lessor and the Lessee as set forth in
Attachment 1 to Exhibit B to the Lease Agreement based upon the reasonably
anticipated operating life, BTU output, and utilization of such Nuclear
Material.
"BTU Charge Agreement" shall mean an agreement in the form of
Attachment 1 to Exhibit B to the Lease Agreement with respect to any Nuclear
Material executed by the Lessor and the Lessee on or prior to the date of the
Final Leasing Record covering such Nuclear Material.
"Business Day" means any day other than (i) a Saturday or
Sunday or (ii) a day on which banking institutions in New York City are
authorized by law to close.
"Capitalized Lease" means any and all lease obligations which
are or should be capitalized on the balance sheet of the Person in question in
accordance with generally accepted accounting principles and Statement No. 13 of
the Financial Accounting Standards Board or any successor to such pronouncement
regarding lease accounting, without regard for the accounting treatment
permitted or required under any applicable state or federal public utility
regulatory accounting system, unless such treatment controls the determination
of the generally accepted accounting principles applicable to such Person.
"Cash Collateral" shall have the meaning specified therefor in
Section 1.02 of the Credit Agreement.
"Closing," means , 1998.
-------------
"Code" means the Internal Revenue Code of 1986, as from time
to time amended.
"Collateral" has the meaning set forth in the granting clauses
of the Security Agreement and includes all property of the Company described in
the Security Agreement as comprising part of the Collateral.
"Collateral Agent" shall have the meaning specified therefor
in Section 1.02 of the Credit Agreement.
"Collateral Agreements" means, collectively, the Security
Agreement, all Assignment Agreements, and any other assignment, security
agreement or instrument executed and delivered to the Secured Parties hereafter
relating to property of the Company which is security for the Notes.
"Collected Funds" means funds which are immediately available
to the Secured Parties, as the Lessor's assignees, for its use in New York, New
York.
"Commercial Paper" shall have the meaning specified therefor
in Section 1.02 of the Credit Agreement.
"Commercial Paper Discount" shall mean, at any time, amounts
payable by the Company in respect of the Face Amount of Commercial Paper
outstanding in excess of the Acquisition Cost together with any Cash Collateral
reduced by the aggregate total amount, if any, of (i) the Monthly Rent
Components
29
paid by the Lessee to the Lessor with respect to the Nuclear Material financed
thereby and (ii) any Monthly Financing Charge payable by the Lessee to the
Company with respect to Nuclear Material during any period in which such Nuclear
Material is subject to an Interim Leasing Record ("Excess Face Amount");
provided, however, that any such Excess Face Amount shall not exceed the
additional Face Amount of Commercial Paper necessary to be issued by the Company
at a discount to face value to purchasers thereof in the commercial paper market
in order to obtain proceeds in an amount equal to the Acquisition Cost reduced
by the aggregate total amount, if any, of (a) the Monthly Rent Components paid
by the Lessee to the Lessor with respect to the Nuclear Material financed
thereby and (b) any Monthly Financing Charge payable by the Lessee to the
Company with respect to Nuclear Material during any period in which such Nuclear
Material is subject to an Interim Lease Record, together with any Cash
Collateral. Amounts payable in respect of Commercial Paper Discount during any
calendar month or portion thereof shall be paid on the first Business Day of the
next succeeding month in which such amounts are incurred.
"Company" means the TMI-1 Fuel Corp., a Delaware
corporation.
"Consents and Agreements" means the agreements, each
substantially in the form attached as Exhibit 2 to Exhibit D to the Lease
Agreement, between the Lessee and the various contractors under the Nuclear
Material Contracts, with such changes to Exhibit 2 to Exhibit D as the Secured
Parties may consent to in writing, which consent shall not be unreasonably
withheld.
"Controlled Group" means a controlled group of corporations of
which the Company is a member within the meaning of Section 414(b) of the Code,
any group of corporations or entities under common control with the Company
within the meaning of Section 414(c) of the Code or any affiliated service group
of which the Company is a member within the meaning of Section 414(m) of the
Code.
"Credit Agreement" means the Credit Agreement dated as of
______, 1998 among TMI-1 Fuel Corp. The First National Bank of Chicago, as
Administrative Agent, PNC Bank, National Association, as Syndication Agent, the
Banks parties thereto, and First Chicago Capital Markets, Inc. and PNC Capital
Markets, Inc., as Arrangers.
"Credit Agreement Default" means an event which would, with
the lapse of time or the giving of notice or both, constitute a Credit Agreement
Event of Default.
"Credit Agreement Event of Default" means any one or more of
the events specified in Section 10.01 of the Credit Agreement.
"Dealer Agreements" mean -----------------------------------.
"Deemed Loss Event" means the following event: if at any time
during the term of the Lease Agreement, (A) the Company, by reason solely of the
ownership of the Nuclear Material or any part thereof or the lease of the
Nuclear Material to the Lessee under the Lease Agreement, or the Company or any
Secured Party, by reason solely of any other transaction contemplated by the
Lease Agreement or any of the other Basic Documents, shall be deemed, by any
governmental authority having jurisdiction, to be, or to be subject to
regulation as an "electric utility" or a "public utility" or a "public utility
holding company" or similar type of entity, under any applicable law or deemed a
"public utility company" or a "subsidiary company" or a "holding company" within
the meaning of the Public Utility Holding Company Act, (B) the Public Utility
Holding
30
Company Act shall be amended, applied, or interpreted in a manner, or any rules
or regulations shall be adopted under the Public Utility Holding Company Act of
1935, which adversely affect the legality, validity and enforceability of the
lease obligations of the Company and the Lessee under the Lease Agreement, or
(C) either the Company or any of the Secured Parties, by reason solely of being
a party to the Basic Documents, shall be required to obtain any consent, order
or approval of, or to make any filing or registration with, or to give any
notice to, any governmental authority, or be subject to any liabilities, duties
or obligations under the Public Utility Holding Company Act, other than the
filing by the Company of a certificate on Form U-7D with the SEC pursuant to SEC
Rule 7(d) under the Public Utility Holding Company Act (17 C.F.R. Section
250.7(d)), except in any case if the same shall be solely the result of
Nonburdensome Regulation; provided, however, that if in compliance with
applicable laws, the Lessee, with the cooperation of the Company, shall have
acted diligently and in good faith to contest, or obtain an exemption from the
application of the laws, rules or regulations described in clauses (A), (B) or
(C) to the Company, the Secured Parties or the Lessee, as the case may be, the
application of which would otherwise constitute a Deemed Loss Event, such Deemed
Loss Event shall be deemed not to have occurred so long as (I) the Lessee shall
have furnished to the Company and the Secured Parties an opinion of counsel
reasonably satisfactory to the Company and the Secured Parties to the effect
that there exists a reasonable basis for such contest or exemption and that the
application of such laws, rules or regulations to the Company, the Secured
Parties or the Lessee, as the case may be, shall be effectively stayed during
the application for exemption or contest and such laws, rules or regulations
shall not be applied retroactively at the conclusion of such contest, (II) the
Company or the Secured Parties shall have determined in their sole discretion
that such contest or exemption shall not adversely affect their business or
involve any danger of the sale, foreclosure or loss of, or creation of a Lien
upon, the Collateral, and (III) the Lessee shall have agreed to indemnify the
Company or such Secured Parties, as the case may be, for expenses incurred in
connection with such contest or exemption; and further provided, that following
notice from the Lessee to the Company or the Secured Parties, as the case may
be, that the Lessee shall be unable to furnish the opinion described in clause
(I) of the next preceding proviso or that any such contest shall not be
successful or such exemption shall not be available, a Deemed Loss Event shall
be deemed not to have occurred for such period, not to exceed 270 days, as may
be approved by any governmental authority having jurisdiction during which
application of such law, rule or regulation to the Company, the Secured Parties
or the Lessee, as the case may be, shall be suspended to enable the Company to
assign or transfer its interest in the Collateral so long as during such period
the Company shall use reasonable efforts to assign or transfer its interest in
the Collateral upon commercially reasonable terms and conditions, provided that
the Company shall not be required to assign or transfer the Nuclear Material for
a price which, after deduction of sales tax and expenses of such sale incurred
by the Company, shall be less than the sum of (A) Stipulated Casualty Value
determined as of the date of such proposed sale, and (B) the Termination Rent
determined in accordance with Section 18 of the Lease Agreement.
"Depositary Agreement" means the Depositary Agreement, dated
as of , 1998, among the Company, Chase Manhattan Bank, as Depositary and
------
The First National Bank of Chicago, as Administrative Agent.
"ERISA" means the Employee Retirement Income Security Act of
1974, as from time to time amended.
"Excepted Payments" means any indemnity, expense, or other
payment which by the terms of any of the Basic Documents shall be payable to the
Company in order for the Company to satisfy its obligations pursuant to Section
7.8 of the Trust Agreement.
31
"Face Amount" shall have the meaning specified therefor in
Section 1.02 of the Credit Agreement.
"Federal Energy Regulatory Commission" means the independent
regulatory commission of the Department of Energy of the United States
Government existing under the authority of the Department of Energy Organization
Act, as amended, or any successor organization or organizations performing any
identical or substantially identical licensing and related regulatory functions.
"Federal Power Act" means the Federal Power Act, as amended.
"Final Leasing Record" means a Leasing Record which records
the leasing of Nuclear Material during any period while such Nuclear Material is
installed for operation in the Generating Facility. A Final Leasing Record shall
be in the form of Exhibit B to the Lease Agreement.
"Financing Costs" means (a) fees and other amounts owing to
any Secured Party or to the Owner Trustee under the Trust Agreement, (b) legal
fees and disbursements and other amounts referred to in Section 10(b) of the
Security Agreement, (c) legal, accounting, and other fees and expenses incurred
by the Lessee and/or the Company in connection with the preparation, execution
and delivery of Basic Documents or the issuance of the Commercial Paper and/or
the Notes, and (d) such other reasonable fees and expenses of the Owner Trustee
and the Company as they may be entitled to under the Basic Documents.
"Fuel Management" means the design of, contracting for, fixing
the price and terms of acquisition of, management, movement, removal,
disengagement, storage and other activities in connection with the acquisition,
utilization, storage and disposal of the Nuclear Material.
"Generating Facility" means the nuclear reactor located at the
Three Mile Island Unit 1 Nuclear Generating Station, located in Londonderry
Township, Pennsylvania.
"Heat Production" means the stage of the Nuclear Material
Cycle commencing with the commercial operation of a Generating Facility, during
which the Nuclear Material in question is producing thermal energy which results
in the production of net positive electrical energy transmitted within the
distribution network of any utility and during which the Nuclear Material in
question is engaged in the reactor core of such Generating Facility.
"Hereof," "herein," "hereunder" and words of similar import
when used in a Basic Document refer to such Basic Document as a whole and not to
any particular section or provision thereof.
"Imposition" means any payment required by a public or
governmental authority in respect of any property subject to the Lease Agreement
or any transaction pursuant to the Lease Agreement or any right or interest held
by virtue of the Lease Agreement; provided, however, that Imposition shall not
include any taxes, whether federal, state or local, payable by any Secured Party
based on or measured by net income of any Secured Party where taxable income is
computed in substantially the same manner as taxable income is computed under
the Code.
"Insurance Requirements" means all terms of any insurance
policy or indemnification agreement covering or applicable to (i) any Nuclear
Material or (ii) the Generating Facility or the Lessee in its capacity as
licensee of the Generating Facility, in each case insofar as any insurance
policy or indemnification agreement directly or indirectly relates to the
Nuclear
32
Material or the performance by the Lessee of its obligations under the Basic
Documents, and all requirements of the issuer of any such policy or agreement
necessary to keep such insurance or agreements in force.
"Interim Leasing Record" means a Leasing Record which records
the leasing of Nuclear Material (i) prior to installation for operation in the
Generating Facility, (ii) after removal from the Generating Facility during the
"cooling off" and storage period, and (iii) while being reprocessed. An Interim
Leasing Record shall be in the form of Exhibit A to the Lease Agreement.
"Investment Company Act" means the Investment Company Act of
1940, as from time to time amended.
"Issuing Bank" shall have the meaning specified therefor in
the first paragraph of the Credit Agreement.
"Lease Agreement" means the Second Amended and Restated
Nuclear Material Lease Agreement, dated as of -------- --, 1998 between TMI-1
Fuel Corp., as the Lessor, and Pennsylvania Electric Company, as the Lessee, as
the same may be modified, supplemented or amended from time to time.
"Lease Event of Default" has the meaning specified in
Section 16 of the Lease Agreement.
"Leasing Record" is a form signed by the Lessor and the Lessee
to record the leasing under the Lease Agreement of the Nuclear Material
specified in such Leasing Record. A Leasing Record shall be either an Interim
Leasing Record or a Final Leasing Record.
"Legal Requirements" means all applicable provisions of the
Atomic Energy Act, all applicable orders, rules, regulations and other
requirements of the Nuclear Regulatory Commission and the Federal Energy
Regulatory Commission, and all other laws, rules, regulations and orders of any
other jurisdiction or regulatory authority relating to (i) the licensing,
acquisition, storage, containerization, transportation, blending, transfer,
consumption, leasing, insuring, using, operating, disposing, fabricating,
channelling and reprocessing of the Nuclear Material, (ii) the Generating
Facility or the Lessee in its capacity as licensee of the Generating Facility,
in each case insofar as such provisions, orders, rules, regulations, laws and
other requirements directly or indirectly relate to the Nuclear Material or the
performance by the Lessee of its obligations under the Basic Documents or (iii)
the Basic Documents, insofar as any of the foregoing directly or indirectly
apply to the Lessee.
"Lessee" has the meaning specified in the introduction to
the Lease Agreement.
"Lessee Representative" means a person at the time designated
to act on behalf of the Lessee by a written instrument furnished to the Company
and the Secured Parties containing the specimen signature of such person and
signed on behalf of the Lessee by any of its officers. The certificate may
designate an alternate or alternates. A Lessee Representative may be an employee
of the Lessee or of the Owner Trustee.
"Lessor" has the meaning specified in the introduction to
the Lease Agreement, and its successors and assigns.
33
"▇▇▇▇▇▇'▇ ▇▇▇▇ of Sale" means an instrument substantially in
the form of Exhibit E to the Lease Agreement, pursuant to which title to all or
any portion of the Nuclear Material is transferred to the Lessee or any designee
of the Lessee.
"Letter Agreement" means the Lessee's Letter Agreement
Regarding TMI-1 Fuel Corp., dated as of ----------- --- , 1998, between the
Lessee, the Company, and the Administrative Agent, as it may be amended from
time to time.
"Lien" means any mortgage, pledge, lien, security interest,
title retention, charge or other encumbrance of any nature whatsoever (including
any conditional sale or other title retention agreement, any lease in the nature
thereof and the filing of or agreement to execute and deliver any financing
statement under the Uniform Commercial Code of any jurisdiction).
"Loans" shall have the meaning specified therefor in Section
1.02 of the Credit Agreement.
"Majority Secured Parties" means at any time the Secured
Parties holding at such time more than 66% of the outstanding principal amount
of all Secured Obligations.
"Manufacturer" means any supplier of Nuclear Material or of
any service (including without limitation, enrichment, fabrication,
transportation, storage and processing) in connection therewith, or any agent or
licensee of any such supplier.
"Manufacturer's Consent" means any consent which may be given
by a Manufacturer under a Nuclear Material Contract to the assignment by the
Lessee to the Company of all or a portion of the Lessee's rights under such
Nuclear Material Contract or of all or a portion of any such rights previously
assigned by the Lessee to the Secured Parties.
"Monthly Debt Service" for any calendar month means the sum of
the Monthly Financing Charge for such calendar month.
"Monthly Financing Charge" means, for any calendar month or
portion thereof, the sum of:
(a) all Commercial Paper Discount payable by the Company with
respect to Commercial Paper outstanding during such month and/or all
interest payable by the Company during such month with respect to all
outstanding Notes and in each case, not included in Acquisition Cost; and
(b) the amounts paid or due and payable by the Company with respect
to the transactions contemplated by the Basic Documents during such
calendar month for the following other fees, costs, charges and expenses
incurred or owed by the Company under or in connection with the Lease
Agreement or the other Basic Documents: (i) legal, printing, reproduction
and closing fees and expenses, (ii) auditors', accountants' and attorneys'
fees and expenses, (iii) franchise taxes and income taxes, and (iv) any
other fees and expenses incurred by the Company under or in respect of the
Basic Documents.
Any figure used in the computation of any component of the Monthly Financing
Charge shall be stated to five decimal places.
34
"Monthly Rent Component" for any Nuclear Material covered by a
Final Leasing Record for each calendar month during the lease of such Nuclear
Material shall be as follows:
(i) for the first partial calendar month the Monthly Rent
Component shall be zero;
(ii) for the first full calendar month the Monthly Rent
Component shall be zero;
(iii) for the second full calendar month the Monthly Rent
Component shall be zero;
(iv) for the third full calendar month the Monthly Rent
Component shall be an amount determined by multiplying (x) the amount of
thermal energy in millions of British Thermal Units of heat produced by
such Nuclear Material during the first calendar month while covered by the
Final Leasing Record and also during the first partial calendar month, if
any, such Nuclear Material was covered by an Interim or Final Leasing
Record and was engaged in Heat Production by (y) the BTU Charge set forth
in the Final Leasing Record covering such Nuclear Material; and
(v) for each full calendar month after the third full calendar
month, the Monthly Rent Component shall be an amount determined by
multiplying (x) the amount of thermal energy in millions of British
Thermal Units of heat produced by such Nuclear Material during the second
preceding month by (y) the BTU Charge set forth in the Final Leasing
Record covering such Nuclear Material.
The BTU Charge for any Nuclear Material may be revised by the Lessee at any time
during the lease thereof to reflect any reasonably anticipated change in its
operating life, BTU output, or utilization. Such revision shall be effected by
the Lessee's executing and forwarding to the Lessor a revised Final Leasing
Record dated the first day of the following month and setting forth such revised
BTU Charge. Upon receipt of such revised Final Leasing Record, the Lessor shall
execute and return a copy thereof to the Lessee. Such revised BTU Charge shall
be applicable to such Nuclear Material for each month thereafter beginning on
the date of the revised Final Leasing Record.
"Nonburdensome Regulation" means (i) ministerial regulatory
requirements that do not impose limitations or regulatory requirements on the
business or activities of, or adversely affect, the Company or any Secured Party
and that are deemed, in the reasonable discretion of the Company or any Secured
Party, not to be burdensome, or (ii) assuming redelivery of the Nuclear Material
in accordance with the Lease Agreement, regulation resulting from any possession
of the Nuclear Material (or right thereto) on or after the termination of the
Lease Agreement.
"Notes" shall have the meaning specified therefor in Section
1.02 of the Credit Agreement.
"Nuclear Incident" shall have the meaning specified in the
Atomic Energy Act, 42 U.S.C. ss.2014(q), as such definition may be amended from
time to time.
"Nuclear Material" means those items which have been purchased
by or on behalf of the Company for which a duly executed Leasing Record has been
delivered to the Company and which continue to be subject to the Lease Agreement
consisting of (i) the items described in such Leasing Record and each of the
35
components thereof in the respective forms in which such items exist during each
stage of the Nuclear Material Cycle, being substances and equipment which, when
fabricated and assembled and loaded into a nuclear reactor, are intended to
produce heat, together with all attachments, accessories, parts and additions
and all improvements and repairs thereto, and all replacements thereof and
substitutions therefor and (ii) the substances and materials underlying the
right, title and interest of the Lessee under any Nuclear Material Contract
assigned to the Company pursuant to the Lease Agreement; provided, however, that
the term Nuclear Material shall not include spent fuel.
"Nuclear Material Contract" means any contract, as from time
to time amended, modified or supplemented, entered into by the Lessee, either in
its own name or as agent for the Lessor, with one or more Manufacturers relating
to the acquisition of Nuclear Material or any service in connection with the
Nuclear Material.
"Nuclear Material Cycle" means the various stages in the
process, whether physical or chemical, by which the component parts of the
Nuclear Material are designed, mined, milled, processed, converted, enriched,
fabricated into assemblies utilizable for Heat Production, loaded or installed
into a reactor core, utilized, disengaged from a reactor core or stored,
together with all incidental processes with respect to the Nuclear Material at
any such stage.
"Nuclear Regulatory Commission" means the independent
regulatory commission of the United States Government existing under the
authority of the Energy Reorganization Act of 1974, as amended, or any successor
organization or organizations performing any identical or substantially
identical licensing and related regulatory functions.
"Obligations" means (i) all items (including, without
limitation, Capitalized Leases but excluding shareholders' equity and minority
interests) which in accordance with generally accepted accounting principles
should be reflected on the liability side of a balance sheet as at the date as
of which such obligations are to be determined; (ii) all obligations and
liabilities (whether or not reflected upon such balance sheet) secured by any
Lien existing on the Property held subject to such Lien, whether or not the
obligation or liability secured thereby shall have been assumed; and (iii) all
guarantees, endorsements (other than for collection in the ordinary course of
business) and contingent obligations in respect of any liabilities of the type
described in clauses (i) and (ii) of this definition (whether or not reflected
on such balance sheet); provided, however, that the term 'Obligations' shall not
include deferred taxes.
"Obligations for Borrowed Money or Deferred Purchase Price"
means all Obligations in respect of borrowed money or the deferred purchase
price of property or services.
"Officer's Certificate" means, with respect to any
corporation, a certificate signed by the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Comptroller, or any Assistant
Comptroller of such corporation, and with respect to any other entity, a
certificate signed by an individual generally authorized to execute and deliver
contracts on behalf of such entity.
"Outstandings" shall have the meaning specified therefor in
Section 1.02 of the Credit Agreement.
36
"Owner Trust Estate" means all estate, right, title and
interest of the Owner Trustee in and to the outstanding stock of the Company and
in and to all monies, securities, investments, instruments, documents, rights,
claims, contracts, and other property held by the Owner Trustee under the Trust
Agreement; provided, however, that there shall be excluded from the Owner Trust
Estate all Excepted Payments.
"Owner Trustee" means United States Trust Company of New York,
not in its individual capacity but solely as trustee under and pursuant to the
Trust Agreement, and its permitted successors.
"PaPUC" means the Pennsylvania Public Utility Commission or
any successor agency thereto.
"Partially Assigned Agreement" means a Nuclear Material
Contract which has been assigned, in part but not in full, to the Company in the
manner specified in Section 5 of the Lease Agreement pursuant to a duly executed
and delivered Assignment Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation, created
by Section 4002(a) of ERISA and any successor thereto.
"Permitted Liens" means (i) any assignment of the Lease
Agreement permitted thereby, and by the Credit Agreement, (ii) liens for
Impositions not yet payable, or payable without the addition of any fine,
penalty, interest or cost for nonpayment, or being contested by the Lessee as
permitted by Section 11 of the Lease Agreement, (iii) liens and security
interests created by the Security Agreement, (iv) the title transfer and
commingling of the Nuclear Material contemplated by paragraph (h) of Section 10
of the Lease Agreement, and (v) liens of mechanics, laborers, materialmen,
suppliers or vendors, or rights thereto, incurred in the ordinary course of
business for sums of money which under the terms of the related contracts are
not more than 30 days past due or are being contested in good faith by the
Lessee as permitted by Section 11 of the Lease Agreement; provided, however,
that, in each case, such reserve or other appropriate provision, if any, as
shall be required by generally accepted accounting principles shall have been
made in respect thereto.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization or other business entity or any
government or any political subdivision or agency thereof.
"Plan" means, with respect to any Person, any plan of a type
described in Section 4021(a) of ERISA in respect of which such Person is an
"employer" or a "substantial employer" as defined in Sections 3(5) and 4001 (a)
(2) of ERISA, respectively.
"Proceeds" shall have the meaning assigned to it under the
Uniform Commercial Code, as amended, and, in any event, shall include, but not
be limited to, (i) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to the Company from time to time with respect to the
Collateral, (ii) any and all payments (in any form whatsoever) made or due and
payable to the Company from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental body, authority, bureau or agency (or any person
acting under color of governmental authority), and (iii) any and all other
amounts from time to time paid or payable under or in connection with any of the
Collateral.
37
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Public Utility Holding Company Act" means the Public Utility
Holding Company Act of 1935, as from time to time amended.
"Qualified Institution" means a commercial bank organized
under the laws of, and doing business in, the United States of America or in any
State thereof, which has combined capital, surplus and undivided profits of at
least $150,000,000 having trust power.
"Related Person" means, with respect to any Person, any trade
or business, (whether or not incorporated) which, together with such Person, is
under common control as described in Section 414(c) of the Code.
"Rent" means Basic Rent, Additional Rent and Termination
Rent.
"Rent Due and SCV Confirmation Schedule" means an instrument,
substantially in the form of Exhibit G to the Lease Agreement, which is to be
used by the Lessee (i) to calculate Basic Rent for each Basic Rent Period and
Other Rent and (ii) to calculate and acknowledge the SCV at the end of each
Basic Rent Period.
"Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder.
"Responsible Officer" means a duly elected or appointed,
authorized, and acting officer, agent or representative of the Person acting.
"Secured Obligations" means each and every debt, liability and
obligation of every type and description which the Company may now or at any
time hereafter owe to any Secured Party under, pursuant to or in connection with
the Credit Agreement, any Note, the Letter of Credit or any other Basic
Document, whether such debt, liability or obligation now exists or is hereafter
created or incurred, and whether it is or may be direct or indirect, due or to
become due, absolute or contingent, primary or secondary, liquidated or
unliquidated, or joint, several or joint and several, including, without
limitation, the principal of, interest on and any premium due with respect to
any Loan and all indemnifications, costs, expenses, fees and other compensation
of the Secured Parties provided for, and all other amounts owed to the Secured
Parties, under the Security Agreement, Credit Agreement and the other Basic
Documents.
"Secured Parties" means the Banks, any other holder from time
to time of any Note and the Issuing Bank.
"Securities Act" means the Securities Act of 1933, as from
time to time amended.
"Security Agreement" means the Security Agreement and
Assignment of Contracts, dated as of , 1998, by and among the Company and
-------
The First National Bank of Chicago, as Collateral Agent in favor of the Secured
Parties.
"Single Employer Plan" means any Plan which is not a
multi-employer plan as defined in Section 4001(a) (3) of ERISA
"Stipulated Casualty Value" or "SCV" for any Nuclear Material
covered by any Leasing Record means an amount equal to the Acquisition Cost for
such Nuclear Material reduced by the aggregate total amount, if any, of the
38
Monthly Rent Components paid by the Lessee to the Lessor with respect to such
Nuclear Material together with Commercial Paper Discount.
"Termination Date" shall have the meaning specified therefor
in Section 1.02 of the Credit Agreement.
"Termination Rent" means an amount which, when added to the
Stipulated Casualty Value and Basic Rent then payable by the Lessee, if any,
will be sufficient to enable the Company to retire, at their respective
maturities, all outstanding Notes and to pay all charges, premiums and fees owed
to the Issuing Bank and all holders of Notes under the Credit Agreement and to
pay all other obligations of the Company incurred in connection with the
implementation of the transactions contemplated by the Basic Documents.
"Termination Settlement Date" has the meaning specified in
Section 8(c), or Section 18(c) of the Lease Agreement.
"Terminating Event" has the meaning specified in Section 18
of the Lease Agreement.
"Trust" means the TMI-I Fuel Corp. and Oyster Creek Fuel
Corp. Trust, a trust formed pursuant to the Trust Agreement.
"Trust Agreement" means the Second Amended and Restated Trust
Agreement dated as of ___________ __, 1998 among Lord Fuel Corp., as Trustor,
the Owner Trustee, as trustee, Lord Fuel Corp., as beneficiary, and Jersey
Central Power & Light Company, Metropolitan Edison Company and Pennsylvania
Electric Company, each as lessee under certain lease agreements, as the same may
be amended, modified or supplemented from time to time.
"Trustor" means the institution designated as such in the
Trust Agreement and its permitted successors.
"UBS Credit Agreement" means the Credit Agreement dated as of
November 17, 1995 among TMI-1 Fuel Corp., Union Bank of Switzerland, New York
Branch, as Arranging Agent, Union Bank of Switzerland, New York Branch, as
Issuing Bank, the Banks Party thereto and Union Bank of Switzerland, New York
Bank, as Administrative Agent.
"UCC" means the Uniform Commercial Code as adopted and in
effect in the State of New York.
"U.S. Trust" means United States Trust Company of New York.
39
EXHIBIT A
INTERIM LEASING RECORD
Record No.
------
Name of Lessee: Pennsylvania Electric Company
Date of Record:
------------------
Date and No. of prior Interim or Final
Leasing Record (if any):
Description and location of Nuclear Material covered by this Record:
Assembly Serial Nos.:
Subassembly Serial Nos.:
Acquisition Cost of Nuclear Material
under prior Leasing Record (if any): $
------------
Acquisition Cost added by this Record: $
------------
Total: $
------------
Credits to Acquisition Cost: $
------------
Total Acquisition Cost under this Record $
------------
Specify nature of Acquisition Cost added by this Record and to whom paid:
Specify nature of any credits received by Lessor covered by this Record and from
whom received:
40
Basic Rent for the Nuclear Material covered by this Record shall be calculated
and paid as provided in Section 9 of the Second Amended and Restated Nuclear
Material Lease Agreement referred to below.
The undersigned Lessor hereby leases to the undersigned Lessee the Nuclear
Material described above in accordance with the covenants, terms and conditions
of the Second Amended and Restated Nuclear Material Lease Agreement between the
undersigned Lessor and Lessee, dated as of , , 1998 which
------------- ----
covenants, terms and conditions are incorporated herein by reference.
TMI-1 FUEL CORP., Lessor PENNSYLVANIA ELECTRIC
COMPANY, Lessee
By By
------------------------------ --------------------
Authorized Signature Authorized Signature
41
EXHIBIT B
FINAL LEASING RECORD
Record No.
------
Name of Lessee: Pennsylvania Electric Company
Date of Record:
------------------
Date and No. of prior Interim or Final
Leasing Record:
Description and location of Nuclear Material covered by this Record:
Assembly Serial Nos.:
Subassembly Serial Nos.:
Acquisition Cost of Nuclear Material
under prior Leasing Record (if any): $
------------
Acquisition Cost added by this Record: $
------------
Total: $
------------
Credits (if any) to Acquisition Cost: $
------------
Total Acquisition Cost under this Record $
------------
BTU Charge: $
------------
Specify nature of Acquisition Cost added by this Record and to whom paid:
Specify nature of any credits received by Lessor covered by this Record and from
whom received:
Basic Rent for the Nuclear Material covered by this Record shall be calculated
and paid as provided in Section 9 of the Second Amended and Restated Nuclear
Material Lease Agreement referred to below.
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The undersigned Lessor hereby leases to the undersigned Lessee the Nuclear
Material described above in accordance with the covenants, terms and conditions
of the Second Amended and Restated Nuclear Material Lease Agreement between the
undersigned Lessor and Lessee, dated as of , 1998, which covenants,
---------- ---
terms and conditions are incorporated herein by reference.
TMI-1 FUEL CORP., Lessor PENNSYLVANIA ELECTRIC
COMPANY, Lessee
By By
---------------------------------- ------------------------
Authorized Signature Authorized Signature
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Attachment 1 to Exhibit B
BRITISH THERMAL UNIT CHARGE AGREEMENT
Dated:
-------------------------------
The undersigned Lessor and Lessee agree that the initial
British Thermal Unit Charge to be used to calculate the Monthly Rent Component
for the Nuclear Material pursuant to the Second Amended and Restated Nuclear
Material Lease Agreement, dated as of , 1998, between the
---------- ----
undersigned Lessor and Lessee shall be as follows:
Description of Nuclear Material British Thermal Unit Charge
------------------------------- ---------------------------
TMI-1 FUEL CORP. PENNSYLVANIA ELECTRIC COMPANY
By: By:
---------------------------------- ---------------------------------
Its: Its:
---------------------------------- ---------------------------------
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EXHIBIT C
NUCLEAR MATERIAL CONTRACTS
The Agreements (each as amended and restated) referred to in
Section 5 of the Second Amended and Restated Nuclear Material Lease Agreement,
dated as of ---------- ---, 1998, between TMI-1 FUEL CORP. ("Lessor") and
PENNSYLVANIA ELECTRIC COMPANY ("Lessee") are:
(1) Agreement, dated January 30, 1975, between Sequoyah Fuels
Corporation and GPUN, as agent for the Lessee, JCP&L and Met-Ed.
(2) Agreement, dated February 12, 1996, between United States
Enrichment Corporation and GPUN, as agent for the Lessee, JCP&L and Met-Ed.
(3) Agreement, dated as of June 14, 1995 between Framatome
Cogema Fuels and GPUN, as agent for the Lessee, JCP&L and Met-Ed.
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EXHIBIT D
ASSIGNMENT AGREEMENT
--------------------
KNOW ALL MEN BY THESE PRESENTS THAT:
Pennsylvania Electric Company (the "Assignor"), in
consideration of one dollar and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, does hereby sell, grant,
bargain, convey and assign to TMI-1 Fuel Corp. ("Assignee"), all right, title
and interest of the Assignor in, to and under the Nuclear Material Contract (the
"Nuclear Material Contract") described in Exhibit 1 attached hereto insofar as
such Nuclear Material Contract relates to the Nuclear Material described in
Exhibit 1 (all of such property, including the items described on Exhibit 1
attached hereto as included with the Property, being herein collectively called
the "Property"). Terms not defined herein shall have the meanings given in
Exhibit 1 attached hereto.
TO HAVE AND TO HOLD the Property unto the Assignee, its
successors and assigns, to its and their own use forever.
1. The interest of the Assignor in the Property, and the
interest transferred by this Assignment Agreement, is that of absolute
ownership.
2. The Assignor hereby warrants that it is the lawful owner of
the rights and interests conveyed by this Assignment Agreement and that its
title to such rights and interests is hereby conveyed to the Assignee free and
clear of all liens, charges, claims and encumbrances of every kind whatsoever,
other than (i) the amounts, if any, owing under the Nuclear Material Contract,
(ii) other claims, if any, of the Assignor and the Contractor which may exist as
between themselves and (iii) Permitted Liens (as defined in the Lease Agreement
referred to below); and that the Assignor will warrant and defend such title
forever against all claims and demands whatsoever.
3. The Assignor hereby releases and transfers to the Assignee
any right, title or interest in the Nuclear Material which may have been
acquired by the Assignor under the Nuclear Material Contract prior to the date
hereof.
4. This Assignment Agreement is made in accordance with the
Second Amended and Restated Nuclear Material Lease Agreement dated as of
---------- -, 1998, between the Assignor and the Assignee (said Nuclear Material
Lease Agreement, as the same may be from time to time amended, modified or
supplemented, being herein called the "Lease Agreement"). Pursuant to a Security
Agreement and Assignment of Contracts made by TMI-1 Fuel Corp. dated as of
--------- --, 1998 (said Security Agreement and Assignment of Contracts, as the
same may from time to time be amended, modified or supplemented, being herein
called the "Security Agreement") made by Assignee in favor of the Secured
Parties, as defined therein, the Assignee is assigning and granting a security
interest in the Property and this Assignment Agreement to the Secured Parties,
as collateral security for all obligations and liabilities of the Assignee to
the Secured Parties, as such obligations are described in the Security
Agreement.
5. It is expressly agreed that, anything contained herein to
the contrary notwithstanding, (a) the Assignor shall at all times remain liable
to the Contractor to observe and perform all of its duties and obligations under
the Nuclear Material Contract to the same extent as if this Assignment
46
Agreement and the Security Agreement had not been executed, (b) the exercise by
the Assignee or the Secured Parties of any of the rights assigned hereunder or
under the Security Agreement, as the case may be, shall not release the Assignor
from any of its duties or obligations to the Contractor under the Nuclear
Material Contract, and (c) neither the Assignee nor any of the Secured Parties
shall have any obligation or liability under the Nuclear Material Contract by
reason of or arising out of this Assignment Agreement, the Lease Agreement or
the Security Agreement, or be obligated to perform or fulfill any of the duties
or obligations of the Assignor under the Nuclear Material Contract, or to make
any payment thereunder, or to make any inquiry as to the nature or sufficiency
of any Property received by it thereunder, or to present or file any claim, or
to take any action to collect or enforce the payment of any amounts or the
delivery of any Property which may have been assigned to it or to which it may
be entitled at any time or times; provided, however, the Assignee agrees, solely
for the benefit of the Assignor, and subject to the terms and conditions of the
Lease Agreement, (i) to purchase the Nuclear Material from the Contractor
pursuant to the Nuclear Material Contract, (ii) to pay to the Contractor and/or
to the Assignor or their order the respective amounts specified in the Lease
Agreement with respect to such Nuclear Material and (iii) to lease such Nuclear
Material to the Assignor in accordance with and subject to the terms and
conditions of the Lease Agreement. The provisions of the Nuclear Material
Contract limiting the liability of the Contractor and its suppliers and
subcontractors' under that Contract shall remain effective against the Assignee
and Secured Parties to the same extent that such provisions are effective
against the Assignor.
6. Notwithstanding anything contained herein to the contrary,
subject to the terms and conditions of the Lease Agreement, the Assignor may
continue to engage in Fuel Management (as such term is defined in the Lease
Agreement) with respect to the Property, including, without limitation, all
dealings with the Contractor and, subject to such terms and conditions and
effective until the occurrence of a Lease Event of Default (as defined in the
Lease Agreement), (i) the Assignee reassigns to the Assignor the Assignee's
rights under clauses (iii), (iv), (v) and (vi) of subparagraph (b) of Exhibit 1
to this Assignment Agreement (provided, however, that insurance proceeds are
reassigned to the Assignor pursuant hereto only to the extent that such proceeds
are needed and used to reimburse the Assignor for the cost of repairing damage
or destruction to Nuclear Material or are used to purchase Nuclear Material from
the Assignee in accordance with the Lease Agreement, and provided further,
however, that the Assignee's rights under clause (vi) are reassigned to the
Assignor subject in all respects to the limitations set forth in paragraph 8.
below), and (ii) the Assignee agrees that the Assignor may, to the extent set
forth in clause (i) above, to the exclusion of the Assignee, exercise and
enforce such rights.
7. The Assignor shall promptly and duly execute, deliver, file
and record all such further counterparts of this Assignment Agreement or such
certificates, financing and continuation statements and other instruments as may
be reasonably requested by the Assignee, and take such further actions as the
Assignee shall from time to time reasonably request, in order to establish,
perfect and maintain the rights and remedies created or intended to be created
in favor of the Assignee and the Secured Parties hereunder and the Assignee's
title to and interest in the Property as against the Assignor or any third party
in any applicable jurisdiction.
8. The Assignor hereby agrees that it will not enter into or
consent to or permit any cancellation, termination, amendment, supplement or
modification of or waiver with respect to the Nuclear Material Contract insofar
as it relates to the Nuclear Material except for cancellations, terminations,
amendments, supplements, modifications or waivers which do not materially
adversely affect the Assignee or the Secured Parties or their respective
47
interests in the Property, nor will the Assignor sell, assign, grant any
security interest in or otherwise transfer its rights or other interests in the
Property or any part thereof, except as permitted by the Lease Agreement.
9. The Assignor hereby represents and warrants that the
Nuclear Material Contract is in full force and effect and represents that it is
the only agreement between the Assignor and the Contractor with respect to the
Nuclear Material.
10. This Assignment Agreement shall become effective only upon
receipt of the written consent of the Contractor to the assignment of the rights
and interests conveyed hereunder, if such consent is required under the Nuclear
Material Contract. The Assignor hereby agrees to send the Contractor a copy of
this Assignment Agreement.
11. This Assignment Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the Assignor has caused this Assignment
Agreement to be duly executed and delivered as of the ----- day of
------------,19----.
PENNSYLVANIA ELECTRIC COMPANY
By:
------------------------------
Title:
------------------------------
The foregoing Assignment Agreement is hereby accepted:
TMI-1 FUEL CORP.
------------------------------
By:
------------------------------
Title:
------------------------------
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EXHIBIT 1
to Assignment Agreement
(a) The ----------------(as the same may from time to time be
amended, modified or supplemented, being herein called the "Nuclear Material
Contract"), dated as of ------------ , between Pennsylvania Electric Company and
--------------- (the "Contractor), insofar as, and only to the extent that, the
Contract relates to ----------------- (the "Nuclear Material"); but not insofar
as the Contract provides for the provision of other nuclear materials and
services to the Assignor; and
(b) The Property shall include, without limitation, (i) any
and all amendments and supplements to the Nuclear Material Contract from time to
time executed and delivered to the extent that any such amendment or supplement
relates to the Nuclear Material, (ii) the Nuclear Material, including the right
to receive title thereto, (iii) all rights, claims and proceeds, now or
hereafter existing, under any insurance, indemnities, warranties and guaranties
provided for in or arising out of the Nuclear Material Contract, to the extent
that such rights or claims relate to the Nuclear Material, (iv) any claim for
damages arising out of or for breach or default by the Contractor under or in
connection with the Nuclear Material Contract insofar as it relates to the
Nuclear Material, (v) any other amount, whether resulting from refunds or
otherwise, from time to time paid or payable by the Contractor under or in
connection with the Nuclear Material Contract insofar as it relates to the
Nuclear Material and (vi) the right of the Assignor to terminate the Nuclear
Material Contract or to perform or to exercise or enforce thereunder, insofar as
it or they relate to the Nuclear Material.
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EXHIBIT 2
to Assignment Agreement
CONSENT AND AGREEMENT
The undersigned, (the "Contractor"), has
-------------------
entered into a (as the same may from tune to time be amended,
----------------
modified or supplemented, being herein called the "Nuclear Material Contract"),
dated as of with Pennsylvania Electric Company (the
------------------------
"Assignor").
The Contractor hereby acknowledges notice that (i) in
accordance with the terms of the Second Amended and Restated Nuclear Material
Lease Agreement dated as of------------- , 1998, between the Assignor and TMI-1
Fuel Corp. (the "Assignee"), the Assignor has assigned to the Assignee a part of
the Assignor's rights under the Nuclear Material Contract pursuant to an
Assignment Agreement, in the form of Annex A hereto (such Assignment Agreement,
as the same may from time to time be amended, modified or supplemented, being
herein collectively called the "Assignment"), and (ii) pursuant to a Security
Agreement and Assignment of Contracts made by TMI-1 Fuel Corp. dated as of
--------- --, 1998 (said Security Agreement and Assignment Contracts, as the
same may from time to time be amended, modified or supplemented, being herein
called the "Security Agreement") made by the Assignee in favor of the Secured
Parties as defined therein (the "Secured Parties"), the Assignee has assigned
and granted a security interest in all rights under the Nuclear Material
Contract from time to time assigned to it by Assignor, as collateral security
for all obligations and liabilities of the Assignee to the Secured Parties.
The Contractor hereby consents to (i) the assignment by the
Assignor to the Assignee of part of the Assignor's right, title and interest in,
to and under the Nuclear Material Contract and the other Property described in
the Assignment pursuant to the Assignment and (ii) the assignment and security
interest in favor of the Secured Parties as described above. The Contractor
further consents to all of the terms and provisions of the Security Agreement.
The Contractor agrees that, if requested by either the
Assignor or the Assignee, it will acknowledge in writing the Assignment
delivered by the Assignor to the Assignee; provided, that neither the lack of
notice to nor acknowledgment by the Contractor of the Assignment shall limit or
otherwise affect the validity or effectiveness of this consent to such
Assignment.
The Contractor hereby confirms to the Assignee and the Secured
Parties that:
(a) all representations, warranties and agreements of the
Contractor under the Nuclear Material Contract which relate to
the Nuclear Material described in the Assignment shall inure
to the benefit of, and shall be enforceable by, the Assignee
or any Secured. Party to the same extent as if originally
named in the Contract as the purchaser of such Nuclear
Material,
(b) the Contractor understands that, pursuant to the Lease
Agreement, the Assignee has agreed to lease the Nuclear
Material described in the Assignment to the Assignor, and
consents to the assignment to the Assignor, for so long as the
Lease Agreement shall be in effect or until otherwise notified
50
by the Assignee, of the Assignee's rights under clauses (iii),
(iv), (v) and (vi) of subparagraph (b) of Exhibit 1 to the
Assignment to the extent that such rights are reassigned to
the Assignor pursuant to the Assignment,
(c) The Contractor is in the business of selling nuclear fuel and
related services of the kind described in the Assignment, and
the proposed sale of such nuclear fuel under the Nuclear
Material Contract will be in the ordinary course of business
of the Contractor, and
(d) Notwithstanding any provision to the contrary contained in
the Nuclear Material Contract, the Contractor agrees that
title to any Nuclear Material covered by the Assignment
shall pass directly to the Assignee under the Contract and
shall not pass to the Assignor; provided that the foregoing
shall not apply to any Nuclear Material for which title has
already passed from the Contractor prior to the execution
and delivery of the Assignment.
It is understood that neither the Assignment, the Security
Agreement nor this Consent and Agreement shall in any way add to the obligations
of the Contractor or the Assignor under the Nuclear Material Contract.
This Consent and. Agreement shall be governed by and
construed in accordance with the laws of the State of .
--------------
IN WITNESS WHEREOF, the undersigned has caused this Consent
and Agreement to be duly executed and delivered by its duly authorized officer
as of----- day of---- , 19-- .
----------------------------------------
By:
--------------------------------
Title:
--------------------------------
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EXHIBIT E
▇▇▇▇ OF SALE
TO
PENNSYLVANIA ELECTRIC COMPANY
-----------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, TMI-1
Fuel Corp., a Delaware corporation (the "Seller"), whose post office address is
c/o United States Trust Company of New York, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust and Agency Division, for and in
consideration paid to the Seller upon or before the execution and delivery of
this ▇▇▇▇ of Sale to Pennsylvania Electric Company (the "Purchaser"), a
Pennsylvania corporation, whose address is ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Comptroller, hereby conveys, transfers, sells and
sets over unto the Purchaser all of its right, title and interest in all of the
personal property consisting of the assemblies of nuclear fuel or components
thereof or other nuclear material described in Annex I hereto (the "Assets"),
and by this ▇▇▇▇ of Sale does hereby grant, bargain, sell, convey, transfer and
deliver the Assets unto the Purchaser, to have and to hold such undivided
interest in the Assets unto the Purchaser, for itself, its successors and
assigns, forever.
The Assets are transferred and conveyed by the Seller AS-IS,
WHERE-IS, WITHOUT REPRESENTATIONS OR WARRANTIES (EXPRESS OR IMPLIED) OF ANY KIND
WHATSOEVER BY THE SELLER OR ANY PERSON ACTING ON ITS BEHALF except that the
Seller represents and warrants that it has not by voluntary act or omission
created or granted any lien on the Assets, other than Permitted Liens, as
defined in that certain Second Amended and Restated Nuclear Material Lease
Agreement, dated as of --------- --, 1998 between the Seller and the Purchaser.
The Purchaser acknowledges and agrees that neither the Seller, its directors,
officers or employees, any company, person or firm controlling, controlled by,
or under common control with any of them nor any other person acting on behalf
of the Seller is a manufacturer of, or is engaged in the sale or distribution
of, nuclear material, has had at any time physical possession of any portion of
the Assets sold hereunder, or has made any inspection thereof. The Purchaser
further acknowledges and agrees that the Assets sold hereunder have been at all
times in the possession of the Purchaser and that the Purchaser has made such
inspections thereof as it deems necessary and that the Purchaser has been solely
responsible for all decisions made with respect to the choice of the suppliers
of such Assets and the enrichment, fabrication, transportation, storage and
processing of the same.
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IN WITNESS WHEREOF, the Seller has caused these presents to be
executed by one of its Vice Presidents, this -------- day-- of
,19 .
------------------ -----
TMI-1 FUEL CORP., Seller
By:
-------------------------------------
Vice President
Acknowledgment and Acceptance
The foregoing ▇▇▇▇ of Sale is hereby acknowledged and accepted
by the undersigned as of the date last above written.
PENNSYLVANIA ELECTRIC COMPANY,
Purchaser
By:
-------------------------------------
Its:
-------------------------------------
53
EXHIBIT F
RENT DUE
AND SCV CONFIRMATION SCHEDULE
For the Basic Rent Period Ended
--------
In accordance with the Second Amended and Restated Lease
Agreement dated as of-----------, 1998, between TMI-1 Fuel Corp., as Lessor,
and Pennsylvania Electric Company, as Lessee, the Lessee certifies that all
amounts set forth below are true and correct in all respects, and both Lessor
and Lessee certify that this Schedule has been prepared in accordance with the
provisions of the Lease Agreement.
I. BASIC RENT, ADDITIONAL RENT AND TERMINATION RENT
A.Basic Rent Owed
1. Calculation of Portion of Monthly Financing Charge Not Allocated
to Acquisition Cost
a.Interest Payable with Respect to All Outstanding Notes (See $ -
attached summary calculation)
--------------
b.Other Amounts Included in Monthly Financing Charge $ -
--------------
▇.▇▇▇▇▇ MONTHLY FINANCING CHARGE NOT ALLOCATED TO ACQUISITION COST $ -
(Total of 1(a) and 1(b))
--------------
2 Aggregate Monthly Rent Component (See attached summary $ -
calculation)
--------------
3. BASIC RENT (total of 1(c) and 2) $ -
==============
B. Additional Rent Owed (see attached summary calculation) $ -
--------------
C.Termination Rent Owed (see attached summary calculation) $ -
--------------
TOTAL RENT DUE (total of A, B and C) $ -
==============
54
II. CALCULATION OF STIPULATED CASUALTY VALUE
Nuclear Material
----------------
Installed for Not Installed Total
Operation In for Operation -----
the in the
Generating Generating
---------- ----------
Facility Facility
-------- --------
A. Stipulated Casualty Value as of $ - $ - $ -
--------------- --------------- ------------
B. Add: Acquisition Cost Incurred in Rent $ - $ - $ -
Period Covered by This Schedule (exclusive of
Monthly Financing Charges)
--------------- --------------- ------------
C. Add: Monthly Financing Charge Allocated $ - $ - $ -
to Acquisition Cost Incurred in Rent Period
Covered by This Schedule
--------------- --------------- ------------
D. Less: SCV of Nuclear Material $ - $ - $ -
Transferred to the Lessee Pursuant to Sections
8(c), 8(g) or 14 of the Lease Agreement during
the Basic Rent Period Covered by This Schedule
--------------- --------------- ------------
STIPULATED CASUALTY VALUE AS OF-------------- $ - $ - $ -
=============== =============== ============
Add: Commercial Paper Discount $ -
------------
STIPULATED CASUALTY VALUE AS OF -------------- $ -
============
55