EXHIBIT B-2(a)(iv)
COUNTERPART NO. ___
AMENDED AND RESTATED
NUCLEAR MATERIAL LEASE AGREEMENT
Dated as of November 17, 1995
between
TMI-1 FUEL CORP.,
as Lessor
and
PENNSYLVANIA ELECTRIC COMPANY
as Lessee
AS OF THE DATE OF THIS AMENDED AND RESTATED LEASE AGREEMENT, THE
LESSOR UNDER THIS AMENDED AND RESTATED LEASE AGREEMENT (THE
"LESSOR") HAS GRANTED TO THE SECURED PARTIES, AS DEFINED HEREIN,
A SECURITY INTEREST IN THIS AMENDED AND RESTATED LEASE AGREEMENT
AND IN ALL OF THE LESSOR'S RIGHTS AND INTERESTS UNDER THIS
AMENDED AND RESTATED LEASE AGREEMENT, INCLUDING, WITHOUT
LIMITATION, ALL OF THE LESSOR'S RIGHTS TO AND INTERESTS IN
NUCLEAR MATERIAL AS DEFINED IN THIS AMENDED AND RESTATED LEASE
AGREEMENT.
THIS AMENDED AND RESTATED LEASE AGREEMENT HAS BEEN MANUALLY
EXECUTED IN EIGHTEEN (18) COUNTERPARTS, NUMBERED CONSECUTIVELY
FROM 1 TO 18. NO SECURITY INTEREST IN THIS AMENDED AND RESTATED
LEASE AGREEMENT OR IN ANY OF THE LESSOR'S RIGHTS AND INTERESTS
UNDER THIS AMENDED AND RESTATED LEASE AGREEMENT MAY BE PERFECTED
BY THE POSSESSION OF ANY SUCH COUNTERPART OTHER THAN COUNTERPART
NO. 1.
TABLE OF CONTENTS
Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Title to Remain in the Lessor; Quiet Enjoyment;
Fuel Management; Location . . . . . . . . . . . . . . . . 2
Agreement for Lease of Nuclear Material . . . . . . . . . . 3
Orders for Nuclear Material and Services;
Assigned Agreements . . . . . . . . . . . . . . . . . . . 3
Leasing Records; Payment of Costs of Lessor . . . . . . . . 4
No Warranties or Representation by Lessor . . . . . . . . . 6
Lease Term; Early Termination; Termination of Leasing Record 7
Payment of Rent; Payments with Respect
to the Lessor's Financing Costs . . . . . . . . . . . . . 9
Compliance with Laws; Restricted Use of Nuclear
Material; Assignments; Permitted Liens; Spent Fuel . . . . 9
Permitted Contests . . . . . . . . . . . . . . . . . . . . 12
Insurance; Compliance with Insurance Requirements . . . . . 13
Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 14
Casualty and Other Events . . . . . . . . . . . . . . . . . 17
Nuclear Material to Remain Personal Property . . . . . . . 17
Events of Default . . . . . . . . . . . . . . . . . . . . . 18
Rights of the Lessor Upon Default of the Lessee . . . . . . 19
Termination After Certain Events . . . . . . . . . . . . . 20
Investment Tax Credit . . . . . . . . . . . . . . . . . . . 23
Certificates; Information; Financial Statements . . . . . . 23
Obligation of the Lessee to Pay Rent . . . . . . . . . . . 24
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 25
AMENDED AND RESTATED NUCLEAR MATERIAL LEASE AGREEMENT
AMENDED AND RESTATED LEASE AGREEMENT (this "Lease
Agreement") dated as of the 17th day of November, 1995, 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. Concurrent with the execution and delivery hereof,
such loan arrangements with Prudential are being terminated and
Lessor is entering into a new credit agreement and related
instruments pursuant to which a bank syndicate for which Union
Bank of Switzerland, New York Branch will act as agent to provide
financing for the acquisition of Nuclear Material being leased
hereunder;
D. Accordingly, the Lessor and the Lessee desire to
enter into this 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;
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:
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(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, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-
0001, Attention: Comptroller, telecopy number ▇▇▇-▇▇▇-▇▇▇▇,
with a copy to GPU Service Corporation, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
Assistant 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 Union Bank of Switzerland, New York
Branch, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, facsimile number (212) 821-
3383; 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 Union Bank of Switzerland, New York Branch at
the address indicated in this Section 2(iii).
3. 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
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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 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
$27,500,000 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
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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.
(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
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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
Prudential pursuant to Section 7A of the Prudential
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 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
5
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
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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
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.
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(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 been transferred to
the Lessee to the Lessee, 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 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
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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 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 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.
9
(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.
10
(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
11
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 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
12
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 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
13
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, 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
14
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
15
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.
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
16
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;
(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
17
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 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.
18
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
November 17, 1998;
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
19
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 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. (a) 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;
20
(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 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
21
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 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;
22
(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(a) below prior to the expiration of its
term in connection with any of the following "Terminating
Events":
(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,
23
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
24
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
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) (i) 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
25
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 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
26
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 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
27
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
28
or remedies hereunder unless 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.
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
PENNSYLVANIA ELECTRIC COMPANY
Lessee
ATTEST
By:
(Assistant) Secretary Name:▇. ▇. ▇▇▇▇▇▇
Title: Vice President &
Treasurer
29
STATE OF )
COUNTY OF ) SS:
On this ___ day of November, 1995, 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 November, 1995, 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:
30
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
31
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,
1
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. 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.
2
"Basic Documents" means the Lease Agreement, the Credit
Agreement, the Security Agreement, the Commercial Paper, the
Letter of Credit, 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 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
3
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 November 17, 1995.
"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 and the Letter of
Credit.
"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 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
4
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 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.
"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 (i) the Dealer Agreement dated
as of November 17, 1995 between the Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇
Money Markets, L.P. and (ii) the Dealer Agreement dated as of
November 17, 1995 between the Company and UBS Securities Inc.
"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
5
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 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
6
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 November 17, 1995 among the Company and Chemical
Bank, as Depositary, and Union Bank of Switzerland, New York
Branch, as Issuing Bank, Arranging Agent and 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.
"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.
7
"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 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.
8
"Issuing Bank" shall have the meaning specified
therefor in the first paragraph of the Credit Agreement.
"Lease Agreement" means the Amended and Restated
Nuclear Material Lease Agreement, dated as of November 17, 1995,
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.
"▇▇▇▇▇▇'▇ ▇▇▇▇ 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.
9
"Letter Agreement" means the Lessee's Letter Agreement
Regarding TMI-1 Fuel Corp., dated as of November 17, 1995,
between the Lessee, the Company, and the Administrative Agent, as
it may be amended from time to time.
"Letter of Credit" has the meaning specified therefor
in Section 1.02 of the Credit Agreement.
"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'
10
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.
"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
11
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. Section 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
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.
12
"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.
"Original Lease" means the Nuclear Material Lease
Agreement, dated as of August 1, 1991 between the Lessee and the
Lessor.
"Outstandings" shall have the meaning specified
therefor in Section 1.02 of the Credit Agreement.
"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
13
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.
"Property" means any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or
intangible.
"Prudential Agreement" means the Floating Rate Credit
Agreement (Pennsylvania Electric Company) dated as of August 1,
14
1991 between and among TMI-1 Fuel Corp. and The Prudential
Insurance Company of America, PruLease, Inc., Prudential Property
and Casualty Insurance Company, Prudential Reinsurance Company
and Pruco Life Insurance Company.
"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.
15
"Securities Act" means the Securities Act of 1933, as
from time to time amended.
"Security Agreement" means the Security Agreement and
Assignment of Contracts by and among the Company and Union Bank
of Switzerland, New York Branch, dated as of November 17, 1995
and 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 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 Amended and Restated Trust
Agreement dated as of November 17, 1995 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.
"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.
16
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:
Basic Rent for the Nuclear Material covered by this Record shall
be calculated and paid as provided in Section 9 of the 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 Nuclear Material Lease
Agreement between the undersigned Lessor and Lessee, dated as of
November 17, 1995, 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
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 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 Amended and Restated
Nuclear Material Lease Agreement between the undersigned Lessor
and Lessee, dated as of November 17, 1995, 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
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
Amended and Restated Nuclear Material Lease Agreement, dated as
of November 17, 1995, 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:
EXHIBIT C
NUCLEAR MATERIAL CONTRACTS
The Agreements (each as amended and restated) referred
to in Section 5 of the Amended and Restated Nuclear Material
Lease Agreement, dated as of November 17, 1995, between TMI-1
FUEL CORP. ("Lessor") and PENNSYLVANIA ELECTRIC COMPANY
("Lessee") are:
(1) Agreement, dated November 18, 1988, between Cameco
Corporation and GPU Nuclear Corporation, as agent for the Lessee,
Jersey Central Power & Light Company ("JCP&L") and Metropolitan
Edison Company ("Met-Ed").
(2) Agreement, dated September 30, 1988, between URI,
Inc. and GPU Nuclear Corporation, as agent for the Lessee, JCP&L
and Met-Ed.
(3) Agreement, dated January 30, 1975, between
Sequoyah Fuels Corporation and GPU Nuclear Corporation, as agent
for the Lessee, JCP&L and Met-Ed.
(4) Agreement, dated October 10, 1984, between United
States Department of Energy and GPU Nuclear Corporation, as agent
for the Lessee, JCP&L and Met-Ed.
(5) Agreement, dated as of June 14, 1995 between B&W
Fuel Company and GPU Nuclear Corporation, as agent for the
Lessee, JCP&L and Met-Ed.
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 an Amended and Restated Nuclear Material Lease Agreement
dated as of November 17, 1995, 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 November 17, 1995 (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 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 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:
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.
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 an Amended and Restated Nuclear
Material Lease Agreement dated as of November 17, 1995, 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
November 17, 1995 (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 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:
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 Amended and Restated Nuclear Material
Lease Agreement, dated as of November 17, 1995 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.
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
Acknowledgement 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:
EXHIBIT F
RENT DUE
AND SCV CONFIRMATION SCHEDULE
For the Basic Rent Period Ended _______
In accordance with the Amended and Restated Lease Agreement dated as of November 17, 1995,
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.
23. 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 $
(c) TOTAL 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 Owned (see attached summary calculation) $
C. Termination Rent Owed (see attached summary calculation) $
TOTAL RENT DUE (total of A, B and C) $
24. CALCULATION OF STIPULATED CASUALTY VALUE
Nuclear Material
Installed for Not Installed for
Operation in the Operation in the
Generating Facility Generating Facility Total
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 ______________ $