SEC FILE NO. 70-7862
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CERTIFICATE PURSUANT TO
RULE 24
OF COMPLETION OF TRANSACTIONS
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
JERSEY CENTRAL POWER & LIGHT COMPANY
METROPOLITAN EDISON COMPANY
PENNSYLVANIA ELECTRIC COMPANY<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------------X
In the Matter of )
)
JERSEY CENTRAL POWER & LIGHT COMPANY )
METROPOLITAN EDISON COMPANY )
PENNSYLVANIA ELECTRIC COMPANY )
)
SEC File No. 70-7862 )
)
(Public Utility Holding )
Company Act of 1935) )
----------------------------------------X
To the Members of the Securities and Exchange Commission:
The undersigned, Jersey Central Power & Light Company
("JCP&L"), Metropolitan Edison Company ("Met-Ed") and
Pennsylvania Electric Company ("Penelec", collectively, the "GPU
Companies") hereby certify pursuant to Rule 24 of the General
Rules and Regulations under the Public Utility Holding Company
Act of 1935, as amended, that the transactions authorized by the
Commission's Supplemental Orders, dated October 25 and October
27, 1995, have been carried out in accordance with the terms and
conditions of, and for the purposes represented by, the
Application, as post-effectively amended, in SEC File No. 70-7862
as follows:
1. On November 17, 1995, JCP&L entered into an
Amended and Restated Nuclear Material Lease Agreement, dated as
of November 17, 1995 (the "Amended Oyster Creek Lease"), with
Oyster Creek Fuel Corp., a Delaware corporation wholly-owned by
United States Trust Company of New York, as Owner Trustee under a
certain Amended and Restated Trust Agreement, dated as of
1<PAGE>
November 17, 1995 (the "Amended Trust Agreement"). The Amended
Oyster Creek Lease provides for the lease by Oyster Creek Fuel
Corp. to JCP&L of nuclear fuel, assemblies and component parts
("Nuclear Material") for use at JCP&L's Oyster Creek nuclear
generating station. Under the Amended Oyster Creek Lease, total
Acquisition Costs (as therein defined) for Nuclear Material may
not exceed $100 million outstanding at any one time.
Simultaneously, Oyster Creek Fuel Corp. entered into a Credit
Agreement, dated as of November 17, 1995, with Union Bank of
Switzerland ("UBS"), New York Branch, as Arranging Agent, Issuing
Bank and Administrative Agent, Canadian Imperial Bank of
Commerce, Mellon Bank, N.A. and PNC Bank, National Association as
Lead Managers and the Bank's parties thereto ("Oyster Creek
Credit Agreement"), and a Security Agreement and Assignment of
Contracts dated as of November 17, 1995 with UBS, as Collateral
Agent. Thereafter, Oyster Creek Fuel Corp., through a commercial
paper depositary, issued commercial paper under the Oyster Creek
Credit Agreement in the aggregate face amount of $71,290,000.
The proceeds of such issuance were used to pay (i) The Prudential
Insurance Company of America and affiliates thereof
("Prudential") the amount outstanding under a certain Floating
Rate Credit Agreement dated as of August 1, 1991 under which
Oyster Creek Fuel Corp. made borrowings to provide for the
acquisition of Nuclear Material and (ii) certain costs associated
with the establishment of the Oyster Creek Credit Agreement.
Such agreement with Prudential and related documents were
terminated upon the making of such payment to Prudential.
2<PAGE>
2. The commercial paper issued by Oyster Creek Fuel Corp.
on November 17, 1995 was issued at a a blended rate of 5.84%. It
is expected that Oyster Creek Fuel Corp. will issue additional
commercial paper or make borrowings under the Oyster Creek Credit
Agreement to pay for Acquisition Costs as they are incurred from
time to time.
3. On November 17, 1995, JCP&L, Met-Ed and Penelec
each entered into separate Amended and Restated Nuclear Material
Lease Agreements, dated as of November 17, 1995 (the "Amended
TMI-1 Leases"), with TMI-1 Fuel Corp., a Delaware corporation
wholly-owned by United States Trust Company of New York, as Owner
Trustee under the Amended Trust Agreement, providing for the
lease to the GPU Companies of Nuclear Material for use at their
Three Mile Island Unit 1 nuclear generating station ("TMI-1") in
proportion to their respective undivided ownership interests
therein (i.e., JCP&L - 25%; Met-Ed - 50%; and Penelec - 25%).
Under the Amended TMI-1 Leases, total Acquisition Costs (as
therein defined) may not exceed $27.5 million for JCP&L, $55
million for Met-Ed and $27.5 million for Penelec outstanding at
any one time. Simultaneously, TMI-1 Fuel Corp. entered into a
Credit Agreement with UBS, as Arranging Agent, Issuing Bank and
Administrative Agent, Canadian Imperial Bank of Commerce, Mellon
Bank, N.A. and PNC Bank, National Association, as Lead Managers
and the Bank's parties thereto ("TMI-1 Credit Agreement"), and
each of JCP&L, Met-Ed and Penelec entered into a Security
Agreement and Assignment of Contracts dated as of November 17,
1995 with UBS, as Collateral Agent. Thereafter, TMI-1 Fuel
Corp., through a commercial paper depositary, issued commercial
3<PAGE>
paper under the TMI-1 Credit Agreement in the aggregate face
amount of $91,424,000. The proceeds of such issuance were used
to pay (i) Prudential for amounts outstanding with respect to the
ownership interests of the GPU Companies in TMI-1 under certain
Floating Rate Credit Agreements dated as of August 1, 1991 under
which TMI-1 Fuel Corp. made borrowings to provide for the
acquisition of Nuclear Material and (ii) certain costs associated
with the establishment of the TMI-1 Credit Agreement. Such
agreements with Prudential and related documents were terminated
upon the making of such payments to Prudential.
4. The commercial paper issued by TMI-1 Fuel Corp. on
November 17, 1995 was issued at a blended rate of 5.86%. It is
expected that TMI-1 Fuel Corp. will issue additional commercial
paper or make borrowings under the TMI-1 Credit Agreement to pay
for Acquisition Costs as they are incurred from time to time.
5. The following exhibits are filed herewith in Item
6:
B-2(a)(i) Amended and Restated Nuclear Material
Lease Agreement, dated as of November
17, 1995, between Oyster Creek Fuel
Corp. and JCP&L.
B-2(a)(ii) Amended and Restated Nuclear Material
Lease Agreement, dated as of November
17, 1995, between TMI-1 Fuel Corp. and
JCP&L.
B-2(a)(iii) Amended and Restated Nuclear Material
Lease Agreement, dated as of November
17, 1995, between TMI-1 Fuel Corp. and
Met-Ed.
B-2(a)(iv) Amended and Restated Nuclear Material
Lease Agreement, dated as of November
17, 1995, between TMI-1 Fuel Corp. and
Penelec.
4<PAGE>
B-2(b)(i) Letter Agreements, dated as of November
17, 1995, from the GPU Companies
relating to the Oyster Creek Lease and
TMI-1 Leases.
B-3(i) Amended and Restated Trust Agreement,
dated as of November 17, 1995, between
United States Trust Company of New York,
as Owner Trustee, Lord Fuel Corp. as
Trustor and Beneficiary, and the GPU
Companies.
F-1(a)(i) "Past-tense" opinion of Berlack, Israels
& Liberman LLP.
F-2(a)(ii) "Past-tense" opinion of Richard S.
Cohen, Esq.
F-1(a)(iii) "Past-tense" opinion of Ryan, Russell,
Ogden & Seltzer.
F-1(a)(iv) "Past-tense" opinion of Ballard Spahr
Andrews & Ingersoll.
5<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935, THE UNDERSIGNED COMPANIES HAVE DULY
CAUSED THIS STATEMENT TO BE SIGNED ON THEIR BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
JERSEY CENTRAL POWER & LIGHT
COMPANY
METROPOLITAN EDISON COMPANY
PENNSYLVANIA ELECTRIC COMPANY
By:
T.G. Howson, Vice President
and Treasurer
Date: November 29, 1995<PAGE>
EXHIBITS TO BE FILED BY EDGAR
Exhibits:
B-2(a)(i) Amended and Restated Nuclear Material
Lease Agreement, dated as of November
17, 1995, between Oyster Creek Fuel
Corp. and JCP&L.
B-2(a)(ii) Amended and Restated Nuclear Material
Lease Agreement, dated as of November
17, 1995, between TMI-1 Fuel Corp. and
JCP&L.
B-2(a)(iii) Amended and Restated Nuclear Material
Lease Agreement, dated as of November
17, 1995, between TMI-1 Fuel Corp. and
Met-Ed.
B-2(a)(iv) Amended and Restated Nuclear Material
Lease Agreement, dated as of November
17, 1995, between TMI-1 Fuel Corp. and
Penelec.
B-2(b)(i) Letter Agreements, dated as of November
17, 1995, from the GPU Companies
relating to the Oyster Creek Lease and
TMI-1 Leases.
B-3(i) Amended and Restated Trust Agreement,
dated as of November 17, 1995, between
United States Trust Company of New York,
as Owner Trustee, Lord Fuel Corp. as
Trustor and Beneficiary, and the GPU
Companies.
F-1(a)(i) "Past-tense" opinion of Berlack, Israels
& Liberman LLP.
F-2(a)(ii) "Past-tense" opinion of Richard S.
Cohen, Esq.
F-1(a)(iii) "Past-tense" opinion of Ryan, Russell,
Ogden & Seltzer.
F-1(a)(iv) "Past-tense" opinion of Ballard Spahr
Andrews & Ingersoll.<PAGE>
EXHIBIT B-2(a)(i)
COUNTERPART NO. ___
AMENDED AND RESTATED
NUCLEAR MATERIAL LEASE AGREEMENT
Dated as of November 17, 1995
between
OYSTER CREEK FUEL CORP.,
as Lessor
and
JERSEY CENTRAL POWER & LIGHT 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.<PAGE>
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<PAGE>
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 OYSTER CREEK FUEL CORP., a Delaware corporation (herein
called the "Lessor"), and JERSEY CENTRAL POWER & LIGHT COMPANY, a
New Jersey 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:
1<PAGE>
(i) If to the Lessor, Oyster Creek Fuel Corp.,
c/o United States Trust Company of New York, 114 West 47th
Street, New York, New York 10036, Attention: Corporate Trust
and Agency Division, telecopy number 212-852-1626, 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, Jersey Central Power &
Light Company, 300 Madison Avenue, Morristown, New Jersey,
07960, Attention: Comptroller, telecopy number 201-455-8582,
with a copy to GPU Service Corporation, 100 Interpace
Parkway, Parsippany, New Jersey 07054-1149, Attention:
Assistant Treasurer, telecopy number 201-263-6397, 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, 299 Park Avenue, New York, New York 10171-0026,
Attention: Peter B. Yearley, 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
2<PAGE>
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
$100,000,000 in the aggregate or such other amount as the Lessor
and the Lessee may agree to in writing (the "Maximum Stipulated
Casualty Value"). The Lessor and the Lessee shall evidence their
agreement to lease particular Nuclear Material in accordance with
the terms and provisions of this Lease Agreement by signing and
delivering to each other, from time to time, Leasing Records,
substantially in the forms of Exhibit A or Exhibit B, as
applicable, prepared by the Lessee, covering such Nuclear
Material. Nothing contained herein shall be deemed to prohibit
the Lessee from leasing from other lessors or otherwise obtaining
other nuclear material for use in the Generating Facility,
subject to the provisions with respect to intermingling of fuel
assemblies or sub-assemblies with other fuel assemblies or
sub-assemblies contained in Section 6 hereof.
5. Orders for Nuclear Material and Services; Assigned
Agreements.
(a) The Nuclear Material Contracts listed in
Exhibit C hereto, relating, among other things, to the purchase
of, and services to be performed with respect to, Nuclear
Material were entered into by the Lessee prior to the date of
3<PAGE>
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
4<PAGE>
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<PAGE>
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
6<PAGE>
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.
7<PAGE>
(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 Lessor's Bill 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
8<PAGE>
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 Lessor's
Bill 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
Lessor's Bill 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<PAGE>
(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<PAGE>
(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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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 Oyster Creek nuclear
generating station site, including the Nuclear Material, in an
amount not less than $1.11 billion. Such liability and physical
damage insurance and indemnification agreements may be subject to
deductible amounts which do not exceed in the aggregate
$5,000,000, and the Lessee may self-insure with respect to such
liability and physical damage insurance and indemnification
agreements to the extent of $5,000,000, provided that such
deductible amounts and such self-insurance are permitted under
all applicable law, rules and regulations.
(b) Third Parties; Insurance Requirements. The
Lessee shall use its best efforts to provide that the Nuclear
Material, while in the possession of third parties, is covered
for liability insurance and indemnification to the maximum extent
available, and for physical damage insurance in an amount not
less than the Stipulated Casualty Value of such Nuclear Material.
To the extent that any such third party is maintaining such
insurance coverage for the Nuclear Material, the Lessee shall
have no obligation to do so under this Lease Agreement.
(c) Named Insureds; Loss Payees. The Lessee
shall provide for the Lessor, the Owner Trustee, U.S. Trust and
the Collateral Agent to be named additional insureds where
possible, and, with respect to physical damage coverage, named
loss payees to the full extent of their interests in all
insurance policies and indemnification agreements relating to the
Nuclear Material required under this Section. All such policies
and, where possible, indemnification agreements, shall provide
for at least ten (10) days' prior written notice to the Lessor,
the Owner Trustee, U.S. Trust and the Collateral Agent of any
cancellation or material alteration of such policies.
(d) Insurance Certificates. The Lessee shall,
upon request of the Lessor, the Owner Trustee, U.S. Trust or the
Collateral Agent, provide the Lessor, the Owner Trustee, U.S.
Trust or the Collateral Agent, as the case may be, with copies of
the policies or insurance certificates in respect of the
insurance procured pursuant to the provisions of this Section and
shall advise the Lessor, the Owner Trustee, U.S. Trust and the
Collateral Agent of all expirations and renewals of policies and
all notices issued by the insurers with respect to such policies.
Within a six-month period from the execution of this Lease
Agreement and at yearly intervals thereafter, the Lessee shall
furnish to the Lessor, the Owner Trustee, U.S. Trust and the
15<PAGE>
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
other right, by or in respect of any Nuclear Material; provided,
16<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
(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<PAGE>
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<PAGE>
(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<PAGE>
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 Price-Anderson 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<PAGE>
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<PAGE>
Settlement Date. The Lessor shall be obligated to deliver to the
Lessee a Lessor's Bill 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<PAGE>
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<PAGE>
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. This Lease Agreement is Intended as Security.
Lessor and Lessee declare and agree that this Lease Agreement is
intended as security and confirm that Lessee hereby grants,
pledges and assigns to Lessor a security interest in the Nuclear
Material and rights in the Assigned Agreements. Subject to the
terms, conditions and limitations contained herein, Lessor has
made funds available to Lessee for the acquisition of Nuclear
Material. Title to the Nuclear Material and rights in the
Assigned Agreements shall be retained or reserved by Lessor
solely for the purpose of securing payment by Lessee to Lessor of
28<PAGE>
all amounts as provided herein and to secure performance by
Lessee of the other terms and conditions hereof. Lessee shall
promptly execute and deliver to Lessor such documents as Lessor
shall deem necessary to further evidence Lessor's security
interests hereunder and in the Nuclear Material. Lessor and
Lessee agree that Lessor holds legal title to the Nuclear
Material and rights in the Assigned Agreements only to evidence
Lessor's security interest therein and the Nuclear Material and
rights in the Assigned Agreements shall be treated as owned by
Lessee for all other purposes.
23. Miscellaneous.
(a) Successors and Assigns. This Lease Agreement
shall be binding upon the Lessee and the Lessor and their
respective successors and assigns and shall inure to the benefit
of the Lessee and the Lessor and their respective successors and
assigns.
(b) Waiver. Neither party shall by act, delay,
omission or otherwise be deemed to have waived any of its rights
or remedies hereunder unless 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
29<PAGE>
construed in accordance with and be governed by the law of the
State of New Jersey.
30<PAGE>
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.
OYSTER CREEK FUEL CORP.
Lessor
ATTEST
By:
(Assistant) Secretary
JERSEY CENTRAL POWER & LIGHT
COMPANY,
Lessee
ATTEST
By:
(Assistant) Secretary Name:T. G. Howson
Title: Vice President &
Treasurer
31<PAGE>
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 Oyster
Creek 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 T. G. Howson, to me personally known, who, being by me
duly sworn, says that he is a Vice President of Jersey Central
Power & Light 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:
32<PAGE>
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 Lessor's Bill of Sale
Exhibit F -- Form of Rent Due and SCV Confirmation
Schedule
33<PAGE>
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<PAGE>
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<PAGE>
"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 Bill 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<PAGE>
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<PAGE>
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 Oyster Creek 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 Oyster Creek 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.
"Deemed Loss Event" means the following event: if at
any time during the term of the Lease Agreement, (A) the Company,
by reason solely of the ownership of the Nuclear Material or any
part thereof or the lease of the Nuclear Material to the Lessee
under the Lease Agreement, or the Company or any Secured Party,
by reason solely of any other transaction contemplated by the
Lease Agreement or any of the other Basic Documents, shall be
deemed, by any governmental authority having jurisdiction, to be,
or to be subject to regulation as an "electric utility" or a
"public utility" or a "public utility holding company" or similar
type of entity, under any applicable law or deemed a "public
utility company" or a "subsidiary company" or a "holding company"
within the meaning of the Public Utility Holding Company Act, (B)
the Public Utility Holding 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,
5<PAGE>
which adversely affect the legality, validity and enforceability
of the lease obligations of the Company and the Lessee under the
Lease Agreement, or (C) either the Company or any of the Secured
Parties, by reason solely of being a party to the Basic
Documents, shall be required to obtain any consent, order or
approval of, or to make any filing or registration with, or to
give any notice to, any governmental authority, or be subject to
any liabilities, duties or obligations under the Public Utility
Holding Company Act, other than the filing by the Company of a
certificate on Form U-7D with the SEC pursuant to SEC Rule 7(d)
under the Public Utility Holding Company Act (17 C.F.R. Section
250.7(d)), except in any case if the same shall be solely the
result of Nonburdensome Regulation; provided, however, that if in
compliance with applicable laws, the Lessee, with the cooperation
of the Company, shall have acted diligently and in good faith to
contest, or obtain an exemption from the application of the laws,
rules or regulations described in clauses (A), (B) or (C) to the
Company, the Secured Parties or the Lessee, as the case may be,
the application of which would otherwise constitute a Deemed Loss
Event, such Deemed Loss Event shall be deemed not to have
occurred so long as (I) the Lessee shall have furnished to the
Company and the Secured Parties an opinion of counsel reasonably
satisfactory to the Company and the Secured Parties to the effect
that there exists a reasonable basis for such contest or
exemption and that the application of such laws, rules or
regulations to the Company, the Secured Parties or the Lessee, as
the case may be, shall be effectively stayed during the
application for exemption or contest and such laws, rules or
regulations shall not be applied retroactively at the conclusion
of such contest, (II) the Company or the Secured Parties shall
have determined in their sole discretion that such contest or
exemption shall not adversely affect their business or involve
any danger of the sale, foreclosure or loss of, or creation of a
Lien upon, the Collateral, and (III) the Lessee shall have agreed
to indemnify the Company or such Secured Parties, as the case may
be, for expenses incurred in connection with such contest or
exemption; and further provided, that following notice from the
Lessee to the Company or the Secured Parties, as the case may be,
that the Lessee shall be unable to furnish the opinion described
in clause (I) of the next preceding proviso or that any such
contest shall not be successful or such exemption shall not be
available, a Deemed Loss Event shall be deemed not to have
occurred for such period, not to exceed 270 days, as may be
approved by any governmental authority having jurisdiction during
which application of such law, rule or regulation to the Company,
the Secured Parties or the Lessee, as the case may be, shall be
suspended to enable the Company to assign or transfer its
interest in the Collateral so long as during such period the
Company shall use reasonable efforts to assign or transfer its
interest in the Collateral upon commercially reasonable terms and
conditions, provided that the Company shall not be required to
assign or transfer the Nuclear Material for a price which, after
deduction of sales tax and expenses of such sale incurred by the
Company, shall be less than the sum of (A) Stipulated Casualty
Value determined as of the date of such proposed sale, and (B)
6<PAGE>
the Termination Rent determined in accordance with Section 18 of
the Lease Agreement.
"Dealer Agreements" mean (i) the Dealer Agreement dated
as of November 17, 1995 between the Company and Goldman Sachs
Money Markets, L.P. and (ii) the Dealer Agreement dated as of
November 17, 1995 between the Company and UBS Securities Inc.
"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<PAGE>
"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 Oyster Creek Nuclear Generating Station, located in Lacey
Township, New Jersey.
"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<PAGE>
"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 Oyster Creek Fuel Corp., as the Lessor, and Jersey
Central Power & Light 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.
"Lessor's Bill 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<PAGE>
"Letter Agreement" means the Lessee's Letter Agreement
Regarding Oyster Creek 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<PAGE>
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.
"NJBPU" means the New Jersey Board of Public Utilities
or any successor agency thereto.
11<PAGE>
"Nonburdensome Regulation" means (i) ministerial
regulatory requirements that do not impose limitations or
regulatory requirements on the business or activities of, or
adversely affect, the Company or any Secured Party and that are
deemed, in the reasonable discretion of the Company or any
Secured Party, not to be burdensome, or (ii) assuming redelivery
of the Nuclear Material in accordance with the Lease Agreement,
regulation resulting from any possession of the Nuclear Material
(or right thereto) on or after the termination of the Lease
Agreement.
"Notes" shall have the meaning specified therefor in
Section 1.02 of the Credit Agreement.
"Nuclear Incident" shall have the meaning specified in
the Atomic Energy Act, 42 U.S.C. 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
12<PAGE>
performing any identical or substantially identical licensing and
related regulatory functions.
"Obligations" means (i) all items (including, without
limitation, Capitalized Leases but excluding shareholders' equity
and minority interests) which in accordance with generally
accepted accounting principles should be reflected on the
liability side of a balance sheet as at the date as of which such
obligations are to be determined; (ii) all obligations and
liabilities (whether or not reflected upon such balance sheet)
secured by any Lien existing on the Property held subject to such
Lien, whether or not the obligation or liability secured thereby
shall have been assumed; and (iii) all guarantees, endorsements
(other than for collection in the ordinary course of business)
and contingent obligations in respect of any liabilities of the
type described in clauses (i) and (ii) of this definition
(whether or not reflected on such balance sheet); provided,
however, that the term 'Obligations' shall not include deferred
taxes.
"Obligations for Borrowed Money or Deferred Purchase
Price" means all Obligations in respect of borrowed money or the
deferred purchase price of property or services.
"Officer's Certificate" means, with respect to any
corporation, a certificate signed by the President, any Vice
President, the Treasurer, any Assistant Treasurer, the
Comptroller, or any Assistant Comptroller of such corporation,
and with respect to any other entity, a certificate signed by an
individual generally authorized to execute and deliver contracts
on behalf of such entity.
"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.
"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<PAGE>
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 dated as of August 1, 1991 between and among Oyster
14<PAGE>
Creek 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<PAGE>
"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.
16<PAGE>
"U.S. Trust" means United States Trust Company of New
York.
17<PAGE>
EXHIBIT A
INTERIM LEASING RECORD
Record No. _____
Name of Lessee: Jersey Central Power & Light 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.
OYSTER CREEK FUEL CORP., Lessor JERSEY CENTRAL POWER & LIGHT
COMPANY, Lessee
By By
Authorized Signature Authorized Signature<PAGE>
EXHIBIT B
FINAL LEASING RECORD
Record No. _____
Name of Lessee: Jersey Central Power & Light 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.
OYSTER CREEK FUEL CORP., Lessor JERSEY CENTRAL POWER & LIGHT
COMPANY, Lessee
By By
Authorized Signature Authorized Signature<PAGE>
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
OYSTER CREEK FUEL CORP. JERSEY CENTRAL POWER & LIGHT
COMPANY
By: By:
Its: Its: <PAGE>
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 OYSTER
CREEK FUEL CORP. ("Lessor") and JERSEY CENTRAL POWER & LIGHT
COMPANY ("Lessee") are:
(1) Agreement, dated November 18, 1988, between Cameco
Corporation and GPU Nuclear Corporation, as agent for the Lessee,
Metropolitan Edison Company ("Met-Ed") and Pennsylvania Electric
Company ("Penelec").
(2) Agreement, dated September 30, 1988, between URI,
Inc. and GPU Nuclear Corporation, as agent for the Lessee, Met-Ed
and Penelec.
(3) Agreement, dated January 30, 1975, between
Sequoyah Fuels Corporation and GPU Nuclear Corporation, as agent
for the Lessee, Met-Ed and Penelec.
(4) Agreement, dated October 10, 1984, between United
States Department of Energy and GPU Nuclear Corporation, as agent
for the Lessee, Met-Ed and Penelec.
(5) Agreement, dated November 12, 1980, between
General Electric Company and the Lessee.<PAGE>
EXHIBIT D
ASSIGNMENT AGREEMENT
KNOW ALL MEN BY THESE PRESENTS THAT:
Jersey Central Power & Light 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 Oyster Creek 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 Oyster Creek 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<PAGE>
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<PAGE>
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____.
JERSEY CENTRAL POWER & LIGHT
COMPANY
By: <PAGE>
Title: <PAGE>
The foregoing Assignment Agreement is hereby accepted:
OYSTER CREEK FUEL CORP.
By:
Title: <PAGE>
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 Jersey Central Power & Light 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.<PAGE>
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 Jersey Central Power & Light 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 Oyster Creek 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 Oyster Creek 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<PAGE>
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:
<PAGE>
EXHIBIT E
BILL OF SALE
TO
JERSEY CENTRAL POWER & LIGHT COMPANY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned,
Oyster Creek Fuel Corp., a Delaware corporation (the "Seller"),
whose post office address is c/o United States Trust Company of
New York, 114 West 47th Street, New York, New York 10036,
Attention: Corporate Trust and Agency Division, for and in
consideration paid to the Seller upon or before the execution and
delivery of this Bill of Sale to Jersey Central Power & Light
Company (the "Purchaser"), a New Jersey corporation, whose
address is 300 Madison Avenue, Morristown, New Jersey, 07960,
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 Bill 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___.
OYSTER CREEK FUEL CORP., Seller
By:
Vice President
<PAGE>
Acknowledgement and Acceptance
The foregoing Bill of Sale is hereby acknowledged and
accepted by the undersigned as of the date last above written.
JERSEY CENTRAL POWER & LIGHT
COMPANY, Purchaser
By:
Its: <PAGE>
<TABLE>
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 Jersey Central Power & Light 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.
<CAPTION>
24. BASIC RENT, ADDITIONAL RENT AND TERMINATION RENT
<S> <C>
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) $<PAGE>
25. CALCULATION OF STIPULATED CASUALTY VALUE
<CAPTION>
Nuclear Material
Installed for Not Installed for
Operation in the Operation in the
Generating Facility Generating Facility Total
<S> <C> <C> <C>
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 ______________ $
</TABLE>
<PAGE>
EXHIBIT B-2(a)(ii)
COUNTERPART NO. ___
AMENDED AND RESTATED
NUCLEAR MATERIAL LEASE AGREEMENT
Dated as of November 17, 1995
between
TMI-1 FUEL CORP.,
as Lessor
and
JERSEY CENTRAL POWER & LIGHT 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.<PAGE>
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 . . . . . . . . . . . . . 21
Investment Tax Credit . . . . . . . . . . . . . . . . . . . 23
Certificates; Information; Financial Statements . . . . . . 23
Obligation of the Lessee to Pay Rent . . . . . . . . . . . 25
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 25<PAGE>
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 JERSEY CENTRAL POWER & LIGHT COMPANY, a New
Jersey corporation (herein called the "Lessee").
RECITALS
i) 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;
ii) 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;
iii) 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;
iv) 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:
I. 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.
II. 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:
1<PAGE>
A. If to the Lessor, TMI-1 Fuel Corp., c/o United
States Trust Company of New York, 114 West 47th Street, New
York, New York 10036, Attention: Corporate Trust and Agency
Division, telecopy number 212-852-1626, or at such other
address as the Lessor may have furnished to the Lessee and
the Secured Parties in writing; or
B. If to the Lessee, Jersey Central Power & Light
Company, 300 Madison Avenue, Morristown, New Jersey 07960,
Attention: Comptroller, telecopy number 201-455-8582, with a
copy to GPU Service Corporation, 100 Interpace Parkway,
Parsippany, New Jersey 07054-1149, Attention: Assistant
Treasurer, telecopy number 201-263-6397, or at such other
address as the Lessee may have furnished the Lessor and the
Secured Parties in writing; or
C. 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, 299
Park Avenue, New York, New York 10171-0026, Attention:
Peter B. Yearley, 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).
III. Title to Remain in the Lessor; Quiet Enjoyment;
Fuel Management; Location.
1. 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.
2. 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
2<PAGE>
possession and use of the Nuclear Material, for the term or terms
herein provided, subject, however, to the terms of this Lease
Agreement.
3. 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.
4. 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.
IV. 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.
V. Orders for Nuclear Material and Services; Assigned
Agreements.
1. 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
3<PAGE>
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.
2. 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.
3. 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.
VI. Leasing Records; Payment of Costs of Lessor.
1. 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
4<PAGE>
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.
2. 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.
3. Payment of Nuclear Material Costs.
(a) 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.
(b) 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<PAGE>
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.
(c) The Lessee shall: (i) 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 (ii) 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.
4. 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.
VII. 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
6<PAGE>
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.
VIII. Lease Term; Early Termination; Termination of
Leasing Record.
1. 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.
2. 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 (a) the date on which there is no outstanding principal
of, or interest or premium, if any, on any of the Outstandings or
(b) the Termination Date but in each case in no event later than
November 17, 2015.
7<PAGE>
3. 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 Lessor's Bill 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 (a) the date on which there is no outstanding principal
of, or interest or premium, if any, on any of the Outstandings or
(b) 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.
4. 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.
5. On the Termination Date unless the Lessee shall
have exercised its purchase option set forth in Section 8(c) and
paid the Lessor the purchase price of the Nuclear Material as
provided therein, the Lessee shall pay to the Lessor an amount
8<PAGE>
equal to the sum of (a) 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 (b) 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 Lessor's Bill 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.
6. 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).
7. 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
Lessor's Bill 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.
IX. Payment of Rent; Payments with Respect to the
Lessor's Financing Costs.
9<PAGE>
1. 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.
2. 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.
3. 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.
4. 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.
X. Compliance with Laws; Restricted Use of Nuclear
Material; Assignments; Permitted Liens; Spent Fuel.
1. Compliance with Legal Requirements. Subject to
the provisions of Section 11 hereof, the Lessee agrees to comply
with all Legal Requirements.
2. 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<PAGE>
3. 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 (a) no such
movement of the Nuclear Material shall materially reduce the then
fair market value of such Nuclear Material, (b) such Nuclear
Material shall be and remain the property of the Lessor, subject
to this Lease Agreement, and (c) 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.
4. 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<PAGE>
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.
5. 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.
6. 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.
7. 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 (a) the Lessee has
given prior written notice of such sublease to the Lessor, (b)
such sublease is not inconsistent with, and is expressly subject
to, this Lease Agreement and (c) such sublease does not in any
way limit or affect the Lessee's duties and obligations under
this Lease Agreement.
8. 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<PAGE>
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 (a)
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, (b) 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
(c) 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.
9. 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.
10. 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 (a) 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 (b) 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.
XI. 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<PAGE>
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 (a) 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,
(b) 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, (c) 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 (d) 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.
XII. 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:
1. 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<PAGE>
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.
2. 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.
3. 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.
4. 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<PAGE>
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.
XIII. 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:
1. 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);
2. 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;
3. the assertion of any claim or demand based upon
any infringement or alleged infringement of any patent or other
16<PAGE>
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;
4. 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;
5. 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;
6. 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;
7. 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
8. 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<PAGE>
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<PAGE>
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.
XIV. Casualty and Other Events. Upon the occurrence
of any one or more of the following events:
1. the loss, destruction or damage beyond repair
of any Nuclear Material, or
2. 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
3. a determination by the Lessee in its sole
discretion that any Nuclear Material is no longer useful to the
Lessee, provided, however, that (a) no Lease Event of Default has
occurred and is continuing, and (b) 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<PAGE>
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.
XV. 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.
XVI. Events of Default. 1. 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:
(a) 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;
(b) Default in the payment of Termination Rent;
(c) The Lessee shall fail to maintain liability
and casualty insurance pursuant to its obligations under
Section 12(a) of this Lease Agreement;
(d) The Lessee shall fail to perform its
obligations to purchase Nuclear Material pursuant to Section
8(e) of this Lease Agreement;
(e) 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<PAGE>
(f) 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;
(g) 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;
(h) 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;
(i) 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;
(j) An event of default shall occur under the
provisions of any Basic Document and such default shall have
continued beyond any applicable cure period.
(k) 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
(l) 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.
XVII. Rights of the Lessor Upon Default of the
Lessee. Upon the occurrence of any Lease Event of Default, the
21<PAGE>
Lessor may, in its discretion, and shall, at the direction of the
Secured Parties, do one or more of the following:
1. 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;
2. 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;
3. 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;
4. 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<PAGE>
5. 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.
XVIII. Termination After Certain Events.
1. 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":
(a) 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;
(b) There shall occur the revocation or material
adverse modification of any authorization, consent,
exemption or approval theretofore obtained from any
23<PAGE>
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;
(c) 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;
(d) There shall have occurred a Deemed Loss
Event;
(e) Any change in, or new interpretation by a
governmental authority having jurisdiction relating to, the
Price-Anderson 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;
(f) 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
(g) Any governmental licenses, approvals or
consents with respect to the Generating Facility, without
which the Generating Facility cannot continue to operate,
shall have been revoked and the Lessee shall not have, in
good faith, within one hundred and eighty (180) days of such
revocation, represented in writing to the Lessor that the
Lessee has made a good faith determination that such
Generating Facility will return to operation within
twenty-four (24) months of such revocation, or for any other
24<PAGE>
reason the Generating Facility shall cease to be operated
for a period of twenty-four (24) consecutive months.
2. 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.
3. 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.
4. (a) 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.
(b) If the Lessor and/or Secured Parties
elect to terminate the Lease Agreement, they shall give notice to
the Lessee and the Secured Parties or the Lessor, as the case may
be, which notice shall (x) acknowledge that the Lease Agreement
has terminated, subject to the continuing obligations of the
Lessee mentioned above, and that title to and ownership of such
Nuclear Material and any spent fuel relating thereto for which
title has not been transferred to the Lessee has transferred to
and vested in the Lessee or such other Person, and (y) specify a
Termination Settlement Date occurring one hundred and fifty (150)
days after the giving of such notice . After such termination of
this Lease Agreement and until such Termination Settlement Date,
the Lessee shall continue to pay Basic Rent and Additional Rent.
On such Termination Settlement Date, the Lessee shall be
obligated to pay to the Lessor as the purchase price for the
Nuclear Material an amount equal to the sum of (x) Stipulated
Casualty Value of the Nuclear Material as of the Termination
Settlement Date and (y) the Termination Rent on the Termination
Settlement Date. The Lessor shall be obligated to deliver to the
25<PAGE>
Lessee a Lessor's Bill 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.
XIX. 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.
XX. Certificates; Information; Financial Statements.
1. 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
Lessor or the Secured Parties may reasonably request, and (iii)
26<PAGE>
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.
2. the Lessee will deliver to the Lessor and the
Secured Parties:
(a) 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);
(b) 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
(c) SEC Reports, etc. With reasonable
promptness, copies of all notices, reports or materials
filed by the Lessee with the Securities and Exchange
Commission (or any governmental body or agency succeeding to
the functions of the Securities and Exchange Commission)
under the Securities Act of 1933, as amended, other than
Registration Statements on Form S-8 or any amendments
27<PAGE>
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.
XXI. 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,
(a) any setoff, counterclaim, recoupment, defense or other right
which the Lessee may have against the Lessor or anyone else for
any reason whatsoever, (b) 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 (c) 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.
XXII. Miscellaneous.
1. 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.
2. Waiver. Neither party shall by act, delay,
omission or otherwise be deemed to have waived any of its rights
or remedies hereunder unless such waiver is given in writing. A
28<PAGE>
waiver on one occasion shall not be construed as a waiver on any
other occasion.
3. 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.
4. 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.
5. 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.
6. 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.
29<PAGE>
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
JERSEY CENTRAL POWER & LIGHT COMPANY
Lessee
ATTEST
By:
(Assistant) Secretary Name:T. G. Howson
Title: Vice President & Treasurer
30<PAGE>
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 T. G. Howson, to me personally known, who, being by me
duly sworn, says that he is a Vice President of Jersey Central
Power & Light 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:
31<PAGE>
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 Lessor's Bill of Sale
Exhibit F -- Form of Rent Due and SCV Confirmation
Schedule<PAGE>
APPENDIX A
DEFINITIONS
As used in the Basic Documents (as defined below), the
following terms shall have the following meanings (such
definitions to be applicable to both singular and plural forms of
the terms defined), except as otherwise specifically defined
therein:
"Acquisition Cost" means the purchase price of any
Nuclear Material, any progress payments made thereon, costs of
milling, conversion, enrichment, fabrication, installation,
delivery, redelivery, containerization, storage, reprocessing,
any other costs incurred by the Company in acquiring the Nuclear
Material (less any discounts or credits actually utilized by the
Company), plus in any case (i) any allowance for funds used
during construction (including any income tax component
associated with such allowance) with respect to Nuclear Material
purchased by the Company, (ii) at the option of the Lessee, any
Rent relating to costs incurred in the ordinary course of
operations but excluding Rent relating to extraordinary costs,
including without limitation, indemnification payments, payable
by the lessee to the Company with respect to any Nuclear Material
prior to the installation of such Nuclear Material for operation
in the Generating Facility, (iii) any sales, excise or other
taxes or charges payable by the Company with respect to any such
payment for such Nuclear Material, (iv) at the option of the
Lessee, any Monthly Financing Charge payable by the Lessee to the
Company with respect to Nuclear Material during any period in
which such Nuclear Material is subject to an Interim Leasing
Record, but excluding any interest charges or penalties for late
payment by the Company of the purchase price or any portion
thereof, if such late payment results from the negligence of the
Company, (v) such other costs with respect to any Nuclear
Material as may be agreed by the Company and the Lessee and
approved by the Administrative Agent, in each case in writing,
and, in the case of any Nuclear Material removed from the
Generating Facility for the purpose of "cooling off' and repair
or reprocessing, shall include the Stipulated Casualty Value
thereof at the time of such removal, if any, and (vi) at the
option of the Lessee, any Financing Costs. Any amount realized by
the Company from the disposition of the by-products (including,
but not limited to, plutonium) of Nuclear Material specified in a
Leasing Record during the repair or reprocessing of such Nuclear
Material while leased hereunder shall be credited against the
Acquisition Cost of such Nuclear Material.
"Additional Rent" shall mean all legal, accounting,
administrative and other operating expenses and taxes incurred by
the Company to the extent not paid as part of Basic Rent
(including, without limitation, any Cancellation Fees and all
other liabilities incurred or owed by the Company pursuant to the
Basic Documents) and all amounts (other than Basic Rent) that the
Lessee agrees to pay under the Lease Agreement (including,
without limitation, indemnification payable under the Lease
Agreement, general and administrative expenses of the Company,<PAGE>
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.
"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<PAGE>
Agreements, the Assigned Agreements, the Assignment Agreements,
the Trust Agreement, the Depositary Agreement, each Bill 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
federal public utility regulatory accounting system, unless such
treatment controls the determination of the generally accepted
accounting principles applicable to such Person.<PAGE>
"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
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.<PAGE>
"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 Goldman Sachs
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
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<PAGE>
Lease Agreement, or (C) either the Company or any of the Secured
Parties, by reason solely of being a party to the Basic
Documents, shall be required to obtain any consent, order or
approval of, or to make any filing or registration with, or to
give any notice to, any governmental authority, or be subject to
any liabilities, duties or obligations under the Public Utility
Holding Company Act, other than the filing by the Company of a
certificate on Form U-7D with the SEC pursuant to SEC Rule 7(d)
under the Public Utility Holding Company Act (17 C.F.R. Section
250.7(d)), except in any case if the same shall be solely the
result of Nonburdensome Regulation; provided, however, that if in
compliance with applicable laws, the Lessee, with the cooperation
of the Company, shall have acted diligently and in good faith to
contest, or obtain an exemption from the application of the laws,
rules or regulations described in clauses (A), (B) or (C) to the
Company, the Secured Parties or the Lessee, as the case may be,
the application of which would otherwise constitute a Deemed Loss
Event, such Deemed Loss Event shall be deemed not to have
occurred so long as (I) the Lessee shall have furnished to the
Company and the Secured Parties an opinion of counsel reasonably
satisfactory to the Company and the Secured Parties to the effect
that there exists a reasonable basis for such contest or
exemption and that the application of such laws, rules or
regulations to the Company, the Secured Parties or the Lessee, as
the case may be, shall be effectively stayed during the
application for exemption or contest and such laws, rules or
regulations shall not be applied retroactively at the conclusion
of such contest, (II) the Company or the Secured Parties shall
have determined in their sole discretion that such contest or
exemption shall not adversely affect their business or involve
any danger of the sale, foreclosure or loss of, or creation of a
Lien upon, the Collateral, and (III) the Lessee shall have agreed
to indemnify the Company or such Secured Parties, as the case may
be, for expenses incurred in connection with such contest or
exemption; and further provided, that following notice from the
Lessee to the Company or the Secured Parties, as the case may be,
that the Lessee shall be unable to furnish the opinion described
in clause (I) of the next preceding proviso or that any such
contest shall not be successful or such exemption shall not be
available, a Deemed Loss Event shall be deemed not to have
occurred for such period, not to exceed 270 days, as may be
approved by any governmental authority having jurisdiction during
which application of such law, rule or regulation to the Company,
the Secured Parties or the Lessee, as the case may be, shall be
suspended to enable the Company to assign or transfer its
interest in the Collateral so long as during such period the
Company shall use reasonable efforts to assign or transfer its
interest in the Collateral upon commercially reasonable terms and
conditions, provided that the Company shall not be required to
assign or transfer the Nuclear Material for a price which, after
deduction of sales tax and expenses of such sale incurred by the
Company, shall be less than the sum of (A) Stipulated Casualty
Value determined as of the date of such proposed sale, and (B)
the Termination Rent determined in accordance with Section 18 of
the Lease Agreement.<PAGE>
"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.
"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.<PAGE>
"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.
"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 Jersey Central Power
& Light 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.<PAGE>
"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.
"Lessor's Bill of Sale" means an instrument
substantially in the form of Exhibit E to the Lease Agreement,
pursuant to which title to all or any portion of the Nuclear
Material is transferred to the Lessee or any designee of the
Lessee.
"Letter Agreement" means the Lessee's Letter Agreement
Regarding TMI-1 Fuel Corp., dated as of 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<PAGE>
filing of or agreement to execute and deliver any financing
statement under the Uniform Commercial Code of any jurisdiction).
"Loans" shall have the meaning specified therefor in
Section 1.02 of the Credit Agreement.
"Majority Secured Parties" means at any time the
Secured Parties holding at such time more than 66 % of the
outstanding principal amount of all Secured Obligations.
"Manufacturer" means any supplier of Nuclear Material
or of any service (including without limitation, enrichment,
fabrication, transportation, storage and processing) in
connection therewith, or any agent or licensee of any such
supplier.
"Manufacturer's Consent" means any consent which may be
given by a Manufacturer under a Nuclear Material Contract to the
assignment by the Lessee to the Company of all or a portion of
the Lessee's rights under such Nuclear Material Contract or of
all or a portion of any such rights previously assigned by the
Lessee to the Secured Parties.
"Monthly Debt Service" for any calendar month means the
sum of the Monthly Financing Charge for such calendar month.
"Monthly Financing Charge" means, for any calendar
month or portion thereof, the sum of:
(a) all Commercial Paper Discount payable by the
Company with respect to Commercial Paper outstanding during
such month and/or all interest payable by the Company during
such month with respect to all outstanding Notes and in each
case, not included in Acquisition Cost; and
(b) the amounts paid or due and payable by the Company
with respect to the transactions contemplated by the Basic
Documents during such calendar month for the following other
fees, costs, charges and expenses incurred or owed by the
Company under or in connection with the Lease Agreement or
the other Basic Documents: (i) legal, printing, reproduction
and closing fees and expenses, (ii) auditors', accountants'
and attorneys' fees and expenses, (iii) franchise taxes and
income taxes, and (iv) any other fees and expenses incurred
by the Company under or in respect of the Basic Documents.
Any figure used in the computation of any component of the
Monthly Financing Charge shall be stated to five decimal places.
"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;<PAGE>
(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.
"NJBPU" means the New Jersey Board of Public Utilities
or any successor agency thereto.
"Nonburdensome Regulation" means (i) ministerial
regulatory requirements that do not impose limitations or
regulatory requirements on the business or activities of, or
adversely affect, the Company or any Secured Party and that are
deemed, in the reasonable discretion of the Company or any
Secured Party, not to be burdensome, or (ii) assuming redelivery
of the Nuclear Material in accordance with the Lease Agreement,
regulation resulting from any possession of the Nuclear Material
(or right thereto) on or after the termination of the Lease
Agreement.
"Notes" shall have the meaning specified therefor in
Section 1.02 of the Credit Agreement.
"Nuclear Incident" shall have the meaning specified in
the Atomic Energy Act, 42 U.S.C. Section 2014(q), as such
definition may be amended from time to time.<PAGE>
"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.
"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.<PAGE>
"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.
"Partially Assigned Agreement" means a Nuclear Material
Contract which has been assigned, in part but not in full, to the
Company in the manner specified in Section 5 of the Lease
Agreement pursuant to a duly executed and delivered Assignment
Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation,
created by Section 4002(a) of ERISA and any successor thereto.
"Permitted Liens" means (i) any assignment of the Lease
Agreement permitted thereby, and by the Credit Agreement, (ii)
liens for Impositions not yet payable, or payable without the
addition of any fine, penalty, interest or cost for nonpayment,
or being contested by the Lessee as permitted by Section 11 of
the Lease Agreement, (iii) liens and security interests created
by the Security Agreement, (iv) the title transfer and
commingling of the Nuclear Material contemplated by paragraph (h)
of Section 10 of the Lease Agreement, and (v) liens of mechanics,
laborers, materialmen, suppliers or vendors, or rights thereto,
incurred in the ordinary course of business for sums of money
which under the terms of the related contracts are not more than
30 days past due or are being contested in good faith by the
Lessee as permitted by Section 11 of the Lease Agreement;
provided, however, that, in each case, such reserve or other
appropriate provision, if any, as shall be required by generally<PAGE>
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 (Jersey Central Power & Light Company) dated as of
August 1, 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.<PAGE>
"Rent Due and SCV Confirmation Schedule" means an
instrument, substantially in the form of Exhibit G to the Lease
Agreement, which is to be used by the Lessee (i) to calculate
Basic Rent for each Basic Rent Period and Other Rent and (ii) to
calculate and acknowledge the SCV at the end of each Basic Rent
Period.
"Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder.
"Responsible Officer" means a duly elected or
appointed, authorized, and acting officer, agent or
representative of the Person acting.
"Secured Obligations" means each and every debt,
liability and obligation of every type and description which the
Company may now or at any time hereafter owe to any Secured Party
under, pursuant to or in connection with the Credit Agreement,
any Note, the Letter of Credit or any other Basic Document,
whether such debt, liability or obligation now exists or is
hereafter created or incurred, and whether it is or may be direct
or indirect, due or to become due, absolute or contingent,
primary or secondary, liquidated or unliquidated, or joint,
several or joint and several, including, without limitation, the
principal of, interest on and any premium due with respect to any
Loan and all indemnifications, costs, expenses, fees and other
compensation of the Secured Parties provided for, and all other
amounts owed to the Secured Parties, under the Security
Agreement, Credit Agreement and the other Basic Documents.
"Secured Parties" means the Banks, any other holder
from time to time of any Note and the Issuing Bank.
"Securities Act" means the Securities Act of 1933, as
from time to time amended.
"Security Agreement" means the Security Agreement and
Assignment of Contracts 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<PAGE>
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.<PAGE>
EXHIBIT A
INTERIM LEASING RECORD
Record No. _____
Name of Lessee: Jersey Central Power & Light 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 JERSEY CENTRAL POWER & LIGHT
COMPANY,
Lessee
By By
Authorized Signature Authorized Signature<PAGE>
EXHIBIT B
FINAL LEASING RECORD
Record No. _____
Name of Lessee: Jersey Central Power & Light 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 JERSEY CENTRAL POWER & LIGHT
COMPANY,
Lessee
By By
Authorized Signature Authorized Signature<PAGE>
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. JERSEY CENTRAL POWER & LIGHT
COMPANY
By: By:
Its: Its: <PAGE>
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 JERSEY CENTRAL POWER & LIGHT COMPANY
("Lessee") are:
(1) Agreement, dated November 18, 1988, between Cameco
Corporation and GPU Nuclear Corporation, as agent for the Lessee,
Penelec and Metropolitan Edison Company ("Met-Ed").
(2) Agreement, dated September 30, 1988, between URI,
Inc. and GPU Nuclear Corporation, as agent for the Lessee,
Penelec and Met-Ed.
(3) Agreement, dated January 30, 1975, between
Sequoyah Fuels Corporation and GPU Nuclear Corporation, as agent
for the Lessee, Penelec and Met-Ed.
(4) Agreement, dated October 10, 1984, between United
States Department of Energy and GPU Nuclear Corporation, as agent
for the Lessee, Penelec 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, Penelec and Met-Ed.<PAGE>
EXHIBIT D
ASSIGNMENT AGREEMENT
KNOW ALL MEN BY THESE PRESENTS THAT:
Jersey Central Power & Light 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<PAGE>
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<PAGE>
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____.
JERSEY CENTRAL POWER & LIGHT
COMPANY
By:
Title: <PAGE>
The foregoing Assignment Agreement is hereby accepted:
TMI-1 FUEL CORP.
By:
Title: <PAGE>
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 Jersey Central Power & Light 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.<PAGE>
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 Jersey Central Power & Light 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<PAGE>
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: <PAGE>
EXHIBIT E
BILL OF SALE
TO
JERSEY CENTRAL POWER & LIGHT 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, 114 West 47th Street, New York, New York 10036, Attention:
Corporate Trust and Agency Division, for and in consideration
paid to the Seller upon or before the execution and delivery of
this Bill of Sale to Jersey Central Power & Light Company (the
"Purchaser"), a New Jersey corporation, whose address is 300
Madison Avenue, Morristown, New Jersey 07960, 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 Bill 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
<PAGE>
Acknowledgement and Acceptance
The foregoing Bill of Sale is hereby acknowledged and
accepted by the undersigned as of the date last above written.
JERSEY CENTRAL POWER & LIGHT
COMPANY,
Purchaser
By:
Its: <PAGE>
<TABLE>
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 Jersey Central Power & Light 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.
<CAPTION>
XXIII. BASIC RENT, ADDITIONAL RENT AND TERMINATION RENT
<S> <C>
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) $<PAGE>
XXIV. CALCULATION OF STIPULATED CASUALTY VALUE
<CAPTION>
Nuclear Material
Installed for Not Installed for
Operation in the Operation in the
Generating Facility Generating Facility Total
<S> <C> <C> <C>
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 ______________ $
</TABLE>
<PAGE>
EXHIBIT B-2(a)(iii)
COUNTERPART NO. ___
AMENDED AND RESTATED
NUCLEAR MATERIAL LEASE AGREEMENT
Dated as of November 17, 1995
between
TMI-1 FUEL CORP.,
as Lessor
and
METROPOLITAN EDISON 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.<PAGE>
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<PAGE>
AMENDED AND RESTATED NUCLEAR MATERIAL LEASE AGREEMENT
AMENDED AND RESTATED LEASE AGREEMENT (this "Lease
Agreement") dated as of the 17th day of November 17, 1995, by and
between TMI-1 FUEL CORP., a Delaware corporation (herein called
the "Lessor"), and METROPOLITAN EDISON 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:
1<PAGE>
(i) If to the Lessor, TMI-1 Fuel Corp., c/o
United States Trust Company of New York, 114 West 47th
Street, New York, New York 10036, Attention: Corporate Trust
and Agency Division, telecopy number 212-852-1626, 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, Metropolitan Edison
Company, 2800 Pottsville Pike, Reading, Pennsylvania 19640-
0001, Attention: Comptroller, telecopy number (610) 921-
6676, with a copy to GPU Service Corporation, 100 Interpace
Parkway, Parsippany, New Jersey 07054-1149, Attention:
Assistant Treasurer, telecopy number 201-263-6397, 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, 299 Park Avenue, New York, New York 10171-0026,
Attention: Peter B. Yearley, facsimile number 212-821-5383;
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
2<PAGE>
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
$55,000,000 in the aggregate or such other amount as the Lessor
and the Lessee may agree to in writing (the "Maximum Stipulated
Casualty Value"). The Lessor and the Lessee shall evidence their
agreement to lease particular Nuclear Material in accordance with
the terms and provisions of this Lease Agreement by signing and
delivering to each other, from time to time, Leasing Records,
substantially in the forms of Exhibit A or Exhibit B, as
applicable, prepared by the Lessee, covering such Nuclear
Material. Nothing contained herein shall be deemed to prohibit
the Lessee from leasing from other lessors or otherwise obtaining
other nuclear material for use in the Generating Facility,
subject to the provisions with respect to intermingling of fuel
assemblies or sub-assemblies with other fuel assemblies or
sub-assemblies contained in Section 6 hereof.
5. Orders for Nuclear Material and Services; Assigned
Agreements.
(a) The Nuclear Material Contracts listed in
Exhibit C hereto, relating, among other things, to the purchase
of, and services to be performed with respect to, Nuclear
Material were entered into by the Lessee prior to the date of
3<PAGE>
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
4<PAGE>
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<PAGE>
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
6<PAGE>
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.
7<PAGE>
(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 Lessor's Bill 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
8<PAGE>
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 Lessor's
Bill 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
Lessor's Bill 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<PAGE>
(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<PAGE>
(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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
(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<PAGE>
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<PAGE>
(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<PAGE>
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 Price-Anderson 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<PAGE>
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<PAGE>
Settlement Date. The Lessor shall be obligated to deliver to the
Lessee a Lessor's Bill 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<PAGE>
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<PAGE>
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<PAGE>
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
METROPOLITAN EDISON COMPANY
Lessee
ATTEST
By:
(Assistant) Secretary Name:T. G. Howson
Title: Vice President &
Treasurer
29
<PAGE>
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 T. G. Howson, to me personally known, who, being by me
duly sworn, says that he is a Vice President of Metropolitan
Edison 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
<PAGE>
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 Lessor's Bill of Sale
Exhibit F -- Form of Rent Due and SCV Confirmation
Schedule
31
<PAGE>
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<PAGE>
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<PAGE>
"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 Bill 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<PAGE>
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<PAGE>
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.
"Deemed Loss Event" means the following event: if at
any time during the term of the Lease Agreement, (A) the Company,
by reason solely of the ownership of the Nuclear Material or any
part thereof or the lease of the Nuclear Material to the Lessee
under the Lease Agreement, or the Company or any Secured Party,
by reason solely of any other transaction contemplated by the
Lease Agreement or any of the other Basic Documents, shall be
deemed, by any governmental authority having jurisdiction, to be,
or to be subject to regulation as an "electric utility" or a
"public utility" or a "public utility holding company" or similar
type of entity, under any applicable law or deemed a "public
utility company" or a "subsidiary company" or a "holding company"
within the meaning of the Public Utility Holding Company Act, (B)
the Public Utility Holding 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,
5<PAGE>
which adversely affect the legality, validity and enforceability
of the lease obligations of the Company and the Lessee under the
Lease Agreement, or (C) either the Company or any of the Secured
Parties, by reason solely of being a party to the Basic
Documents, shall be required to obtain any consent, order or
approval of, or to make any filing or registration with, or to
give any notice to, any governmental authority, or be subject to
any liabilities, duties or obligations under the Public Utility
Holding Company Act, other than the filing by the Company of a
certificate on Form U-7D with the SEC pursuant to SEC Rule 7(d)
under the Public Utility Holding Company Act (17 C.F.R. Section
250.7(d)), except in any case if the same shall be solely the
result of Nonburdensome Regulation; provided, however, that if in
compliance with applicable laws, the Lessee, with the cooperation
of the Company, shall have acted diligently and in good faith to
contest, or obtain an exemption from the application of the laws,
rules or regulations described in clauses (A), (B) or (C) to the
Company, the Secured Parties or the Lessee, as the case may be,
the application of which would otherwise constitute a Deemed Loss
Event, such Deemed Loss Event shall be deemed not to have
occurred so long as (I) the Lessee shall have furnished to the
Company and the Secured Parties an opinion of counsel reasonably
satisfactory to the Company and the Secured Parties to the effect
that there exists a reasonable basis for such contest or
exemption and that the application of such laws, rules or
regulations to the Company, the Secured Parties or the Lessee, as
the case may be, shall be effectively stayed during the
application for exemption or contest and such laws, rules or
regulations shall not be applied retroactively at the conclusion
of such contest, (II) the Company or the Secured Parties shall
have determined in their sole discretion that such contest or
exemption shall not adversely affect their business or involve
any danger of the sale, foreclosure or loss of, or creation of a
Lien upon, the Collateral, and (III) the Lessee shall have agreed
to indemnify the Company or such Secured Parties, as the case may
be, for expenses incurred in connection with such contest or
exemption; and further provided, that following notice from the
Lessee to the Company or the Secured Parties, as the case may be,
that the Lessee shall be unable to furnish the opinion described
in clause (I) of the next preceding proviso or that any such
contest shall not be successful or such exemption shall not be
available, a Deemed Loss Event shall be deemed not to have
occurred for such period, not to exceed 270 days, as may be
approved by any governmental authority having jurisdiction during
which application of such law, rule or regulation to the Company,
the Secured Parties or the Lessee, as the case may be, shall be
suspended to enable the Company to assign or transfer its
interest in the Collateral so long as during such period the
Company shall use reasonable efforts to assign or transfer its
interest in the Collateral upon commercially reasonable terms and
conditions, provided that the Company shall not be required to
assign or transfer the Nuclear Material for a price which, after
deduction of sales tax and expenses of such sale incurred by the
Company, shall be less than the sum of (A) Stipulated Casualty
Value determined as of the date of such proposed sale, and (B)
6<PAGE>
the Termination Rent determined in accordance with Section 18 of
the Lease Agreement.
"Dealer Agreements" mean (i) the Dealer Agreement dated
as of November 17, 1995 between the Company and Goldman Sachs
Money Markets, L.P. and (ii) the Dealer Agreement dated as of
November 17, 1995 between the Company and UBS Securities Inc.
"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<PAGE>
"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<PAGE>
"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 Metropolitan Edison
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.
"Lessor's Bill 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<PAGE>
"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<PAGE>
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<PAGE>
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<PAGE>
"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<PAGE>
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 (Metropolitan Edison Company) dated as of August 1,
14<PAGE>
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<PAGE>
"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
<PAGE>
EXHIBIT A
INTERIM LEASING RECORD
Record No. _____
Name of Lessee: Metropolitan Edison 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 METROPOLITAN EDISON COMPANY,
Lessee
By By
Authorized Signature Authorized Signature<PAGE>
EXHIBIT B
FINAL LEASING RECORD
Record No. _____
Name of Lessee: Metropolitan Edison 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 METROPOLITAN EDISON
COMPANY, Lessee
By By
Authorized Signature Authorized Signature<PAGE>
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. METROPOLITAN EDISON
COMPANY
By: By:
Its: Its: <PAGE>
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 METROPOLITAN EDISON 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 Pennsylvania
Electric Company ("Penelec").
(2) Agreement, dated September 30, 1988, between URI,
Inc. and GPU Nuclear Corporation, as agent for the Lessee, JCP&L
and Penelec.
(3) Agreement, dated January 30, 1975, between
Sequoyah Fuels Corporation and GPU Nuclear Corporation, as agent
for the Lessee, JCP&L and Penelec.
(4) Agreement, dated October 10, 1984, between United
States Department of Energy and GPU Nuclear Corporation, as agent
for the Lessee, JCP&L and Penelec.
(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 Penelec.<PAGE>
EXHIBIT D
ASSIGNMENT AGREEMENT
KNOW ALL MEN BY THESE PRESENTS THAT:
Metropolitan Edison 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<PAGE>
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<PAGE>
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____.
METROPOLITAN EDISON COMPANY
By:
Title: <PAGE>
The foregoing Assignment Agreement is hereby accepted:
TMI-1 FUEL CORP.
By:
Title: <PAGE>
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 Metropolitan Edison 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.<PAGE>
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 Metropolitan Edison 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<PAGE>
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: <PAGE>
EXHIBIT E
BILL OF SALE
TO
METROPOLITAN EDISON 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, 114 West 47th Street, New York, New York 10036, Attention:
Corporate Trust and Agency Division, for and in consideration
paid to the Seller upon or before the execution and delivery of
this Bill of Sale to Metropolitan Edison Company (the
"Purchaser"), a Pennsylvania corporation, whose address is 2800
Pottsville Pike, Reading, Pennsylvania 19640, 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 Bill 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
<PAGE>
Acknowledgement and Acceptance
The foregoing Bill of Sale is hereby acknowledged and
accepted by the undersigned as of the date last above written.
METROPOLITAN EDISON COMPANY,
Purchaser
By:
Its: <PAGE>
<TABLE>
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 Metropolitan Edison 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.
<CAPTION>
23. BASIC RENT, ADDITIONAL RENT AND TERMINATION RENT
<S> <C>
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) $<PAGE>
24. CALCULATION OF STIPULATED CASUALTY VALUE
<CAPTION>
Nuclear Material
Installed for Not Installed for
Operation in the Operation in the
Generating Facility Generating Facility Total
<S> <C> <C> <C>
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 ______________ $
</TABLE>
<PAGE>
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.<PAGE>
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<PAGE>
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:
1<PAGE>
(i) If to the Lessor, TMI-1 Fuel Corp., c/o
United States Trust Company of New York, 114 West 47th
Street, New York, New York 10036, Attention: Corporate Trust
and Agency Division, telecopy number 212-852-1626, 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, 2800 Pottsville Pike, Reading, Pennsylvania 19640-
0001, Attention: Comptroller, telecopy number 610-921-6676,
with a copy to GPU Service Corporation, 100 Interpace
Parkway, Parsippany, New Jersey 07054-1149, Attention:
Assistant Treasurer, telecopy number 201-263-6397, 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, 299 Park Avenue, New York, New York 10171-0026,
Attention: Peter B. Yearley, 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
2<PAGE>
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
3<PAGE>
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
4<PAGE>
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<PAGE>
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
6<PAGE>
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.
7<PAGE>
(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 Lessor's Bill 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
8<PAGE>
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 Lessor's
Bill 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
Lessor's Bill 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<PAGE>
(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<PAGE>
(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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
(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<PAGE>
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<PAGE>
(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<PAGE>
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 Price-Anderson 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<PAGE>
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<PAGE>
Settlement Date. The Lessor shall be obligated to deliver to the
Lessee a Lessor's Bill 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<PAGE>
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<PAGE>
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<PAGE>
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:T. G. Howson
Title: Vice President &
Treasurer
29
<PAGE>
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 T. G. Howson, 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
<PAGE>
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 Lessor's Bill of Sale
Exhibit F -- Form of Rent Due and SCV Confirmation
Schedule
31
<PAGE>
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<PAGE>
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<PAGE>
"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 Bill 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<PAGE>
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<PAGE>
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 Goldman Sachs
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<PAGE>
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<PAGE>
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<PAGE>
"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<PAGE>
"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.
"Lessor's Bill 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<PAGE>
"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<PAGE>
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<PAGE>
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<PAGE>
"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<PAGE>
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<PAGE>
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<PAGE>
"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
<PAGE>
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<PAGE>
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<PAGE>
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: <PAGE>
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.<PAGE>
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<PAGE>
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<PAGE>
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: <PAGE>
The foregoing Assignment Agreement is hereby accepted:
TMI-1 FUEL CORP.
By:
Title: <PAGE>
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.<PAGE>
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<PAGE>
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:
<PAGE>
EXHIBIT E
BILL 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, 114 West 47th Street, New York, New York 10036, Attention:
Corporate Trust and Agency Division, for and in consideration
paid to the Seller upon or before the execution and delivery of
this Bill of Sale to Pennsylvania Electric Company (the
"Purchaser"), a Pennsylvania corporation, whose address is 2800
Pottsville Pike, Reading, Pennsylvania 19640, 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 Bill 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<PAGE>
Acknowledgement and Acceptance
The foregoing Bill of Sale is hereby acknowledged and
accepted by the undersigned as of the date last above written.
PENNSYLVANIA ELECTRIC COMPANY,
Purchaser
By:
Its: <PAGE>
<TABLE>
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.
<CAPTION>
23. BASIC RENT, ADDITIONAL RENT AND TERMINATION RENT
<S> <C>
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) $<PAGE>
24. CALCULATION OF STIPULATED CASUALTY VALUE
<CAPTION>
Nuclear Material
Installed for Not Installed for
Operation in the Operation in the
Generating Facility Generating Facility Total
<S> <C> <C> <C>
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 ______________ $
</TABLE>
<PAGE>
EXHIBIT B-2(b)(i)(A)
JERSEY CENTRAL POWER & LIGHT COMPANY
LESSEE'S LETTER AGREEMENT
Regarding
OYSTER CREEK FUEL CORP.
Dated as of November 17, 1995<PAGE>
TABLE OF CONTENTS
Section Page
1. Definitions. . . . . . . . . . . . . . . . . . . . 1
2. Performance of Fuel Lease and Liens. . . . . . . . . 2
3. Security Interest of Collateral. . . . . . . . . . . 2
4. Sale of Nuclear Material and Assignment of Rights under
Nuclear Material Contracts. . . . . . . . . . . . . 2
5. Collateral Equivalence Test; No Additional Collateral
or Covenants; Condemnation Statements; Exercise of
Rights of Secured Parties. . . . . . . . . . . . . . 3
6. Fuel Management; Quiet Enjoyment. . . . . . . . . . 4
7. Insurance. . . . . . . . . . . . . . . . . . . . . 5
8. Representations and Warranties. . . . . . . . . . . 5
9. General Covenants of the Lessee. . . . . . . . . . . 10
10. GPU Events . . . . . . . . . . . . . . . . . . 16
11. Credit Agreement and Notes. . . . . . . . . . . . . 16
12. Consent to Assignment; Direct Payment of Payments
Under the Fuel Lease. . . . . . . . . . . . . . . . 16
13. Severability. . . . . . . . . . . . . . . . . . . . 17
14. Indemnification. . . . . . . . . . . . . . . . . . . 17
15. No Waiver; Amendments. . . . . . . . . . . . . . . . 19
16. Successors and Assigns. . . . . . . . . . . . . . . 19
17. Notices. . . . . . . . . . . . . . . . . . . . . . . 19
18. Set-off . . . . . . . . . . . . . . . . . . . . . . 20
19. Waiver of Jury Trial . . . . . . . . . . . . . . . . 20
20. Governing Law . . . . . . . . . . . . . . . . . . . 21
(i)<PAGE>
THIS LESSEE'S LETTER AGREEMENT (the "Letter Agreement") is
made as of November 17, 1995, by and between Jersey Central
Power & Light Company, a New Jersey corporation (the "Lessee"),
Oyster Creek Fuel Corp, a Delaware corporation (the "Company"),
and Union Bank of Switzerland, New York Branch, as Administrative
Agent (the "Administrative Agent"), for the Banks party to the
Credit Agreement referred to below (the "Banks") and the Lead
Managers.
WHEREAS, the Lessee has entered into the Amended and
Restated Nuclear Material Lease Agreement, dated as of
November 17, 1995 ("Fuel Lease"), with the Company in order to
enable the Company to obtain financing for the acquisition,
processing and use of Nuclear Material in the Generating
Facility; and
WHEREAS, pursuant to the Fuel Lease, the Company has agreed
to make payments due to Manufacturers and/or to reimburse the
Lessee for payments previously made to Manufacturers with respect
to the Nuclear Material; and
WHEREAS, in order to finance the cost of such Nuclear
Material, the Company proposes to (i) sell its Commercial Paper
which shall be entitled to the benefit of a letter of credit to
be issued by the Issuing Bank, and (ii) obtain the Commitment of
the Issuing Bank to issue its letter of credit and of each Bank
to make Loans from time to time as hereinafter provided; and
WHEREAS, the Lessee has agreed to make payments under the
Fuel Lease sufficient to enable the Company to meet its
obligations under the Company's financing arrangements, including
the Company's obligations under the Credit Agreement, dated as of
November 17, 1995, among the Company, the Banks, the Issuing Bank
and the Administrative Agent (the "Credit Agreement");
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein contained and other good and valuable
consideration, so long as any of the Loans, the Letter of Credit
or the Commercial Paper shall remain outstanding, or the
Commitments shall be continuing, notwithstanding any provision of
the Fuel Lease or any other agreement of the Lessee to the
contrary, the Lessee, the Company, the Administrative Agent and
the Banks agree that:
1. Definitions. Unless the context otherwise specifies or
requires, each term defined in the Credit Agreement or Appendix A
to the Fuel Lease, shall, when used in this Letter Agreement,
have the meaning indicated in the Credit Agreement or Appendix A
or set forth in the paragraph indicated therein.
2. Performance of Fuel Lease and Liens. The Lessee will
perform and comply with all the terms of the Fuel Lease to be<PAGE>
2
performed or complied with by it and will not omit to take an
action the omission of which would cause a Lease Event of
Default. The Lessee acknowledges that, except as otherwise
provided in the Fuel Lease, its obligations as set forth under
the Fuel Lease are absolute and unconditional. The Lessee will
not directly or indirectly create or permit to be created or to
remain, and will promptly take such action as may be necessary to
discharge, any Lien on any Collateral except Permitted Liens.
3. Security Interest of Collateral. The Lessee represents
that no other financing statement (other that those (i) naming
the Secured Parties as a secured party or (ii) the Prudential
Companies as a secured party which liens shall be terminated in
connection with the initial issuance of Commercial Paper)
covering all or any part of the Collateral (as defined in the
Security Agreement relating to the Lessee) is on file in any
public office. The Lessee shall make, or shall cause to be made,
all filings and recordings, and shall take, or cause to be taken,
such other actions, including filing all continuation statements,
necessary to establish, preserve and perfect the Secured Parties'
lien on and security interest in, the Collateral as a legal,
valid and enforceable first priority lien and security interest,
or purchase money security interest, as the case may be, therein,
subject only to the existence or priority of any Permitted Lien,
and the Lessee represents that all such filings, recordings and
other actions have been duly made. The Lessee shall deliver to
the Administrative Agent evidence of the due filings of any
continuation statements to be delivered to the Administrative
Agent within the time period specified in Section 8.05 of the
Credit Agreement. In no event will the Lessee permit the Nuclear
Material to enter any jurisdiction in which all necessary action
has not been taken to establish, maintain and protect the Secured
Parties' first priority perfected lien and security interest in
the Nuclear Material under the Security Agreement, subject only
to Permitted Liens.
4. Sale of Nuclear Material and Assignment of Rights under
Nuclear Material Contracts.
(a) In the event that the Lessee desires the Company,
on behalf of the Lessee, to purchase Nuclear Material or to have
services performed on such Nuclear Material pursuant to any
Nuclear Material Contract, the Lessee shall provide the Company
with an Assignment Agreement and a Manufacturer's Consent, both
substantially in the form of Exhibit D to the Fuel Lease, 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, with respect to such Nuclear Material Contract on or
before the date on which the Company is to purchase such Nuclear
Material or to have such services performed pursuant thereto.
Notwithstanding the foregoing, the Lessee shall not be required
to have obtained a Manufacturer's Consent in any instance where<PAGE>
3
the Manufacturer's obligations under the applicable Nuclear
Material Contract have been fully discharged and performed, and
the Manufacturer's warranties with respect to such Nuclear
Material Contract have expired, and the Lessee has delivered to
the Company and the Collateral Agent a certificate to such
effect.
(b) The Lessee at its expense will perform and comply
with all the terms and provisions of each Assigned Agreement to
be performed or complied with by it, will maintain each Assigned
Agreement in full force and effect, will enforce each of the
Assigned Agreements in accordance with their respective terms,
and will take all such action to that end as from time to time
may reasonably be requested by the Majority Banks.
(c) The Lessee shall not enter into or consent to or
permit any cancellation, termination, amendment, supplement or
modification of or waiver with respect to any Assigned Agreement
without the prior written consent of the Majority Banks.
(d) The Lessee will from time to time, upon request of
the Administrative Agent, furnish to the Administrative Agent
such information concerning the Nuclear Material or any Assigned
Agreement, as any Bank may reasonably request.
(e) The Lessee will not change its principal place of
business or chief executive offices from the location specified
in paragraph 8(a) hereof or remove therefrom its records
concerning the Assigned Agreements unless it gives the
Administrative Agent at least 30 days' prior written notice
thereof.
5. Collateral Equivalence Test; No Additional Collateral
or Covenants; Condemnation Statements; Exercise of Rights of
Secured Parties.
(a) The Lessee shall not permit the sum of aggregate
Stipulated Casualty Value of the Nuclear Material leased under
the Fuel Lease and Cash Collateral to be less than Outstandings.
(b) The Lessee shall not provide to any Person (other
than the Banks), in order to induce such Person to extend credit
to the Company, any collateral or any guarantee or other
assurance against loss or non-payment, nor shall the Lessee
consent to the provision thereof by the Company.
(c) The Lessee shall not agree to any affirmative or
negative covenant with respect to the condition, financial or
otherwise, of the Lessee with any Person in order to induce such
Person to extend credit to the Company.<PAGE>
4
(d) The Lessee shall not sell, assign, convey, pledge
or otherwise dispose of or encumber in any manner any interest it
may have in the Trust or any rights it may have under the Trust
Agreement. The Lessee shall not direct the Owner Trustee to
liquidate, dissolve, merge or consolidate the Company except if
such transaction is consented to in writing by the Banks. The
Lessee shall not direct the Owner Trustee to take any action
under the Trust Agreement which is inconsistent with the duties
imposed upon the Company by the Basic Documents and any other
agreements, documents, instruments and articles executed and
delivered, and to be executed and delivered, by the Owner Trustee
in connection therewith.
(e) The Nuclear Material leased under the Fuel Lease
shall constitute the Lessee's entire ownership interest in the
items used or to be used by it as nuclear fuel in the Generating
Facility. The Lessee agrees that 100% of the Lessor's ownership
interest in any Nuclear Material which is subject to the Fuel
Lease will be leased to the Lessee. The Lessee further agrees
not to take any action under the terms of the Fuel Lease,
including, but not limited to, the delivery of any Leasing
Record, which would result in 100% of the Lessor's ownership
interest in any such Nuclear Material not being so leased.
(f) As provided in the Security Agreement, (i) the
Secured Parties may, on and after the occurrence of a Credit
Agreement Default or Credit Agreement Event of Default, pursuant
to Section 10 of the Security Agreement, exercise any and all of
the Company's rights under the Fuel Lease, the Assigned
Agreements and each other Basic Document to which the Lessee is a
party, and (i) if a Lease Event of Default occurs and is
continuing, the Secured Parties may, pursuant to Section 10 of
the Security Agreement, enforce and exercise any and all of the
Company's rights under the Fuel Lease, the Assigned Agreements
and each other Basic Document to which the Lessee is a party, or
the rights and remedies granted to the Secured Parties under the
Security Agreement at their election and in their sole
discretion, and, in the event that any Secured Parties are
permitted to exercise such rights pursuant to Section 10 of the
Security Agreement, the Lessee agrees that the Collateral Agent
may do so either in concert with or in place of the Company, and
the Lessee shall assist in, comply with and perform in accordance
with all rights or remedies so enforced or exercised by the
Collateral Agent for the ratable benefit of the Secured Parties.
6. Fuel Management; Quiet Enjoyment. The occurrence of a
Credit Agreement Default, a Credit Agreement Event of Default,
Lease Event of Default or an event or condition which would, with
the lapse of time or the giving of notice or both, become a Lease
Event of Default, shall not affect the Lessee's sole obligation
to engage in Fuel Management; provided that, upon the occurrence
of a Credit Agreement Event of Default or Lease Event of Default,<PAGE>
5
the Majority Secured Parties may, at their option, by written
notice to the Lessee, elect to revoke such power and authority,
in which case the Person from time to time designated by the
Majority Secured Parties may (but shall not be obligated to), to
the extent that the Majority Secured Parties desire and to the
extent permitted by law, engage in Fuel Management and/or remove
all or any part of the responsibility for Fuel Management from
the Lessee; provided, however, that, subject to the right of the
Secured Parties to exercise any or all rights granted to the
Secured Parties under the Security Agreement, the rights granted
to the Secured Parties under this Section 6 shall not be
construed to include the right to direct, whether directly or
indirectly, the operation of the Generating Facility. In the
event the Majority Secured Parties, in accordance with the
preceding sentence, shall revoke the Lessee's power and authority
to engage in Fuel Management, all rights conferred by the Company
to the Lessee pursuant to Section 3 of the Fuel Lease shall be
deemed to be automatically reassigned to the Company and the
Lessee shall execute such documents and instruments as the
Secured Parties shall request to further confirm such assignment.
7. Insurance. Each year, the Lessee will furnish the
Administrative Agent and each Bank a detailed statement
certified by an officer of Lessee setting forth (i) the location
of all Nuclear Material and (i) the insurance policies and
indemnification agreements provided pursuant to Sections 14 and
17 of the Fuel Lease and certifying that such insurance policies
and indemnification agreements comply with the requirements of
the Fuel Lease. In addition, the Lessee shall promptly furnish
at any time to the Administrative Agent and any Bank such
information as any such Bank shall reasonably request concerning
location of Nuclear Material, insurance policies and
indemnification agreements and Manufacturers or other third
parties with whom arrangements exist with respect to
transportation, storage or processing of Nuclear Material.
8. Representations and Warranties. The Lessee hereby
represents and warrants to the Company, the Administrative Agent
and the Banks that as of the date hereof:
(a) Organization and Standing. The Lessee is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of New Jersey, and is
qualified to do business in each state or other jurisdiction in
which the nature of its business makes such qualification
necessary, except where the failure to be so qualified would not
have a material adverse effect on its ability to perform its
obligations under this Letter Agreement or each other Basic
Document to which the Lessee is a party. The Lessee's chief
executive office is located at 300 Madison Avenue, Morristown,
New Jersey 07960.<PAGE>
6
(b) Corporate Authority. The Lessee has the corporate
power and authority to execute and perform this Letter Agreement
and the Fuel Lease and to lease the Nuclear Material thereunder.
The execution and delivery of this Letter Agreement and the Fuel
Lease and the lease of the Nuclear Material thereunder will not
have a material adverse effect on the financial condition,
results of operations, business, properties or operations of the
Lessee.
(c) Compliance with Other Instruments, etc. The
execution, delivery and performance by the Lessee of this Letter
Agreement and each Basic Document to which the Lessee is a party,
and other related instruments, documents and agreements, and the
compliance by the Lessee with the terms hereof and thereof,
(i) have been duly and legally authorized by appropriate
corporate action taken by the Lessee, (i) are not in
contravention of, and will not result in a violation or breach
of, any of the terms of the Lessee's articles of incorporation,
its by-laws or of any provisions relating to shares of the
capital stock of the Lessee and (i) will not violate or
constitute a breach of any provision of (x) any applicable law,
order, rule or regulation, rule or regulation of any governmental
authority (except in those cases where non-compliance with any
such law, order, rule or regulation could not reasonably be
expected to have a material adverse effect on the financial
condition, results of operations, business, properties or
operations of the Lessee or its ability to perform its
obligations hereunder or under each Basic Document) or (y) any
indenture, agreement or other instrument to which the Lessee is
party, or by or under which the Lessee or any of the Lessee's
property is bound, or be in conflict with, result in breach of,
or constitute (with due notice and/or lapse of time) a default
under any such indenture, agreement or instrument, or result in
the creation or imposition of any Lien upon any of the Lessee's
property or assets or any Nuclear Material.
(d) Legal Obligations. This Letter Agreement and the
Fuel Lease have been executed by a duly authorized officer of the
Lessee, and this Letter Agreement and the Fuel Lease constitute,
and each Leasing Record, when executed by a duly authorized
officer of the Lessee and delivered to the Company, will
constitute, the legal, valid and binding obligations of the
Lessee, enforceable against the Lessee in accordance with their
respective terms, except as the enforceability thereof may be
limited by the Atomic Energy Act and the rules, regulations or
orders issued pursuant thereto, or by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights
in general, and except as the availability of the remedy of
specific performance is subject to general principles of equity
(regardless of whether such remedy is sought in a proceeding in
equity or at law).<PAGE>
7
(e) Governmental Consents. Neither the execution and
delivery of this Letter Agreement, the Fuel Lease or any Leasing
Record by the Lessee, nor the performance by the Lessee of all of
its obligations hereunder or thereunder, requires the consent or
approval of, the giving of notice to, or the registration, filing
or recording with, or the taking of any other action in respect
of, any Federal, state, local or foreign government or
governmental authority or agency or any other person except for
the order of the Securities and Exchange Commission (the "SEC"),
dated October 25, 1995, the filing of the supplemental order of
the SEC dated October 27, 1995, the filing of a notice with the
New Jersey Board of Public Utilities which notice was filed
September 29, 1995, and the filing of any statement or other
instrument pursuant to Section 10(b) of the Fuel Lease, and
except for the filing of certificates by the Lessee with the SEC
pursuant to SEC Rule 24 under the Public Utility Holding Company
Act to report on the transactions authorized by such SEC order,
the filing of which is not necessary to the execution or delivery
of this Letter Agreement, the Fuel Lease or any Leasing Record by
the Lessee or for the performance by the Lessee of any of its
obligations hereunder or thereunder, and the failure to file any
of which will not affect the validity or enforceability of any of
this Letter Agreement, the Fuel Lease or any Leasing Record.
(f) Consents and Permits. The Lessee possesses all
material licenses, permits, franchises and certificates which
are necessary or appropriate to own or operate its material
properties and assets and to conduct its business as now
conducted.
(g) Litigation. There is no litigation or other
proceeding now pending or, to the best of the Lessee's knowledge,
threatened, against or affecting the Lessee, before any court,
arbitrator or administrative or governmental agency (i) which
would adversely affect or impair the title of the Company to the
Nuclear Material, (i) which questions the validity or
enforceability of this Letter Agreement, the Fuel Lease, the
Assigned Agreements or any other Basic Document to which the
Lessee is a party or any action taken or to be taken by the
Lessee pursuant to or in connection with this Letter Agreement,
or (i) except as disclosed in the Lessee's Annual Report on Form
10-K for the year ended December 31, 1994 and Quarterly Report on
Form 10-Q for the quarter ended September 30, 1995, copies of
which have previously been delivered to the Administrative Agent
and the Banks, which, if decided adversely to the Lessee, would
materially adversely affect the condition, financial or
otherwise, of the Lessee.
(h) Taxes. The Lessee has filed or caused to be filed
all tax returns which are required to be filed, and has paid or
caused to be paid all taxes as shown on said returns and all
assessments received by it to the extent that such taxes and<PAGE>
8
assessments have become due, except for taxes and assessments
which are being contested in good faith and by appropriate
proceedings and as to which it has provided reserves which are
adequate in accordance with generally accepted accounting
principles.
(i) Reaffirmation and Restatement of Representations
and Warranties. The Lessee repeats and reaffirms as of the date
hereof for the benefit of the Administrative Agent and each Bank
the representations and warranties made by the Lessee in the Fuel
Lease as though set forth in full herein with the same effect as
though such representations and warranties had been made on and
as of the date hereof. In addition, the Lessee represents and
warrants that as of the date hereof (i) the Lessee is in
compliance with all the terms and provisions set forth in the
Fuel Lease on its part to be observed or performed, (i) no
Terminating Event has occurred and no event has occurred which,
with the lapse of time or the giving of notice, or both, would
constitute such a Terminating Event, and (i) no Lease Event of
Default has occurred and is continuing and no event has occurred
and is continuing on such date which, with the lapse of time or
the giving of notice, or both, would constitute a Lease Event of
Default.
(j) First Perfected Security Interest. Except for
Permitted Liens, upon the execution and delivery of this Letter
Agreement and the Security Agreement and the due filing of the
Uniform Commercial Code financing statements required to be
executed and filed from time to time, the Secured Parties will
have a legal, valid and enforceable first priority security
interest (i) in the rights, titles and interests of the Company
in and to the Fuel Lease and (i) in and to the other Collateral.
Such security interest will constitute a perfected security
interest in the Collateral consisting of Nuclear Material
Contracts and the Collateral consisting of Nuclear Material
located in the States of Illinois, Kentucky, Ohio, New Jersey and
North Carolina, except for any such Collateral which consists of
cash, instruments (as defined in the New York Uniform Commercial
Code) and other items in which a security interest may only be
perfected by possession, enforceable against all third parties as
security for the Secured Obligations.
(k) No Material Adverse Change. Since June 30, 1995,
there has been no material adverse change in the financial
condition, results of operations, business, properties or
operations of the Lessee or in its ability to perform its
obligations under the Basic Documents.
(l) No Defaults. The Lessee is not in default under
any bond, debenture, note or any other evidence of Obligations
for Borrowed Money or Deferred Purchase Price or any mortgage,
deed of trust, indenture, loan agreement or other agreement<PAGE>
9
relating thereto, where the amount thereof is in excess of
$20,000,000.
(m) Pension Plans. No accumulated funding deficiency
(as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, exists with respect to any plan (other
than a multiemployer plan). No liability to the Pension Benefit
Guaranty Corporation has been, or is expected by the Lessee to
be, incurred with respect to any plan (other than a multiemployer
plan) by the Lessee which is or would be materially adverse to
the Lessee. The Lessee has not incurred and presently does not
expect to incur any withdrawal liability under Title IV of ERISA
with respect to any multiemployer plan which is or would be
materially adverse to the Lessee. Neither the execution and
delivery by the Company of the Credit Agreement and the other
Basic Documents, and the issuance of the Commercial Paper, nor
the execution and delivery by the Lessee of this Letter
Agreement, the Trust Agreement and each other Basic Document to
which the Lessee is a party, will involve any transaction which
is subject to the prohibitions of Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to
Section 4975. As used herein, the term "plan" shall mean an
"employee pension benefit plan" (as defined in Section 3 of
ERISA) which is and has been established or maintained, or to
which contributions are or have been made, by the Lessee or by
any trade or business, whether or not incorporated, which,
together with the Lessee is under common control as described in
Section 414(b) or (c) of the Code, and the term "multiemployer
plan" shall mean any plan which is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).
(n) Financial Statements. The audited balance sheet
of the Lessee as of December 31, 1994, and the related statements
of income and cash flows (including the notes thereto) of the
Lessee for the year then ended, copies of which have been
delivered to the Company, the Administrative Agent and the Banks,
and all other annual or quarterly financial statements including,
without limitation, the quarterly statement dated as of June 30,
1995 so delivered fairly present the financial condition of the
Lessee on the dates for which, and the results of its operations
for the periods for which, the same have been furnished and have
been prepared in accordance with generally accepted accounting
principles consistently applied.
(o) Nuclear Material. The Nuclear Material is free
and clear of any Lien in favor of any Person claiming by, through
or under the Lessee or any Affiliate thereof, other than
Permitted Liens. No default or event which with the giving of
notice or lapse of time would constitute a default has occurred
and is continuing under any Nuclear Material Contract.<PAGE>
10
(p) Disclosure. Neither the representations in this
Letter Agreement, or in any other document, certificate or
statement furnished in writing to the Administrative Agent or any
Bank by or on behalf of the Lessee in connection with the
transactions contemplated hereby, nor the information disclosed
in the Lessee's Annual Report on Form 10-K for the year ended
December 31, 1994 or Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995, contained as of its date, any untrue
statement of a material fact or omitted to state a material fact
necessary in order to make such representations or information
not misleading in light of the circumstances under which they
were made.
(q) Collateral Equivalence Test Met. The sum of the
aggregate Stipulated Casualty Value of the Nuclear Material
leased under the Fuel Lease and the Cash Collateral equals or
exceeds the Outstandings.
9. General Covenants of the Lessee.
(a) Information. The Lessee will furnish to the
Company and the Administrative Agent in sufficient copies for
each Bank:
(i) Quarterly Statements. As soon as practicable
after the end of each of the first three quarterly fiscal
periods in each fiscal year of the Lessee, and in any event
within 60 days thereafter, copies of:
(A) a balance sheet of the Lessee as at the end of
such quarter, and (B) statements of income and cash
flows of the Lessee for such quarter and for the
twelve-month period ending as of the end of such
quarter and (in the case of the second and third
quarters) for the portion of the fiscal year ending
with the end of such quarter, setting forth in each
case in comparative form the figures for the
corresponding periods in the previous fiscal year, all
in reasonable detail and certified as complete and
correct, subject to changes resulting from year-end
adjustments, by a principal financial officer of the
Lessee; provided that it is understood that the
delivery of the Lessee's Quarterly Report on Form 10-Q
shall be deemed to satisfy the requirements with
respect to such financial statements;
(ii) Annual Statements. As soon as practicable after
the end of each fiscal year of the Lessee, and in any event
within 120 days thereafter, copies of:
(A) a balance sheet of the Lessee at the end of such
fiscal year, and (B) statements of income and cash<PAGE>
11
flows of the Lessee for such year, setting forth in
each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and
accompanied by an opinion thereon of independent
certified public accountants of recognized national
standing selected by the Lessee, which opinion shall
state that such financial statements have been prepared
in accordance with generally accepted accounting
principles consistently applied (except for changes in
application in which such accountants concur) and that
the examination of such accountants in connection with
such financial statements has been made in accordance
with generally accepted auditing standards; provided
that it is understood that the delivery of the Lessee's
Annual Report on Form 10-K shall be deemed to satisfy
the requirement with respect to such financial
statements;
(iii) Officer's Compliance Certificate.
Simultaneously with the financial statements referred to in
Sections 9(a)(i) and (ii), a certificate of an authorized
officer of the Lessee stating that such officer has reviewed
the relevant terms and conditions of the Fuel Lease and
other Basic Documents to which the Lessee is a party, and
has made, or caused to be made, under such officer's
supervision, a review of the transactions and financial
condition of the Lessee from the beginning of the accounting
period covered by the income statements being delivered
therewith to the date of the certificate, and that the
Lessee has observed or performed all of its covenants and
other agreements, and satisfied every condition, contained
in this Letter Agreement, the Fuel Lease and any other Basic
Document to which the Lessee is a party, and no Terminating
Event, Lease Event of Default or default or event of default
under any such Basic Document has occurred and is continuing
and no event has occurred and is continuing which, with the
lapse of time or the giving of notice, or both, would
constitute a Terminating Event, Lease Event of Default or a
default or event of default under any such Basic Document
or, if such condition or event has occurred and is
continuing, a statement as to the nature thereof and the
action which is proposed to be taken with respect thereto;
(iv) Auditor's Compliance Certificate. Simultaneously
with the financial statements referred to in Section
9(a)(ii), a certificate of the independent public
accountants who audited such statements stating that such
accountants have reviewed the relevant terms and conditions
of the Fuel Lease and other Basic Agreements to which the
Lessee is a party, and that, in making the examination
necessary for the audit of such statements, they have
obtained no knowledge of any condition or event which<PAGE>
12
constitutes or which with notice or lapse of time or both
would constitute a Terminating Event, Lease Event of Default
or default or event of default under any such Basic
Document, or if such accountants shall have obtained
knowledge of any such condition or event, specifying in such
certificate each such condition or event of which they have
knowledge and the nature and status thereof;
(v) Notices Required under the Basic Documents.
Immediately upon delivery to the Lessee or the Company, all
notices, consents, documents, certificates or instruments of
any kind relating to the Lessee required pursuant to the
Fuel Lease;
(vi) Defaults. (A) Promptly upon becoming aware of the
occurrence thereof, notice of any Terminating Event, Lease
Event of Default or any event which, with the lapse of time
or the giving of notice, or both, would constitute a
Terminating Event or a Lease Event of Default, and
(A) within 10 days of becoming aware of the occurrence
thereof, notice of any other material event affecting the
Lessee's obligations under any Basic Document or any Nuclear
Material Contract (except to the extent such event has
previously been disclosed in the Lessee's SEC reports
delivered pursuant to clause (viii) below);
(vii) Notice of Claimed Default. Immediately upon
becoming aware that the holder or holders of any evidence of
Obligations for Borrowed Money or Deferred Purchase Price or
other security of the Lessee or any subsidiary exceeding
$20,000,000 in the aggregate have given notice (or taken any
other action) with respect to a claimed default, breach or
event of default, a notice describing the notice given (or
action taken) and the nature of the claimed default, breach,
or event of default;
(viii) SEC and Other Reports. Promptly after filing
thereof, copies of all regular and periodic reports and
registration statements which the Lessee may file with the
Securities and Exchange Commission ("SEC") or any
governmental agency substituted therefor and, promptly upon
written request therefor, copies of the financial statements
which the Lessee may file annually with any state regulatory
agency or agencies; and
(ix) Requested Information. With reasonable
promptness, such other data and information, including,
without limitation, information regarding Nuclear Material
or any Nuclear Material Contract, with respect to the
Lessee as from time to time may be reasonably requested by
the Administrative Agent or any Bank.<PAGE>
13
(b) Notice of Litigation. Immediately upon the Lessee
becoming aware thereof, written notice of (i) any litigation or
proceedings which would be required to be disclosed as an
exception to the representations and warranties contained herein
or in the Fuel Lease in order that such representations and
warranties would be true and correct on a continuing basis; and
(i) any dispute between the Lessee and any governmental authority
or other party relating to any part of the transactions
contemplated by this Letter Agreement or any of the other Basic
Documents to which the Lessee is a party which would have a
material adverse effect on the ability of the Lessee to carry out
its obligations hereunder or under any other Basic Document to
which the Lessee is a party; provided, however, that the notice
requirement in this Section 9(b) shall be satisfied if the Lessee
furnishes the Company and the Administrative Agent in sufficient
copies for each Bank a Current Report on Form 8-K regarding the
event requiring notice by the time that the Current Report is
required to be filed with the Securities and Exchange Commission.
(c) General Obligations. Subject to the last sentence of
this Section 9(c), the Lessee will:
(i) duly comply with all laws, rules, orders, regulations
or other valid requirements (including, without
limitation, any of the foregoing which are applicable
to Nuclear Material or the operation of the
Generating Facility) of any governmental authority
necessary to the conduct of its business or to its
properties or assets, noncompliance with which could
reasonably be expected to have a material adverse
effect upon the transactions contemplated by this
Letter Agreement or any other Basic Document, or upon
the financial condition, results of operations,
business, properties or operations of the Lessee, or
the ability of the Lessee to carry out its
obligations under any Basic Document or this Letter
Agreement);
(ii) continue to engage principally in the electric
utility business;
(iii) obtain, maintain and keep in full force and effect
all consents, permits, licenses and approvals, the
absence of which would have a material adverse
effect upon the transactions contemplated by this
Letter Agreement or any other Basic Document to
which the Lessee is a party, or upon the financial
condition, results of operations, business,
properties or operations of the Lessee, or the
ability of the Lessee to carry out its obligations
under this Letter Agreement or any other Basic
Document to which the Lessee is a party;<PAGE>
14
(iv) maintain its material operating properties used or
useful in its business in good repair, working
order and condition consistent with prudent
utility practice; provided, however, that the
Lessee shall not be prevented from discontinuing
the operation and maintenance of any of its
properties if it shall determine that the
continued operation and maintenance of such
properties is no longer necessary, desirable or
permissible;
(v) pay when due all fees, taxes, assessments and
governmental charges or levies imposed upon it or
upon its income or profits or upon any property
belonging to it, and maintain appropriate reserves
for the accrual of the same in accordance with
generally accepted accounting principles;
(vi) except as permitted by clause (vii) below, at all
times maintain its corporate existence,
privileges, franchises and rights to carry on
business, and duly procure all renewals and
extensions thereof, if and when any shall be
necessary;
(vii) not consolidate or merge with, or sell or
otherwise dispose of all or substantially all of
its properties and assets to any Person unless
(i) the surviving or resulting entity is the
Lessee hereunder, (i) immediately after giving
effect thereto no Credit Agreement Event of
Default, Credit Agreement Default, Lease Event of
Default or event which with the giving of notice
or passage of time would constitute a Lease Event
of Default shall have occurred and be continuing,
and (i) the senior unsecured debt of the surviving
or resulting Lessee shall be rated at least
investment grade by S&P or Moody's;
(viii) perform and comply with each of the material
provisions of each material indenture, credit
agreement, contract or other agreement by which
the Lessee is bound, non-performance or non-
compliance with which would have a material
adverse effect upon its business or credit or in
any way affect its ability to perform its
obligations hereunder except material contracts or
other agreements being contested in good faith;
(ix) preserve and maintain its corporate existence in
the jurisdiction of its incorporation, and qualify
and remain qualified as a foreign corporation in<PAGE>
15
good standing in each jurisdiction in which such
qualification is necessary or desirable in view of
its business and operations or the ownership of
its properties, except where the failure to be so
qualified would not materially adversely affect
its financial condition, operations, properties or
business, and preserve its material rights,
franchises and privileges to conduct its business
substantially as conducted on the date hereof;
(x) maintain insurance in effect at all times in such
amounts as are available to the Lessee and covering
such risks as is usually carried by companies of a
similar size, engaged in similar businesses and
owning similar properties (including, without
limitation, the operation and ownership of nuclear
generating facilities) in the same general
geographical area in which the Lessee operates,
either with responsible and reputable insurance
companies or associations, or, in whole or in part,
by establishing reserves of one or more insurance
funds, either alone or with other corporations or
associations;
(xi) at any reasonable time and from time to time,
permit the Administrative Agent or any Bank or any
agents or representatives thereof to examine and
make copies of and abstracts from the records and
books of account of, and visit the properties of,
the Lessee and discuss the affairs, finances and
accounts of the Lessee with any of its officers or
directors;
(xii) not sell, transfer, lease, assign or otherwise
convey or dispose of more than 25% of its assets
(whether now owned or hereafter acquired), in any
single or series of transactions, whether or not
related, except for dispositions of current assets
in the ordinary course of business as presently
conducted, if immediately prior to such sale,
transfer, lease, assignment, conveyance or
disposition or as a result of such sale, transfer,
lease, assignment, conveyance or disposition, the
senior unsecured debt of the Lessee shall not be
rated at least investment grade by S&P or Moody's.
(xiii) comply with the Letter Agreement and such other
Basic Documents to which the Lessee is a party in
accordance with the respective terms and
conditions set forth herein and therein; and<PAGE>
16
(xiv) except for Permitted Liens, permit the creation of
any Liens on the Collateral.
Notwithstanding the foregoing provisions of this Section 9(c),
the Lessee may contest by appropriate proceedings conducted in
good faith and due diligence, the amount, validity or
application, in whole or in part of any fee, tax, assessment or
government charge or levy, or any legal requirement, provided
that the Lessee shall have set aside on its books adequate
reserves, if required in accordance with generally accepted
accounting principles with respect thereto and shall furnish such
security, if any, as may be required in the proceeding.
10. GPU Events. It shall be a default hereunder if
General Public Utilities Corporation (a) fails to maintain at all
times beneficial ownership of at least 75% of all outstanding
shares of common stock of each of the Lessee, Met-Ed and PE; or
(b) pledges, grants options on, create any charge on or security
interest in, or otherwise subjects to any charge or encumbrance,
any of the common stock of the Lessee, Met-Ed or PE unless the
obligations hereunder are secured ratably and with equal
priority, in form and substance reasonably satisfactory to the
Majority Banks.
11. Credit Agreement and Notes. The Lessee hereby
acknowledges receipt of executed counterparts of the Credit
Agreement and photostatic copies of the Notes evidencing the
Loans, and consents to all of the terms and provisions of the
Credit Agreement and the Notes.
12. Consent to Assignment; Direct Payment of Payments
Under the Fuel Lease.
(a) Consent to Assignment. The Lessee hereby
acknowledges notice of and consents to all the terms and
provisions of the Security Agreement and hereby confirms to and
agrees with the Secured Parties that all representations,
warranties, indemnities and agreements of the Lessee contained in
this Letter Agreement and each other Basic Document to which the
Lessee is a party shall inure to the benefit of, and shall be
enforceable by, the Secured Parties to the same extent as if such
Secured Parties were originally parties to or named in the such
documents and agreements. The Lessee further acknowledges and
consents to the assignment and transfer, and any future
assignments and transfers, to the Secured Parties by the Company
of the Company's right to exercise any and all of its rights,
remedies, powers and privileges (but none of its obligations,
duties or liabilities) under the Fuel Lease, the Assigned
Agreements and each other Basic Document to which the Lessee is a
party. The Lessee hereby agrees with the Secured Parties to
comply with any exercise by the Secured Parties, either directly
or through the Company, of any rights, remedies, powers or<PAGE>
17
privileges pursuant to the Security Agreement. The Secured
Parties acknowledge that neither the Security Agreement nor this
Section 12 shall in any way add to the obligations of the Lessee
(except those obligations of the Lessee to any Person, which, if
not previously so, hereby become enforceable directly by the
Secured Parties) under the Fuel Lease, the Assigned Agreements
and each other Basic Document to which the Lessee is a party.
Notwithstanding the foregoing, so long as no Lease Event of
Default shall have occurred and be continuing, the Lessee shall
have exclusive right to possession and use of the Nuclear
Material in accordance with the Fuel Lease and may use such
Nuclear Material for any lawful purpose consistent with the Fuel
Lease.
(b) Direct Payment of Payments Under the Fuel Lease. The
Lessee acknowledges that it has been directed by the Company to,
and agrees that it will, make all payments of monies due and to
become due to the Company under the Fuel Lease, the Assigned
Agreements and each other Basic Document to which the Lessee is a
party, directly to the Collateral Agent, including, without
limitation, Basic Rent, Additional Rent, the purchase price of
Nuclear Material pursuant to Section 8(c), 8(d), 8(e) and 8(g) of
the Fuel Lease, payments pursuant to Sections 9(e), 14, 17 and 18
of the Fuel Lease in the manner and to the accounts of the
Secured Parties as specified in Section 3.03 of the Credit
Agreement.
13. Severability. Any provision of this Letter 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.
14. Indemnification. The Lessee shall pay and indemnify
and hold harmless the Administrative Agent and each Bank, and
their respective officers, directors, incorporators,
shareholders, partners, employees, agents and servants from and
against any and all liabilities (other than liabilities arising
out of the gross negligence or willful misconduct of such
Person), taxes, (excluding, however, taxes measured solely by the
net income of any Person indemnified or intended to be
indemnified pursuant to this Section 14, except as otherwise
provided in Section 14 hereof), losses, obligations, claims,
damages, penalties, causes of action, suits, costs and expenses
(including, without limitation, reasonable attorneys' and
accountants' fees and expenses) and judgments of any nature
arising from or in any way relating to any and all of the<PAGE>
18
following during the term of the Fuel Lease and thereafter:
(a) 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 (as that term is defined in the Atomic
Energy Act, 42 U.S.C. Paragraph 2011 et seq.) involving or
connected in any way with the Nuclear Material or any portion
thereof, (a) the acquisition, ownership (including strict
liability of an owner or liability without fault), possession,
disposition, sale, use, nonuse, misuse, leasing, fabrication,
design, cycling, recycling, transportation, containerization,
cooling, processing, reprocessing, storing, condition,
management, operation, construction, maintenance, repair or
rebuilding of the Nuclear Material or any portion thereof or
resulting from the condition of adjoining and underlying land,
buildings, streets or ways, (a) any use, nonuse or condition of,
or any other matter of circumstance relating to, the Generating
Facility, any other property associated therewith or any
adjoining and underlying land, buildings, streets and ways,
(a) any violation or default, or alleged violation or default, of
the Fuel Lease or this Letter Agreement by or on behalf of
Lessee, or of any contracts or agreements to which the Lessee is
a party or by which it is bound, or any Legal Requirements,
(a) performance of any labor or services or the furnishing of any
materials or other property in respect of the Nuclear Material or
any portion thereof, (a) any infringement or alleged infringement
of any patent, copyright, trade secret or other similar right
relating to the Nuclear Material or any portion thereof,
(a) Lessee's agreements or obligations contained in the Fuel
Lease or this Letter Agreement, (a) any claim arising out of loss
of damage to the environment, (a) any claim arising out of strict
or absolute liability in tort, or (a) the offering and sale of
Commercial Paper. The Lessee also indemnifies each indemnitee,
as aforesaid, from and against all other liabilities, taxes,
losses, obligations, claims, damages, penalties, causes of
action, suits, costs and expenses (including, without limitation,
reasonable attorneys' and accountants' fees and expenses) and
judgments of any nature which may be imposed on, incurred by, or
asserted at any time against any indemnitee in any way relating
to or arising out of the performance of this Letter Agreement,
the Fuel Lease or any other Basic Document to which Lessee is a
party, provided, except for claims of a nature contemplated by
(i) above, that the Lessee shall not be required to indemnify any
indemnitee with respect to any liability relating to or arising
out of indemnitee's gross negligence or willful misconduct and
provided, further, that the foregoing immunity shall not limit
the terms of any indemnity that the Lessee may grant separately
to any indemnitee pursuant to any separate agreement. In the
event that any action, suit or proceeding is brought against the
Company or any other Person indemnified or intended to be
indemnified pursuant to this Section 14 by reason of any such
occurrence, the Lessee shall, at the Lessee's expense, resist and
defend such action, suit or proceeding or cause the same to be<PAGE>
19
resisted and defended by counsel designated by the Lessee and
reasonably acceptable to the Person or Persons indemnified or
intended to be indemnified under this Section 14 provided there
is no conflict of interest with the Person or Persons indemnified
or intended to be indemnified under this Section 14. In the
event a conflict of interest contemplated by the proviso of the
immediately preceding sentence shall exist, then the Person or
Persons as to which such conflict exists may be defended by
counsel of its or their choice at Lessee's expense, provided
Lessee's obligation for such expense shall be limited to one firm
for all such Persons as to which such a conflict exists. The
obligations of the Lessee under this Section 14 shall survive any
termination of this Letter Agreement, the Credit Agreement, the
Fuel Lease or the Security Agreement, in whole or in part.
15. No Waiver; Amendments. Neither the Administrative
Agent, the Collateral Agent, the Banks, the Company nor the
Lessee shall, by any act, delay, omission or otherwise, be deemed
to have waived any of its rights and remedies hereunder, and no
waiver shall be valid unless in writing signed by the party or
parties sought to be bound thereby. A waiver by the
Administrative Agent, the Collateral Agent, the Banks, the
Company or the Lessee of any of their respective rights or
remedies hereunder on any one occasion shall not be construed as
a bar to any right or remedy which the Administrative Agent, the
Banks, the Company or the Lessee, as applicable, would otherwise
have had on any future occasion. No failure to exercise nor any
delay in exercise of any such right or remedy hereunder shall
preclude any other or future exercise or partial exercise of any
other right or remedy. The rights and remedies hereunder
provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies
provided by law. None of the terms or provisions of this Letter
Agreement may be waived, altered, modified or amended except by
an instrument in writing, duly executed by the party or parties
sought to be bound thereby.
16. Successors and Assigns. This Letter Agreement shall
bind the successors and assigns of the Lessee and the Company and
shall inure to the benefit of permitted successors and assigns
of either. The Letter Agreement shall not be assignable by the
Lessee or the Company, either voluntarily or by operation of law,
unless consented to by the Administrative Agent and the Majority
Banks. No permitted assignment by the Lessee or the Company
shall release the Lessee or the Company from any of its
obligations hereunder. This Letter Agreement shall inure to and
shall be binding upon the successors and assigns of the
Administrative Agent and the Banks.
17. Notices. Any notice, demand or other communication
which by any provision of this Letter Agreement is required or
provided to be given shall be deemed to have been delivered if in<PAGE>
20
writing addressed as provided below and actually delivered by
mail, courier or facsimile to the following addresses:
(a) except as otherwise requested in writing by the
Administrative Agent or any Bank, any notice, demand
or communication which by any provision of this
Letter Agreement is required or provided to be given
to the Administrative Agent or any Bank shall be
deemed to have been delivered to the Administrative
Agent or any Bank if a single copy thereof is
delivered to the Administrative Agent at its address
set forth in Section 12.01 of the Credit Agreement or
at such other address as either may have furnished
the Company and the Lessee in writing;
(b) if to the Company (with copies to the Lessee at the
address listed below), Oyster Creek Fuel Corp. c/o
United States Trust Company of New York, 114 West
47th Street, New York, New York 10036, marked for the
attention of the Corporate Trust and Agency Division,
telecopy number 212-852-1626, or at such other
address as it may have furnished in writing to the
Administrative Agent and the Lessee; or
(c) if to the Lessee, to Jersey Central Power & Light
Company, 300 Madison Avenue, Morristown, New Jersey
07960; Attention: Vice President and Comptroller;
Telecopier: (201) 455-4217, and to GPU Service
Corporation, 100 Interpace Parkway, Parsippany, New
Jersey 07054-1149, marked for the attention of the
Assistant Treasurer, Telecopier: (201) 263-6397, or
at such other address or addresses as the Lessee may
have furnished to the Administrative Agent and the
Company.
18. Set-off. (a) Lessee hereby acknowledges and agrees
to set-off rights against it as provided for in Section 12.08 of
the Credit Agreement.
(b) Lessee agrees that it shall have no right of set-off,
deduction or counterclaim in respect of its obligations
hereunder, and that the obligations of the Banks hereunder and
under the Credit Agreement are several and not joint. Nothing
contained herein shall constitute a relinquishment or waiver of
the Lessee's rights to any independent claim that the Lessee may
have against the Administrative Agent or any Bank for the
Administrative Agent's or such Bank's, as the case may be, gross
negligence or wilful misconduct, but no Bank shall be liable for
the conduct of the Administrative Agent or any Bank, and the<PAGE>
21
Administrative Agent shall not be liable for the conduct of any
Bank.
19. Waiver of Jury Trial. Lessee irrevocably waives all
right to trial by jury in any action, proceeding or counterclaim
arising out of relating to this Letter Agreement, the Credit
Agreement, the other Basic Documents or any instrument or
document delivered hereunder from or thereunder, except that the
foregoing shall not preclude any party hereto from submitting to
a jury for determination in any such action, proceeding or
counterclaim any dispute involving (a) the accuracy or
completeness of any representation or warranty made under the
Basic Documents by Lessee, (b) the performance by Lessee of any
affirmative or negative covenant or agreement contained in the
Basic Documents, or (c) questions of materiality, or the
reasonableness of, or good faith basis for, any action taken, or
determination made, by any other party hereto (other than in
respect of any calculation of principal, interest, fees, or
increased costs payable by the Lessee under the Basic Documents).
20. Governing Law. This Letter Agreement shall be
governed by, and be construed and interpreted in accordance with
the laws of the State of New York.
<PAGE>
S-1
IN WITNESS WHEREOF, the undersigned have caused this Letter
Agreement to be executed as of the date first above written.
JERSEY CENTRAL POWER &
LIGHT COMPANY
By
Vice President
OYSTER CREEK FUEL CORP.
By
Title
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH,
as Administrative Agent
By
Title
By
Title
<PAGE>
EXHIBIT B-2(b)(i)(B)
JERSEY CENTRAL POWER & LIGHT COMPANY
LESSEE'S LETTER AGREEMENT
Regarding
TMI-1 FUEL CORP.
Dated as of November 17, 1995<PAGE>
TABLE OF CONTENTS
Section Page
1. Definitions. . . . . . . . . . . . . . . . . . . 1
2. Performance of Fuel Lease and Liens. . . . . . . 1
3. Security Interest of Collateral. . . . . . . . . 2
4. Sale of Nuclear Material and Assignment of Rights
under Nuclear Material Contracts. . . . . . . . 2
5. Collateral Equivalence Test; No Additional
Collateral or Covenants; Condemnation Statements;
Exercise of Rights of Secured Parties. . . . . . 3
6. Fuel Management; Quiet Enjoyment. . . . . . . . . 4
7. Insurance. . . . . . . . . . . . . . . . . . . . 5
8. Representations and Warranties. . . . . . . . . . 5
9. General Covenants of the Lessee. . . . . . . . . 10
10. GPU Events . . . . . . . . . . . . . . . . . . . 16
11. Credit Agreement and Notes. . . . . . . . . . . . 16
12. Consent to Assignment; Direct Payment of
Payments Under the Fuel Lease. . . . . . . . . . 16
13. Severability. . . . . . . . . . . . . . . . . . . 17
14. Indemnification. . . . . . . . . . . . . . . . . 17
15. No Waiver; Amendments. . . . . . . . . . . . . . 19
16. Successors and Assigns. . . . . . . . . . . . . . 19
17. Notices. . . . . . . . . . . . . . . . . . . . . 19
18. Set-off . . . . . . . . . . . . . . . . . . . . . 20
19. Waiver of Jury Trial . . . . . . . . . . . . . . 20
20. Governing Law . . . . . . . . . . . . . . . . . . 21
i<PAGE>
THIS LESSEE'S LETTER AGREEMENT (the "Letter Agreement") is
made as of November 17, 1995, by and between Jersey Central
Power & Light Company, a New Jersey corporation (the "Lessee"),
TMI-1 Fuel Corp, a Delaware corporation (the "Company"), and
Union Bank of Switzerland, New York Branch, as Administrative
Agent (the
"Administrative Agent"), for the Banks party to the Credit
Agreement referred to below (the "Banks") and the Lead Managers.
WHEREAS, the Lessee has entered into the Amended and
Restated Nuclear Material Lease Agreement, dated as of
November 17, 1995 ("Fuel Lease"), with the Company in order to
enable the Company to obtain financing for the acquisition,
processing and use of Nuclear Material in the Generating
Facility; and
WHEREAS, pursuant to the Fuel Lease, the Company has agreed
to make payments due to Manufacturers and/or to reimburse the
Lessee for payments previously made to Manufacturers with respect
to the Nuclear Material; and
WHEREAS, in order to finance the cost of such Nuclear
Material, the Company proposes to (i) sell its Commercial Paper
which shall be entitled to the benefit of a letter of credit to
be issued by the Issuing Bank, and (ii) obtain the Commitment of
the Issuing Bank to issue its letter of credit and of each Bank
to make Loans from time to time as hereinafter provided; and
WHEREAS, the Lessee has agreed to make payments under the
Fuel Lease sufficient to enable the Company to meet its
obligations under the Company's financing arrangements, including
the Company's obligations under the Credit Agreement, dated as of
November 17, 1995, among the Company, the Banks, the Issuing Bank
and the Administrative Agent (the "Credit Agreement");
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein contained and other good and valuable
consideration, so long as any of the Loans, the Letter of Credit
or the Commercial Paper shall remain outstanding, or the
Commitments shall be continuing, notwithstanding any provision of
the Fuel Lease or any other agreement of the Lessee to the
contrary, the Lessee, the Company, the Administrative Agent and
the Banks agree that:
1. Definitions. Unless the context otherwise specifies or
requires, each term defined in the Credit Agreement or Appendix A
to the Fuel Lease, shall, when used in this Letter Agreement,
have the meaning indicated in the Credit Agreement or Appendix A
or set forth in the paragraph indicated therein.
2. Performance of Fuel Lease and Liens. The Lessee will
perform and comply with all the terms of the Fuel Lease to be<PAGE>
2
performed or complied with by it and will not omit to take an
action the omission of which would cause a Lease Event of
Default. The Lessee acknowledges that, except as otherwise
provided in the Fuel Lease, its obligations as set forth under
the Fuel Lease are absolute and unconditional. The Lessee will
not directly or indirectly create or permit to be created or to
remain, and will promptly take such action as may be necessary to
discharge, any Lien on any Collateral except Permitted Liens.
3. Security Interest of Collateral. The Lessee represents
that no other financing statement (other that those (i) naming
the Secured Parties as a secured party or (ii) the Prudential
Companies as a secured party which liens shall be terminated in
connection with the initial issuance of Commercial Paper)
covering all or any part of the Collateral (as defined in the
Security Agreement relating to the Lessee) is on file in any
public office. The Lessee shall make, or shall cause to be made,
all filings and recordings, and shall take, or cause to be taken,
such other actions, including filing all continuation statements,
necessary to establish, preserve and perfect the Secured Parties'
lien on and security interest in, the Collateral as a legal,
valid and enforceable first priority lien and security interest,
or purchase money security interest, as the case may be, therein,
subject only to the existence or priority of any Permitted Lien,
and the Lessee represents that all such filings, recordings and
other actions have been duly made. The Lessee shall deliver to
the Administrative Agent evidence of the due filings of any
continuation statements to be delivered to the Administrative
Agent within the time period specified in Section 8.05 of the
Credit Agreement. In no event will the Lessee permit the Nuclear
Material to enter any jurisdiction in which all necessary action
has not been taken to establish, maintain and protect the Secured
Parties' first priority perfected lien and security interest in
the Nuclear Material under the Security Agreement, subject only
to Permitted Liens.
4. Sale of Nuclear Material and Assignment of Rights under
Nuclear Material Contracts.
(a) In the event that the Lessee desires the Company,
on behalf of the Lessee, to purchase Nuclear Material or to have
services performed on such Nuclear Material pursuant to any
Nuclear Material Contract, the Lessee shall provide the Company
with an Assignment Agreement and a Manufacturer's Consent, both
substantially in the form of Exhibit D to the Fuel Lease, 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, with respect to such Nuclear Material Contract on or
before the date on which the Company is to purchase such Nuclear
Material or to have such services performed pursuant thereto.
Notwithstanding the foregoing, the Lessee shall not be required
to have obtained a Manufacturer's Consent in any instance where<PAGE>
3
the Manufacturer's obligations under the applicable Nuclear
Material Contract have been fully discharged and performed, and
the Manufacturer's warranties with respect to such Nuclear
Material Contract have expired, and the Lessee has delivered to
the Company and the Collateral Agent a certificate to such
effect.
(b) The Lessee at its expense will perform and comply
with all the terms and provisions of each Assigned Agreement to
be performed or complied with by it, will maintain each Assigned
Agreement in full force and effect, will enforce each of the
Assigned Agreements in accordance with their respective terms,
and will take all such action to that end as from time to time
may reasonably be requested by the Majority Banks.
(c) The Lessee shall not enter into or consent to or
permit any cancellation, termination, amendment, supplement or
modification of or waiver with respect to any Assigned Agreement
without the prior written consent of the Majority Banks.
(d) The Lessee will from time to time, upon request of
the Administrative Agent, furnish to the Administrative Agent
such information concerning the Nuclear Material or any Assigned
Agreement, as any Bank may reasonably request.
(e) The Lessee will not change its principal place of
business or chief executive offices from the location specified
in paragraph 8(a) hereof or remove therefrom its records
concerning the Assigned Agreements unless it gives the
Administrative Agent at least 30 days' prior written notice
thereof.
5. Collateral Equivalence Test; No Additional Collateral
or Covenants; Condemnation Statements; Exercise of Rights of
Secured Parties.
(a) The Lessee shall not permit the sum of aggregate
Stipulated Casualty Value of the Nuclear Material leased under
the Fuel Lease and the Lessee's Percentage of Cash Collateral to
be less than the Lessee's Percentage of Outstandings.
(b) The Lessee shall not provide to any Person (other
than the Banks), in order to induce such Person to extend credit
to the Company, any collateral or any guarantee or other
assurance against loss or non-payment, nor shall the Lessee
consent to the provision thereof by the Company.
(c) The Lessee shall not agree to any affirmative or
negative covenant with respect to the condition, financial or
otherwise, of the Lessee with any Person in order to induce such
Person to extend credit to the Company.<PAGE>
4
(d) The Lessee shall not sell, assign, convey, pledge
or otherwise dispose of or encumber in any manner any interest it
may have in the Trust or any rights it may have under the Trust
Agreement. The Lessee shall not direct the Owner Trustee to
liquidate, dissolve, merge or consolidate the Company except if
such transaction is consented to in writing by the Banks. The
Lessee shall not direct the Owner Trustee to take any action
under the Trust Agreement which is inconsistent with the duties
imposed upon the Company by the Basic Documents and any other
agreements, documents, instruments and articles executed and
delivered, and to be executed and delivered, by the Owner Trustee
in connection therewith.
(e) The Nuclear Material leased under the Fuel Lease
shall constitute the Lessee's entire ownership interest in the
items used or to be used by it as nuclear fuel in the Generating
Facility. The Lessee agrees that 25% of the Lessor's ownership
interest in any Nuclear Material which is subject to the Fuel
Lease will be leased to the Lessee. The Lessee further agrees
not to take any action under the terms of the Fuel Lease,
including, but not limited to, the delivery of any Leasing
Record, which would result in 25% of the Lessor's ownership
interest in any such Nuclear Material not being so leased.
(f) As provided in the Security Agreement, (i) the
Secured Parties may, on and after the occurrence of a Credit
Agreement Default, Credit Agreement Event of Default, Lessee
Default or Lessee Event of Default, pursuant to Section 10 of the
Security Agreement, exercise any and all of the Company's rights
under the Fuel Lease, the Assigned Agreements and each other
Basic Document to which the Lessee is a party, and (i) if a Lease
Event of Default occurs and is continuing, the Secured Parties
may, pursuant to Section 10 of the Security Agreement, enforce
and exercise any and all of the Company's rights under the Fuel
Lease, the Assigned Agreements and each other Basic Document to
which the Lessee is a party, or the rights and remedies granted
to the Secured Parties under the Security Agreement at their
election and in their sole discretion, and, in the event that any
Secured Parties are permitted to exercise such rights pursuant to
Section 10 of the Security Agreement, the Lessee agrees that the
Collateral Agent may do so either in concert with or in place of
the Company, and the Lessee shall assist in, comply with and
perform in accordance with all rights or remedies so enforced or
exercised by the Collateral Agent for the ratable benefit of the
Secured Parties.
6. Fuel Management; Quiet Enjoyment. The occurrence of a
Credit Agreement Default, a Credit Agreement Event of Default,
Lease Event of Default, Lessee Default, Lessee Event of Default
or an event or condition which would, with the lapse of time or
the giving of notice or both, become a Lease Event of Default,
shall not affect the Lessee's sole obligation to engage in Fuel<PAGE>
5
Management; provided that, upon the occurrence of a Credit
Agreement Event of Default or Lessee Event of Default, the
Majority Secured Parties may, at their option, by written notice
to the Lessee, elect to revoke such power and authority, in which
case the Person from time to time designated by the Majority
Secured Parties may (but shall not be obligated to), to the
extent that the Majority Secured Parties desire and to the extent
permitted by law, engage in Fuel Management and/or remove all or
any part of the responsibility for Fuel Management from the
Lessee; provided, however, that, subject to the right of the
Secured Parties to exercise any or all rights granted to the
Secured Parties under the Security Agreement, the rights granted
to the Secured Parties under this Section 6 shall not be
construed to include the right to direct, whether directly or
indirectly, the operation of the Generating Facility. In the
event the Majority Secured Parties, in accordance with the
preceding sentence, shall revoke the Lessee's power and authority
to engage in Fuel Management, all rights conferred by the Company
to the Lessee pursuant to Section 3 of the Fuel Lease shall be
deemed to be automatically reassigned to the Company and the
Lessee shall execute such documents and instruments as the
Secured Parties shall request to further confirm such assignment.
7. Insurance. Each year, the Lessee will furnish the
Administrative Agent and each Bank a detailed statement
certified by an officer of Lessee setting forth (i) the location
of all Nuclear Material and (i) the insurance policies and
indemnification agreements provided pursuant to Sections 14 and
17 of the Fuel Lease and certifying that such insurance policies
and indemnification agreements comply with the requirements of
the Fuel Lease. In addition, the Lessee shall promptly furnish
at any time to the Administrative Agent and any Bank such
information as any such Bank shall reasonably request concerning
location of Nuclear Material, insurance policies and
indemnification agreements and Manufacturers or other third
parties with whom arrangements exist with respect to
transportation, storage or processing of Nuclear Material.
8. Representations and Warranties. The Lessee hereby
represents and warrants to the Company, the Administrative Agent
and the Banks that as of the date hereof:
(a) Organization and Standing. The Lessee is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of New Jersey, and is
qualified to do business in each state or other jurisdiction in
which the nature of its business makes such qualification
necessary, except where the failure to be so qualified would not
have a material adverse effect on its ability to perform its
obligations under this Letter Agreement or each other Basic
Document to which the Lessee is a party. The Lessee's chief<PAGE>
6
executive office is located at 300 Madison Avenue, Morristown,
New Jersey 07960.
(b) Corporate Authority. The Lessee has the corporate
power and authority to execute and perform this Letter Agreement
and the Fuel Lease and to lease the Nuclear Material thereunder.
The execution and delivery of this Letter Agreement and the Fuel
Lease and the lease of the Nuclear Material thereunder will not
have a material adverse effect on the financial condition,
results of operations, business, properties or operations of the
Lessee.
(c) Compliance with Other Instruments, etc. The
execution, delivery and performance by the Lessee of this Letter
Agreement and each Basic Document to which the Lessee is a party,
and other related instruments, documents and agreements, and the
compliance by the Lessee with the terms hereof and thereof,
(i) have been duly and legally authorized by appropriate
corporate action taken by the Lessee, (i) are not in
contravention of, and will not result in a violation or breach
of, any of the terms of the Lessee's articles of incorporation,
its by-laws or of any provisions relating to shares of the
capital stock of the Lessee and (i) will not violate or
constitute a breach of any provision of (x) any applicable law,
order, rule or regulation, rule or regulation of any governmental
authority (except in those cases where non-compliance with any
such law, order, rule or regulation could not reasonably be
expected to have a material adverse effect on the financial
condition, results of operations, business, properties or
operations of the Lessee or its ability to perform its
obligations hereunder or under each Basic Document) or (y) any
indenture, agreement or other instrument to which the Lessee is
party, or by or under which the Lessee or any of the Lessee's
property is bound, or be in conflict with, result in breach of,
or constitute (with due notice and/or lapse of time) a default
under any such indenture, agreement or instrument, or result in
the creation or imposition of any Lien upon any of the Lessee's
property or assets or any Nuclear Material.
(d) Legal Obligations. This Letter Agreement and the
Fuel Lease have been executed by a duly authorized officer of the
Lessee, and this Letter Agreement and the Fuel Lease constitute,
and each Leasing Record, when executed by a duly authorized
officer of the Lessee and delivered to the Company, will
constitute, the legal, valid and binding obligations of the
Lessee, enforceable against the Lessee in accordance with their
respective terms, except as the enforceability thereof may be
limited by the Atomic Energy Act and the rules, regulations or
orders issued pursuant thereto, or by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights
in general, and except as the availability of the remedy of
specific performance is subject to general principles of equity<PAGE>
7
(regardless of whether such remedy is sought in a proceeding in
equity or at law).
(e) Governmental Consents. Neither the execution and
delivery of this Letter Agreement, the Fuel Lease or any Leasing
Record by the Lessee, nor the performance by the Lessee of all of
its obligations hereunder or thereunder, requires the consent or
approval of, the giving of notice to, or the registration, filing
or recording with, or the taking of any other action in respect
of, any Federal, state, local or foreign government or
governmental authority or agency or any other person except for
the order of the Securities and Exchange Commission (the "SEC"),
dated October 25, 1995, the filing of the supplemental order of
the SEC dated October 27, 1995, the filing of a notice with the
New Jersey Board of Public Utilities which notice was filed
September 29, 1995, and the filing of any statement or other
instrument pursuant to Section 10(b) of the Fuel Lease, and
except for the filing of certificates by the Lessee with the SEC
pursuant to SEC Rule 24 under the Public Utility Holding Company
Act to report on the transactions authorized by such SEC order,
the filing of which is not necessary to the execution or delivery
of this Letter Agreement, the Fuel Lease or any Leasing Record by
the Lessee or for the performance by the Lessee of any of its
obligations hereunder or thereunder, and the failure to file any
of which will not affect the validity or enforceability of any of
this Letter Agreement, the Fuel Lease or any Leasing Record.
(f) Consents and Permits. The Lessee possesses all
material licenses, permits, franchises and certificates which
are necessary or appropriate to own or operate its material
properties and assets and to conduct its business as now
conducted.
(g) Litigation. There is no litigation or other
proceeding now pending or, to the best of the Lessee's knowledge,
threatened, against or affecting the Lessee, before any court,
arbitrator or administrative or governmental agency (i) which
would adversely affect or impair the title of the Company to the
Nuclear Material, (i) which questions the validity or
enforceability of this Letter Agreement, the Fuel Lease, the
Assigned Agreements or any other Basic Document to which the
Lessee is a party or any action taken or to be taken by the
Lessee pursuant to or in connection with this Letter Agreement,
or (i) except as disclosed in the Lessee's Annual Report on Form
10-K for the year ended December 31, 1994 and Quarterly Report on
Form 10-Q for the quarter ended September 30, 1995, copies of
which have previously been delivered to the Administrative Agent
and the Banks, which, if decided adversely to the Lessee, would
materially adversely affect the condition, financial or
otherwise, of the Lessee.<PAGE>
8
(h) Taxes. The Lessee has filed or caused to be filed
all tax returns which are required to be filed, and has paid or
caused to be paid all taxes as shown on said returns and all
assessments received by it to the extent that such taxes and
assessments have become due, except for taxes and assessments
which are being contested in good faith and by appropriate
proceedings and as to which it has provided reserves which are
adequate in accordance with generally accepted accounting
principles.
(i) Reaffirmation and Restatement of Representations
and Warranties. The Lessee repeats and reaffirms as of the date
hereof for the benefit of the Administrative Agent and each Bank
the representations and warranties made by the Lessee in the Fuel
Lease as though set forth in full herein with the same effect as
though such representations and warranties had been made on and
as of the date hereof. In addition, the Lessee represents and
warrants that as of the date hereof (i) the Lessee is in
compliance with all the terms and provisions set forth in the
Fuel Lease on its part to be observed or performed, (i) no
Terminating Event has occurred and no event has occurred which,
with the lapse of time or the giving of notice, or both, would
constitute such a Terminating Event, and (i) no Lease Event of
Default has occurred and is continuing and no event has occurred
and is continuing on such date which, with the lapse of time or
the giving of notice, or both, would constitute a Lease Event of
Default.
(j) First Perfected Security Interest. Except for
Permitted Liens, upon the execution and delivery of this Letter
Agreement and the Security Agreement and the due filing of the
Uniform Commercial Code financing statements required to be
executed and filed from time to time, the Secured Parties will
have a legal, valid and enforceable first priority security
interest (i) in the rights, titles and interests of the Company
in and to the Fuel Lease and (i) in and to the other Collateral.
Such security interest will constitute a perfected security
interest in the Collateral consisting of Nuclear Material
Contracts and the Collateral consisting of Nuclear Material
located in the States of Illinois, Kentucky, Ohio, Pennsylvania,
and Virginia except for any such Collateral which consists of
cash, instruments (as defined in the New York Uniform Commercial
Code) and other items in which a security interest may only be
perfected by possession, enforceable against all third parties as
security for the Secured Obligations.
(k) No Material Adverse Change. Since June 30, 1995,
there has been no material adverse change in the financial
condition, results of operations, business, properties or
operations of the Lessee or in its ability to perform its
obligations under the Basic Documents.<PAGE>
9
(l) No Defaults. The Lessee is not in default under
any bond, debenture, note or any other evidence of Obligations
for Borrowed Money or Deferred Purchase Price or any mortgage,
deed of trust, indenture, loan agreement or other agreement
relating thereto, where the amount thereof is in excess of
$20,000,000.
(m) Pension Plans. No accumulated funding deficiency
(as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, exists with respect to any plan (other
than a multiemployer plan). No liability to the Pension Benefit
Guaranty Corporation has been, or is expected by the Lessee to
be, incurred with respect to any plan (other than a multiemployer
plan) by the Lessee which is or would be materially adverse to
the Lessee. The Lessee has not incurred and presently does not
expect to incur any withdrawal liability under Title IV of ERISA
with respect to any multiemployer plan which is or would be
materially adverse to the Lessee. Neither the execution and
delivery by the Company of the Credit Agreement and the other
Basic Documents, and the issuance of the Commercial Paper, nor
the execution and delivery by the Lessee of this Letter
Agreement, the Trust Agreement and each other Basic Document to
which the Lessee is a party, will involve any transaction which
is subject to the prohibitions of Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to
Section 4975. As used herein, the term "plan" shall mean an
"employee pension benefit plan" (as defined in Section 3 of
ERISA) which is and has been established or maintained, or to
which contributions are or have been made, by the Lessee or by
any trade or business, whether or not incorporated, which,
together with the Lessee is under common control as described in
Section 414(b) or (c) of the Code, and the term "multiemployer
plan" shall mean any plan which is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).
(n) Financial Statements. The audited balance sheet
of the Lessee as of December 31, 1994, and the related statements
of income and cash flows (including the notes thereto) of the
Lessee for the year then ended, copies of which have been
delivered to the Company, the Administrative Agent and the Banks,
and all other annual or quarterly financial statements including,
without limitation, the quarterly statement dated as of June 30,
1995 so delivered fairly present the financial condition of the
Lessee on the dates for which, and the results of its operations
for the periods for which, the same have been furnished and have
been prepared in accordance with generally accepted accounting
principles consistently applied.
(o) Nuclear Material. The Nuclear Material is free
and clear of any Lien in favor of any Person claiming by, through
or under the Lessee or any Affiliate thereof, other than
Permitted Liens. No default or event which with the giving of<PAGE>
10
notice or lapse of time would constitute a default has occurred
and is continuing under any Nuclear Material Contract.
(p) Disclosure. Neither the representations in this
Letter Agreement, or in any other document, certificate or
statement furnished in writing to the Administrative Agent or any
Bank by or on behalf of the Lessee in connection with the
transactions contemplated hereby, nor the information disclosed
in the Lessee's Annual Report on Form 10-K for the year ended
December 31, 1994 or Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995, contained as of its date, any untrue
statement of a material fact or omitted to state a material fact
necessary in order to make such representations or information
not misleading in light of the circumstances under which they
were made.
(q) Collateral Equivalence Test Met. The sum of the
aggregate Stipulated Casualty Value of the Nuclear Material
leased under the Fuel Lease and the Lessee's Percentage of the
Cash Collateral equals or exceeds the Lessee's Percentage of
Outstandings.
9. General Covenants of the Lessee.
(a) Information. The Lessee will furnish to the
Company and the Administrative Agent in sufficient copies for
each Bank:
(i) Quarterly Statements. As soon as practicable
after the end of each of the first three quarterly fiscal
periods in each fiscal year of the Lessee, and in any event
within 60 days thereafter, copies of:
(A) a balance sheet of the Lessee as at the end of
such quarter, and (B) statements of income and cash
flows of the Lessee for such quarter and for the
twelve-month period ending as of the end of such
quarter and (in the case of the second and third
quarters) for the portion of the fiscal year ending
with the end of such quarter, setting forth in each
case in comparative form the figures for the
corresponding periods in the previous fiscal year, all
in reasonable detail and certified as complete and
correct, subject to changes resulting from year-end
adjustments, by a principal financial officer of the
Lessee; provided that it is understood that the
delivery of the Lessee's Quarterly Report on Form 10-Q
shall be deemed to satisfy the requirements with
respect to such financial statements;<PAGE>
11
(ii) Annual Statements. As soon as practicable after
the end of each fiscal year of the Lessee, and in any event
within 120 days thereafter, copies of:
(A) a balance sheet of the Lessee at the end of such
fiscal year, and (B) statements of income and cash
flows of the Lessee for such year, setting forth in
each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and
accompanied by an opinion thereon of independent
certified public accountants of recognized national
standing selected by the Lessee, which opinion shall
state that such financial statements have been prepared
in accordance with generally accepted accounting
principles consistently applied (except for changes in
application in which such accountants concur) and that
the examination of such accountants in connection with
such financial statements has been made in accordance
with generally accepted auditing standards; provided
that it is understood that the delivery of the Lessee's
Annual Report on Form 10-K shall be deemed to satisfy
the requirement with respect to such financial
statements;
(iii) Officer's Compliance Certificate.
Simultaneously with the financial statements referred to in
Sections 9(a)(i) and (ii), a certificate of an authorized
officer of the Lessee stating that such officer has reviewed
the relevant terms and conditions of the Fuel Lease and
other Basic Documents to which the Lessee is a party, and
has made, or caused to be made, under such officer's
supervision, a review of the transactions and financial
condition of the Lessee from the beginning of the accounting
period covered by the income statements being delivered
therewith to the date of the certificate, and that the
Lessee has observed or performed all of its covenants and
other agreements, and satisfied every condition, contained
in this Letter Agreement, the Fuel Lease and any other Basic
Document to which the Lessee is a party, and no Terminating
Event, Lessee Default, Lessee Event of Default, Lease Event
of Default or default or event of default under any such
Basic Document has occurred and is continuing and no event
has occurred and is continuing which, with the lapse of time
or the giving of notice, or both, would constitute a
Terminating Event, Lessee Default, Lessee Event of Default,
Lease Event of Default or a default or event of default
under any such Basic Document or, if such condition or event
has occurred and is continuing, a statement as to the nature
thereof and the action which is proposed to be taken with
respect thereto;<PAGE>
12
(iv) Auditor's Compliance Certificate. Simultaneously
with the financial statements referred to in Section
9(a)(ii), a certificate of the independent public
accountants who audited such statements stating that such
accountants have reviewed the relevant terms and conditions
of the Fuel Lease and other Basic Agreements to which the
Lessee is a party, and that, in making the examination
necessary for the audit of such statements, they have
obtained no knowledge of any condition or event which
constitutes or which with notice or lapse of time or both
would constitute a Terminating Event, Lessee Default, Lessee
Event of Default, Lease Event of Default or default or event
of default under any such Basic Document, or if such
accountants shall have obtained knowledge of any such
condition or event, specifying in such certificate each such
condition or event of which they have knowledge and the
nature and status thereof;
(v) Notices Required under the Basic Documents.
Immediately upon delivery to the Lessee or the Company, all
notices, consents, documents, certificates or instruments of
any kind relating to the Lessee required pursuant to the
Fuel Lease;
(vi) Defaults. (A) Promptly upon becoming aware of the
occurrence thereof, notice of any Terminating Event, Lessee
Default, Lessee Event of Default, Lease Event of Default or
any event which, with the lapse of time or the giving of
notice, or both, would constitute a Terminating Event or a
Lease Event of Default, and (A) within 10 days of becoming
aware of the occurrence thereof, notice of any other
material event affecting the Lessee's obligations under any
Basic Document or any Nuclear Material Contract (except to
the extent such event has previously been disclosed in the
Lessee's SEC reports delivered pursuant to clause (viii)
below);
(vii) Notice of Claimed Default. Immediately upon
becoming aware that the holder or holders of any evidence of
Obligations for Borrowed Money or Deferred Purchase Price or
other security of the Lessee or any subsidiary exceeding
$20,000,000 in the aggregate have given notice (or taken any
other action) with respect to a claimed default, breach or
event of default, a notice describing the notice given (or
action taken) and the nature of the claimed default, breach,
or event of default;
(viii) SEC and Other Reports. Promptly after filing
thereof, copies of all regular and periodic reports and
registration statements which the Lessee may file with the
Securities and Exchange Commission ("SEC") or any
governmental agency substituted therefor and, promptly upon<PAGE>
13
written request therefor, copies of the financial statements
which the Lessee may file annually with any state regulatory
agency or agencies; and
(ix) Requested Information. With reasonable
promptness, such other data and information, including,
without limitation, information regarding Nuclear Material
or any Nuclear Material Contract, with respect to the
Lessee as from time to time may be reasonably requested by
the Administrative Agent or any Bank.
(b) Notice of Litigation. Immediately upon the Lessee
becoming aware thereof, written notice of (i) any litigation or
proceedings which would be required to be disclosed as an
exception to the representations and warranties contained herein
or in the Fuel Lease in order that such representations and
warranties would be true and correct on a continuing basis; and
(i) any dispute between the Lessee and any governmental authority
or other party relating to any part of the transactions
contemplated by this Letter Agreement or any of the other Basic
Documents to which the Lessee is a party which would have a
material adverse effect on the ability of the Lessee to carry out
its obligations hereunder or under any other Basic Document to
which the Lessee is a party; provided, however, that the notice
requirement in this Section 9(b) shall be satisfied if the Lessee
furnishes the Company and the Administrative Agent in sufficient
copies for each Bank a Current Report on Form 8-K regarding the
event requiring notice by the time that the Current Report is
required to be filed with the Securities and Exchange Commission.
(c) General Obligations. Subject to the last sentence of
this Section 9(c), the Lessee will:
(i) duly comply with all laws, rules, orders,
regulations or other valid requirements
(including, without limitation, any of the
foregoing which are applicable to Nuclear Material
or the operation of the Generating Facility) of
any governmental authority necessary to the
conduct of its business or to its properties or
assets, noncompliance with which could reasonably
be expected to have a material adverse effect upon
the transactions contemplated by this Letter
Agreement or any other Basic Document, or upon the
financial condition, results of operations,
business, properties or operations of the Lessee,
or the ability of the Lessee to carry out its
obligations under any Basic Document or this
Letter Agreement);
(ii) continue to engage principally in the electric
utility business;<PAGE>
14
(iii) obtain, maintain and keep in full force and effect
all consents, permits, licenses and approvals, the
absence of which would have a material adverse
effect upon the transactions contemplated by this
Letter Agreement or any other Basic Document to
which the Lessee is a party, or upon the financial
condition, results of operations, business,
properties or operations of the Lessee, or the
ability of the Lessee to carry out its obligations
under this Letter Agreement or any other Basic
Document to which the Lessee is a party;
(iv) maintain its material operating properties used or
useful in its business in good repair, working
order and condition consistent with prudent
utility practice; provided, however, that the
Lessee shall not be prevented from discontinuing
the operation and maintenance of any of its
properties if it shall determine that the
continued operation and maintenance of such
properties is no longer necessary, desirable or
permissible;
(v) pay when due all fees, taxes, assessments and
governmental charges or levies imposed upon it or
upon its income or profits or upon any property
belonging to it, and maintain appropriate reserves
for the accrual of the same in accordance with
generally accepted accounting principles;
(vi) except as permitted by clause (vii) below, at all
times maintain its corporate existence,
privileges, franchises and rights to carry on
business, and duly procure all renewals and
extensions thereof, if and when any shall be
necessary;
(vii) not consolidate or merge with, or sell or
otherwise dispose of all or substantially all of
its properties and assets to any Person unless
(i) the surviving or resulting entity is the
Lessee hereunder, (i) immediately after giving
effect thereto no Credit Agreement Event of
Default, Credit Agreement Default, Lease Event of
Default, Lessee Default, Lessee Event of Default
or event which with the giving of notice or
passage of time would constitute a Lease Event of
Default shall have occurred and be continuing, and
(i) the senior unsecured debt of the surviving or
resulting Lessee shall be rated at least
investment grade by S&P or Moody's;<PAGE>
15
(viii) perform and comply with each of the material
provisions of each material indenture, credit
agreement, contract or other agreement by which
the Lessee is bound, non-performance or non-
compliance with which would have a material
adverse effect upon its business or credit or in
any way affect its ability to perform its
obligations hereunder except material contracts or
other agreements being contested in good faith;
(ix) preserve and maintain its corporate existence in
the jurisdiction of its incorporation, and qualify
and remain qualified as a foreign corporation in
good standing in each jurisdiction in which such
qualification is necessary or desirable in view of
its business and operations or the ownership of
its properties, except where the failure to be so
qualified would not materially adversely affect
its financial condition, operations, properties or
business, and preserve its material rights,
franchises and privileges to conduct its business
substantially as conducted on the date hereof;
(x) maintain insurance in effect at all times in such
amounts as are available to the Lessee and
covering such risks as is usually carried by
companies of a similar size, engaged in similar
businesses and owning similar properties
(including, without limitation, the operation and
ownership of nuclear generating facilities) in the
same general geographical area in which the Lessee
operates, either with responsible and reputable
insurance companies or associations, or, in whole
or in part, by establishing reserves of one or
more insurance funds, either alone or with other
corporations or associations;
(xi) at any reasonable time and from time to time,
permit the Administrative Agent or any Bank or any
agents or representatives thereof to examine and
make copies of and abstracts from the records and
books of account of, and visit the properties of,
the Lessee and discuss the affairs, finances and
accounts of the Lessee with any of its officers or
directors;
(xii) not sell, transfer, lease, assign or otherwise
convey or dispose of more than 25% of its assets
(whether now owned or hereafter acquired), in any
single or series of transactions, whether or not
related, except for dispositions of current assets
in the ordinary course of business as presently<PAGE>
16
conducted, if immediately prior to such sale,
transfer, lease, assignment, conveyance or
disposition or as a result of such sale, transfer,
lease, assignment, conveyance or disposition, the
senior unsecured debt of the Lessee shall not be
rated at least investment grade by S&P or Moody's.
(xiii) comply with the Letter Agreement and such other
Basic Documents to which the Lessee is a party in
accordance with the respective terms and
conditions set forth herein and therein; and
(xiv) except for Permitted Liens, permit the creation of
any Liens on the Collateral.
Notwithstanding the foregoing provisions of this Section 9(c),
the Lessee may contest by appropriate proceedings conducted in
good faith and due diligence, the amount, validity or
application, in whole or in part of any fee, tax, assessment or
government charge or levy, or any legal requirement, provided
that the Lessee shall have set aside on its books adequate
reserves, if required in accordance with generally accepted
accounting principles with respect thereto and shall furnish such
security, if any, as may be required in the proceeding.
10. GPU Events. It shall be a default hereunder if
General Public Utilities Corporation (a) fails to maintain at all
times beneficial ownership of at least 75% of all outstanding
shares of common stock of each of the Lessee, Met-Ed and PE; or
(b) pledges, grants options on, create any charge on or security
interest in, or otherwise subjects to any charge or encumbrance,
any of the common stock of the Lessee, Met-Ed or PE unless the
obligations hereunder are secured ratably and with equal
priority, in form and substance reasonably satisfactory to the
Majority Banks.
11. Credit Agreement and Notes. The Lessee hereby
acknowledges receipt of executed counterparts of the Credit
Agreement and photostatic copies of the Notes evidencing the
Loans, and consents to all of the terms and provisions of the
Credit Agreement and the Notes.
12. Consent to Assignment; Direct Payment of Payments
Under the Fuel Lease.
(a) Consent to Assignment. The Lessee hereby
acknowledges notice of and consents to all the terms and
provisions of the Security Agreement and hereby confirms to and
agrees with the Secured Parties that all representations,
warranties, indemnities and agreements of the Lessee contained in
this Letter Agreement and each other Basic Document to which the
Lessee is a party shall inure to the benefit of, and shall be<PAGE>
17
enforceable by, the Secured Parties to the same extent as if such
Secured Parties were originally parties to or named in the such
documents and agreements. The Lessee further acknowledges and
consents to the assignment and transfer, and any future
assignments and transfers, to the Secured Parties by the Company
of the Company's right to exercise any and all of its rights,
remedies, powers and privileges (but none of its obligations,
duties or liabilities) under the Fuel Lease, the Assigned
Agreements and each other Basic Document to which the Lessee is a
party. The Lessee hereby agrees with the Secured Parties to
comply with any exercise by the Secured Parties, either directly
or through the Company, of any rights, remedies, powers or
privileges pursuant to the Security Agreement. The Secured
Parties acknowledge that neither the Security Agreement nor this
Section 12 shall in any way add to the obligations of the Lessee
(except those obligations of the Lessee to any Person, which, if
not previously so, hereby become enforceable directly by the
Secured Parties) under the Fuel Lease, the Assigned Agreements
and each other Basic Document to which the Lessee is a party.
Notwithstanding the foregoing, so long as no Lease Event of
Default shall have occurred and be continuing, the Lessee shall
have exclusive right to possession and use of the Nuclear
Material in accordance with the Fuel Lease and may use such
Nuclear Material for any lawful purpose consistent with the Fuel
Lease.
(b) Direct Payment of Payments Under the Fuel Lease. The
Lessee acknowledges that it has been directed by the Company to,
and agrees that it will, make all payments of monies due and to
become due to the Company under the Fuel Lease, the Assigned
Agreements and each other Basic Document to which the Lessee is a
party, directly to the Collateral Agent, including, without
limitation, Basic Rent, Additional Rent, the purchase price of
Nuclear Material pursuant to Section 8(c), 8(d), 8(e) and 8(g) of
the Fuel Lease, payments pursuant to Sections 9(e), 14, 17 and 18
of the Fuel Lease in the manner and to the accounts of the
Secured Parties as specified in Section 3.03 of the Credit
Agreement.
13. Severability. Any provision of this Letter 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.
14. Indemnification. The Lessee shall pay and indemnify
and hold harmless the Administrative Agent and each Bank, and<PAGE>
18
their respective officers, directors, incorporators,
shareholders, partners, employees, agents and servants from and
against any and all liabilities (other than liabilities arising
out of the gross negligence or willful misconduct of such
Person), taxes, (excluding, however, taxes measured solely by the
net income of any Person indemnified or intended to be
indemnified pursuant to this Section 14, except as otherwise
provided in Section 14 hereof), losses, obligations, claims,
damages, penalties, causes of action, suits, costs and expenses
(including, without limitation, reasonable attorneys' and
accountants' fees and expenses) and judgments of any nature
arising from or in any way relating to any and all of the
following during the term of the Fuel Lease and thereafter:
(a) 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 (as that term is defined in the Atomic
Energy Act, 42 U.S.C. Paragraph 2011 et seq.) involving or
connected in any way with the Nuclear Material or any portion
thereof, (a) the acquisition, ownership (including strict
liability of an owner or liability without fault), possession,
disposition, sale, use, nonuse, misuse, leasing, fabrication,
design, cycling, recycling, transportation, containerization,
cooling, processing, reprocessing, storing, condition,
management, operation, construction, maintenance, repair or
rebuilding of the Nuclear Material or any portion thereof or
resulting from the condition of adjoining and underlying land,
buildings, streets or ways, (a) any use, nonuse or condition of,
or any other matter of circumstance relating to, the Generating
Facility, any other property associated therewith or any
adjoining and underlying land, buildings, streets and ways,
(a) any violation or default, or alleged violation or default, of
the Fuel Lease or this Letter Agreement by or on behalf of
Lessee, or of any contracts or agreements to which the Lessee is
a party or by which it is bound, or any Legal Requirements,
(a) performance of any labor or services or the furnishing of any
materials or other property in respect of the Nuclear Material or
any portion thereof, (a) any infringement or alleged infringement
of any patent, copyright, trade secret or other similar right
relating to the Nuclear Material or any portion thereof,
(a) Lessee's agreements or obligations contained in the Fuel
Lease or this Letter Agreement, (a) any claim arising out of loss
of damage to the environment, (a) any claim arising out of strict
or absolute liability in tort, or (a) the offering and sale of
Commercial Paper. The Lessee also indemnifies each indemnitee,
as aforesaid, from and against all other liabilities, taxes,
losses, obligations, claims, damages, penalties, causes of
action, suits, costs and expenses (including, without limitation,
reasonable attorneys' and accountants' fees and expenses) and
judgments of any nature which may be imposed on, incurred by, or
asserted at any time against any indemnitee in any way relating
to or arising out of the performance of this Letter Agreement,
the Fuel Lease or any other Basic Document to which Lessee is a<PAGE>
19
party, provided, except for claims of a nature contemplated by
(i) above, that the Lessee shall not be required to indemnify any
indemnitee with respect to any liability relating to or arising
out of indemnitee's gross negligence or willful misconduct and
provided, further, that the foregoing immunity shall not limit
the terms of any indemnity that the Lessee may grant separately
to any indemnitee pursuant to any separate agreement. In the
event that any action, suit or proceeding is brought against the
Company or any other Person indemnified or intended to be
indemnified pursuant to this Section 14 by reason of any such
occurrence, the Lessee shall, at the Lessee's expense, resist and
defend such action, suit or proceeding or cause the same to be
resisted and defended by counsel designated by the Lessee and
reasonably acceptable to the Person or Persons indemnified or
intended to be indemnified under this Section 14 provided there
is no conflict of interest with the Person or Persons indemnified
or intended to be indemnified under this Section 14. In the
event a conflict of interest contemplated by the proviso of the
immediately preceding sentence shall exist, then the Person or
Persons as to which such conflict exists may be defended by
counsel of its or their choice at Lessee's expense, provided
Lessee's obligation for such expense shall be limited to one firm
for all such Persons as to which such a conflict exists. The
obligations of the Lessee under this Section 14 shall survive any
termination of this Letter Agreement, the Credit Agreement, the
Fuel Lease or the Security Agreement, in whole or in part.
15. No Waiver; Amendments. Neither the Administrative
Agent, the Collateral Agent, the Banks, the Company nor the
Lessee shall, by any act, delay, omission or otherwise, be deemed
to have waived any of its rights and remedies hereunder, and no
waiver shall be valid unless in writing signed by the party or
parties sought to be bound thereby. A waiver by the
Administrative Agent, the Collateral Agent, the Banks, the
Company or the Lessee of any of their respective rights or
remedies hereunder on any one occasion shall not be construed as
a bar to any right or remedy which the Administrative Agent, the
Banks, the Company or the Lessee, as applicable, would otherwise
have had on any future occasion. No failure to exercise nor any
delay in exercise of any such right or remedy hereunder shall
preclude any other or future exercise or partial exercise of any
other right or remedy. The rights and remedies hereunder
provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies
provided by law. None of the terms or provisions of this Letter
Agreement may be waived, altered, modified or amended except by
an instrument in writing, duly executed by the party or parties
sought to be bound thereby.
16. Successors and Assigns. This Letter Agreement shall
bind the successors and assigns of the Lessee and the Company and
shall inure to the benefit of permitted successors and assigns<PAGE>
20
of either. The Letter Agreement shall not be assignable by the
Lessee or the Company, either voluntarily or by operation of law,
unless consented to by the Administrative Agent and the Majority
Banks. No permitted assignment by the Lessee or the Company
shall release the Lessee or the Company from any of its
obligations hereunder. This Letter Agreement shall inure to and
shall be binding upon the successors and assigns of the
Administrative Agent and the Banks.
17. Notices. Any notice, demand or other communication
which by any provision of this Letter Agreement is required or
provided to be given shall be deemed to have been delivered if in
writing addressed as provided below and actually delivered by
mail, courier or facsimile to the following addresses:
(a) except as otherwise requested in writing by the
Administrative Agent or any Bank, any notice, demand
or communication which by any provision of this
Letter Agreement is required or provided to be given
to the Administrative Agent or any Bank shall be
deemed to have been delivered to the Administrative
Agent or any Bank if a single copy thereof is
delivered to the Administrative Agent at its address
set forth in Section 12.01 of the Credit Agreement or
at such other address as either may have furnished
the Company and the Lessee in writing;
(b) if to the Company (with copies to the Lessee at the
address listed below), TMI-1 Fuel Corp. c/o United
States Trust Company of New York, 114 West 47th
Street, New York, New York 10036, marked for the
attention of the Corporate Trust and Agency Division,
telecopy number 212-852-1626, or at such other
address as it may have furnished in writing to the
Administrative Agent and the Lessee; or
(c) if to the Lessee, to Jersey Central Power & Light
Company, 300 Madison Avenue, Morristown, New Jersey
07960; Attention: Vice President and Comptroller;
Telecopier: (201) 455-4217, and to GPU Service
Corporation, 100 Interpace Parkway, Parsippany, New
Jersey 07054-1149, marked for the attention of the
Assistant Treasurer, Telecopier: (201) 263-6397, or
at such other address or addresses as the Lessee may
have furnished to the Administrative Agent and the
Company.
18. Set-off. (a) Lessee hereby acknowledges and agrees
to the set-off rights against it as provided for in Section 12.08
of the Credit Agreement.<PAGE>
21
(b) Lessee agrees that it shall have no right of set-off,
deduction or counterclaim in respect of its obligations
hereunder, and that the obligations of the Banks hereunder and
under the Credit Agreement are several and not joint. Nothing
contained herein shall constitute a relinquishment or waiver of
the Lessee's rights to any independent claim that the Lessee may
have against the Administrative Agent or any Bank for the
Administrative Agent's or such Bank's, as the case may be, gross
negligence or wilful misconduct, but no Bank shall be liable for
the conduct of the Administrative Agent or any other Bank, and
the Administrative Agent shall not be liable for the conduct of
any Bank.
19. Waiver of Jury Trial. Lessee irrevocably waives all
right to trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Letter Agreement, the Credit
Agreement, the other Basic Documents or any instrument or
document delivered hereunder or thereunder, except that the
foregoing shall not preclude any party hereto from submitting to
a jury for determination in any such action, proceeding or
counterclaim any dispute involving (a) the accuracy or
completeness of any representation or warranty made under the
Basic Documents by Lessee, (b) the performance by Lessee of any
affirmative or negative covenant or agreement contained in the
Basic Documents, or (c) questions of materiality, or the
reasonableness of, or good faith basis for, any action taken, or
determination made, by any other party hereto (other than in
respect of any calculation of principal, interest, fees, or
increased costs payable by the Lessee under the Basic Documents).
20. Governing Law. This Letter Agreement shall be
governed by, and be construed and interpreted in accordance with
the laws of the State of New York.<PAGE>
S-1
IN WITNESS WHEREOF, the undersigned have caused this
Letter Agreement to be executed as of the date first above
written.
JERSEY CENTRAL POWER &
LIGHT COMPANY
By
Vice President
TMI-1 FUEL CORP.
By
Title
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH,
as Administrative Agent
By
Title
By
Title <PAGE>
EXHIBIT B-2(b)(i)(C)
METROPOLITAN EDISON COMPANY
LESSEE'S LETTER AGREEMENT
Regarding
TMI-1 FUEL CORP.
Dated as of November 17, 1995<PAGE>
TABLE OF CONTENTS
Section Page
1. Definitions. . . . . . . . . . . . . . . . . . . . 1
2. Performance of Fuel Lease and Liens. . . . . . . . . 1
3. Security Interest of Collateral. . . . . . . . . . . 2
4. Sale of Nuclear Material and Assignment of Rights under
Nuclear Material Contracts. . . . . . . . . . . 2
5. Collateral Equivalence Test; No Additional Collateral
or Covenants; Condemnation Statements; Exercise of
Rights of Secured Parties. . . . . . . . . . . 3
6. Fuel Management; Quiet Enjoyment. . . . . . . . . . 4
7. Insurance. . . . . . . . . . . . . . . . . . . . . 5
8. Representations and Warranties. . . . . . . . . . . 5
9. General Covenants of the Lessee. . . . . . . . . . . 10
10. GPU Events . . . . . . . . . . . . . . . . . . . . . 16
11. Credit Agreement and Notes. . . . . . . . . . . . . 16
12. Consent to Assignment; Direct Payment of Payments
Under the Fuel Lease. . . . . . . . . . . . . . 16
13. Severability. . . . . . . . . . . . . . . . . . . . 17
14. Indemnification. . . . . . . . . . . . . . . . . . . 17
15. No Waiver; Amendments. . . . . . . . . . . . . . . . 19
16. Successors and Assigns. . . . . . . . . . . . . . . 19
17. Notices. . . . . . . . . . . . . . . . . . . . . . . 19
18. Set-off . . . . . . . . . . . . . . . . . . . . . . 20
19. Waiver of Jury Trial . . . . . . . . . . . . . . . . 20
20. Governing Law . . . . . . . . . . . . . . . . . . . 21
(i)<PAGE>
THIS LESSEE'S LETTER AGREEMENT (the "Letter Agreement") is
made as of November 17, 1995, by and between Metropolitan Edison
Company, a Pennsylvania corporation (the "Lessee"), TMI-1 Fuel
Corp, a Delaware corporation (the "Company"), and Union Bank of
Switzerland, New York Branch, as Administrative Agent (the
"Administrative Agent"), for the Banks party to the Credit
Agreement referred to below (the "Banks") and the Lead Managers.
WHEREAS, the Lessee has entered into the Amended and
Restated Nuclear Material Lease Agreement, dated as of
November 17, 1995 ("Fuel Lease"), with the Company in order to
enable the Company to obtain financing for the acquisition,
processing and use of Nuclear Material in the Generating
Facility; and
WHEREAS, pursuant to the Fuel Lease, the Company has agreed
to make payments due to Manufacturers and/or to reimburse the
Lessee for payments previously made to Manufacturers with respect
to the Nuclear Material; and
WHEREAS, in order to finance the cost of such Nuclear
Material, the Company proposes to (i) sell its Commercial Paper
which shall be entitled to the benefit of a letter of credit to
be issued by the Issuing Bank, and (ii) obtain the Commitment of
the Issuing Bank to issue its letter of credit and of each Bank
to make Loans from time to time as hereinafter provided; and
WHEREAS, the Lessee has agreed to make payments under the
Fuel Lease sufficient to enable the Company to meet its
obligations under the Company's financing arrangements, including
the Company's obligations under the Credit Agreement, dated as of
November 17, 1995, among the Company, the Banks, the Issuing Bank
and the Administrative Agent (the "Credit Agreement");
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein contained and other good and valuable
consideration, so long as any of the Loans, the Letter of Credit
or the Commercial Paper shall remain outstanding, or the
Commitments shall be continuing, notwithstanding any provision of
the Fuel Lease or any other agreement of the Lessee to the
contrary, the Lessee, the Company, the Administrative Agent and
the Banks agree that:
1. Definitions. Unless the context otherwise specifies or
requires, each term defined in the Credit Agreement or Appendix A
to the Fuel Lease, shall, when used in this Letter Agreement,
have the meaning indicated in the Credit Agreement or Appendix A
or set forth in the paragraph indicated therein.
2. Performance of Fuel Lease and Liens. The Lessee will
perform and comply with all the terms of the Fuel Lease to be
performed or complied with by it and will not omit to take an
action the omission of which would cause a Lease Event of
Default. The Lessee acknowledges that, except as otherwise
provided in the Fuel Lease, its obligations as set forth under
the Fuel Lease are absolute and unconditional. The Lessee will<PAGE>
2
not directly or indirectly create or permit to be created or to
remain, and will promptly take such action as may be necessary to
discharge, any Lien on any Collateral except Permitted Liens.
3. Security Interest of Collateral. The Lessee represents
that no other financing statement (other that those (i) naming
the Secured Parties as a secured party or (ii) the Prudential
Companies as a secured party which liens shall be terminated in
connection with the initial issuance of Commercial Paper)
covering all or any part of the Collateral (as defined in the
Security Agreement relating to the Lessee) is on file in any
public office. The Lessee shall make, or shall cause to be made,
all filings and recordings, and shall take, or cause to be taken,
such other actions, including filing all continuation statements,
necessary to establish, preserve and perfect the Secured Parties'
lien on and security interest in, the Collateral as a legal,
valid and enforceable first priority lien and security interest,
or purchase money security interest, as the case may be, therein,
subject only to the existence or priority of any Permitted Lien,
and the Lessee represents that all such filings, recordings and
other actions have been duly made. The Lessee shall deliver to
the Administrative Agent evidence of the due filings of any
continuation statements to be delivered to the Administrative
Agent within the time period specified in Section 8.05 of the
Credit Agreement. In no event will the Lessee permit the Nuclear
Material to enter any jurisdiction in which all necessary action
has not been taken to establish, maintain and protect the Secured
Parties' first priority perfected lien and security interest in
the Nuclear Material under the Security Agreement, subject only
to Permitted Liens.
4. Sale of Nuclear Material and Assignment of Rights under
Nuclear Material Contracts.
(a) In the event that the Lessee desires the Company,
on behalf of the Lessee, to purchase Nuclear Material or to have
services performed on such Nuclear Material pursuant to any
Nuclear Material Contract, the Lessee shall provide the Company
with an Assignment Agreement and a Manufacturer's Consent, both
substantially in the form of Exhibit D to the Fuel Lease, 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, with respect to such Nuclear Material Contract on or
before the date on which the Company is to purchase such Nuclear
Material or to have such services performed pursuant thereto.
Notwithstanding the foregoing, the Lessee shall not be required
to have obtained a Manufacturer's Consent in any instance where
the Manufacturer's obligations under the applicable Nuclear
Material Contract have been fully discharged and performed, and
the Manufacturer's warranties with respect to such Nuclear
Material Contract have expired, and the Lessee has delivered to
the Company and the Collateral Agent a certificate to such
effect.
(b) The Lessee at its expense will perform and comply
with all the terms and provisions of each Assigned Agreement to<PAGE>
3
be performed or complied with by it, will maintain each Assigned
Agreement in full force and effect, will enforce each of the
Assigned Agreements in accordance with their respective terms,
and will take all such action to that end as from time to time
may reasonably be requested by the Majority Banks.
(c) The Lessee shall not enter into or consent to or
permit any cancellation, termination, amendment, supplement or
modification of or waiver with respect to any Assigned Agreement
without the prior written consent of the Majority Banks.
(d) The Lessee will from time to time, upon request of
the Administrative Agent, furnish to the Administrative Agent
such information concerning the Nuclear Material or any Assigned
Agreement, as any Bank may reasonably request.
(e) The Lessee will not change its principal place of
business or chief executive offices from the location specified
in paragraph 8(a) hereof or remove therefrom its records
concerning the Assigned Agreements unless it gives the
Administrative Agent at least 30 days' prior written notice
thereof.
5. Collateral Equivalence Test; No Additional Collateral
or Covenants; Condemnation Statements; Exercise of Rights of
Secured Parties.
(a) The Lessee shall not permit the sum of aggregate
Stipulated Casualty Value of the Nuclear Material leased under
the Fuel Lease and the Lessee's Percentage of Cash Collateral to
be less than the Lessee's Percentage of Outstandings.
(b) The Lessee shall not provide to any Person (other
than the Banks), in order to induce such Person to extend credit
to the Company, any collateral or any guarantee or other
assurance against loss or non-payment, nor shall the Lessee
consent to the provision thereof by the Company.
(c) The Lessee shall not agree to any affirmative or
negative covenant with respect to the condition, financial or
otherwise, of the Lessee with any Person in order to induce such
Person to extend credit to the Company.
(d) The Lessee shall not sell, assign, convey, pledge
or otherwise dispose of or encumber in any manner any interest it
may have in the Trust or any rights it may have under the Trust
Agreement. The Lessee shall not direct the Owner Trustee to
liquidate, dissolve, merge or consolidate the Company except if
such transaction is consented to in writing by the Banks. The
Lessee shall not direct the Owner Trustee to take any action
under the Trust Agreement which is inconsistent with the duties
imposed upon the Company by the Basic Documents and any other
agreements, documents, instruments and articles executed and
delivered, and to be executed and delivered, by the Owner Trustee
in connection therewith.<PAGE>
4
(e) The Nuclear Material leased under the Fuel Lease
shall constitute the Lessee's entire ownership interest in the
items used or to be used by it as nuclear fuel in the Generating
Facility. The Lessee agrees that 50% of the Lessor's ownership
interest in any Nuclear Material which is subject to the Fuel
Lease will be leased to the Lessee. The Lessee further agrees
not to take any action under the terms of the Fuel Lease,
including, but not limited to, the delivery of any Leasing
Record, which would result in 50% of the Lessor's ownership
interest in any such Nuclear Material not being so leased.
(f) As provided in the Security Agreement, (i) the
Secured Parties may, on and after the occurrence of a Credit
Agreement Default, Credit Agreement Event of Default, Lessee
Default or Lessee Event of Default, pursuant to Section 10 of the
Security Agreement, exercise any and all of the Company's rights
under the Fuel Lease, the Assigned Agreements and each other
Basic Document to which the Lessee is a party, and (i) if a Lease
Event of Default occurs and is continuing, the Secured Parties
may, pursuant to Section 10 of the Security Agreement, enforce
and exercise any and all of the Company's rights under the Fuel
Lease, the Assigned Agreements and each other Basic Document to
which the Lessee is a party, or the rights and remedies granted
to the Secured Parties under the Security Agreement at their
election and in their sole discretion, and, in the event that any
Secured Parties are permitted to exercise such rights pursuant to
Section 10 of the Security Agreement, the Lessee agrees that the
Collateral Agent may do so either in concert with or in place of
the Company, and the Lessee shall assist in, comply with and
perform in accordance with all rights or remedies so enforced or
exercised by the Collateral Agent for the ratable benefit of the
Secured Parties.
6. Fuel Management; Quiet Enjoyment. The occurrence of a
Credit Agreement Default, a Credit Agreement Event of Default,
Lease Event of Default, Lessee Default, Lessee Event of Default
or an event or condition which would, with the lapse of time or
the giving of notice or both, become a Lease Event of Default,
shall not affect the Lessee's sole obligation to engage in Fuel
Management; provided that, upon the occurrence of a Credit
Agreement Event of Default, Lessee Event of Default or Lease
Event of Default, the Majority Secured Parties may, at their
option, by written notice to the Lessee, elect to revoke such
power and authority, in which case the Person from time to time
designated by the Majority Secured Parties may (but shall not be
obligated to), to the extent that the Majority Secured Parties
desire and to the extent permitted by law, engage in Fuel
Management and/or remove all or any part of the responsibility
for Fuel Management from the Lessee; provided, however, that,
subject to the right of the Secured Parties to exercise any or
all rights granted to the Secured Parties under the Security
Agreement, the rights granted to the Secured Parties under this
Section 6 shall not be construed to include the right to direct,
whether directly or indirectly, the operation of the Generating
Facility. In the event the Majority Secured Parties, in
accordance with the preceding sentence, shall revoke the Lessee's<PAGE>
5
power and authority to engage in Fuel Management, all rights
conferred by the Company to the Lessee pursuant to Section 3 of
the Fuel Lease shall be deemed to be automatically reassigned to
the Company and the Lessee shall execute such documents and
instruments as the Secured Parties shall request to further
confirm such assignment.
7. Insurance. Each year, the Lessee will furnish the
Administrative Agent and each Bank a detailed statement
certified by an officer of Lessee setting forth (i) the location
of all Nuclear Material and (i) the insurance policies and
indemnification agreements provided pursuant to Sections 14 and
17 of the Fuel Lease and certifying that such insurance policies
and indemnification agreements comply with the requirements of
the Fuel Lease. In addition, the Lessee shall promptly furnish
at any time to the Administrative Agent and any Bank such
information as any such Bank shall reasonably request concerning
location of Nuclear Material, insurance policies and
indemnification agreements and Manufacturers or other third
parties with whom arrangements exist with respect to
transportation, storage or processing of Nuclear Material.
8. Representations and Warranties. The Lessee hereby
represents and warrants to the Company, the Administrative Agent
and the Banks that as of the date hereof:
(a) Organization and Standing. The Lessee is a
corporation duly incorporated, validly existing and subsisting
under the laws of the Commonwealth of Pennsylvania, and is
qualified to do business in each state or other jurisdiction in
which the nature of its business makes such qualification
necessary, except where the failure to be so qualified would not
have a material adverse effect on its ability to perform its
obligations under this Letter Agreement or each other Basic
Document to which the Lessee is a party. The Lessee's chief
executive office is located at 2800 Pottsville Pike, Reading,
Pennsylvania 19605.
(b) Corporate Authority. The Lessee has the corporate
power and authority to execute and perform this Letter Agreement
and the Fuel Lease and to lease the Nuclear Material thereunder.
The execution and delivery of this Letter Agreement and the Fuel
Lease and the lease of the Nuclear Material thereunder will not
have a material adverse effect on the financial condition,
results of operations, business, properties or operations of the
Lessee.
(c) Compliance with Other Instruments, etc. The
execution, delivery and performance by the Lessee of this Letter
Agreement and each Basic Document to which the Lessee is a party,
and other related instruments, documents and agreements, and the
compliance by the Lessee with the terms hereof and thereof,
(i) have been duly and legally authorized by appropriate
corporate action taken by the Lessee, (i) are not in
contravention of, and will not result in a violation or breach
of, any of the terms of the Lessee's articles of incorporation,<PAGE>
6
its by-laws or of any provisions relating to shares of the
capital stock of the Lessee and (i) will not violate or
constitute a breach of any provision of (x) any applicable law,
order, rule or regulation, rule or regulation of any governmental
authority (except in those cases where non-compliance with any
such law, order, rule or regulation could not reasonably be
expected to have a material adverse effect on the financial
condition, results of operations, business, properties or
operations of the Lessee or its ability to perform its
obligations hereunder or under each Basic Document) or (y) any
indenture, agreement or other instrument to which the Lessee is
party, or by or under which the Lessee or any of the Lessee's
property is bound, or be in conflict with, result in breach of,
or constitute (with due notice and/or lapse of time) a default
under any such indenture, agreement or instrument, or result in
the creation or imposition of any Lien upon any of the Lessee's
property or assets or any Nuclear Material.
(d) Legal Obligations. This Letter Agreement and the
Fuel Lease have been executed by a duly authorized officer of the
Lessee, and this Letter Agreement and the Fuel Lease constitute,
and each Leasing Record, when executed by a duly authorized
officer of the Lessee and delivered to the Company, will
constitute, the legal, valid and binding obligations of the
Lessee, enforceable against the Lessee in accordance with their
respective terms, except as the enforceability thereof may be
limited by the Atomic Energy Act and the rules, regulations or
orders issued pursuant thereto, or by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights
in general, and except as the availability of the remedy of
specific performance is subject to general principles of equity
(regardless of whether such remedy is sought in a proceeding in
equity or at law).
(e) Governmental Consents. Neither the execution and
delivery of this Letter Agreement, the Fuel Lease or any Leasing
Record by the Lessee, nor the performance by the Lessee of all of
its obligations hereunder or thereunder, requires the consent or
approval of, the giving of notice to, or the registration, filing
or recording with, or the taking of any other action in respect
of, any Federal, state, local or foreign government or
governmental authority or agency or any other person except for
the order of the Securities and Exchange Commission (the "SEC"),
dated October 25, 1995, the filing of the supplemental order of
the SEC dated October 27, 1995, the order of the PaPUC, dated
October 13, 1995, and the filing of any statement or other
instrument pursuant to Section 10(b) of the Fuel Lease, and
except for the filing of certificates by the Lessee with the SEC
pursuant to SEC Rule 24 under the Public Utility Holding Company
Act to report on the transactions authorized by such SEC order,
the filing of which is not necessary to the execution or delivery
of this Letter Agreement, the Fuel Lease or any Leasing Record by
the Lessee or for the performance by the Lessee of any of its
obligations hereunder or thereunder, and the failure to file any
of which will not affect the validity or enforceability of any of
this Letter Agreement, the Fuel Lease or any Leasing Record.<PAGE>
7
(f) Consents and Permits. The Lessee possesses all
material licenses, permits, franchises and certificates which
are necessary or appropriate to own or operate its material
properties and assets and to conduct its business as now
conducted.
(g) Litigation. There is no litigation or other
proceeding now pending or, to the best of the Lessee's knowledge,
threatened, against or affecting the Lessee, before any court,
arbitrator or administrative or governmental agency (i) which
would adversely affect or impair the title of the Company to the
Nuclear Material, (i) which questions the validity or
enforceability of this Letter Agreement, the Fuel Lease, the
Assigned Agreements or any other Basic Document to which the
Lessee is a party or any action taken or to be taken by the
Lessee pursuant to or in connection with this Letter Agreement,
or (i) except as disclosed in the Lessee's Annual Report on Form
10-K for the year ended December 31, 1994 and Quarterly Report on
Form 10-Q for the quarter ended September 30, 1995, copies of
which have previously been delivered to the Administrative Agent
and the Banks, which, if decided adversely to the Lessee, would
materially adversely affect the condition, financial or
otherwise, of the Lessee.
(h) Taxes. The Lessee has filed or caused to be filed
all tax returns which are required to be filed, and has paid or
caused to be paid all taxes as shown on said returns and all
assessments received by it to the extent that such taxes and
assessments have become due, except for taxes and assessments
which are being contested in good faith and by appropriate
proceedings and as to which it has provided reserves which are
adequate in accordance with generally accepted accounting
principles.
(i) Reaffirmation and Restatement of Representations
and Warranties. The Lessee repeats and reaffirms as of the date
hereof for the benefit of the Administrative Agent and each Bank
the representations and warranties made by the Lessee in the Fuel
Lease as though set forth in full herein with the same effect as
though such representations and warranties had been made on and
as of the date hereof. In addition, the Lessee represents and
warrants that as of the date hereof (i) the Lessee is in
compliance with all the terms and provisions set forth in the
Fuel Lease on its part to be observed or performed, (i) no
Terminating Event has occurred and no event has occurred which,
with the lapse of time or the giving of notice, or both, would
constitute such a Terminating Event, and (i) no Lease Event of
Default has occurred and is continuing and no event has occurred
and is continuing on such date which, with the lapse of time or
the giving of notice, or both, would constitute a Lease Event of
Default.
(j) First Perfected Security Interest. Except for
Permitted Liens, upon the execution and delivery of this Letter
Agreement and the Security Agreement and the due filing of the
Uniform Commercial Code financing statements required to be<PAGE>
8
executed and filed from time to time, the Secured Parties will
have a legal, valid and enforceable first priority security
interest (i) in the rights, titles and interests of the Company
in and to the Fuel Lease and (i) in and to the other Collateral.
Such security interest will constitute a perfected security
interest in the Collateral consisting of Nuclear Material
Contracts and the Collateral consisting of Nuclear Material
located in the States of Illinois, Kentucky, Ohio, Pennsylvania,
and Virginia except for any such Collateral which consists of
cash, instruments (as defined in the New York Uniform Commercial
Code) and other items in which a security interest may only be
perfected by possession, enforceable against all third parties as
security for the Secured Obligations.
(k) No Material Adverse Change. Since June 30, 1995,
there has been no material adverse change in the financial
condition, results of operations, business, properties or
operations of the Lessee or in its ability to perform its
obligations under the Basic Documents.
(l) No Defaults. The Lessee is not in default under
any bond, debenture, note or any other evidence of Obligations
for Borrowed Money or Deferred Purchase Price or any mortgage,
deed of trust, indenture, loan agreement or other agreement
relating thereto, where the amount thereof is in excess of
$20,000,000.
(m) Pension Plans. No accumulated funding deficiency
(as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, exists with respect to any plan (other
than a multiemployer plan). No liability to the Pension Benefit
Guaranty Corporation has been, or is expected by the Lessee to
be, incurred with respect to any plan (other than a multiemployer
plan) by the Lessee which is or would be materially adverse to
the Lessee. The Lessee has not incurred and presently does not
expect to incur any withdrawal liability under Title IV of ERISA
with respect to any multiemployer plan which is or would be
materially adverse to the Lessee. Neither the execution and
delivery by the Company of the Credit Agreement and the other
Basic Documents, and the issuance of the Commercial Paper, nor
the execution and delivery by the Lessee of this Letter
Agreement, the Trust Agreement and each other Basic Document to
which the Lessee is a party, will involve any transaction which
is subject to the prohibitions of Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to
Section 4975. As used herein, the term "plan" shall mean an
"employee pension benefit plan" (as defined in Section 3 of
ERISA) which is and has been established or maintained, or to
which contributions are or have been made, by the Lessee or by
any trade or business, whether or not incorporated, which,
together with the Lessee is under common control as described in
Section 414(b) or (c) of the Code, and the term "multiemployer
plan" shall mean any plan which is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).<PAGE>
9
(n) Financial Statements. The audited balance sheet
of the Lessee as of December 31, 1994, and the related statements
of income and cash flows (including the notes thereto) of the
Lessee for the year then ended, copies of which have been
delivered to the Company, the Administrative Agent and the Banks,
and all other annual or quarterly financial statements including,
without limitation, the quarterly statement dated as of June 30,
1995 so delivered fairly present the financial condition of the
Lessee on the dates for which, and the results of its operations
for the periods for which, the same have been furnished and have
been prepared in accordance with generally accepted accounting
principles consistently applied.
(o) Nuclear Material. The Nuclear Material is free
and clear of any Lien in favor of any Person claiming by, through
or under the Lessee or any Affiliate thereof, other than
Permitted Liens. No default or event which with the giving of
notice or lapse of time would constitute a default has occurred
and is continuing under any Nuclear Material Contract.
(p) Disclosure. Neither the representations in this
Letter Agreement, or in any other document, certificate or
statement furnished in writing to the Administrative Agent or any
Bank by or on behalf of the Lessee in connection with the
transactions contemplated hereby, nor the information disclosed
in the Lessee's Annual Report on Form 10-K for the year ended
December 31, 1994 or Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995, contained as of its date, any untrue
statement of a material fact or omitted to state a material fact
necessary in order to make such representations or information
not misleading in light of the circumstances under which they
were made.
(q) Collateral Equivalence Test Met. The sum of the
aggregate Stipulated Casualty Value of the Nuclear Material
leased under the Fuel Lease and the Lessee's Percentage of the
Cash Collateral equals or exceeds the Lessee's Percentage of
Outstandings.
9. General Covenants of the Lessee.
(a) Information. The Lessee will furnish to the
Company and the Administrative Agent in sufficient copies for
each Bank:
(i) Quarterly Statements. As soon as practicable
after the end of each of the first three quarterly fiscal
periods in each fiscal year of the Lessee, and in any event
within 60 days thereafter, copies of:
(A) a balance sheet of the Lessee as at the end of
such quarter, and (B) statements of income and cash
flows of the Lessee for such quarter and for the
twelve-month period ending as of the end of such
quarter and (in the case of the second and third
quarters) for the portion of the fiscal year ending<PAGE>
10
with the end of such quarter, setting forth in each
case in comparative form the figures for the
corresponding periods in the previous fiscal year, all
in reasonable detail and certified as complete and
correct, subject to changes resulting from year-end
adjustments, by a principal financial officer of the
Lessee; provided that it is understood that the
delivery of the Lessee's Quarterly Report on Form 10-Q
shall be deemed to satisfy the requirements with
respect to such financial statements;
(ii) Annual Statements. As soon as practicable after
the end of each fiscal year of the Lessee, and in any event
within 120 days thereafter, copies of:
(A) a balance sheet of the Lessee at the end of such
fiscal year, and (B) statements of income and cash
flows of the Lessee for such year, setting forth in
each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and
accompanied by an opinion thereon of independent
certified public accountants of recognized national
standing selected by the Lessee, which opinion shall
state that such financial statements have been prepared
in accordance with generally accepted accounting
principles consistently applied (except for changes in
application in which such accountants concur) and that
the examination of such accountants in connection with
such financial statements has been made in accordance
with generally accepted auditing standards; provided
that it is understood that the delivery of the Lessee's
Annual Report on Form 10-K shall be deemed to satisfy
the requirement with respect to such financial
statements;
(iii) Officer's Compliance Certificate.
Simultaneously with the financial statements referred to in
Sections 9(a)(i) and (ii), a certificate of an authorized
officer of the Lessee stating that such officer has reviewed
the relevant terms and conditions of the Fuel Lease and
other Basic Documents to which the Lessee is a party, and
has made, or caused to be made, under such officer's
supervision, a review of the transactions and financial
condition of the Lessee from the beginning of the accounting
period covered by the income statements being delivered
therewith to the date of the certificate, and that the
Lessee has observed or performed all of its covenants and
other agreements, and satisfied every condition, contained
in this Letter Agreement, the Fuel Lease and any other Basic
Document to which the Lessee is a party, and no Terminating
Event, Lessee Default, Lessee Event of Default, Lease Event
of Default or default or event of default under any such
Basic Document has occurred and is continuing and no event
has occurred and is continuing which, with the lapse of time
or the giving of notice, or both, would constitute a
Terminating Event, Lessee Default, Lessee Event of Default,<PAGE>
11
Lease Event of Default or a default or event of default
under any such Basic Document or, if such condition or event
has occurred and is continuing, a statement as to the nature
thereof and the action which is proposed to be taken with
respect thereto;
(iv) Auditor's Compliance Certificate. Simultaneously
with the financial statements referred to in Section
9(a)(ii), a certificate of the independent public
accountants who audited such statements stating that such
accountants have reviewed the relevant terms and conditions
of the Fuel Lease and other Basic Agreements to which the
Lessee is a party, and that, in making the examination
necessary for the audit of such statements, they have
obtained no knowledge of any condition or event which
constitutes or which with notice or lapse of time or both
would constitute a Terminating Event, Lessee Default, Lessee
Event of Default, Lease Event of Default or default or event
of default under any such Basic Document, or if such
accountants shall have obtained knowledge of any such
condition or event, specifying in such certificate each such
condition or event of which they have knowledge and the
nature and status thereof;
(v) Notices Required under the Basic Documents.
Immediately upon delivery to the Lessee or the Company, all
notices, consents, documents, certificates or instruments of
any kind relating to the Lessee required pursuant to the
Fuel Lease;
(vi) Defaults. (A) Promptly upon becoming aware of the
occurrence thereof, notice of any Terminating Event, Lessee
Default, Lessee Event of Default, Lease Event of Default or
any event which, with the lapse of time or the giving of
notice, or both, would constitute a Terminating Event or a
Lease Event of Default, and (A) within 10 days of becoming
aware of the occurrence thereof, notice of any other
material event affecting the Lessee's obligations under any
Basic Document or any Nuclear Material Contract (except to
the extent such event has previously been disclosed in the
Lessee's SEC reports delivered pursuant to clause (viii)
below);
(vii) Notice of Claimed Default. Immediately upon
becoming aware that the holder or holders of any evidence of
Obligations for Borrowed Money or Deferred Purchase Price or
other security of the Lessee or any subsidiary exceeding
$20,000,000 in the aggregate have given notice (or taken any
other action) with respect to a claimed default, breach or
event of default, a notice describing the notice given (or
action taken) and the nature of the claimed default, breach,
or event of default;
(viii) SEC and Other Reports. Promptly after filing
thereof, copies of all regular and periodic reports and
registration statements which the Lessee may file with the<PAGE>
12
Securities and Exchange Commission ("SEC") or any
governmental agency substituted therefor and, promptly upon
written request therefor, copies of the financial statements
which the Lessee may file annually with any state regulatory
agency or agencies; and
(ix) Requested Information. With reasonable
promptness, such other data and information, including,
without limitation, information regarding Nuclear Material
or any Nuclear Material Contract, with respect to the
Lessee as from time to time may be reasonably requested by
the Administrative Agent or any Bank.
(b) Notice of Litigation. Immediately upon the Lessee
becoming aware thereof, written notice of (i) any litigation or
proceedings which would be required to be disclosed as an
exception to the representations and warranties contained herein
or in the Fuel Lease in order that such representations and
warranties would be true and correct on a continuing basis; and
(i) any dispute between the Lessee and any governmental authority
or other party relating to any part of the transactions
contemplated by this Letter Agreement or any of the other Basic
Documents to which the Lessee is a party which would have a
material adverse effect on the ability of the Lessee to carry out
its obligations hereunder or under any other Basic Document to
which the Lessee is a party; provided, however, that the notice
requirement in this Section 9(b) shall be satisfied if the Lessee
furnishes the Company and the Administrative Agent in sufficient
copies for each Bank a Current Report on Form 8-K regarding the
event requiring notice by the time that the Current Report is
required to be filed with the Securities and Exchange Commission.
(c) General Obligations. Subject to the last sentence of
this Section 9(c), the Lessee will:
(i) duly comply with all laws, rules, orders, regulations
or other valid requirements (including, without
limitation, any of the foregoing which are applicable
to Nuclear Material or the operation of the
Generating Facility) of any governmental authority
necessary to the conduct of its business or to its
properties or assets, noncompliance with which could
reasonably be expected to have a material adverse
effect upon the transactions contemplated by this
Letter Agreement or any other Basic Document, or upon
the financial condition, results of operations,
business, properties or operations of the Lessee, or
the ability of the Lessee to carry out its
obligations under any Basic Document or this Letter
Agreement);
(ii) continue to engage principally in the electric
utility business;
(iii) obtain, maintain and keep in full force and effect
all consents, permits, licenses and approvals, the<PAGE>
13
absence of which would have a material adverse
effect upon the transactions contemplated by this
Letter Agreement or any other Basic Document to
which the Lessee is a party, or upon the financial
condition, results of operations, business,
properties or operations of the Lessee, or the
ability of the Lessee to carry out its obligations
under this Letter Agreement or any other Basic
Document to which the Lessee is a party;
(iv) maintain its material operating properties used or
useful in its business in good repair, working
order and condition consistent with prudent
utility practice; provided, however, that the
Lessee shall not be prevented from discontinuing
the operation and maintenance of any of its
properties if it shall determine that the
continued operation and maintenance of such
properties is no longer necessary, desirable or
permissible;
(v) pay when due all fees, taxes, assessments and
governmental charges or levies imposed upon it or
upon its income or profits or upon any property
belonging to it, and maintain appropriate reserves
for the accrual of the same in accordance with
generally accepted accounting principles;
(vi) except as permitted by clause (vii) below, at all
times maintain its corporate existence,
privileges, franchises and rights to carry on
business, and duly procure all renewals and
extensions thereof, if and when any shall be
necessary;
(vii) not consolidate or merge with, or sell or
otherwise dispose of all or substantially all of
its properties and assets to any Person unless
(i) the surviving or resulting entity is the
Lessee hereunder, (i) immediately after giving
effect thereto no Credit Agreement Event of
Default, Credit Agreement Default, Lease Event of
Default, Lessee Default, Lessee Event of Default
or event which with the giving of notice or
passage of time would constitute a Lease Event of
Default shall have occurred and be continuing, and
(i) the senior unsecured debt of the surviving or
resulting Lessee shall be rated at least
investment grade by S&P or Moody's;
(viii) perform and comply with each of the material
provisions of each material indenture, credit
agreement, contract or other agreement by which
the Lessee is bound, non-performance or non-
compliance with which would have a material
adverse effect upon its business or credit or in<PAGE>
14
any way affect its ability to perform its
obligations hereunder except material contracts or
other agreements being contested in good faith;
(ix) preserve and maintain its corporate existence in
the jurisdiction of its incorporation, and qualify
and remain qualified as a foreign corporation in
good standing in each jurisdiction in which such
qualification is necessary or desirable in view of
its business and operations or the ownership of
its properties, except where the failure to be so
qualified would not materially adversely affect
its financial condition, operations, properties or
business, and preserve its material rights,
franchises and privileges to conduct its business
substantially as conducted on the date hereof;
(x) maintain insurance in effect at all times in such
amounts as are available to the Lessee and covering
such risks as is usually carried by companies of a
similar size, engaged in similar businesses and
owning similar properties (including, without
limitation, the operation and ownership of nuclear
generating facilities) in the same general
geographical area in which the Lessee operates,
either with responsible and reputable insurance
companies or associations, or, in whole or in part,
by establishing reserves of one or more insurance
funds, either alone or with other corporations or
associations;
(xi) at any reasonable time and from time to time,
permit the Administrative Agent or any Bank or any
agents or representatives thereof to examine and
make copies of and abstracts from the records and
books of account of, and visit the properties of,
the Lessee and discuss the affairs, finances and
accounts of the Lessee with any of its officers or
directors;
(xii) not sell, transfer, lease, assign or otherwise
convey or dispose of more than 25% of its assets
(whether now owned or hereafter acquired), in any
single or series of transactions, whether or not
related, except for dispositions of current assets
in the ordinary course of business as presently
conducted, if immediately prior to such sale,
transfer, lease, assignment, conveyance or
disposition or as a result of such sale, transfer,
lease, assignment, conveyance or disposition, the
senior unsecured debt of the Lessee shall not be
rated at least investment grade by S&P or Moody's.
(xiii) comply with the Letter Agreement and such other
Basic Documents to which the Lessee is a party in<PAGE>
15
accordance with the respective terms and
conditions set forth herein and therein; and
(xiv) except for Permitted Liens, permit the creation of
any Liens on the Collateral.
Notwithstanding the foregoing provisions of this Section 9(c),
the Lessee may contest by appropriate proceedings conducted in
good faith and due diligence, the amount, validity or
application, in whole or in part of any fee, tax, assessment or
government charge or levy, or any legal requirement, provided
that the Lessee shall have set aside on its books adequate
reserves, if required in accordance with generally accepted
accounting principles with respect thereto and shall furnish such
security, if any, as may be required in the proceeding.
10. GPU Events. It shall be a default hereunder if
General Public Utilities Corporation (a) fails to maintain at all
times beneficial ownership of at least 75% of all outstanding
shares of common stock of each of the Lessee, JCP&L and PE; or
(b) pledges, grants options on, create any charge on or security
interest in, or otherwise subjects to any charge or encumbrance,
any of the common stock of the Lessee, JCP&L or PE unless the
obligations hereunder are secured ratably and with equal
priority, in form and substance reasonably satisfactory to the
Majority Banks.
11. Credit Agreement and Notes. The Lessee hereby
acknowledges receipt of executed counterparts of the Credit
Agreement and photostatic copies of the Notes evidencing the
Loans, and consents to all of the terms and provisions of the
Credit Agreement and the Notes.
12. Consent to Assignment; Direct Payment of Payments
Under the Fuel Lease.
(a) Consent to Assignment. The Lessee hereby
acknowledges notice of and consents to all the terms and
provisions of the Security Agreement and hereby confirms to and
agrees with the Secured Parties that all representations,
warranties, indemnities and agreements of the Lessee contained in
this Letter Agreement and each other Basic Document to which the
Lessee is a party shall inure to the benefit of, and shall be
enforceable by, the Secured Parties to the same extent as if such
Secured Parties were originally parties to or named in the such
documents and agreements. The Lessee further acknowledges and
consents to the assignment and transfer, and any future
assignments and transfers, to the Secured Parties by the Company
of the Company's right to exercise any and all of its rights,
remedies, powers and privileges (but none of its obligations,
duties or liabilities) under the Fuel Lease, the Assigned
Agreements and each other Basic Document to which the Lessee is a
party. The Lessee hereby agrees with the Secured Parties to
comply with any exercise by the Secured Parties, either directly
or through the Company, of any rights, remedies, powers or
privileges pursuant to the Security Agreement. The Secured<PAGE>
16
Parties acknowledge that neither the Security Agreement nor this
Section 12 shall in any way add to the obligations of the Lessee
(except those obligations of the Lessee to any Person, which, if
not previously so, hereby become enforceable directly by the
Secured Parties) under the Fuel Lease, the Assigned Agreements
and each other Basic Document to which the Lessee is a party.
Notwithstanding the foregoing, so long as no Lease Event of
Default shall have occurred and be continuing, the Lessee shall
have exclusive right to possession and use of the Nuclear
Material in accordance with the Fuel Lease and may use such
Nuclear Material for any lawful purpose consistent with the Fuel
Lease.
(b) Direct Payment of Payments Under the Fuel Lease. The
Lessee acknowledges that it has been directed by the Company to,
and agrees that it will, make all payments of monies due and to
become due to the Company under the Fuel Lease, the Assigned
Agreements and each other Basic Document to which the Lessee is a
party, directly to the Collateral Agent, including, without
limitation, Basic Rent, Additional Rent, the purchase price of
Nuclear Material pursuant to Section 8(c), 8(d), 8(e) and 8(g) of
the Fuel Lease, payments pursuant to Sections 9(e), 14, 17 and 18
of the Fuel Lease in the manner and to the accounts of the
Secured Parties as specified in Section 3.03 of the Credit
Agreement.
13. Severability. Any provision of this Letter 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.
14. Indemnification. The Lessee shall pay and indemnify
and hold harmless the Administrative Agent and each Bank, and
their respective officers, directors, incorporators,
shareholders, partners, employees, agents and servants from and
against any and all liabilities (other than liabilities arising
out of the gross negligence or willful misconduct of such
Person), taxes, (excluding, however, taxes measured solely by the
net income of any Person indemnified or intended to be
indemnified pursuant to this Section 14, except as otherwise
provided in Section 14 hereof), losses, obligations, claims,
damages, penalties, causes of action, suits, costs and expenses
(including, without limitation, reasonable attorneys' and
accountants' fees and expenses) and judgments of any nature
arising from or in any way relating to any and all of the
following during the term of the Fuel Lease and thereafter:
(a) 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 (as that term is defined in the Atomic
Energy Act, 42 U.S.C. Paragraph 2011 et seq.) involving or<PAGE>
17
connected in any way with the Nuclear Material or any portion
thereof, (a) the acquisition, ownership (including strict
liability of an owner or liability without fault), possession,
disposition, sale, use, nonuse, misuse, leasing, fabrication,
design, cycling, recycling, transportation, containerization,
cooling, processing, reprocessing, storing, condition,
management, operation, construction, maintenance, repair or
rebuilding of the Nuclear Material or any portion thereof or
resulting from the condition of adjoining and underlying land,
buildings, streets or ways, (a) any use, nonuse or condition of,
or any other matter of circumstance relating to, the Generating
Facility, any other property associated therewith or any
adjoining and underlying land, buildings, streets and ways,
(a) any violation or default, or alleged violation or default, of
the Fuel Lease or this Letter Agreement by or on behalf of
Lessee, or of any contracts or agreements to which the Lessee is
a party or by which it is bound, or any Legal Requirements,
(a) performance of any labor or services or the furnishing of any
materials or other property in respect of the Nuclear Material or
any portion thereof, (a) any infringement or alleged infringement
of any patent, copyright, trade secret or other similar right
relating to the Nuclear Material or any portion thereof,
(a) Lessee's agreements or obligations contained in the Fuel
Lease or this Letter Agreement, (a) any claim arising out of loss
of damage to the environment, (a) any claim arising out of strict
or absolute liability in tort, or (a) the offering and sale of
Commercial Paper. The Lessee also indemnifies each indemnitee,
as aforesaid, from and against all other liabilities, taxes,
losses, obligations, claims, damages, penalties, causes of
action, suits, costs and expenses (including, without limitation,
reasonable attorneys' and accountants' fees and expenses) and
judgments of any nature which may be imposed on, incurred by, or
asserted at any time against any indemnitee in any way relating
to or arising out of the performance of this Letter Agreement,
the Fuel Lease or any other Basic Document to which Lessee is a
party, provided, except for claims of a nature contemplated by
(i) above, that the Lessee shall not be required to indemnify any
indemnitee with respect to any liability relating to or arising
out of indemnitee's gross negligence or willful misconduct and
provided, further, that the foregoing immunity shall not limit
the terms of any indemnity that the Lessee may grant separately
to any indemnitee pursuant to any separate agreement. In the
event that any action, suit or proceeding is brought against the
Company or any other Person indemnified or intended to be
indemnified pursuant to this Section 14 by reason of any such
occurrence, the Lessee shall, at the Lessee's expense, resist and
defend such action, suit or proceeding or cause the same to be
resisted and defended by counsel designated by the Lessee and
reasonably acceptable to the Person or Persons indemnified or
intended to be indemnified under this Section 14 provided there
is no conflict of interest with the Person or Persons indemnified
or intended to be indemnified under this Section 14. In the
event a conflict of interest contemplated by the proviso of the
immediately preceding sentence shall exist, then the Person or
Persons as to which such conflict exists may be defended by
counsel of its or their choice at Lessee's expense, provided<PAGE>
18
Lessee's obligation for such expense shall be limited to one firm
for all such Persons as to which such a conflict exists. The
obligations of the Lessee under this Section 14 shall survive any
termination of this Letter Agreement, the Credit Agreement, the
Fuel Lease or the Security Agreement, in whole or in part.
15. No Waiver; Amendments. Neither the Administrative
Agent, the Collateral Agent, the Banks, the Company nor the
Lessee shall, by any act, delay, omission or otherwise, be deemed
to have waived any of its rights and remedies hereunder, and no
waiver shall be valid unless in writing signed by the party or
parties sought to be bound thereby. A waiver by the
Administrative Agent, the Collateral Agent, the Banks, the
Company or the Lessee of any of their respective rights or
remedies hereunder on any one occasion shall not be construed as
a bar to any right or remedy which the Administrative Agent, the
Banks, the Company or the Lessee, as applicable, would otherwise
have had on any future occasion. No failure to exercise nor any
delay in exercise of any such right or remedy hereunder shall
preclude any other or future exercise or partial exercise of any
other right or remedy. The rights and remedies hereunder
provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies
provided by law. None of the terms or provisions of this Letter
Agreement may be waived, altered, modified or amended except by
an instrument in writing, duly executed by the party or parties
sought to be bound thereby.
16. Successors and Assigns. This Letter Agreement shall
bind the successors and assigns of the Lessee and the Company and
shall inure to the benefit of permitted successors and assigns
of either. The Letter Agreement shall not be assignable by the
Lessee or the Company, either voluntarily or by operation of law,
unless consented to by the Administrative Agent and the Majority
Banks. No permitted assignment by the Lessee or the Company
shall release the Lessee or the Company from any of its
obligations hereunder. This Letter Agreement shall inure to and
shall be binding upon the successors and assigns of the
Administrative Agent and the Banks.
17. Notices. Any notice, demand or other communication
which by any provision of this Letter Agreement is required or
provided to be given shall be deemed to have been delivered if in
writing addressed as provided below and actually delivered by
mail, courier or facsimile to the following addresses:
(a) except as otherwise requested in writing by the
Administrative Agent or any Bank, any notice, demand
or communication which by any provision of this
Letter Agreement is required or provided to be given
to the Administrative Agent or any Bank shall be
deemed to have been delivered to the Administrative
Agent or any Bank if a single copy thereof is
delivered to the Administrative Agent at its address
set forth in Section 12.01 of the Credit Agreement or<PAGE>
19
at such other address as either may have furnished
the Company and the Lessee in writing;
(b) if to the Company (with copies to the Lessee at the
address listed below), TMI-1 Fuel Corp. c/o United
States Trust Company of New York, 114 West 47th
Street, New York, New York 10036, marked for the
attention of the Corporate Trust and Agency Division,
telecopy number 212-852-1626, or at such other
address as it may have furnished in writing to the
Administrative Agent and the Lessee; or
(c) if to the Lessee, to Metropolitan Edison Company,
2800 Pottsville Pike, Reading, Pennsylvania 19605;
Attention: Comptroller; Telecopier: (610) 921-6676,
and to GPU Service Corporation, 100 Interpace
Parkway, Parsippany, New Jersey 07054-1149, marked
for the attention of the Assistant Treasurer,
Telecopier: (201) 263-6397, or at such other address
or addresses as the Lessee may have furnished to the
Administrative Agent and the Company.
18. Set-off. (a) Lessee hereby acknowledges and agrees
to the set-off rights against it as provided for in Section 12.08
of the Credit Agreement.
(b) Lessee agrees that it shall have no right of set-off,
deduction or counterclaim in respect of its obligations
hereunder, and that the obligations of the Banks hereunder and
under the Credit Agreement are several and not joint. Nothing
contained herein shall constitute a relinquishment or waiver of
the Lessee's rights to any independent claim that the Lessee may
have against the Administrative Agent or any Bank for the
Administrative Agent's or such Bank's, as the case may be, gross
negligence or wilful misconduct, but no Bank shall be liable for
the conduct of the Administrative Agent or any other Bank, and
the Administrative Agent shall not be liable for the conduct of
any Bank.
19. Waiver of Jury Trial. Lessee irrevocably waives all
right to trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Letter Agreement, the Credit
Agreement, the other Basic Documents or any instrument or
document delivered hereunder or thereunder, except that the
foregoing shall not preclude any party hereto from submitting to
a jury for determination in any such action, proceeding or
counterclaim any dispute involving (a) the accuracy or
completeness of any representation or warranty made under the
Basic Documents by Lessee, (b) the performance by Lessee of any
affirmative or negative covenant or agreement contained in the
Basic Documents, or (c) questions of materiality, or the
reasonableness of, or good faith basis for, any action taken, or
determination made, by any other party hereto (other than in
respect of any calculation of principal, interest, fees, or
increased costs payable by the Lessee under the Basic Documents).<PAGE>
20
20. Governing Law. This Letter Agreement shall be
governed by, and be construed and interpreted in accordance with
the laws of the State of New York.<PAGE>
S-1
IN WITNESS WHEREOF, the undersigned have caused this
Letter Agreement to be executed as of the date first above
written.
METROPOLITAN EDISON COMPANY
By
Vice President
TMI-1 FUEL CORP.
By
Title
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH,
as Administrative Agent
By
Title
By
Title <PAGE>
EXHIBIT B-2(b)(i)(D)
PENNSYLVANIA ELECTRIC COMPANY
LESSEE'S LETTER AGREEMENT
Regarding
TMI-1 FUEL CORP.
Dated as of November 17, 1995<PAGE>
TABLE OF CONTENTS
Section Page
1. Definitions. . . . . . . . . . . . . . . . . . . . 1
2. Performance of Fuel Lease and Liens. . . . . . . . . 1
3. Security Interest of Collateral. . . . . . . . . . . 2
4. Sale of Nuclear Material and Assignment of Rights under
Nuclear Material Contracts. . . . . . . . . . . . . 2
5. Collateral Equivalence Test; No Additional Collateral
or Covenants; Condemnation Statements; Exercise of
Rights of Secured Parties. . . . . . . . . . . . . . 3
6. Fuel Management; Quiet Enjoyment. . . . . . . . . . 4
7. Insurance. . . . . . . . . . . . . . . . . . . . . 5
8. Representations and Warranties. . . . . . . . . . . 5
9. General Covenants of the Lessee. . . . . . . . . . . 10
10. GPU Events . . . . . . . . . . . . . . . . . . . . . 16
11. Credit Agreement and Notes. . . . . . . . . . . . . 16
12. Consent to Assignment; Direct Payment of Payments
Under the Fuel Lease. . . . . . . . . . . . . . . . 16
13. Severability. . . . . . . . . . . . . . . . . . . . 17
14. Indemnification. . . . . . . . . . . . . . . . . . . 17
15. No Waiver; Amendments. . . . . . . . . . . . . . . . 19
16. Successors and Assigns. . . . . . . . . . . . . . . 19
17. Notices. . . . . . . . . . . . . . . . . . . . . . . 19
18. Set-off . . . . . . . . . . . . . . . . . . . . . . 20
19. Waiver of Jury Trial . . . . . . . . . . . . . . . . 20
20. Governing Law . . . . . . . . . . . . . . . . . . . 21
(i)<PAGE>
THIS LESSEE'S LETTER AGREEMENT (the "Letter Agreement") is
made as of November 17, 1995, by and between Pennsylvania
Electric Company, a Pennsylvania corporation (the "Lessee"), TMI-
1 Fuel Corp, a Delaware corporation (the "Company"), and Union
Bank of Switzerland, New York Branch, as Administrative Agent
(the "Administrative Agent"), for the Banks party to the Credit
Agreement referred to below (the "Banks") and the Lead Managers.
WHEREAS, the Lessee has entered into the Amended and
Restated Nuclear Material Lease Agreement, dated as of
November 17, 1995 ("Fuel Lease"), with the Company in order to
enable the Company to obtain financing for the acquisition,
processing and use of Nuclear Material in the Generating
Facility; and
WHEREAS, pursuant to the Fuel Lease, the Company has agreed
to make payments due to Manufacturers and/or to reimburse the
Lessee for payments previously made to Manufacturers with respect
to the Nuclear Material; and
WHEREAS, in order to finance the cost of such Nuclear
Material, the Company proposes to (i) sell its Commercial Paper
which shall be entitled to the benefit of a letter of credit to
be issued by the Issuing Bank, and (ii) obtain the Commitment of
the Issuing Bank to issue its letter of credit and of each Bank
to make Loans from time to time as hereinafter provided; and
WHEREAS, the Lessee has agreed to make payments under the
Fuel Lease sufficient to enable the Company to meet its
obligations under the Company's financing arrangements, including
the Company's obligations under the Credit Agreement, dated as of
November 17, 1995, among the Company, the Banks, the Issuing Bank
and the Administrative Agent (the "Credit Agreement");
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein contained and other good and valuable
consideration, so long as any of the Loans, the Letter of Credit
or the Commercial Paper shall remain outstanding, or the
Commitments shall be continuing, notwithstanding any provision of
the Fuel Lease or any other agreement of the Lessee to the
contrary, the Lessee, the Company, the Administrative Agent and
the Banks agree that:
1. Definitions. Unless the context otherwise specifies or
requires, each term defined in the Credit Agreement or Appendix A
to the Fuel Lease, shall, when used in this Letter Agreement,
have the meaning indicated in the Credit Agreement or Appendix A
or set forth in the paragraph indicated therein.
2. Performance of Fuel Lease and Liens. The Lessee will
perform and comply with all the terms of the Fuel Lease to be
performed or complied with by it and will not omit to take an<PAGE>
2
action the omission of which would cause a Lease Event of
Default. The Lessee acknowledges that, except as otherwise
provided in the Fuel Lease, its obligations as set forth under
the Fuel Lease are absolute and unconditional. The Lessee will
not directly or indirectly create or permit to be created or to
remain, and will promptly take such action as may be necessary to
discharge, any Lien on any Collateral except Permitted Liens.
3. Security Interest of Collateral. The Lessee represents
that no other financing statement (other that those (i) naming
the Secured Parties as a secured party or (ii) the Prudential
Companies as a secured party which liens shall be terminated in
connection with the initial issuance of Commercial Paper)
covering all or any part of the Collateral (as defined in the
Security Agreement relating to the Lessee) is on file in any
public office. The Lessee shall make, or shall cause to be made,
all filings and recordings, and shall take, or cause to be taken,
such other actions, including filing all continuation statements,
necessary to establish, preserve and perfect the Secured Parties'
lien on and security interest in, the Collateral as a legal,
valid and enforceable first priority lien and security interest,
or purchase money security interest, as the case may be, therein,
subject only to the existence or priority of any Permitted Lien,
and the Lessee represents that all such filings, recordings and
other actions have been duly made. The Lessee shall deliver to
the Administrative Agent evidence of the due filings of any
continuation statements to be delivered to the Administrative
Agent within the time period specified in Section 8.05 of the
Credit Agreement. In no event will the Lessee permit the Nuclear
Material to enter any jurisdiction in which all necessary action
has not been taken to establish, maintain and protect the Secured
Parties' first priority perfected lien and security interest in
the Nuclear Material under the Security Agreement, subject only
to Permitted Liens.
4. Sale of Nuclear Material and Assignment of Rights under
Nuclear Material Contracts.
(a) In the event that the Lessee desires the Company,
on behalf of the Lessee, to purchase Nuclear Material or to have
services performed on such Nuclear Material pursuant to any
Nuclear Material Contract, the Lessee shall provide the Company
with an Assignment Agreement and a Manufacturer's Consent, both
substantially in the form of Exhibit D to the Fuel Lease, 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, with respect to such Nuclear Material Contract on or
before the date on which the Company is to purchase such Nuclear
Material or to have such services performed pursuant thereto.
Notwithstanding the foregoing, the Lessee shall not be required
to have obtained a Manufacturer's Consent in any instance where
the Manufacturer's obligations under the applicable Nuclear<PAGE>
3
Material Contract have been fully discharged and performed, and
the Manufacturer's warranties with respect to such Nuclear
Material Contract have expired, and the Lessee has delivered to
the Company and the Collateral Agent a certificate to such
effect.
(b) The Lessee at its expense will perform and comply
with all the terms and provisions of each Assigned Agreement to
be performed or complied with by it, will maintain each Assigned
Agreement in full force and effect, will enforce each of the
Assigned Agreements in accordance with their respective terms,
and will take all such action to that end as from time to time
may reasonably be requested by the Majority Banks.
(c) The Lessee shall not enter into or consent to or
permit any cancellation, termination, amendment, supplement or
modification of or waiver with respect to any Assigned Agreement
without the prior written consent of the Majority Banks.
(d) The Lessee will from time to time, upon request of
the Administrative Agent, furnish to the Administrative Agent
such information concerning the Nuclear Material or any Assigned
Agreement, as any Bank may reasonably request.
(e) The Lessee will not change its principal place of
business or chief executive offices from the location specified
in paragraph 8(a) hereof or remove therefrom its records
concerning the Assigned Agreements unless it gives the
Administrative Agent at least 30 days' prior written notice
thereof.
5. Collateral Equivalence Test; No Additional Collateral
or Covenants; Condemnation Statements; Exercise of Rights of
Secured Parties.
(a) The Lessee shall not permit the sum of aggregate
Stipulated Casualty Value of the Nuclear Material leased under
the Fuel Lease and the Lessee's Percentage of Cash Collateral to
be less than the Lessee's Percentage of Outstandings.
(b) The Lessee shall not provide to any Person (other
than the Banks), in order to induce such Person to extend credit
to the Company, any collateral or any guarantee or other
assurance against loss or non-payment, nor shall the Lessee
consent to the provision thereof by the Company.
(c) The Lessee shall not agree to any affirmative or
negative covenant with respect to the condition, financial or
otherwise, of the Lessee with any Person in order to induce such
Person to extend credit to the Company.<PAGE>
4
(d) The Lessee shall not sell, assign, convey, pledge
or otherwise dispose of or encumber in any manner any interest it
may have in the Trust or any rights it may have under the Trust
Agreement. The Lessee shall not direct the Owner Trustee to
liquidate, dissolve, merge or consolidate the Company except if
such transaction is consented to in writing by the Banks. The
Lessee shall not direct the Owner Trustee to take any action
under the Trust Agreement which is inconsistent with the duties
imposed upon the Company by the Basic Documents and any other
agreements, documents, instruments and articles executed and
delivered, and to be executed and delivered, by the Owner Trustee
in connection therewith.
(e) The Nuclear Material leased under the Fuel Lease
shall constitute the Lessee's entire ownership interest in the
items used or to be used by it as nuclear fuel in the Generating
Facility. The Lessee agrees that 25% of the Lessor's ownership
interest in any Nuclear Material which is subject to the Fuel
Lease will be leased to the Lessee. The Lessee further agrees
not to take any action under the terms of the Fuel Lease,
including, but not limited to, the delivery of any Leasing
Record, which would result in 25% of the Lessor's ownership
interest in any such Nuclear Material not being so leased.
(f) As provided in the Security Agreement, (i) the
Secured Parties may, on and after the occurrence of a Credit
Agreement Default, Credit Agreement Event of Default, Lessee
Default or Lessee Event of Default, pursuant to Section 10 of the
Security Agreement, exercise any and all of the Company's rights
under the Fuel Lease, the Assigned Agreements and each other
Basic Document to which the Lessee is a party, and (i) if a Lease
Event of Default occurs and is continuing, the Secured Parties
may, pursuant to Section 10 of the Security Agreement, enforce
and exercise any and all of the Company's rights under the Fuel
Lease, the Assigned Agreements and each other Basic Document to
which the Lessee is a party, or the rights and remedies granted
to the Secured Parties under the Security Agreement at their
election and in their sole discretion, and, in the event that any
Secured Parties are permitted to exercise such rights pursuant to
Section 10 of the Security Agreement, the Lessee agrees that the
Collateral Agent may do so either in concert with or in place of
the Company, and the Lessee shall assist in, comply with and
perform in accordance with all rights or remedies so enforced or
exercised by the Collateral Agent for the ratable benefit of the
Secured Parties.
6. Fuel Management; Quiet Enjoyment. The occurrence of a
Credit Agreement Default, a Credit Agreement Event of Default,
Lease Event of Default, Lessee Default, Lessee Event of Default
or an event or condition which would, with the lapse of time or
the giving of notice or both, become a Lease Event of Default,
shall not affect the Lessee's sole obligation to engage in Fuel<PAGE>
5
Management; provided that, upon the occurrence of a Credit
Agreement Event of Default, Lessee Event of Default or Lease
Event of Default, the Majority Secured Parties may, at their
option, by written notice to the Lessee, elect to revoke such
power and authority, in which case the Person from time to time
designated by the Majority Secured Parties may (but shall not be
obligated to), to the extent that the Majority Secured Parties
desire and to the extent permitted by law, engage in Fuel
Management and/or remove all or any part of the responsibility
for Fuel Management from the Lessee; provided, however, that,
subject to the right of the Secured Parties to exercise any or
all rights granted to the Secured Parties under the Security
Agreement, the rights granted to the Secured Parties under this
Section 6 shall not be construed to include the right to direct,
whether directly or indirectly, the operation of the Generating
Facility. In the event the Majority Secured Parties, in
accordance with the preceding sentence, shall revoke the Lessee's
power and authority to engage in Fuel Management, all rights
conferred by the Company to the Lessee pursuant to Section 3 of
the Fuel Lease shall be deemed to be automatically reassigned to
the Company and the Lessee shall execute such documents and
instruments as the Secured Parties shall request to further
confirm such assignment.
7. Insurance. Each year, the Lessee will furnish the
Administrative Agent and each Bank a detailed statement
certified by an officer of Lessee setting forth (i) the location
of all Nuclear Material and (i) the insurance policies and
indemnification agreements provided pursuant to Sections 14 and
17 of the Fuel Lease and certifying that such insurance policies
and indemnification agreements comply with the requirements of
the Fuel Lease. In addition, the Lessee shall promptly furnish
at any time to the Administrative Agent and any Bank such
information as any such Bank shall reasonably request concerning
location of Nuclear Material, insurance policies and
indemnification agreements and Manufacturers or other third
parties with whom arrangements exist with respect to
transportation, storage or processing of Nuclear Material.
8. Representations and Warranties. The Lessee hereby
represents and warrants to the Company, the Administrative Agent
and the Banks that as of the date hereof:
(a) Organization and Standing. The Lessee is a
corporation duly incorporated, validly existing and subsisting
under the laws of the Commonwealth of Pennsylvania, and is
qualified to do business in each state or other jurisdiction in
which the nature of its business makes such qualification
necessary, except where the failure to be so qualified would not
have a material adverse effect on its ability to perform its
obligations under this Letter Agreement or each other Basic
Document to which the Lessee is a party. The Lessee's chief<PAGE>
6
executive office is located at 2800 Pottsville Pike, Reading,
Pennsylvania 19605.
(b) Corporate Authority. The Lessee has the corporate
power and authority to execute and perform this Letter Agreement
and the Fuel Lease and to lease the Nuclear Material thereunder.
The execution and delivery of this Letter Agreement and the Fuel
Lease and the lease of the Nuclear Material thereunder will not
have a material adverse effect on the financial condition,
results of operations, business, properties or operations of the
Lessee.
(c) Compliance with Other Instruments, etc. The
execution, delivery and performance by the Lessee of this Letter
Agreement and each Basic Document to which the Lessee is a party,
and other related instruments, documents and agreements, and the
compliance by the Lessee with the terms hereof and thereof,
(i) have been duly and legally authorized by appropriate
corporate action taken by the Lessee, (i) are not in
contravention of, and will not result in a violation or breach
of, any of the terms of the Lessee's articles of incorporation,
its by-laws or of any provisions relating to shares of the
capital stock of the Lessee and (i) will not violate or
constitute a breach of any provision of (x) any applicable law,
order, rule or regulation, rule or regulation of any governmental
authority (except in those cases where non-compliance with any
such law, order, rule or regulation could not reasonably be
expected to have a material adverse effect on the financial
condition, results of operations, business, properties or
operations of the Lessee or its ability to perform its
obligations hereunder or under each Basic Document) or (y) any
indenture, agreement or other instrument to which the Lessee is
party, or by or under which the Lessee or any of the Lessee's
property is bound, or be in conflict with, result in breach of,
or constitute (with due notice and/or lapse of time) a default
under any such indenture, agreement or instrument, or result in
the creation or imposition of any Lien upon any of the Lessee's
property or assets or any Nuclear Material.
(d) Legal Obligations. This Letter Agreement and the
Fuel Lease have been executed by a duly authorized officer of the
Lessee, and this Letter Agreement and the Fuel Lease constitute,
and each Leasing Record, when executed by a duly authorized
officer of the Lessee and delivered to the Company, will
constitute, the legal, valid and binding obligations of the
Lessee, enforceable against the Lessee in accordance with their
respective terms, except as the enforceability thereof may be
limited by the Atomic Energy Act and the rules, regulations or
orders issued pursuant thereto, or by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights
in general, and except as the availability of the remedy of
specific performance is subject to general principles of equity<PAGE>
7
(regardless of whether such remedy is sought in a proceeding in
equity or at law).
(e) Governmental Consents. Neither the execution and
delivery of this Letter Agreement, the Fuel Lease or any Leasing
Record by the Lessee, nor the performance by the Lessee of all of
its obligations hereunder or thereunder, requires the consent or
approval of, the giving of notice to, or the registration, filing
or recording with, or the taking of any other action in respect
of, any Federal, state, local or foreign government or
governmental authority or agency or any other person except for
the order of the Securities and Exchange Commission (the "SEC"),
dated October 25, 1995, the filing of the supplemental order of
the SEC dated October 27, 1995, the order of the PaPUC, dated
October 15, 1995, and the filing of any statement or other
instrument pursuant to Section 10(b) of the Fuel Lease, and
except for the filing of certificates by the Lessee with the SEC
pursuant to SEC Rule 24 under the Public Utility Holding Company
Act to report on the transactions authorized by such SEC order,
the filing of which is not necessary to the execution or delivery
of this Letter Agreement, the Fuel Lease or any Leasing Record by
the Lessee or for the performance by the Lessee of any of its
obligations hereunder or thereunder, and the failure to file any
of which will not affect the validity or enforceability of any of
this Letter Agreement, the Fuel Lease or any Leasing Record.
(f) Consents and Permits. The Lessee possesses all
material licenses, permits, franchises and certificates which
are necessary or appropriate to own or operate its material
properties and assets and to conduct its business as now
conducted.
(g) Litigation. There is no litigation or other
proceeding now pending or, to the best of the Lessee's knowledge,
threatened, against or affecting the Lessee, before any court,
arbitrator or administrative or governmental agency (i) which
would adversely affect or impair the title of the Company to the
Nuclear Material, (i) which questions the validity or
enforceability of this Letter Agreement, the Fuel Lease, the
Assigned Agreements or any other Basic Document to which the
Lessee is a party or any action taken or to be taken by the
Lessee pursuant to or in connection with this Letter Agreement,
or (i) except as disclosed in the Lessee's Annual Report on Form
10-K for the year ended December 31, 1994 and Quarterly Report on
Form 10-Q for the quarter ended September 30, 1995, copies of
which have previously been delivered to the Administrative Agent
and the Banks, which, if decided adversely to the Lessee, would
materially adversely affect the condition, financial or
otherwise, of the Lessee.
(h) Taxes. The Lessee has filed or caused to be filed
all tax returns which are required to be filed, and has paid or<PAGE>
8
caused to be paid all taxes as shown on said returns and all
assessments received by it to the extent that such taxes and
assessments have become due, except for taxes and assessments
which are being contested in good faith and by appropriate
proceedings and as to which it has provided reserves which are
adequate in accordance with generally accepted accounting
principles.
(i) Reaffirmation and Restatement of Representations
and Warranties. The Lessee repeats and reaffirms as of the date
hereof for the benefit of the Administrative Agent and each Bank
the representations and warranties made by the Lessee in the Fuel
Lease as though set forth in full herein with the same effect as
though such representations and warranties had been made on and
as of the date hereof. In addition, the Lessee represents and
warrants that as of the date hereof (i) the Lessee is in
compliance with all the terms and provisions set forth in the
Fuel Lease on its part to be observed or performed, (i) no
Terminating Event has occurred and no event has occurred which,
with the lapse of time or the giving of notice, or both, would
constitute such a Terminating Event, and (i) no Lease Event of
Default has occurred and is continuing and no event has occurred
and is continuing on such date which, with the lapse of time or
the giving of notice, or both, would constitute a Lease Event of
Default.
(j) First Perfected Security Interest. Except for
Permitted Liens, upon the execution and delivery of this Letter
Agreement and the Security Agreement and the due filing of the
Uniform Commercial Code financing statements required to be
executed and filed from time to time, the Secured Parties will
have a legal, valid and enforceable first priority security
interest (i) in the rights, titles and interests of the Company
in and to the Fuel Lease and (i) in and to the other Collateral.
Such security interest will constitute a perfected security
interest in the Collateral consisting of Nuclear Material
Contracts and the Collateral consisting of Nuclear Material
located in the States of Illinois, Kentucky, Ohio, Pennsylvania
and Virginia, except for any such Collateral which consists of
cash, instruments (as defined in the New York Uniform Commercial
Code) and other items in which a security interest may only be
perfected by possession, enforceable against all third parties as
security for the Secured Obligations.
(k) No Material Adverse Change. Since June 30, 1995,
there has been no material adverse change in the financial
condition, results of operations, business, properties or
operations of the Lessee or in its ability to perform its
obligations under the Basic Documents.
(l) No Defaults. The Lessee is not in default under
any bond, debenture, note or any other evidence of Obligations<PAGE>
9
for Borrowed Money or Deferred Purchase Price or any mortgage,
deed of trust, indenture, loan agreement or other agreement
relating thereto, where the amount thereof is in excess of
$20,000,000.
(m) Pension Plans. No accumulated funding deficiency
(as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, exists with respect to any plan (other
than a multiemployer plan). No liability to the Pension Benefit
Guaranty Corporation has been, or is expected by the Lessee to
be, incurred with respect to any plan (other than a multiemployer
plan) by the Lessee which is or would be materially adverse to
the Lessee. The Lessee has not incurred and presently does not
expect to incur any withdrawal liability under Title IV of ERISA
with respect to any multiemployer plan which is or would be
materially adverse to the Lessee. Neither the execution and
delivery by the Company of the Credit Agreement and the other
Basic Documents, and the issuance of the Commercial Paper, nor
the execution and delivery by the Lessee of this Letter
Agreement, the Trust Agreement and each other Basic Document to
which the Lessee is a party, will involve any transaction which
is subject to the prohibitions of Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to
Section 4975. As used herein, the term "plan" shall mean an
"employee pension benefit plan" (as defined in Section 3 of
ERISA) which is and has been established or maintained, or to
which contributions are or have been made, by the Lessee or by
any trade or business, whether or not incorporated, which,
together with the Lessee is under common control as described in
Section 414(b) or (c) of the Code, and the term "multiemployer
plan" shall mean any plan which is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).
(n) Financial Statements. The audited balance sheet
of the Lessee as of December 31, 1994, and the related statements
of income and cash flows (including the notes thereto) of the
Lessee for the year then ended, copies of which have been
delivered to the Company, the Administrative Agent and the Banks,
and all other annual or quarterly financial statements including,
without limitation, the quarterly statement dated as of June 30,
1995 so delivered fairly present the financial condition of the
Lessee on the dates for which, and the results of its operations
for the periods for which, the same have been furnished and have
been prepared in accordance with generally accepted accounting
principles consistently applied.
(o) Nuclear Material. The Nuclear Material is free
and clear of any Lien in favor of any Person claiming by, through
or under the Lessee or any Affiliate thereof, other than
Permitted Liens. No default or event which with the giving of
notice or lapse of time would constitute a default has occurred
and is continuing under any Nuclear Material Contract.<PAGE>
10
(p) Disclosure. Neither the representations in this
Letter Agreement, or in any other document, certificate or
statement furnished in writing to the Administrative Agent or any
Bank by or on behalf of the Lessee in connection with the
transactions contemplated hereby, nor the information disclosed
in the Lessee's Annual Report on Form 10-K for the year ended
December 31, 1994 or Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995, contained as of its date, any untrue
statement of a material fact or omitted to state a material fact
necessary in order to make such representations or information
not misleading in light of the circumstances under which they
were made.
(q) Collateral Equivalence Test Met. The sum of the
aggregate Stipulated Casualty Value of the Nuclear Material
leased under the Fuel Lease and the Lessee's Percentage of the
Cash Collateral equals or exceeds the Lessee's Percentage of
Outstandings.
9. General Covenants of the Lessee.
(a) Information. The Lessee will furnish to the
Company and the Administrative Agent in sufficient copies for
each Bank:
(i) Quarterly Statements. As soon as practicable
after the end of each of the first three quarterly fiscal
periods in each fiscal year of the Lessee, and in any event
within 60 days thereafter, copies of:
(A) a balance sheet of the Lessee as at the end of
such quarter, and (B) statements of income and cash
flows of the Lessee for such quarter and for the
twelve-month period ending as of the end of such
quarter and (in the case of the second and third
quarters) for the portion of the fiscal year ending
with the end of such quarter, setting forth in each
case in comparative form the figures for the
corresponding periods in the previous fiscal year, all
in reasonable detail and certified as complete and
correct, subject to changes resulting from year-end
adjustments, by a principal financial officer of the
Lessee; provided that it is understood that the
delivery of the Lessee's Quarterly Report on Form 10-Q
shall be deemed to satisfy the requirements with
respect to such financial statements;
(ii) Annual Statements. As soon as practicable after
the end of each fiscal year of the Lessee, and in any event
within 120 days thereafter, copies of:<PAGE>
11
(A) a balance sheet of the Lessee at the end of such
fiscal year, and (B) statements of income and cash
flows of the Lessee for such year, setting forth in
each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and
accompanied by an opinion thereon of independent
certified public accountants of recognized national
standing selected by the Lessee, which opinion shall
state that such financial statements have been prepared
in accordance with generally accepted accounting
principles consistently applied (except for changes in
application in which such accountants concur) and that
the examination of such accountants in connection with
such financial statements has been made in accordance
with generally accepted auditing standards; provided
that it is understood that the delivery of the Lessee's
Annual Report on Form 10-K shall be deemed to satisfy
the requirement with respect to such financial
statements;
(iii) Officer's Compliance Certificate.
Simultaneously with the financial statements referred to in
Sections 9(a)(i) and (ii), a certificate of an authorized
officer of the Lessee stating that such officer has reviewed
the relevant terms and conditions of the Fuel Lease and
other Basic Documents to which the Lessee is a party, and
has made, or caused to be made, under such officer's
supervision, a review of the transactions and financial
condition of the Lessee from the beginning of the accounting
period covered by the income statements being delivered
therewith to the date of the certificate, and that the
Lessee has observed or performed all of its covenants and
other agreements, and satisfied every condition, contained
in this Letter Agreement, the Fuel Lease and any other Basic
Document to which the Lessee is a party, and no Terminating
Event, Lessee Default, Lessee Event of Default, Lease Event
of Default or default or event of default under any such
Basic Document has occurred and is continuing and no event
has occurred and is continuing which, with the lapse of time
or the giving of notice, or both, would constitute a
Terminating Event, Lessee Default, Lessee Event of Default,
Lease Event of Default or a default or event of default
under any such Basic Document or, if such condition or event
has occurred and is continuing, a statement as to the nature
thereof and the action which is proposed to be taken with
respect thereto;
(iv) Auditor's Compliance Certificate. Simultaneously
with the financial statements referred to in Section
9(a)(ii), a certificate of the independent public
accountants who audited such statements stating that such
accountants have reviewed the relevant terms and conditions<PAGE>
12
of the Fuel Lease and other Basic Agreements to which the
Lessee is a party, and that, in making the examination
necessary for the audit of such statements, they have
obtained no knowledge of any condition or event which
constitutes or which with notice or lapse of time or both
would constitute a Terminating Event, Lessee Default, Lessee
Event of Default, Lease Event of Default or default or event
of default under any such Basic Document, or if such
accountants shall have obtained knowledge of any such
condition or event, specifying in such certificate each such
condition or event of which they have knowledge and the
nature and status thereof;
(v) Notices Required under the Basic Documents.
Immediately upon delivery to the Lessee or the Company, all
notices, consents, documents, certificates or instruments of
any kind relating to the Lessee required pursuant to the
Fuel Lease;
(vi) Defaults. (A) Promptly upon becoming aware of the
occurrence thereof, notice of any Terminating Event, Lessee
Default, Lessee Event of Default, Lease Event of Default or
any event which, with the lapse of time or the giving of
notice, or both, would constitute a Terminating Event or a
Lease Event of Default, and (A) within 10 days of becoming
aware of the occurrence thereof, notice of any other
material event affecting the Lessee's obligations under any
Basic Document or any Nuclear Material Contract (except to
the extent such event has previously been disclosed in the
Lessee's SEC reports delivered pursuant to clause (viii)
below);
(vii) Notice of Claimed Default. Immediately upon
becoming aware that the holder or holders of any evidence of
Obligations for Borrowed Money or Deferred Purchase Price or
other security of the Lessee or any subsidiary exceeding
$20,000,000 in the aggregate have given notice (or taken any
other action) with respect to a claimed default, breach or
event of default, a notice describing the notice given (or
action taken) and the nature of the claimed default, breach,
or event of default;
(viii) SEC and Other Reports. Promptly after filing
thereof, copies of all regular and periodic reports and
registration statements which the Lessee may file with the
Securities and Exchange Commission ("SEC") or any
governmental agency substituted therefor and, promptly upon
written request therefor, copies of the financial statements
which the Lessee may file annually with any state regulatory
agency or agencies; and<PAGE>
13
(ix) Requested Information. With reasonable
promptness, such other data and information, including,
without limitation, information regarding Nuclear Material
or any Nuclear Material Contract, with respect to the
Lessee as from time to time may be reasonably requested by
the Administrative Agent or any Bank.
(b) Notice of Litigation. Immediately upon the Lessee
becoming aware thereof, written notice of (i) any litigation or
proceedings which would be required to be disclosed as an
exception to the representations and warranties contained herein
or in the Fuel Lease in order that such representations and
warranties would be true and correct on a continuing basis; and
(i) any dispute between the Lessee and any governmental authority
or other party relating to any part of the transactions
contemplated by this Letter Agreement or any of the other Basic
Documents to which the Lessee is a party which would have a
material adverse effect on the ability of the Lessee to carry out
its obligations hereunder or under any other Basic Document to
which the Lessee is a party; provided, however, that the notice
requirement in this Section 9(b) shall be satisfied if the Lessee
furnishes the Company and the Administrative Agent in sufficient
copies for each Bank a Current Report on Form 8-K regarding the
event requiring notice by the time that the Current Report is
required to be filed with the Securities and Exchange Commission.
(c) General Obligations. Subject to the last sentence of
this Section 9(c), the Lessee will:
(i) duly comply with all laws, rules, orders, regulations
or other valid requirements (including, without
limitation, any of the foregoing which are applicable
to Nuclear Material or the operation of the
Generating Facility) of any governmental authority
necessary to the conduct of its business or to its
properties or assets, noncompliance with which could
reasonably be expected to have a material adverse
effect upon the transactions contemplated by this
Letter Agreement or any other Basic Document, or upon
the financial condition, results of operations,
business, properties or operations of the Lessee, or
the ability of the Lessee to carry out its
obligations under any Basic Document or this Letter
Agreement);
(ii) continue to engage principally in the electric
utility business;
(iii) obtain, maintain and keep in full force and effect
all consents, permits, licenses and approvals, the
absence of which would have a material adverse
effect upon the transactions contemplated by this<PAGE>
14
Letter Agreement or any other Basic Document to
which the Lessee is a party, or upon the financial
condition, results of operations, business,
properties or operations of the Lessee, or the
ability of the Lessee to carry out its obligations
under this Letter Agreement or any other Basic
Document to which the Lessee is a party;
(iv) maintain its material operating properties used or
useful in its business in good repair, working
order and condition consistent with prudent
utility practice; provided, however, that the
Lessee shall not be prevented from discontinuing
the operation and maintenance of any of its
properties if it shall determine that the
continued operation and maintenance of such
properties is no longer necessary, desirable or
permissible;
(v) pay when due all fees, taxes, assessments and
governmental charges or levies imposed upon it or
upon its income or profits or upon any property
belonging to it, and maintain appropriate reserves
for the accrual of the same in accordance with
generally accepted accounting principles;
(vi) except as permitted by clause (vii) below, at all
times maintain its corporate existence,
privileges, franchises and rights to carry on
business, and duly procure all renewals and
extensions thereof, if and when any shall be
necessary;
(vii) not consolidate or merge with, or sell or
otherwise dispose of all or substantially all of
its properties and assets to any Person unless
(i) the surviving or resulting entity is the
Lessee hereunder, (i) immediately after giving
effect thereto no Credit Agreement Event of
Default, Credit Agreement Default, Lease Event of
Default, Lessee Default, Lessee Event of Default
or event which with the giving of notice or
passage of time would constitute a Lease Event of
Default shall have occurred and be continuing, and
(i) the senior unsecured debt of the surviving or
resulting Lessee shall be rated at least
investment grade by S&P or Moody's;
(viii) perform and comply with each of the material
provisions of each material indenture, credit
agreement, contract or other agreement by which
the Lessee is bound, non-performance or non-<PAGE>
15
compliance with which would have a material
adverse effect upon its business or credit or in
any way affect its ability to perform its
obligations hereunder except material contracts or
other agreements being contested in good faith;
(ix) preserve and maintain its corporate existence in
the jurisdiction of its incorporation, and qualify
and remain qualified as a foreign corporation in
good standing in each jurisdiction in which such
qualification is necessary or desirable in view of
its business and operations or the ownership of
its properties, except where the failure to be so
qualified would not materially adversely affect
its financial condition, operations, properties or
business, and preserve its material rights,
franchises and privileges to conduct its business
substantially as conducted on the date hereof;
(x) maintain insurance in effect at all times in such
amounts as are available to the Lessee and
covering such risks as is usually carried by
companies of a similar size, engaged in similar
businesses and owning similar properties
(including, without limitation, the operation and
ownership of nuclear generating facilities) in the
same general geographical area in which the Lessee
operates, either with responsible and reputable
insurance companies or associations, or, in whole
or in part, by establishing reserves of one or
more insurance funds, either alone or with other
corporations or associations;
(xi) at any reasonable time and from time to time,
permit the Administrative Agent or any Bank or any
agents or representatives thereof to examine and
make copies of and abstracts from the records and
books of account of, and visit the properties of,
the Lessee and discuss the affairs, finances and
accounts of the Lessee with any of its officers or
directors;
(xii) not sell, transfer, lease, assign or otherwise
convey or dispose of more than 25% of its assets
(whether now owned or hereafter acquired), in any
single or series of transactions, whether or not
related, except for dispositions of current assets
in the ordinary course of business as presently
conducted, if immediately prior to such sale,
transfer, lease, assignment, conveyance or
disposition or as a result of such sale, transfer,
lease, assignment, conveyance or disposition, the<PAGE>
16
senior unsecured debt of the Lessee shall not be
rated at least investment grade by S&P or Moody's.
(xiii) comply with the Letter Agreement and such other
Basic Documents to which the Lessee is a party in
accordance with the respective terms and
conditions set forth herein and therein; and
(xiv) except for Permitted Liens, permit the creation of
any Liens on the Collateral.
Notwithstanding the foregoing provisions of this Section 9(c),
the Lessee may contest by appropriate proceedings conducted in
good faith and due diligence, the amount, validity or
application, in whole or in part of any fee, tax, assessment or
government charge or levy, or any legal requirement, provided
that the Lessee shall have set aside on its books adequate
reserves, if required in accordance with generally accepted
accounting principles with respect thereto and shall furnish such
security, if any, as may be required in the proceeding.
10. GPU Events. It shall be a default hereunder if
General Public Utilities Corporation (a) fails to maintain at all
times beneficial ownership of at least 75% of all outstanding
shares of common stock of each of the Lessee, Met-Ed and JCP&L;
or (b) pledges, grants options on, create any charge on or
security interest in, or otherwise subjects to any charge or
encumbrance, any of the common stock of the Lessee, Met-Ed or
JCP&L unless the obligations hereunder are secured ratably and
with equal priority, in form and substance reasonably
satisfactory to the Majority Banks.
11. Credit Agreement and Notes. The Lessee hereby
acknowledges receipt of executed counterparts of the Credit
Agreement and photostatic copies of the Notes evidencing the
Loans, and consents to all of the terms and provisions of the
Credit Agreement and the Notes.
12. Consent to Assignment; Direct Payment of Payments
Under the Fuel Lease.
(a) Consent to Assignment. The Lessee hereby
acknowledges notice of and consents to all the terms and
provisions of the Security Agreement and hereby confirms to and
agrees with the Secured Parties that all representations,
warranties, indemnities and agreements of the Lessee contained in
this Letter Agreement and each other Basic Document to which the
Lessee is a party shall inure to the benefit of, and shall be
enforceable by, the Secured Parties to the same extent as if such
Secured Parties were originally parties to or named in the such
documents and agreements. The Lessee further acknowledges and
consents to the assignment and transfer, and any future<PAGE>
17
assignments and transfers, to the Secured Parties by the Company
of the Company's right to exercise any and all of its rights,
remedies, powers and privileges (but none of its obligations,
duties or liabilities) under the Fuel Lease, the Assigned
Agreements and each other Basic Document to which the Lessee is a
party. The Lessee hereby agrees with the Secured Parties to
comply with any exercise by the Secured Parties, either directly
or through the Company, of any rights, remedies, powers or
privileges pursuant to the Security Agreement. The Secured
Parties acknowledge that neither the Security Agreement nor this
Section 12 shall in any way add to the obligations of the Lessee
(except those obligations of the Lessee to any Person, which, if
not previously so, hereby become enforceable directly by the
Secured Parties) under the Fuel Lease, the Assigned Agreements
and each other Basic Document to which the Lessee is a party.
Notwithstanding the foregoing, so long as no Lease Event of
Default shall have occurred and be continuing, the Lessee shall
have exclusive right to possession and use of the Nuclear
Material in accordance with the Fuel Lease and may use such
Nuclear Material for any lawful purpose consistent with the Fuel
Lease.
(b) Direct Payment of Payments Under the Fuel Lease. The
Lessee acknowledges that it has been directed by the Company to,
and agrees that it will, make all payments of monies due and to
become due to the Company under the Fuel Lease, the Assigned
Agreements and each other Basic Document to which the Lessee is a
party, directly to the Collateral Agent, including, without
limitation, Basic Rent, Additional Rent, the purchase price of
Nuclear Material pursuant to Section 8(c), 8(d), 8(e) and 8(g) of
the Fuel Lease, payments pursuant to Sections 9(e), 14, 17 and 18
of the Fuel Lease in the manner and to the accounts of the
Secured Parties as specified in Section 3.03 of the Credit
Agreement.
13. Severability. Any provision of this Letter 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.
14. Indemnification. The Lessee shall pay and indemnify
and hold harmless the Administrative Agent and each Bank, and
their respective officers, directors, incorporators,
shareholders, partners, employees, agents and servants from and
against any and all liabilities (other than liabilities arising
out of the gross negligence or willful misconduct of such<PAGE>
18
Person), taxes, (excluding, however, taxes measured solely by the
net income of any Person indemnified or intended to be
indemnified pursuant to this Section 14, except as otherwise
provided in Section 14 hereof), losses, obligations, claims,
damages, penalties, causes of action, suits, costs and expenses
(including, without limitation, reasonable attorneys' and
accountants' fees and expenses) and judgments of any nature
arising from or in any way relating to any and all of the
following during the term of the Fuel Lease and thereafter:
(a) 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 (as that term is defined in the Atomic
Energy Act, 42 U.S.C. Paragraph 2011 et seq.) involving or
connected in any way with the Nuclear Material or any portion
thereof, (a) the acquisition, ownership (including strict
liability of an owner or liability without fault), possession,
disposition, sale, use, nonuse, misuse, leasing, fabrication,
design, cycling, recycling, transportation, containerization,
cooling, processing, reprocessing, storing, condition,
management, operation, construction, maintenance, repair or
rebuilding of the Nuclear Material or any portion thereof or
resulting from the condition of adjoining and underlying land,
buildings, streets or ways, (a) any use, nonuse or condition of,
or any other matter of circumstance relating to, the Generating
Facility, any other property associated therewith or any
adjoining and underlying land, buildings, streets and ways,
(a) any violation or default, or alleged violation or default, of
the Fuel Lease or this Letter Agreement by or on behalf of
Lessee, or of any contracts or agreements to which the Lessee is
a party or by which it is bound, or any Legal Requirements,
(a) performance of any labor or services or the furnishing of any
materials or other property in respect of the Nuclear Material or
any portion thereof, (a) any infringement or alleged infringement
of any patent, copyright, trade secret or other similar right
relating to the Nuclear Material or any portion thereof,
(a) Lessee's agreements or obligations contained in the Fuel
Lease or this Letter Agreement, (a) any claim arising out of loss
of damage to the environment, (a) any claim arising out of strict
or absolute liability in tort, or (a) the offering and sale of
Commercial Paper. The Lessee also indemnifies each indemnitee,
as aforesaid, from and against all other liabilities, taxes,
losses, obligations, claims, damages, penalties, causes of
action, suits, costs and expenses (including, without limitation,
reasonable attorneys' and accountants' fees and expenses) and
judgments of any nature which may be imposed on, incurred by, or
asserted at any time against any indemnitee in any way relating
to or arising out of the performance of this Letter Agreement,
the Fuel Lease or any other Basic Document to which Lessee is a
party, provided, except for claims of a nature contemplated by
(i) above, that the Lessee shall not be required to indemnify any
indemnitee with respect to any liability relating to or arising
out of indemnitee's gross negligence or willful misconduct and<PAGE>
19
provided, further, that the foregoing immunity shall not limit
the terms of any indemnity that the Lessee may grant separately
to any indemnitee pursuant to any separate agreement. In the
event that any action, suit or proceeding is brought against the
Company or any other Person indemnified or intended to be
indemnified pursuant to this Section 14 by reason of any such
occurrence, the Lessee shall, at the Lessee's expense, resist and
defend such action, suit or proceeding or cause the same to be
resisted and defended by counsel designated by the Lessee and
reasonably acceptable to the Person or Persons indemnified or
intended to be indemnified under this Section 14 provided there
is no conflict of interest with the Person or Persons indemnified
or intended to be indemnified under this Section 14. In the
event a conflict of interest contemplated by the proviso of the
immediately preceding sentence shall exist, then the Person or
Persons as to which such conflict exists may be defended by
counsel of its or their choice at Lessee's expense, provided
Lessee's obligation for such expense shall be limited to one firm
for all such Persons as to which such a conflict exists. The
obligations of the Lessee under this Section 14 shall survive any
termination of this Letter Agreement, the Credit Agreement, the
Fuel Lease or the Security Agreement, in whole or in part.
15. No Waiver; Amendments. Neither the Administrative
Agent, the Collateral Agent, the Banks, the Company nor the
Lessee shall, by any act, delay, omission or otherwise, be deemed
to have waived any of its rights and remedies hereunder, and no
waiver shall be valid unless in writing signed by the party or
parties sought to be bound thereby. A waiver by the
Administrative Agent, the Collateral Agent, the Banks, the
Company or the Lessee of any of their respective rights or
remedies hereunder on any one occasion shall not be construed as
a bar to any right or remedy which the Administrative Agent, the
Banks, the Company or the Lessee, as applicable, would otherwise
have had on any future occasion. No failure to exercise nor any
delay in exercise of any such right or remedy hereunder shall
preclude any other or future exercise or partial exercise of any
other right or remedy. The rights and remedies hereunder
provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies
provided by law. None of the terms or provisions of this Letter
Agreement may be waived, altered, modified or amended except by
an instrument in writing, duly executed by the party or parties
sought to be bound thereby.
16. Successors and Assigns. This Letter Agreement shall
bind the successors and assigns of the Lessee and the Company and
shall inure to the benefit of permitted successors and assigns
of either. The Letter Agreement shall not be assignable by the
Lessee or the Company, either voluntarily or by operation of law,
unless consented to by the Administrative Agent and the Majority
Banks. No permitted assignment by the Lessee or the Company<PAGE>
20
shall release the Lessee or the Company from any of its
obligations hereunder. This Letter Agreement shall inure to and
shall be binding upon the successors and assigns of the
Administrative Agent and the Banks.
17. Notices. Any notice, demand or other communication
which by any provision of this Letter Agreement is required or
provided to be given shall be deemed to have been delivered if in
writing addressed as provided below and actually delivered by
mail, courier or facsimile to the following addresses:
(a) except as otherwise requested in writing by the
Administrative Agent or any Bank, any notice, demand
or communication which by any provision of this
Letter Agreement is required or provided to be given
to the Administrative Agent or any Bank shall be
deemed to have been delivered to the Administrative
Agent or any Bank if a single copy thereof is
delivered to the Administrative Agent at its address
set forth in Section 12.01 of the Credit Agreement or
at such other address as either may have furnished
the Company and the Lessee in writing;
(b) if to the Company (with copies to the Lessee at the
address listed below), TMI-1 Fuel Corp. c/o United
States Trust Company of New York, 114 West 47th
Street, New York, New York 10036, marked for the
attention of the Corporate Trust and Agency Division,
telecopy number 212-852-1626, or at such other
address as it may have furnished in writing to the
Administrative Agent and the Lessee; or
(c) if to the Lessee, to Pennsylvania Electric Company,
2800 Pottsville Pike, Reading Pennsylvania 19605;
Attention: Comptroller; Telecopier: (610) 921-6676,
and to GPU Service Corporation, 100 Interpace
Parkway, Parsippany, New Jersey 07054-1149, marked
for the attention of the Assistant Treasurer,
Telecopier: (201) 263-6397, or at such other address
or addresses as the Lessee may have furnished to the
Administrative Agent and the Company.
18. Set-off. (a) Lessee hereby acknowledges and agrees
to the set-off rights against it as provided for in Section 12.08
of the Credit Agreement.
(b) Lessee agrees that it shall have no right of set-off,
deduction or counterclaim in respect of its obligations
hereunder, and that the obligations of the Banks hereunder and
under the Credit Agreement are several and not joint. Nothing
contained herein shall constitute a relinquishment or waiver of
the Lessee's rights to any independent claim that the Lessee may<PAGE>
21
have against the Administrative Agent or any Bank for the
Administrative Agent's or such Bank's, as the case may be, gross
negligence or wilful misconduct, but no Bank shall be liable for
the conduct of the Administrative Agent or any other Bank, and
the Administrative Agent shall not be liable for the conduct of
any Bank.
19. Waiver of Jury Trial. Lessee irrevocably waives all
right to trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Letter Agreement, the Credit
Agreement, the other Basic Documents or any instrument or
document delivered hereunder or thereunder, except that the
foregoing shall not preclude any party hereto from submitting to
a jury for determination in any such action, proceeding or
counterclaim any dispute involving (a) the accuracy or
completeness of any representation or warranty made under the
Basic Documents by Lessee, (b) the performance by Lessee of any
affirmative or negative covenant or agreement contained in the
Basic Documents, or (c) questions of materiality, or the
reasonableness of, or good faith basis for, any action taken, or
determination made, by any other party hereto (other than in
respect of any calculation of principal, interest, fees, or
increased costs payable by the Lessee under the Basic Documents).
20. Governing Law. This Letter Agreement shall be
governed by, and be construed and interpreted in accordance with
the laws of the State of New York.<PAGE>
S-1
IN WITNESS WHEREOF, the undersigned have caused this
Letter Agreement to be executed as of the date first above
written.
PENNSYLVANIA ELECTRIC COMPANY
By
Vice President
TMI-1 FUEL CORP.
By
Title
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH,
as Administrative Agent
By
Title
By
Title <PAGE>
EXHIBIT B-3(i)
AMENDED AND RESTATED
TRUST AGREEMENT
Dated as of November 17, 1995
Among
LORD FUEL CORP., as Trustor
and
UNITED STATES TRUST COMPANY OF NEW YORK, as Owner Trustee
and
JERSEY CENTRAL POWER & LIGHT COMPANY,
METROPOLITAN EDISON COMPANY AND
PENNSYLVANIA ELECTRIC COMPANY,
each as Lessees under certain lease agreements
and
LORD FUEL CORP., as Trust Beneficiary
________________
TMI-1 FUEL CORP. AND OYSTER CREEK FUEL CORP.
TRUST
_______________
<PAGE>
TRUST AGREEMENT
TABLE OF CONTENTS
RECITALS . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . 2
SECTION 2. AUTHORITY TO EXECUTE AND PERFORM DOCUMENTS;
DECLARATION OF TRUST . . . . . . . . . . . . . 2
2.1 Execution of Documents and Performance of Duties 2
2.2 Declaration of Trust . . . . . . . . . . . . . . 2
2.3 Name of Trust . . . . . . . . . . . . . . . . . . 2
2.4 No Other Business or Obligation . . . . . . . . . 2
2.5 No Disposition of Owner Trust Estate . . . . . . 3
SECTION 3. TRUSTOR'S INTEREST. . . . . . . . . . . . . . . 3
3.1 Investment by Trustor . . . . . . . . . . . . . . 3
3.2 Payment from Proceeds of Owner Trust Estate Only 3
3.3 Manner of Payment . . . . . . . . . . . . . . . . 3
SECTION 4. ACQUISITION AND FINANCING OF NUCLEAR MATERIAL . 3
4.1 Authorization of Transactions . . . . . . . . . . 3
4.2 Closing Procedures . . . . . . . . . . . . . . . 6
4.3 Conditions to Effecting Transactions . . . . . . 6
SECTION 5. RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME
FROM THE OWNER TRUST ESTATE . . . . . . . . . 7
5.1 Application of Proceeds of Financings and Specific
Payments . . . . . . . . . . . . . . . . . . . . 7
5.2 Amounts Payable to the Banks . . . . . . . . . . 7
5.3 Other Amounts . . . . . . . . . . . . . . . . . . 7
5.4 Excepted Payments . . . . . . . . . . . . . . . . 7
SECTION 6. DUTIES OF THE OWNER TRUSTEE . . . . . . . . . . 7
6.1 Documents . . . . . . . . . . . . . . . . . . . . 7
6.2 Notice of Default . . . . . . . . . . . . . . . . 7
6.3 Indemnification; Legal Action . . . . . . . . . . 8
6.4 No Implied Duties . . . . . . . . . . . . . . . . 8
6.5 No Unauthorized Transactions . . . . . . . . . . 9
SECTION 7. THE OWNER TRUSTEE . . . . . . . . . . . . . . . 9
7.1 Acceptance of Trust, Etc. . . . . . . . . . . . . 9
7.2 Limitation of Duties . . . . . . . . . . . . . . 10
7.3 Representations and Warranties of Owner Trustee . 11
7.4 Deposit of Funds . . . . . . . . . . . . . . . . 11
7.5 Reliance on Documents; Agents; Right to Consult
with Counsel and Others; Etc. . . . . . . . . . 11
7.6 Not Acting in Individual Capacity . . . . . . . . 12
7.7 Interpretation of Trust Agreement . . . . . . . . 12
7.8 Compensation . . . . . . . . . . . . . . . . . . 12
7.9 Books, Records and Tax Returns . . . . . . . . . 12
7.10 Effect of Sales by a Company . . . . . . . . . . 13
7.11 Exculpatory Provisions . . . . . . . . . . . . . 14
- i -<PAGE>
SECTION 8. INDEMNIFICATION OF THE OWNER TRUSTEE . . . . . 15
SECTION 9. CO-TRUSTEES, SEPARATE TRUSTEES . . . . . . . . 16
SECTION 10. SUCCESSOR TRUSTEES . . . . . . . . . . . . . . 18
SECTION 11. SUPPLEMENTS AND AMENDMENTS TO THIS TRUST
AGREEMENT AND THE BASIC DOCUMENTS . . . . . . 20
11.1 Supplements Upon Request of the Lessee . . . . 20
11.2 Amendments and Supplements Affecting Owner
Trustee . . . . . . . . . . . . . . . . . . . 20
SECTION 12. TERMINATION OF TRUST, ETC. . . . . . . . . . . 21
SECTION 13. MISCELLANEOUS . . . . . . . . . . . . . . . . . 21
13.1 Legal Title to Owner Trust Estate . . . . . . . 21
13.2 Validity of Sale of Owner Trustee . . . . . . . 21
13.3 Trust Agreement for Benefit of Parties thereto 22
13.4 Notices . . . . . . . . . . . . . . . . . . . . 22
13.5 Severability . . . . . . . . . . . . . . . . . 22
13.6 Waivers, Etc. . . . . . . . . . . . . . . . . . 22
13.7 Counterparts . . . . . . . . . . . . . . . . . 23
13.8 Successors and Assigns . . . . . . . . . . . . 23
13.9 Headings. . . . . . . . . . . . . . . . . . . 23
13.10 Self-Dealing . . . . . . . . . . . . . . . . . 23
13.11 Governing Law . . . . . . . . . . . . . . . . . 23
13.12 No Unauthorized Transactions . . . . . . . . . 23
13.13 Rights and Remedies . . . . . . . . . . . . . . 23
- ii -<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT, dated as of
November 17, 1995 (this "Trust Agreement"), among Lord Fuel
Corp., a Delaware corporation, as trustor (herein, together with
its successors and assigns hereunder, called the "Trustor"),
United States Trust Company of New York, a New York corporation,
as trustee (herein, together with its successors and assigns
hereunder, called the "Owner Trustee"), and Jersey Central Power
& Light Company, a New Jersey corporation, Metropolitan Edison
Company, a Pennsylvania corporation, and Pennsylvania Electric
Company, a Pennsylvania corporation, each as lessees under the
Lease Agreements as defined herein (each a "Lessee", together
with their successors and assigns hereunder, called the
"Lessees") and Lord Fuel Corp., as trust beneficiary (herein,
together with its successors and assigns hereunder, called the
"Trust Beneficiary").
RECITALS
A. The Trustor, the Owner Trustee, the Lessees and
the Trust Beneficiary are parties to a certain Trust Agreement
dated as of August 1, 1991 ("Original Trust Agreement") under
which a trust was created for the purpose of enabling the Owner
Trustee to acquire as part of the Trust Estate all of the
outstanding stock of each of TMI-1 Fuel Corp. and Oyster Creek
Fuel Corp, each Delaware corporations (each, a "Company";
together, the "Companies") and the Owner Trustee caused the
Companies to each acquire certain Nuclear Material.
B. Under the Original Trust Agreement, the Lessees
have provided for the direction of the Owner Trustee with respect
to actions to be taken by the Companies pursuant to the Basic
Documents, as defined in the Original Trust Agreement, to provide
for the lease of Nuclear Material thereunder and certain
transactions related thereto.
C. The Original Trust Agreement provided that the
Companies enter into certain loan agreements and ancillary
documents with The Prudential Insurance Company of America and
affiliates thereof ("Prudential") to provide financing from
Prudential for the acquisition of Nuclear Material leased under
the Lease Agreements.
D. Concurrent with the execution and delivery hereof,
the Companies are entering into new credit agreements and related
instruments pursuant to which a bank syndicate, for which Union
Bank of Switzerland, New York Branch will act as agent, will
provide financing for the acquisition of Nuclear Material being
leased under the Lease Agreements.
E. The parties to the Original Trust Agreement desire
to amend and restate such Agreement to reflect necessary
modifications consistent with the establishment of such new
credit facility.
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F. The Owner Trustee is willing to accept the duties
and obligations imposed hereby subject to the terms and
conditions as provided herein.
NOW, THEREFORE, the parties thereby agree as follows:
SECTION 1. DEFINITIONS.
For all purposes of this Trust Agreement, unless the
context requires otherwise, capitalized terms used herein which
are defined in Exhibit A hereto, which is hereby incorporated by
reference for all purposes, shall have the respective meanings
assigned in said Exhibit A.
SECTION 2. AUTHORITY TO EXECUTE AND PERFORM
DOCUMENTS; DECLARATION OF TRUST.
2.1 Execution of Documents and Performance of Duties.
The Trustor hereby authorizes and directs the Owner Trustee
(without any further action, approval, authorization or consent
by Trustor), and the Owner Trustee hereby agrees (a) to maintain
its ownership of all of the authorized capital stock of each of
the Companies, (b) to cause each of the Companies, on such
date(s) as the applicable Lessees shall specify to the Owner
Trustee, to execute and deliver, or accept, as the case may be,
the Basic Documents or amendments thereto to which each of the
Companies shall be a party, in such respective forms as the
applicable Lessees shall approve and as are acceptable to the
Owner Trustee, and thereafter, but only upon written instruction
of the applicable Lessees or in accordance with Section 6 hereof,
to cause each of the Companies to exercise rights, make payments
and expenditures, and perform their duties under such Basic
Documents or amendments thereto, subject to the terms of this
Trust Agreement, and (c) upon written instruction of the
applicable Lessees to the Owner Trustee requesting action by the
Owner Trustee, and only upon such instructions, to do all such
things, and to take all such actions, as may be necessary,
appropriate or convenient to consummate the transactions contem-
plated hereby or to effect the Owner Trustee's performance of its
duties and obligations as the Owner Trustee as contemplated
hereby; provided that such actions are reasonably satisfactory to
the Owner Trustee and its counsel.
2.2 Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Owner Trust Estate in trust upon
the terms and conditions hereinafter set forth for the use and
benefit of the Trust Beneficiary.
2.3 Name of Trust. For convenience of reference, the
trust created hereby may be referred to as the TMI-1 Fuel Corp.
and Oyster Creek Fuel Corp. Fuel Trust. This Trust is also
referred to as the Trust in the Basic Documents.
2.4 No Other Business or Obligation. The Trust shall
not engage in any business or enter in any Obligations other than
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the Basic Documents and the transactions and Obligations contem-
plated by the Basic Documents.
2.5 No Disposition of Owner Trust Estate. Except to
exercise and carry out the rights, duties and obligations of the
Owner Trustee under this Trust Agreement, including its rights to
obtain payment of compensation and indemnification to which it
may be entitled hereunder, the Owner Trustee shall not sell,
assign, transfer, convey, pledge, or otherwise dispose of or
encumber in any manner the Owner Trust Estate, including but not
limited to the stock of each of the Companies, or approve, vote
for, consent to or otherwise agree to the liquidation,
dissolution, merger or consolidation of either of the Companies
except upon the written direction of the applicable Lessees or,
if at such time there are any Outstandings, any Commitments shall
not have been terminated. The Owner Trustee shall cause each of
the Companies to engage solely in the business of acquiring the
Nuclear Material and consummating the transactions contemplated
by the Basic Documents. The Owner Trustee shall not accept from
or permit either of the Companies to pay or to distribute to it
as dividends, or otherwise, any funds or property of either of
the Companies except as provided in Section 5.3 hereof.
SECTION 3. TRUSTOR'S INTEREST.
3.1 Investment by Trustor. Prior to the date of
execution and delivery hereof, the Trustor has made a cash
conveyance to the Trust of $10.00.
3.2 Payment from Proceeds of Owner Trust Estate Only.
Any and all amounts payable by the Owner Trustee with respect to
the Owner Trust Estate and under this Trust Agreement shall be
payable only from the Owner Trust Estate. The Owner Trustee
shall not be personally liable to any Person for any amounts
payable under this Trust Agreement or the Basic Documents or,
except as expressly provided in this Trust Agreement or the Basic
Documents, for any liability under this Trust Agreement and the
Basic Documents.
3.3 Manner of Payment. Amounts payable to the Trust
Beneficiary pursuant to or under this Trust Agreement shall be
paid by the Owner Trustee, in funds of the type received by the
Owner Trustee, in such manner and at such place as the Trust
Beneficiary shall from time to time request in writing, subject
in all events to the terms and conditions of this Trust Agreement
and the Basic Documents.
SECTION 4. ACQUISITION AND FINANCING OF NUCLEAR
MATERIAL.
4.1 Authorization of Transactions. Without limiting
the generality of the authorization and directions contained in
Section 2.1 hereof, the Owner Trustee is hereby authorized and
directed to, and the Owner Trustee agrees that it will, upon the
written direction of the applicable Lessees or in accordance with
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Section 6 hereof and subject to compliance with Section 4.3
hereof, cause the Companies to:
(a) Accept, execute and deliver the Lease Agreements
relating to them and any modification thereof or supplement
thereto and perform all of the obligations and duties, and
exercise all of the rights, of each of the Companies thereunder
(including the giving of notice of termination under Section 8(c)
thereof pursuant to written instructions of the Lessees);
(b) Accept, execute and deliver the Credit Agreements
relating to them and perform all of the obligations and duties,
and exercise, pursuant to written instructions of the Lessees,
all of the rights, of each of the Companies thereunder;
(c) Accept, execute and deliver the Basic Documents
relating to them and perform all of the obligations and duties,
and exercise, pursuant to written instructions of the Lessees,
all of the rights, of each of the Companies thereunder;
(d) Accept, execute and deliver any agreements which
are entered into in accordance with the terms of the Basic
Documents relating to them, and perform all of the obligations
and duties, and exercise, pursuant to written instructions of the
Lessees, all of the rights, of each of the Companies thereunder;
(e) Issue, execute and deliver their Commercial Paper
to the Depositary and issue, execute and deliver their Notes to
the Banks pursuant to the Credit Agreements relating to them, and
apply the proceeds thereof as permitted by the Basic Documents to
which they shall be a party;
(f) Apply the proceeds received from issuance of their
Commercial Paper and Notes as provided in the Basic Documents to
which they shall be a party;
(g) Acquire, pay for, and hold such title to and/or
interest in the Nuclear Material as shall be conveyed to them
pursuant to the Basic Documents to which they shall be a party;
(h) Lease the Nuclear Material relating to them to the
Lessees pursuant to the Lease Agreements to which they shall be a
party;
(i) Grant to the Secured Parties the security
interests provided for in the Security Agreements;
(j) Execute and deliver to their Lessees such agree-
ments, documents, instruments, pledges, chattel mortgages,
security agreements, financing statements and certificates
prepared and submitted to them by their Lessees and perform all
such other acts which (i) each of the Companies is obligated to
execute, deliver or perform, and record or file, under any of the
provisions of the Basic Documents relating to them, or (ii) are
in accordance with written instructions of the applicable Lessees
are necessary or advisable in connection with the transactions
- 4 -<PAGE>
contemplated by the Basic Documents to which they shall be a
party, or are incidental to or necessary or appropriate to
consummate any such transactions;
(k) Borrow such amounts, including, without
limitation, amounts in respect of the Credit Agreements to which
they shall be a party, and upon such terms and conditions, issue
such drafts, bills of exchange, promissory notes, obligations or
evidences of indebtedness as may be necessary or desirable to
perform their obligations under the Lease Agreements to which
they shall be a party, all as provided under or permitted by the
terms of the Basic Documents to which they shall be a party, and
perform all of the obligations and duties of each of the
Companies thereunder;
(l) Execute and deliver from time to time, such notes,
drafts, instruments, financing statements, continuation
statements, endorsements and certificates as may be required
pursuant to the terms and conditions of the Credit Agreements, or
Collateral Agreements to which they shall be a party;
(m) Perform each of the Companies' duties and,
pursuant to written instructions of the Lessees, pay each of the
Companies' obligations and exercise each of their rights under
each of the aforesaid agreements and documents, including,
without limitation, from time to time, to:
(i) acquire title and dispose of title to
Nuclear Material pursuant to the terms of the Lease
Agreements relating to them and accept invoices and
Bills of Sale and assignments and partial assignments
of Nuclear Material Contracts and other contracts in
respect thereof;
(ii) make payments for Nuclear Material pur-
suant to the terms of the Lease Agreements; and
(iii) take such action as may be reasonably
requested by any Secured Party under the Collateral
Agreements to perfect or maintain the security
interests thereby created or intended to so be created;
(n) Accept, execute and deliver all other instruments,
documents and agreements presented to each of the Companies by
the applicable Lessees; provided that such instruments, documents
and agreements are reasonably satisfactory to the Owner Trustee
and its counsel, and, upon the written instructions of the
applicable Lessees and only upon such instructions, do all such
things and take all such action as may be necessary, appropriate
or convenient to consummate the transactions contemplated herein
and to perform their duties and obligations as contemplated by
the documents referred to herein, provided that such doing,
taking and performing shall be reasonably satisfactory to the
Owner Trustee;
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(o) Execute and deliver such other agreements, accept
the assignment of such other agreements or rights, and acquire
and dispose of such properties and enter into such transactions,
as the applicable Lessees may lawfully request; provided that
such agreements, assignments, acquisitions and transactions are
reasonably satisfactory to the Owner Trustee and to its counsel;
and perform all of the obligations and duties, and exercise all
of the rights, of the Companies under any such agreements,
assignments, rights or transactions;
(p) Deliver to their Lessees copies of any notices
received by the Companies under any Basic Documents or otherwise
relating to the transactions contemplated thereby; and
(q) Agree to execute and deliver amendments,
modifications, and changes in any Basic Documents when requested
by the applicable Lessees or when requested by the parties hereto
other than the applicable Lessees with and only with the written
consent of the applicable Lessees.
The documents referred to in clauses (a) through (q) of
this Section 4.1 shall be executed in substantially the forms
delivered to the Owner Trustee or the Companies by the applicable
Lessees on or after the date hereof, with such changes as shall
be approved by the applicable Lessees.
4.2 Closing Procedures. The Owner Trustee understands
and agrees that at the direction of the applicable Lessees, it
may be obligated to cause either of the Companies from time to
time to take certain action and execute the documents and
instruments to be executed by them (including Commercial Paper
and Notes) prior to the actual issuance of such Commercial Paper
and Notes and deliver such documents and instruments, some of
which shall be undated, to a law firm representing one of the
Lessees or the Banks, to be held in escrow, which law firm shall,
at the time of closing of such transaction, date all undated
documents and instruments so held by it (including Commercial
Paper and Notes) and deliver them to the appropriate Persons,
such delivery to constitute delivery by the Companies or a
Company, as the case may be, at such time. The Owner Trustee
also agrees that it will cause each of the Companies to take such
other action as may be reasonably requested by the applicable
Lessees in order to effect transactions contemplated by the Basic
Documents.
4.3 Conditions to Effecting Transactions. The
authority and obligation of the Owner Trustee to take the action
required by Section 4.1 hereof shall be subject to the
fulfillment to the satisfaction of the Owner Trustee of each of
the conditions precedent to the action specified in the
applicable Basic Documents.
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SECTION 5. RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE OWNER TRUST ESTATE.
5.1 Application of Proceeds of Financings and Specific
Payments. The Owner Trustee shall cause each of the Companies to
promptly pay all amounts received by them from the issuance of
Commercial Paper and Notes as provided in the Basic Documents to
which they shall be a party and to apply all payments received by
them for which provision as to the application thereof is made in
such Basic Documents forthwith to the purpose for which such
payments were made in accordance with the terms of such Basic
Documents.
5.2 Amounts Payable to the Banks. Unless and until
all Outstandings have been paid in full, the Owner Trustee shall
cause the Companies to pay over upon receipt thereof all amounts
received by them pursuant to the Basic Documents to which they
shall be a party (other than Excepted Payments and amounts
received and applied pursuant to Section 5.4) to the Banks.
5.3 Other Amounts. Except as otherwise provided in
Section 5.4 hereof with respect to Excepted Payments, the Owner
Trustee shall cause each of the Companies to distribute or pay
over all amounts received by them pursuant to the Basic Documents
to which they shall be a party that are not applied pursuant to
Section 5.1 hereof or that are not payable to the Banks pursuant
to Section 5.2 hereof in the following order of priority:
First -- such amounts as may be due and owing
to the Owner Trustee hereunder to the Owner Trustee in
reimbursement therefor; and
Second -- the remainder of such amounts shall
be promptly distributed and paid over to the Trust
Beneficiary.
5.4 Excepted Payments. Notwithstanding anything to
the contrary contained in this Section 5, each Excepted Payment
shall be promptly distributed to the Person to whom such Excepted
Payment is owed in accordance with the Basic Documents.
SECTION 6. DUTIES OF THE OWNER TRUSTEE.
6.1 Documents. The Owner Trustee agrees, subject to
the terms of this Trust Agreement, to cause each of the Companies
pursuant to Section 2.1 or 4.1 hereof to perform the duties
imposed upon them by the Basic Documents to which they shall be a
party and the other agreements, documents, instruments and
certificates executed and delivered, and to be executed and
delivered, by them.
6.2 Notice of Default. In the event the Owner Trustee
shall have knowledge of a default or an event of default, or any
event ("potential default event") which would, with the lapse of
time or the giving of notice or both, constitute an event of
default under any Basic Document, the Owner Trustee shall give
- 7 -<PAGE>
prompt telex, telegraphic or telephonic notice thereof (followed
by prompt written notice in the manner provided in Section 13.4
hereof) to the Trustor, the Lessees and the Secured Parties.
Subject to Section 6.3, the Owner Trustee shall cause each of the
Companies to take such action, and only such action, not
inconsistent with the terms of the Basic Documents to which they
shall be a party, with respect to such default, event of default
or potential default event, as the Owner Trustee or the
applicable Company shall be instructed in writing pursuant to the
Security Agreement to which it is a party. For all purposes of
this Trust Agreement, in the absence of actual knowledge of an
officer in the Corporate Trust Department of the Owner Trustee
who is also an officer or director of either of such Companies,
the Owner Trustee shall not be deemed to have knowledge of a
default, event of default or potential default event, unless and
until notified thereof in writing by the Administrative Agent, a
Secured Party or the Lessee. The Owner Trustee shall have no
duty to inquire as to whether a default, event of default or
potential default event has occurred.
6.3 Indemnification; Legal Action. The Owner Trustee
shall not be required to take any action or refrain from taking
any action under Section 6.2 hereof, or any action which in its
opinion may involve expense or liability to the Owner Trustee,
unless it and each of the applicable Companies, if required, and
the directors, officers, employees and agents of the Owner
Trustee and each of the applicable Companies, if required, shall
have been indemnified by the Banks, in manner and form
satisfactory to the Owner Trustee, against any liability, cost or
expense (including reasonable counsel fees) which may be incurred
in connection with such action or inaction. The Owner Trustee
shall not take any action under Section 6.2 hereof, nor shall any
other provision of this Trust Agreement be deemed to impose a
duty on the Owner Trustee to take any action, if the Owner
Trustee shall reasonably determine, or shall have been advised by
counsel, that such action is contrary to the provisions of this
Trust Agreement or any other Basic Document, or is contrary to
law.
6.4 No Implied Duties. The Owner Trustee shall not
have any duty or obligation to cause either of the Companies to
manage, control, use, sell, dispose of or otherwise deal with the
Nuclear Material or any part thereof or any other part of its
property, or, either in its individual capacity or as trustee,
otherwise to cause either of the Companies to take or refrain
from taking any action under or in connection with this Trust
Agreement or any other Basic Document to which they shall be a
party, except as expressly provided by the provisions of this
Trust Agreement or any other Basic Document to which they shall
be a party, or as expressly provided in written instructions
pursuant to this Section 6 or Section 7.7 hereof and reasonably
satisfactory to the Owner Trustee and its counsel, and shall not
cause either of the Companies to take or refrain from taking any
such action unless expressly so provided or instructed; and no
implied duties or obligations which are additional to the
obligations and duties contained in such Basic Documents shall be
- 8 -<PAGE>
read into this Trust Agreement or the other Basic Documents
against the Owner Trustee. The United States Trust Company of
New York, in its individual capacity, nevertheless agrees that it
will, at its own cost and expense, promptly take such action as
may be necessary duly to discharge any Liens other than Permitted
Liens or any part of the property of either Company or the Owner
Trust Estate (a) resulting from any claim against the Owner
Trustee in its individual capacity arising out of events or
conditions not related to or connected with the ownership of the
Owner Trust Estate, the administration of the Owner Trust Estate
or any other transaction contemplated by any of the Basic
Documents or (b) resulting from any voluntary action of the Owner
Trustee which (i) is taken other than pursuant to the
instructions of either of the Lessees or the Secured Parties and
(ii) is not taken as the result of any default by any of the
Lessees under any Basic Documents or in the performance of the
obligations of either of the Companies under any Basic Document
to which either of the Companies shall be a party. Nothing in
this Section 6.4 shall be construed to affect the legality,
validity or enforceability of the obligations of either of the
Companies under the Basic Documents to which they shall be a
party or to restrict the rights and remedies available against
either of the Companies under such Basic Documents.
6.5 No Unauthorized Transactions. The Owner Trustee
agrees that it will not cause or permit either of the Companies
to manage, control, use, sell, dispose of or otherwise deal with
any part of the Nuclear Material or any other part of its
property except (a) as expressly permitted or required by the
terms of any Basic Document to which they shall be a party, (b)
in accordance with the powers granted to or the authority
conferred on the Owner Trustee pursuant to this Trust Agreement
or (c) in accordance with written instructions pursuant to this
Section 6 or Section 7.7 hereof.
SECTION 7. THE OWNER TRUSTEE.
7.1 Acceptance of Trust, Etc.
(a) The Owner Trustee accepts the trusts hereby
created and agrees to perform the same upon the terms of this
Trust Agreement, and agrees to disburse any and all moneys and
property received by it constituting part of the Owner Trust
Estate in accordance with the terms of this Trust Agreement.
(b) The Owner Trustee and any of its officers,
employees, agents or representatives serving as an officer or
director of either of the Companies shall not be answerable or
accountable under any circumstances except for their or such
Person's own willful misconduct or gross negligence. The Owner
Trustee shall not be liable for any loss, damage, liability,
claim, cost or expense (including reasonable counsel fees and
expenses) incurred by or asserted against the Trustor, the Trust
Beneficiary, any Lessee, or either of the Companies (whether
resulting from any diminution of the Owner Trust Estate by reason
of a claim against the Owner Trust Estate or otherwise) except
- 9 -<PAGE>
for such losses, damages, liability, claims, costs, or expenses
caused by (i) the willful misconduct or gross negligence of the
Owner Trustee, (ii) the Owner Trustee's failure to discharge
Liens pursuant to the penultimate sentence of Section 6.4 hereof,
(iii) the inaccuracy of any of the representations or warranties
contained in Section 7.3 of this Trust Agreement, (iv) taxes,
fees or other governmental charges imposed on the Owner Trustee,
based on or measured by any fees, commissions or compensation
received by it for services rendered in connection with any of
the transactions contemplated by the Basic Documents and (v) its
failure to use the degree of care of a reasonable corporate
trustee to disburse moneys actually received by it in accordance
with the terms hereof.
(c) Whether or not expressly so provided, every
provision of this Trust Agreement relating to the conduct or
affecting the liability of or affording protection to the Owner
Trustee shall be subject to the provisions of Section 7.1(b)
hereof.
7.2 Limitation of Duties.
The Owner Trustee shall have no duty itself and no duty
to cause either Company (i) to see to any recording or filing of
this Trust Agreement or of any Basic Document or of any other
document referred to herein or therein or with respect to any
security interest or lien, or to see to the maintenance of any
such recording or filing, (ii) to see to any insurance on the
Nuclear Material or to effect or maintain any such insurance,
whether or not the Lessee shall be in default with respect
thereto, other than to receive and forward to the Collateral
Agent any notices, policies, certificates or binders received by
the Owner Trustee or either of the Companies pursuant to the
Lease Agreements, (iii) except as provided in the penultimate
sentence of Section 6.4 hereof, to see to the payment or
discharge of any tax, assessment or other governmental charge or
any Lien of any kind owing with respect to, assessed or levied
against any part of the Owner Trust Estate or property of either
Company, or any fees or charges in connection therewith, other
than to forward notice of such tax, assessment or other
governmental charge or Lien received by the Owner Trustee to the
applicable Lessees, (iv) to monitor the receipt of or confirm or
verify any financial statements of a Lessee or (v) to inspect the
Nuclear Material at any time or ascertain or inquire as to the
performance or observance of any of a Lessee's covenants under
the Lease Agreement or any other Basic Documents. Notwith-
standing the foregoing, the Owner Trustee will furnish to the
applicable Lessees, promptly upon receipt thereof, duplicates of
all reports, notices, requests, demands, certificates and other
instruments furnished to the Owner Trustee or either of the
Companies under any of the Basic Documents to which they shall be
a party unless any such document or accompanying documentation
shall state that such document has previously been furnished
directly to such Lessees.
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7.3 Representations and Warranties of Owner Trustee.
THE OWNER TRUSTEE MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE VALUE, CONDITION, DESIGN, OPERATION, QUALITY,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY PART
OF THE NUCLEAR MATERIAL, OR AS TO THE OWNER TRUSTEE'S OR A
COMPANY'S TITLE THERETO, OR LEASEHOLD INTEREST THEREIN, OR ANY
OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE NUCLEAR
MATERIAL WHATSOEVER, EXCEPT that the Owner Trustee hereby
represents, warrants and covenants to the applicable Lessees that
the Owner Trustee shall have caused each of the Companies to have
accepted whatever title to or leasehold interest in the Nuclear
Material as was conveyed to it.
7.4 Deposit of Funds. Moneys received by the Owner
Trustee or a Company may be deposited with the Owner Trustee
under such general conditions as may be prescribed by law in the
general banking department of the Owner Trustee and the Owner
Trustee shall not be liable for any interest thereon except as
may be agreed to by it.
7.5 Reliance on Documents; Agents; Right to Consult
with Counsel and Others; Etc.
(a) The Owner Trustee shall not be liable to the
Trustor, Lessees, the Beneficiary or others who are or may be
parties to agreements with the Owner Trustee in acting upon any
writing or oral notification; including but not limited to,
instructions from the Beneficiary, the applicable Lessee
(pursuant to the Lease Agreements), or such other parties and
certificates of any officer thereof, letters, facsimile
transmissions, telexes, telegrams and cablegrams, in assuming the
truth and correctness of any statement, opinion or assertion of
any nature therein, provided, however, that any such writing or
oral notification is believed by the Owner Trustee to be genuine
and to have been sent or communicated by or on behalf of a party
or parties to the Basic Documents.
(b) The Owner Trustee shall not incur any liability to
anyone in acting in reliance upon any signature, instrument,
notice, resolution, request, consent, telegram, order,
certificate, report, opinion, bond or other document or paper
believed by it in good faith to be genuine and believed by it in
good faith to be signed by the proper party or parties. The
Owner Trustee may accept a copy of a resolution of the Board of
Directors (or the Executive Committee thereof) of any party,
certified by the Secretary or an Assistant Secretary of the same
as duly adopted and in full force and effect as conclusive
evidence that such resolution has been duly adopted by said Board
of Directors (or Executive Committee thereof) and that such
resolution is in full force and effect. As to any fact or matter
the manner of ascertainment of which is not specifically
prescribed herein, the Owner Trustee may for all purposes hereof
rely as to such fact or matter on an Officer's Certificate as to
such fact or matter, and such an Officer's Certificate shall
constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance
- 11 -<PAGE>
thereon. In the administration of the trusts hereunder the Owner
Trustee may execute any of the trusts or powers hereof and
perform its powers and duties hereunder directly or through
agents or attorneys and may, at the expense of the Owner Trust
Estate (unless such person is regularly in the Owner Trustee's
employ), consult with counsel, accountants and other skilled
persons of generally accepted competence to be selected and
retained by it, and the Owner Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion of any such counsel,
accountants or other skilled persons (unless such person is
regularly in the Owner Trustee's employ), provided such thing is
not contrary to this Trust Agreement and such advice or opinion
interprets or applies to this Trust Agreement.
7.6 Not Acting in Individual Capacity. In accepting
the trusts hereby created, the Owner Trustee acts solely as
trustee hereunder and not in its individual capacity and all
Persons, other than as provided in Section 7.1(b) herein, having
any claim against the Owner Trustee by reason of the transactions
contemplated hereby shall look only to the Owner Trust Estate for
payment or satisfaction thereof.
7.7 Interpretation of Trust Agreement. In the event
that the Owner Trustee is uncertain as to the application of any
provision of this Trust Agreement, or such provision is ambiguous
as to its application or is, or appears to be, in conflict with
any other applicable provision hereof, or in the event that this
Trust Agreement permits any determination by the Owner Trustee or
is silent or incomplete as to the course of action which the
Owner Trustee is required to take with respect to a particular
set of facts, the Owner Trustee may seek instructions from the
applicable Lessees and shall not be liable to any Person to the
extent that its acts in good faith in accordance with the
instructions of such Lessees.
7.8 Compensation. The applicable Lessees shall pay to
the Owner Trustee, and the Owner Trustee shall be entitled to
receive from the applicable Lessees, reasonable compensation for
its services, including without limitation, services in causing
each of the Companies to take actions hereunder, and
reimbursement for its expenses hereunder, which fees shall not be
limited by any provisions of law with respect to the trustee of
an express trust. No separate fee shall be chargeable to a
Company except as provided in the Basic Documents to which they
shall be a party.
7.9 Books, Records and Tax Returns.
(a) Except for financial statements and tax returns,
the Owner Trustee shall be responsible for the keeping of all
books and records relating to the receipt and disbursement of all
moneys under this Trust Agreement. The Owner Trustee agrees to
prepare, sign and/or file and to cause each of the Companies to
prepare, sign and/or file all returns and reports with respect to
taxes (including but not limited to tax returns and any
- 12 -<PAGE>
information, returns or reports for each of the Companies and the
Trust, if any) as the applicable Lessees shall direct with
respect to all transactions encompassed by the Basic Documents as
provided in this Section 7.9. The Owner Trustee shall keep
copies of all returns delivered to it or filed by it. The Owner
Trustee shall not be personally liable for any tax due and
payable in connection with this Trust Agreement or any other
Basic Document except for any such tax arising from its own
willful misconduct or gross negligence and except for any tax
based on or measured by amounts paid to the Owner Trustee as fees
or compensation in connection with the transactions contemplated
hereby pursuant to Section 7.8 hereof or otherwise.
(b) In addition, the Owner Trustee shall be
responsible for certain administrative activities to be performed
on behalf of the Companies including (i) receiving and causing
the Company to countersign Leasing Records; (ii) receiving
invoices relating to Nuclear Material Contracts; (iii) receiving
and causing the Company to approve administrative invoices
relating to the Companies; (iv) receiving monthly rate notices
from the Banks with respect to the payment of Outstandings and
causing the Company to forward copies to Lessees; (v) receiving
periodic reports from Lessee as described in Section 20 of the
Lease Agreements; (vi) maintaining records of the Stipulated
Casualty Value of Nuclear Material under the Lease Agreements and
the limitations on such Stipulated Casualty Value as set forth in
Section 4 of the Lease Agreements; (vii) preparing and
maintaining all books of account of the Companies; and (viii)
performing any other duties as may be agreed upon in writing with
the applicable Lessees.
(c) The Owner Trustee shall retain Coopers & Lybrand
L.L.P. or another firm of certified accountants of nationally
recognized standing to prepare financial statements for the
Companies and to prepare and file with all appropriate
governmental authorities all returns and reports with respect to
taxes (including but not limited to tax returns and any
information, returns or reports for each of the Companies and the
Trust, if any) as the applicable Lessees shall direct with
respect to all transactions encompassed by the Basic Documents on
behalf of the Companies and the Trust. The applicable Lessees
shall be responsible for payment of such firm in connection with
the performance of such services.
7.10 Effect of Sales by a Company. Any sale of all or
part of the Nuclear Material or other property owned by either of
the Companies which the Owner Trustee causes such Company to make
shall bind the Trust and the Trust Beneficiary and shall be
effective for the benefit of the purchasers thereof and their
respective successors and assigns to divest and transfer all
right, title and interest in the property so sold, and no such
purchasers shall be required to inquire as to compliance by the
Owner Trustee with any of the terms of this Trust Agreement or to
see to the application of any consideration paid for such
property; provided, however, that, except in the case of the
security interest in the Nuclear Material granted by either of
- 13 -<PAGE>
the Companies to the Secured Parties, the Owner Trustee shall not
cause or permit such Company to make any sale or other transfer
of title to or right to possession or use of any part of the
Nuclear Material (other than pursuant to the Lease Agreements to
which it shall be a party) unless and until the Owner Trustee
shall have received from the proposed transferee an opinion of
counsel, satisfactory to the Owner Trustee, that such transferee
has obtained all permits, licenses, consents, approvals and
authorizations necessary for such sale or other transfer, and
that such sale or other transfer will not otherwise violate any
applicable law or regulations; provided, further, that notice of
such sale and a copy of such opinion of counsel shall be given to
the Secured Parties; and provided, further, that, except as
expressly permitted by the Collateral Agreements to which they
shall be a party, the Owner Trustee shall have no right or power
itself and shall not cause or permit either Company to sell or
otherwise transfer title to or the right to possession or use of
any part of the Nuclear Material other than to their Lessees or
the designees thereof pursuant to the Lease Agreements to which
they shall be a party.
7.11 Exculpatory Provisions. Except for those set
forth in Section 7.3, the Owner Trustee shall not be responsible
in any manner whatsoever for the correctness of any recitals,
statements, representations or warranties contained herein or in
the Basic Documents, all of which are made solely by each of the
Companies. The Owner Trustee makes no representations as to the
value or condition of the Collateral or any part thereof, or as
to the title of either Company to the Collateral (other than as
provided in Section 7.3) or as to the security afforded by the
Collateral Agreements, or as to the validity, execution,
enforceability, legality or sufficiency hereof or of the
Collateral Agreements, and the Owner Trustee shall incur no
liability or responsibility in respect of any such matters. The
Trust Agreement and any other document executed and delivered by
the Owner Trustee in connection herewith is intended to be a
corporate obligation of the Owner Trustee only. Therefore,
anything contained in the Trust Agreement, the Lease Agreements,
the Credit Agreements, the Security Agreements and any other
document to the contrary notwithstanding, no recourse may be made
by the Trust Beneficiary, the Lessees, any of the Secured Parties
or any other Person against any incorporator, shareholder (direct
or indirect), Affiliate, director, officer, employee or agent of
the Owner Trustee with respect to claims against the Owner
Trustee arising under or relating to this Trust Agreement;
provided, however, that nothing in this Section 7.11 shall
relieve the Owner Trustee from its corporate obligations under
this Trust Agreement.
SECTION 8. INDEMNIFICATION OF THE OWNER TRUSTEE, THE
TRUSTOR AND THE TRUST BENEFICIARY.
The Lessees agree (whether or not any of the
transactions contemplated hereby are consummated) to assume
liability for, and do hereby indemnify, protect, save and keep
harmless the Owner Trustee, the Trustor and the Trust Beneficiary
- 14 -<PAGE>
and each of their successors, assigns, agents, representatives
and servants, in the case of the Owner Trustee including but not
limited to its employees, agents, representatives or designees
acting as officers or directors of either of the Companies, (the
Owner Trustee, the Trustor and the Trust Beneficiary and such
others being collectively referred to as the "Indemnified
Persons") from and against, any and all liabilities, obligations,
losses, damages, taxes (except as set forth below), penalties,
claims, actions, suits, costs, expenses and disbursements
(including reasonable legal fees and disbursements) of any kind
and nature whatsoever (for purposes of this Section 8,
collectively referred to as "Liabilities") which may be imposed
on, incurred by or asserted at any time against the Indemnified
Persons (whether or not also indemnified against by any other
Person under any other document) in any way relating to or
arising out of the administration of the Owner Trust Estate or
the action or inaction of the Indemnified Persons in connection
with the provisions hereof or: (a) the manufacture, design,
acquisition, construction, installation, ownership, purchase,
acceptance, nonacceptance, possession, use, operation, condition,
sale, lease, sublease or other disposition of the Nuclear
Material or Owner Trust Estate property or any part thereof,
including, without limitation, (i) latent and other defects,
whether or not discoverable, (ii) any claim, for patent,
trademark or copyright infringement, (iii) loss of or damage to
any property or the environment, (iv) death of or injury to any
person and (v) tort claims of any kind; or (b) this Trust
Agreement or any of the Basic Documents or any other document
referred to herein or therein pertaining to the transactions
contemplated hereby and thereby, or the enforcement of any of the
terms hereof or thereof; except only that the Lessees shall not
be required to indemnify the Indemnified Persons for: (A)
Liabilities resulting solely from willful misconduct or gross
negligence on the part of the Indemnified Persons; and (B)
Liabilities resulting from matters from which the Owner Trustee
is not exculpated pursuant to the last sentence of Section 7.1(b)
hereof. Notwithstanding anything in this Trust Agreement to the
contrary, the Lessees shall have no obligation whatsoever to the
Indemnified Persons for any Liabilities with respect to, or
resulting from, any taxes based on or measured by amounts paid to
the Owner Trustee as fees or compensation in connection with the
transactions contemplated hereby pursuant to Section 7.8 hereof
or otherwise. With respect to any taxes for which the Lessees
are liable to the Indemnified Persons under this Section 8 (the
"Indemnified Taxes"), the Indemnified Persons shall be obligated
to claim, on a timely basis, any refund to which they may be
entitled with respect to any Indemnified Taxes, to take all steps
necessary to diligently prosecute such claim, and to pay over to
the Lessees any refund (and any interest thereon) recovered by
them as soon as practicable after receipt thereof. The indemni-
ties, rights and obligations contained in this Section 8 shall
survive the termination of this Trust Agreement. The Owner
Trustee shall be entitled to indemnification from the Owner Trust
Estate for any Liabilities indemnified against pursuant to this
Section 8 to the extent not reimbursed by the applicable Lessees
or any other Person; and to secure the same the Owner Trustee
- 15 -<PAGE>
shall have a lien on the Owner Trust Estate prior to any interest
therein of the Trust Beneficiary but subject and subordinate to
the lien of the Collateral Documents upon the Nuclear Material
and other property of the Companies.
SECTION 9. CO-TRUSTEES, SEPARATE TRUSTEES.
(a) At any time, for the purposes of conforming to the
legal requirements or restrictions of any jurisdiction in which
any part of the Owner Trust Estate (owned directly or indirectly)
may at the time be located and subject to the prior receipt of
all necessary governmental approvals and consents, the Owner
Trustee shall have the power to appoint one or more Persons
approved by the Lessees either to act as a co-trustee or co-
trustees, jointly with the Owner Trustee, of all or any part of
the Owner Trust Estate, or to act as separate trustee or trustees
of any property constituting part of the Owner Trust Estate, in
either case with such powers as may be provided in the instrument
of appointment, and to vest in such Person or Persons, in the
capacity as aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the remaining provisions of
this Section 9.
(b) Every co-trustee or separate trustee shall, to the
extent permitted by law, be appointed subject to the following
terms:
(i) All rights, powers, duties and obligations
conferred upon the Owner Trustee in respect of the
receipt, custody and payment of moneys shall be
exercised solely by the Owner Trustee;
(ii) All other rights, powers, duties and obliga-
tions conferred or imposed upon the Owner Trustee
hereby or by any Basic Document to which the Owner
Trustee shall be a party shall be conferred or imposed
upon and exercised or performed by the Owner Trustee or
by the Owner Trustee and such co-trustee or co-trustees
or separate trustee or separate trustees jointly, as
shall be provided in the instrument appointing such co-
trustee or co-trustees or separate trustee or separate
trustees, except to the extent that, under the law of
any jurisdiction in which any particular act or acts
are to be performed, the Owner Trustee shall be
incompetent or unqualified to perform such act or acts,
in which event such rights, powers, duties and
obligations shall be exercised and performed by such
co-trustee or co-trustees or separate trustee or
separate trustees;
(iii) The Owner Trustee at any time, by an
instrument in writing executed by it, may accept the
resignation of or remove any co-trustee or separate
trustee appointed under this Section 9, and a successor
to any co-trustee or separate trustee so resigned or
- 16 -<PAGE>
removed may be appointed in the manner provided in this
Section 9;
(iv) No trustee hereunder shall be personally
liable by reason of any act or omission of any other
trustee hereunder except, in the case of the Owner
Trustee, if a co-trustee or separate trustee is an
employee of the Owner Trustee;
(v) No power given hereby to any such co-trustee
or separate trustee shall be separately exercised
hereunder by such co-trustee or separate trustee except
with the consent in writing of the Owner Trustee,
anything herein contained to the contrary
notwithstanding. The power to vote or appoint proxies
to vote with respect to any shares of the capital stock
of the Company shall be exercised solely by the Owner
Trustee itself or its successor Owner Trustees
hereunder.
(c) Any notice, request or other writing delivered to
the Owner Trustee shall be deemed to have been delivered to all
of the then co-trustees or separate trustees as effectively as if
delivered to each of them. Every instrument appointing any
trustee or trustees other than a successor to the original Owner
Trustee shall refer to this Section 9 and the conditions
expressed herein. Upon the acceptance in writing of such
appointment by any such co-trustee or separate trustee, he, she
or it shall be vested with the estate or property specified in
the instrument of appointment jointly with the Owner Trustee
(except insofar as local law makes it necessary for any such co-
trustee or separate trustee to act alone) subject to all the
provisions of this Trust Agreement. Each such acceptance shall
be filed with the Owner Trustee with copies to the Trust
Beneficiary, the Lessees and the Secured Parties. Any co-trustee
or separate trustee may, at any time by an instrument in writing,
constitute the Owner Trustee his or its agent and attorney-in-
fact, with full power and authority to do all acts and things and
to exercise all discretion on his or its behalf and in his or its
name. In case any co-trustee or separate trustee shall die or be
dissolved, become incapable of acting, resign or be removed, all
the estates, properties, rights, powers, trusts, duties and
obligations of said co-trustee or separate trustee, as far as
permitted by law, shall vest in and be exercised by the Owner
Trustee without the appointment of a new trustee as successor to
such co-trustee or separate trustee.
(d) Any and all exculpatory provisions, immunities and
indemnities in favor of the Owner Trustee under this Trust
Agreement or under any other agreement, document or instrument
described or referred to which apply to the Owner Trustee shall
also apply to any co-trustees and separate trustees appointed
pursuant to this Section 9.
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<PAGE>
SECTION 10. SUCCESSOR TRUSTEES.
(a) The Owner Trustee or any successor thereto may
resign without cause at any time by giving at least 90 days'
prior written notice to the Trust Beneficiary, the Lessees and
the Secured Parties. Any such resignation shall become effective
upon acceptance of appointment by the successor Owner Trustee
under Section 10(c) hereof. In addition, the Lessees may at any
time remove the Owner Trustee with or without cause by an
instrument in writing delivered to the aforesaid Persons and to
the Owner Trustee, such removal to be effective upon the
acceptance of appointment by the successor Owner Trustee under
Section 10(c) hereof; provided, however, that if an Event of
Default under the Lease Agreements has occurred and is
continuing, such removal shall be effective only with the consent
of the Secured Parties. In the case of the resignation or
removal of the Owner Trustee, the Lessees may appoint, by an
instrument in writing, with copies to the Secured Parties, a
successor Owner Trustee. If a successor Owner Trustee shall not
have been appointed and accepted its appointment under Section
10(c) hereof within 60 days after such written notice of such
resignation or such delivery of the notice relating to such
removal, the Owner Trustee or the Lessees may apply to any court
of competent jurisdiction to appoint a successor Owner Trustee to
act until such time, if any, as a successor Owner Trustee shall
have accepted its appointment as above provided. Any successor
Owner Trustee so appointed by such court shall immediately and
without further act be superseded by any successor Owner Trustee
appointed by the Lessees as above provided.
(b) Should the Person then serving as Owner Trustee
hereunder (a) cease its activities or cease doing business as a
going concern (other than pursuant to a transaction described in
Section 10(e) hereof), or (b) become incapable of acting as such,
or (c) make an assignment for the benefit of creditors, or (d)
admit in writing his or its inability to pay its debts as they
become due or (e) file a voluntary petition in bankruptcy, or (f)
be adjudicated a bankrupt or insolvent or have an order for
relief entered against it in any proceeding under the Bankruptcy
Reform Act of 1978, as amended, or any law with respect to
bankruptcy, insolvency or reorganization that is a successor
thereto, or (g) file a petition seeking for itself any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar arrangement under any present
or future statute, law or regulation, or (h) file an answer
admitting the material allegations of such a petition filed
against it in any such proceeding, or (i) consent to or acquiesce
in the appointment of a trustee, receiver or liquidator of him or
it or all or any substantial part of its assets or properties, or
(j) take any action looking to its dissolution or liquidation, or
(k) be subject to any proceeding against it seeking
reorganization, arrangement, readjustment, liquidation,
dissolution or similar relief under any present or future
statute, law or regulation, which proceeding is not dismissed
within forty-five (45) days after commencement thereof, or (1) be
subject to the appointment, without its consent or acquiescence,
of any trustee, receiver or liquidator of it or all or any
substantial part of its assets or properties, which appointment
- 18 -<PAGE>
is not vacated within forty-five (45) days after the date
thereof, then such Person shall be deemed to have resigned as
Owner Trustee hereunder effective immediately prior to the
occurrence of any matter specified in items (a) through (j)
above, or, in the event of the occurrence of any of the matters
specified in items (k) or (l) above, immediately prior to the
expiration of the 45-day period specified therein. Upon any
resignation of the Owner Trustee, the Lessees shall appoint a
successor trustee hereunder.
(c) Any successor Owner Trustee, whether appointed by
a court or by the Lessees or otherwise, shall execute and deliver
to the predecessor Owner Trustee an instrument accepting such
appointment, and thereupon such successor Owner Trustee, without
further act, shall become vested with all the estates,
properties, rights, powers, duties, obligations and trusts of the
predecessor Owner Trustee with like effect as if originally named
as Owner Trustee herein; but nevertheless, upon the written
request of such successor Owner Trustee, such predecessor Owner
Trustee shall execute and deliver an instrument transferring to
such successor Owner Trustee, subject to its lien pursuant to
Section 8 of this Trust Agreement and payment of any amounts due
the predecessor Owner Trustee, upon the trusts herein expressed,
all the estates, properties, rights, powers and trusts of such
predecessor Owner Trustee hereunder (including, without
limitation, all such instruments, in proper form for recording
where appropriate as may be necessary or appropriate to transfer
the Owner Trust Estate to such successor Owner Trustee), and such
predecessor Owner Trustee shall duly assign, transfer, deliver
and pay over to such successor Owner Trustee certificates
representing all of the issued and outstanding capital stock of
each of the Companies registered in the name of the Owner Trustee
and all moneys or other property then held by such predecessor
Owner Trustee upon the trusts herein expressed, and shall deliver
to such successor Owner Trustee any and all records or copies
thereof, in respect of the Trust or the Owner Trust Estate which
it may have.
(d) Any successor Owner Trustee, however appointed,
shall be a Qualified Institution if there be such an institution
willing, able and legally qualified to perform the duties of the
Owner Trustee hereunder upon reasonable or customary terms;
provided, however, that the appointment of such Qualified
Institution as successor Owner Trustee shall not violate any
provision of any law or regulation or create a relationship which
would be in violation thereof, and that all consents and
approvals of, and filings and declarations with, any governmental
authority which are necessary in connection with such appointment
shall have been obtained or made and shall be in full force and
effect.
(e) Any corporation into which the Owner Trustee in
its individual capacity may be merged or converted or with which
it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Owner Trustee in
its individual capacity shall be a party, or any corporation to
- 19 -<PAGE>
which all or substantially all the corporate trust business of
the Owner Trustee in its individual capacity may be transferred,
shall, subject to the terms of Section 10(d) hereof, be Owner
Trustee under this Agreement without further act.
SECTION 11. SUPPLEMENTS AND AMENDMENTS TO THIS TRUST
AGREEMENT AND THE BASIC DOCUMENTS.
11.1 Supplements Upon Request of the Lessee. Subject
to Section 11.2 hereof and any applicable provision of the Basic
Documents (including but not limited to the Credit Agreements),
at any time and from time to time, upon the written request of
the Lessees, (a) the Owner Trustee together with the Lessees,
with the consent of the Trustor, shall execute an amendment or
supplement hereto for the purpose of adding provisions to, or
changing or eliminating provisions of, this Trust Agreement as
specified in such request and (b) the Owner Trustee shall cause
either of the Companies to enter into such written amendment of
or supplement to any of the Basic Documents to which they shall
be a party or other documents referred to in any thereof as the
other party or parties to any such instrument may agree to and as
may be specified in such request, or execute and delivery such
written waiver or modification of the terms of any such
instrument as may be specified in such request; provided,
however, that no such amendment or supplement shall extend the
maximum term of this Trust beyond the term provided for by
Section 12 hereof. It shall not be necessary for any such
written request to specify the particular form of the proposed
document to be executed, but it shall be sufficient if such
request shall indicate the substance thereof. Except as
expressly provided herein, the Owner Trustee and the Trustor need
not consent to, approve, or join in any such amendment or
supplement for it to be valid and effective; provided, however,
that no such amendment or supplement may increase any duties or
responsibilities of the Owner Trustee or affect any immunity or
indemnity in its favor under this Trust Agreement or any of the
Basic Documents or increase its duties or obligations hereunder
or thereunder without the Owner Trustee's written consent.
11.2 Amendments and Supplements Affecting Owner
Trustee. If in the opinion of the Owner Trustee any document
required to be executed pursuant to the terms of Section 11.1
hereof affects any immunity or indemnity in its favor under this
Trust Agreement or any of the Basic Documents or increases its
duties or obligations hereunder or thereunder, the Owner Trustee
may in its discretion decline to execute such document.
SECTION 12. TERMINATION OF TRUST, ETC.
This Trust Agreement and the Trust created hereby shall
terminate and this Trust Agreement shall be of no further force
and effect upon the earlier of (i) the payment in full of all
Outstandings under the Credit Agreements and the expiration or
termination of all Commitments, and the sale or other final
disposition by the Secured Parties and/or the Owner Trustee and
each of the Companies, as the case may be, of all property
- 20 -<PAGE>
consisting of the Owner Trust Estate and property of each of the
Companies and the final distribution by the Secured Parties
and/or the Owner Trustee and each of the Companies, as the case
may be, of all moneys and other property or proceeds constituting
a part of the Owner Trust Estate and property of each of the
Companies in accordance with the terms of this Trust Agreement
and/or the Collateral Agreements, as the case may be; provided
that at such time the Lessee shall have fully complied with all
of the terms of the Basic Documents, or (ii) twenty-one years
less one day after the death of the life of the last survivor of
the members of the Board of Directors of General Public Utilities
Corporation now in office and their children, living on the date
hereof. Otherwise, this Trust Agreement and the Trust created
hereby shall continue in full force and effect in accordance with
the terms hereof. If the Trust shall terminate by operation of
law prior to its intended termination, the Owner Trustee and the
Trustor agree to take all reasonable actions to extend or reform
the Trust. Upon termination of the Trust, the funds held in the
Owner Trust Estate shall be distributed as provided in Section 5
of this Trust Agreement and all other property in the Owner Trust
Estate including but not limited to all of the stock of the
Companies, shall be assigned and distributed to the Trust
Beneficiary, or as otherwise then directed in writing by the
Trust Beneficiary.
SECTION 13. MISCELLANEOUS.
13.1 Legal Title to Owner Trust Estate. No Person
other than the Owner Trustee shall have legal title to any part
of the Owner Trust Estate. No transfer, by operation of law or
otherwise, of any right, title or interest of any Person in and
to the Owner Trust Estate or hereunder shall operate to terminate
this Trust Agreement or the trusts hereunder to entitle any
successor or transferee of such Person to an accounting or to the
transfer to it of legal title to any part of the Owner Trust
Estate.
13.2 Validity of Sale of Owner Trustee. Any sale or
other conveyance of the Nuclear Material or other property of
either Company or Owner Trust Estate property or any part thereof
by such Company or the Owner Trustee made pursuant to the terms
of this Trust Agreement or the Lease Agreement or any other Basic
Documents to which such Company is a party shall bind each Person
having any right, title or interest in such Nuclear Material,
other property, or Owner Trust Estate, and shall be effective to
transfer or convey all right, title and interest of either
Company, the Owner Trustee and such Persons in and to the Nuclear
Material or leasehold interest or any part thereof. No purchaser
or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale
or conveyance or as to the application of any sale or other
proceeds with respect thereto by either Company or the Owner
Trustee.
13.3 Trust Agreement for Benefit of Parties thereto.
Nothing in this Trust Agreement, whether expressed or implied,
- 21 -<PAGE>
shall be construed to give to any Person, other than the Owner
Trustee, the Trustor, the Lessees and the Trust Beneficiary any
legal or equitable right, remedy or claim under or in respect of
this Trust Agreement or the Owner Trust Estate, and this Trust
Agreement shall be for the sole and exclusive benefit of such
Persons. Notwithstanding the foregoing sentence, the Companies
shall be third party beneficiaries of Section 7.1(b).
13.4 Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices and other
communications hereunder shall be in writing, personally
delivered or mailed by certified mail, postage prepaid or
telegraphed, telecopied or telexed and (a) if to the Trustor,
addressed to it at c/o Lord Securities Corporation, 2 Wall
Street, 19th Floor, New York, New York 10005, Fax: (212) 316-
9012, Attention: Vice President; (b) if to the Owner Trustee,
addressed to it at the principal office of the Owner Trustee at
United States Trust Company of New York, 114 West 47th Street,
New York, New York 10036, Attention: Corporate Trust and Agency
Division, Fax: (212) 852-1625; (c) if to the Lessees, addressed
to them at Jersey Central Power & Light Company, 300 Madison
Avenue, Morristown, New Jersey 07960, Attention: Comptroller; and
Metropolitan Edison Company and Pennsylvania Electric Company,
2800 Pottsville Pike, Reading, Pennsylvania 19640, Attention:
Comptroller; with a copy to GPU Service Corporation, 100
Interpace Parkway, Parsippany, New Jersey 07054, Attention:
Assistant Treasurer; (d) if to the Trust Beneficiary, addressed
to it at the same address as the Trustor; and (e) if to the
Secured Parties, addressed to them as described in the Security
Agreements or (f) as to any such party, at such other address as
such party shall have furnished to the other party. Each notice
shall be deemed received when personally delivered, five days
after sent by certified mail or one day after sent by telecopy.
13.5 Severability. Any provision of this Trust
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to each 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.
13.6 Waivers, Etc. No term or provision of this Trust
Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party
against whom enforcement of the change, waiver, discharge or
termination is sought, and any waiver of the terms hereof shall
be effective only in the specific instance and for the specific
purpose given.
13.7 Counterparts. This Trust Agreement may be
executed by the parties hereto in separate counterparts, each of
which when so executed and delivered shall be an original, but
all such counterparts shall together constitute but one and the
same instrument.
- 22 -<PAGE>
13.8 Successors and Assigns. All covenants and agree-
ments contained herein shall be binding upon and shall inure to
the benefit of the Owner Trustee and its successors and the
Trustor and its successors, and the Lessees and Trust Beneficiary
and its successors. The Trustor and the Trust Beneficiary shall
not transfer nor assign (otherwise than by merger or
consolidation or transfer by the Trust Beneficiary otherwise
permitted by the Lease Agreement with respect to the Trust
Beneficiary's interest thereunder) any or all interests
hereunder.
13.9 Headings. The headings of the various Sections
herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
13.10 Self-Dealing. The Owner Trustee in its
individual capacity or any corporation in or with which the Owner
Trustee in its individual capacity or its shareholders may be
interested or affiliated, including but not limited to the
Companies, or any officer or director of the Owner Trustee in its
individual capacity or of any other such corporation, or any
agent appointed by the Owner Trustee, may have commercial
relations and otherwise deal with the Trustor, the Trust
Beneficiary, any Secured Party, the Companies, and the Lessees or
with any other corporation having relations with the Trustor, the
Trust Beneficiary, the Banks, the Companies, or the Lessees and
with any other corporation or entity, whether or not affiliated
with the Owner Trustee.
13.11 Governing Law. THIS TRUST AGREEMENT SHALL IN
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, EXCEPT TO THE EXTENT THAT
THE DELAWARE GENERAL CORPORATION LAW GOVERNS THE COMPANIES'
RELATIONSHIP WITH THE TRUST AS ITS SOLE STOCKHOLDER.
13.12 No Unauthorized Transactions. The Trustor
agrees that it will not take or refrain from taking any action
under this Trust Agreement or in connection with the Owner Trust
Estate except as expressly required by the terms of this Trust
Agreement.
13.13 Rights and Remedies.
(a) Pursuit of any remedy shall not be deemed a waiver
of any other remedy hereunder or at law or equity; and
(b) The rights, remedies, powers and privileges herein
provided are cumulative and not exhaustive of the rights,
remedies, powers and privileges permitted by law.
IN WITNESS WHEREOF, the parties hereto have caused this
Trust Agreement to be duly executed as of the day and year first
above written in the presence of the undersigned witnesses.
- 23 -<PAGE>
TRUSTOR AND TRUST BENEFICIARY
Witnesses: LORD FUEL CORP., AS TRUSTOR
AND TRUST BENEFICIARY
______________________
______________________ By :_________________________
Name:_________________________
Title:_________________________
OWNER TRUSTEE
Witnesses: UNITED STATES TRUST COMPANY OF
NEW YORK, as trustee
______________________
______________________ By:_________________________
Name:_________________________
Title:_________________________
LESSEES
Witnesses: JERSEY CENTRAL POWER & LIGHT
COMPANY
______________________
______________________ By:_________________________
Name:T. G. Howson
Title:Vice President & Treasurer
- 24 -<PAGE>
Witnesses: METROPOLITAN EDISON COMPANY
______________________
______________________ By:_________________________
Name :T. G. Howson
Title:Vice President & Treasurer
Witnesses: PENNSYLVANIA ELECTRIC COMPANY
______________________
______________________ By:_________________________
Name:T. G. Howson
Title:Vice President & Treasurer
- 25 -<PAGE>
STATE OF _____________)
: ss:
COUNTY OF ____________)
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
_____________________ of Lord 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 _____________)
: ss:
COUNTY OF ____________)
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
_____________________ of United States Trust Company of New York
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:
- 26 -<PAGE>
STATE OF NEW JERSEY)
: ss:
COUNTY OF MORRIS )
On this _____ day of November, 1995, before me
personally appeared T. G. Howson, to me personally known, who,
being by me duly sworn, says that he is a Vice President of
Jersey Central Power & Light 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:
STATE OF NEW JERSEY)
: ss:
COUNTY OF MORRIS )
On this _____ day of November, 1995, before me
personally appeared T. G. Howson, to me personally known, who,
being by me duly sworn, says that he is a Vice President of
Metropolitan Edison 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:
- 27 -<PAGE>
STATE OF NEW JERSEY)
: ss:
COUNTY OF MORRIS)
On this _____ day of November, 1995, before me
personally appeared T. G. Howson, 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:
- 28 -<PAGE>
EXHIBIT A
DEFINITIONS
As used in the Trust Agreement (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:
"Administrative Agent" shall have the meaning specified
therefor in the first paragraph of the Credit Agreements.
"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.
"Assigned Agreement" means a Nuclear Material Contract
which has been assigned to a Company in the manner specified in
Section 5 of the Lease Agreements 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 forms of Exhibit D to the Lease Agreements.
"Banks" shall have the meaning specified therefor in
Section 1.02 of the Credit Agreements.
"Basic Documents" means the Lease Agreements, the
Credit Agreements, the Security Agreements, the Commercial Paper,
the Letter of Credit, the Notes, the Letter Agreements, the
Assigned Agreements, the Assignment Agreements, the Trust
Agreement, the Depositary Agreements, each Bill of Sale, each
Leasing Record, each Rent Due and SCV Confirmation Schedule, and
other agreements related or incidental thereto which are
identified in writing by either Company, the Lessees 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 Period" means each calendar month or
portion thereof commencing on, in the case of the first such
period, the effective date of the Lease Agreements, and in 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.
"Bill of Sale" means a bill of sale substantially in
the forms of Exhibit E to the Lease Agreements, pursuant to which
- 1 -<PAGE>
title to all or any portion of the Nuclear Material is
transferred to a Lessee or any designee of a Lessee.
"Capitalized Lease" means any and all lease obligations
which are or should be capitalized on the balance sheet of the
Person in question in accordance with generally accepted
accounting principles and Statement No. 13 of the Financial
Accounting Standards Board or any successor to such pronouncement
regarding lease accounting, without regard for the accounting
treatment permitted or required under any applicable state or
federal public utility regulatory accounting system, unless such
treatment controls the determination of the generally accepted
accounting principles applicable to such Person.
"Closing" means November 17, 1995.
"Collateral" has the meaning set forth in the granting
clauses of a Security Agreement and includes all property of a
Company described in a Security Agreement as comprising part of
the Collateral.
"Collateral Agent" shall have the meaning specified
therefor in Section 1.02 of the Credit Agreements.
"Collateral Agreements" means, collectively, the
Security Agreements, all Assignment Agreements, and any other
assignment, security agreement or instrument executed and
delivered to the Secured Parties hereafter relating to property
of a Company which is security for the Letter of Credit and the
Notes.
"Commercial Paper" shall have the meaning set forth in
Section 1.2 of the Credit Agreements.
"Commitment" means the commitment of the Banks to make
Loans or of the Issuing Bank to issue a Letter of Credit from
time to time under any Credit Agreement.
"Companies" means TMI-1 Fuel Corp. and Oyster Creek
Fuel Corp., each Delaware corporations.
"Company" means TMI-1 Fuel Corp. or Oyster Creek Fuel
Corp., each Delaware corporations.
"Credit Agreements" mean (i) the Credit Agreement,
dated as of November 17, 1995 between TMI-1 Fuel Corp. and Union
Bank of Switzerland, New York Branch, as Arranging Agent, Issuing
Bank and Administrative Agent, Canadian Imperial Bank of
Commerce, Mellon Bank, N.A. and PNC Bank, National Associations,
as Lead Managers and the Banks Party thereto and (ii) the Credit
Agreement, dated as of November 17, 1995, between Oyster Creek
Fuel Corp. and Union Bank of Switzerland, New York Branch, as
Arranging Agent, Issuing Bank and Administrative Agent, Canadian
Imperial Bank of Commerce, Mellon Bank, N.A. and PNC Bank,
- 2 -<PAGE>
National Associations, as Lead Managers and the Banks Party
thereto, as each may be amended from time to time.
"Depositary Agreements" mean the (i) Depositary
Agreement dated as of November 17, 1995 among TMI-1 Fuel Corp.,
Chemical Bank, as Depositary Agent, and Union Bank of
Switzerland, New York Branch, as Issuing Agent, Arranging Agent
and Administrative Agent and (ii) Depositary Agreement dated as
of November 17, 1995 among Oyster Creek Fuel Corp., Chemical Bank
as Depositary Agent and Union Bank of Switzerland, New York
Branch, as Issuing Agent, Arranging Agent and Administrative
Agent.
"Excepted Payments" means (i) any indemnity, expense,
or other payment which by the terms of any of the Basic Documents
shall be payable to a Company in order for such Company to
satisfy its obligations pursuant to Section 7.8 of the Trust
Agreement, (ii) any payment by any Company pursuant to Section
7.8 of the Trust Agreement, or (iii) a payment by any Lessee
pursuant to Section 8 of the Trust Agreement.
"Final Leasing Record" means a Leasing Record which
records the leasing of Nuclear Material during any period when
such Nuclear Material is installed for operation in a Generating
Facility. A Final Leasing Record shall be in the forms of
Exhibit C to the Lease Agreements.
"Generating Facility" means each of Unit No. 1 of Three
Mile Island Nuclear Generating Station, located in Londonderry
Township, Pennsylvania and Oyster Creek Nuclear Generating
Station, located in Lacey Township, New Jersey.
"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.
"Impositions" means all payments required by a public
or governmental authority in respect of any property subject to a
Lease Agreement or any transaction pursuant to a Lease Agreement
or any right or interest held by virtue of a Lease Agreement.
"Interim Leasing Record" means a Leasing Record which
records the leasing of Nuclear Material (i) prior to installation
for operation in a Generating Facility, (ii) after removal from a
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 Agreements.
"Lease Agreements" means (i) the Amended and Restated
Nuclear Material Lease Agreements each dated as of November 17,
1995 between TMI-1 Fuel Corp., as Lessor, and Jersey Central
Power & Light Company, Metropolitan Edison Company and
Pennsylvania Electric Company, respectively, as Lessees, in
connection with the Three Mile Island Unit 1 Nuclear Generating
- 3 -<PAGE>
Facility, and (ii) the Amended and Restated Nuclear Material
Lease Agreement, dated as of November 17, 1995 between Oyster
Creek Fuel Corp. as Lessor and Jersey Central Power & Light
Company, as Lessee, in connection with the Oyster Creek Nuclear
Generating Facility, as each of the same may be modified, supple-
mented or amended from time to time.
"Leasing Record" is a form signed by a Lessor and its
Lessee to record the leasing under a 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.
"Lessee" or "Lessees" shall have the meanings specified
therefor in the introduction to the Lease Agreements.
"Lessor" or "Lessors" shall have the meanings specified
therefor in the introduction to the Lease Agreements and its
successors and assigns.
"Letter Agreements" means the Letter Agreements, each
dated as of November 17, 1995 between the Lessees, the Companies
and Union Bank of Switzerland, New York Branch, as Administrative
Agent, as the same may be amended from time to time.
"Letter of Credit" shall have the meaning specified
therefor in Section 1.02 of the Credit Agreements.
"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 Agreements.
"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.
"Notes" shall have the meaning specified therefor in
Section 1.02 of the Credit Agreements.
"Nuclear Material" means those items which have been
purchased by or on behalf of a Company for which a duly executed
Leasing Record has been delivered to a Company and which continue
to be subject to a 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
- 4 -<PAGE>
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 a Lessee under any
Nuclear Material Contract assigned to a Company pursuant to a
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 a
Lessee 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.
"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.
"Officer's Certificate" means, with respect to any
corporation, a certificate signed by the President, any Vice
President, the Treasurer or any Assistant Treasurer, the Comp-
troller 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 Trust Agreement" means the Trust Agreement
dated as of August 1, 1991, among Lord Fuel Corp., as Trustor,
United States Trust Company of New York, as Owner Trustee, Jersey
Central Power & Light Company, Metropolitan Edison Company and
Pennsylvania Electric Company, as Lessees, and Lord Fuel Corp.,
- 5 -<PAGE>
as Trust Beneficiary, as the same may be amended, modified or
supplemented from time to time.
"Outstandings" shall have the meaning specified
therefor in Section 1.02 of the Credit Agreements.
"Owner Trust Estate" means all estate, right, title and
interest of the Owner Trustee in and to the outstanding stock of
the Companies 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 the United States Trust Company
of New York, not in its individual capacity but solely acting as
trustee under and pursuant to the Trust Agreement, and its
permitted successors.
"Partially Assigned Agreement" means a Nuclear Material
Contract which has been assigned, in part but not in full, to a
Company in the manner specified in Section 5 of each Lease
Agreement pursuant to a duly executed and delivered Assignment
Agreement.
"Permitted Liens" means (i) any assignment of a Lease
Agreement permitted thereby, by a Note Agreement and by a 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 a Lessee as permitted by
Section 11 of the Lease Agreements, (iii) liens and security
interests created by a Security Agreement, (iv) the title
transfer and commingling of the Nuclear Material contemplated by
paragraph (h) of Section 10 of the Lease Agreements 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 a Lessee as permitted by Section 11 of the Lease
Agreements; 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.
"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 a 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
- 6 -<PAGE>
a Company from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or part
of 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.
"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.
"Rent Due and SCV Confirmation Schedule" means an
instrument substantially in the form of Exhibit F to the Lease
Agreements which is to be completed by a Lessee for the purpose
of calculating and acknowledging the SCV at the end of each Basic
Rent Period.
"Secured Parties" means the Banks and any other holder
from time to time of any Note.
"Security Agreements" means the (i) Jersey Central
Power & Light Company Security Agreement and Assignment of
Contracts dated as of November 17, 1995, (ii) Metropolitan Edison
Company Security Agreement and Assignment of Contracts dated as
of November 17, 1995 and (iii) Pennsylvania Electric Company
Security Agreement and Assignment of Contract dated as of
November 17, 1995 between TMI-1 Fuel Corp. and the Secured
Parties and (iv) the Security Agreement and Assignment of
Contracts, dated as of November 17, 1995, between Oyster Creek
Fuel Corp. and the Secured Parties.
"Terminating Event" shall have the meaning set forth in
Section 18 of the Lease Agreements.
"Termination Settlement Date" shall have the meaning
specified therefor in Section 8(c) or 18(c) of the Lease
Agreements.
"Trust" means the TMI-1 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, United States Trust Company of New York, as Owner
Trustee, Jersey Central Power & Light Company, Metropolitan
Edison Company and Pennsylvania Electric Company, as Lessees, and
Lord Fuel Corp., as Trust Beneficiary, as the same may be
amended, modified or supplemented from time to time.
- 7 -<PAGE>
"Trust Beneficiary" means Lord Fuel Corp., a Delaware
corporation, and its permitted successors.
"Trustor" means the institution designated as such in
the Trust Agreement and its permitted successors.
- 8 -<PAGE>
Exhibit F-1(a)(i)
November 29, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Jersey Central Power & Light Company
Metropolitan Edison Company
Pennsylvania Electric Company
SEC File No. 70-7862
Ladies and Gentlemen:
We refer to our opinion, dated October 13, 1995, filed
as Exhibit F-1(a) to Post-Effective Amendment No. 2 to the
Application on Form U-1, dated July 15, 1995, under the Public
Utility Holding Company Act of 1935 (the "Act"), filed by Jersey
Central Power & Light Company ("JCP&L"), Metropolitan Edison
Company ("Met-Ed") and Pennsylvania Electric Company ("Penelec")
(collectively, the "GPU Companies"), subsidiaries of General
Public Utilities Corporation ("GPU"), which has been docketed in
SEC File No. 70-7862. (The Application, as so amended, is
hereinafter referred to as the "Application".)
The Application contemplated, among other things, that
the GPU Companies would amend and/or restate their existing lease
agreements with lessor fuel corporations (as so amended, the
"Lease Agreements") to provide for the future acquisition and
leasing of Nuclear Material for use at Oyster Creek nuclear
generating station ("Oyster Creek") and the Three Mile Island
Unit 1 nuclear generating station ("TMI-1"). JCP&L owns 100% of
Oyster Creek and the GPU Companies jointly own TMI-1 in the
following percentages: JCP&L - 25%; Met-Ed - 50%; and Penelec -
25%. The initial terms of the Oyster Creek and TMI-1 Lease
Agreements will be for three years, subject to annual renewal
upon the satisfaction of certain conditions. The total amount of
acquisition costs for nuclear fuel, assemblies and component
parts ("Nuclear Material") which may be outstanding at any one
time under the Lease Agreements may not exceed $100 million in
the case of the Oyster Creek Lease Agreement and $110 million in
the case of the TMI-1 Lease Agreements. The fuel lessors would
establish a new credit facility with Union Bank of Switzerland,
New York Branch, to provide financing for the acquisition of
Nuclear Material for Oyster Creek and TMI-1.<PAGE>
Securities and Exchange Commission
November 29, 1995
Page 2
In addition to the matters recited in our aforesaid
opinion, dated October 13, 1995, we have examined signed copies
of the Commission's Supplemental Orders, dated October 25 and
October 27, 1995, permitting the Application, as then amended, to
become effective forthwith. We also attended the closing on
November 17, 1995 of the transactions contemplated by the
Application and examined the various instruments, agreements and
other documents executed and delivered at the closing.
In addition, we have examined a copy of the Certificate
Pursuant to Rule 24 of Completion of Transactions, with which
this opinion is being filed as an exhibit, certifying as to the
completion of the transactions contemplated by the Application.
We have also examined such other instruments, agreements and
other documents and made such further investigation as we have
deemed necessary as a basis for this opinion.
We have been counsel to GPU, a Pennsylvania corpora-
tion, for many years. In such capacity, and as counsel to GPU's
subsidiaries, we have participated in various proceedings
relating to GPU and we are familiar with the terms of the
outstanding securities of the General Public Utilities holding
company system.
With respect to all matters of New Jersey law, we have
relied upon the opinion of Richard S. Cohen, Esq., filed as
Exhibit F-2(a)(i) to the aforesaid Rule 24 Certificate. With
respect to matters of Pennsylvania law, insofar as it applies to
the transactions contemplated by Met-Ed, we have relied upon the
opinion of Ryan, Russell, Ogden & Seltzer which is being filed as
Exhibit F-3(a)(i) to such Rule 24 Certificate. As to all other
matters of Pennsylvania law, we have relied upon the opinion of
Ballard Spahr Andrews & Ingersoll which is being filed as Exhibit
F-4(a)(i) to such Rule 24 Certificate.
Based upon the foregoing, we are of the opinion that,
(a) all State laws applicable to the pro-
posed transactions have been complied with;
(b) the Lease Agreements are valid and
binding obligations of the GPU Companies which are
parties thereto in accordance with their respec-
tive terms, subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance,
moratorium and other similar laws affecting
creditors' rights generally and the Atomic Energy
Act of 1954, as amended, and the regulations
thereunder and general principles of equity; and<PAGE>
Securities and Exchange Commission
November 29, 1995
Page 3
(c) the consummation of the transactions
proposed in the Application did not violate the
legal rights of the holders of any securities
issued by any of the GPU Companies or any "asso-
ciate company" thereof, as defined in the Act.
We hereby consent to the filing of this opinion as an
exhibit to the aforesaid Certificate Pursuant to Rule 24 and in
any proceedings before the Commission that may be held in
connection therewith.
Very truly yours,
BERLACK, ISRAELS & LIBERMAN LLP
<PAGE>
Exhibit F-2(a) (ii)
November 29, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Jersey Central Power & Light Company
Metropolitan Edison Company
Pennsylvania Electric Company
SEC File No. 70-7862
Ladies and Gentlemen:
I refer to my opinion, dated October 13, 1995, filed as
Exhibit F-2(a) to Post-Effective Amendment No. 2 to the
Application on Form U-1, dated July 15, 1995, under the Public
Utility Holding Company Act of 1935 (the "Act"), filed by Jersey
Central Power & Light Company ("JCP&L"), Metropolitan Edison
Company ("Met-Ed") and Pennsylvania Electric Company ("Penelec")
(collectively, the "GPU Companies"), subsidiaries of General
Public Utilities Corporation ("GPU"), which has been docketed in
SEC File No. 70-7862 (The Application, as so amended, is
hereinafter referred to as the "Application".)
The Application contemplated, among other things, that the
GPU Companies would amend and/or restate their existing lease
agreements with lessor fuel corporations (as so amended, the
"Lease Agreements") to provide for the future acquisition and
leasing of Nuclear Material for use at Oyster Creek nuclear
generating station ("Oyster Creek") and the Three Mile Island
Unit 1 nuclear generating station ("TMI-1"). JCP&L owns 100% of
Oyster Creek and the GPU Companies jointly own TMI-1 in the
following percentages: JCP&L - 25%; Met-Ed - 50%; and Penelec -
25%. The initial terms of the Oyster Creek and TMI-1 Lease
Agreements will be for three years, subject to annual renewal
upon the satisfaction of certain conditions. The total amount of
acquisition costs for nuclear fuel, assemblies and component
parts ("Nuclear Material") which may be outstanding at any one
time under the Lease Agreements may not exceed $100 million in
the case of the Oyster Creek Lease Agreement and $110 million in
the case of the TMI-1 Lease Agreements. The fuel lessors would
establish a new credit facility with Union Bank of Switzerland,
New York Branch, to provide financing for the acquisition of
Nuclear Material for Oyster Creek and TMI-1.<PAGE>
Securities and Exchange Commission
November 29, 1995
Page 2
In addition to the matters recited in my aforesaid opinion,
dated October 13, 1995, I have examined a copy of the Certificate
Pursuant to Rule 24 of Completion of Transactions, with which
this opinion is being filed as an exhibit, certifying as to
the completion of the transactions contemplated by the
Application. I have also examined such other instruments,
agreements and other documents and made such further
investigation as I have deemed necessary as a basis for this
opinion.
I am Corporate Counsel of JCP&L and am familiar with the
affairs of JCP&L, including the terms of its outstanding
securities and those of its subsidiary.
Based upon the foregoing, I am of the opinion, insofar as
the laws of the State of New Jersey are concerned, that,
(a) all laws of the State of New Jersey
applicable to the proposed transactions have
been complied with;
(b) the Lease Agreements to which JCP&L is a
party thereto are valid and binding
obligations of JCP&L in accordance with their
respective terms, subject to the effect of
any applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance,
moratorium or other laws affecting creditors'
rights generally, the Atomic Energy Act of
1954, as amended, and the regulations
thereunder, and general principles of equity;
and
(c) the consummation of the transactions
proposed in the Application did not violate
the legal rights of the holders of any
securities issued by JCP&L or JCP&L Capital,
L.P.
I hereby consent to the filing of this opinion as an exhibit
to the aforesaid Certificate Pursuant to Rule 24 and in any
proceedings before the Commission that may be held in connection
therewith.
Very truly yours,
Richard S. Cohen<PAGE>
Exhibit F-1(a)(iii)
November 29, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Jersey Central Power & Light Company
Metropolitan Edison Company
Pennsylvania Electric Company
SEC File No. 70-7862
Ladies and Gentlemen:
We refer to our opinion, dated October 13, 1995, filed
as Exhibit F-3(a) to Post-Effective Amendment No. 2 to the
Application on Form U-1, dated July 15, 1995, under the Public
Utility Holding Company Act of 1935 (the "Act"), filed by Jersey
Central Power & Light Company ("JCP&L"), Metropolitan Edison
Company ("Met-Ed") and Pennsylvania Electric Company ("Penelec")
(collectively, the "GPU Companies"), subsidiaries of General
Public Utilities Corporation ("GPU"), which has been docketed in
SEC File No. 70-7862. (The Application, as so amended, is
hereinafter referred to as the "Application".)
The Application contemplated, among other things, that
the GPU Companies would amend and/or restate their existing lease
agreements with lessor fuel corporations (as so amended, the
"Lease Agreements") to provide for the future acquisition and
leasing of Nuclear Material for use at Oyster Creek nuclear
generating station ("Oyster Creek") and the Three Mile Island
Unit 1 nuclear generating station ("TMI-1"). JCP&L owns 100% of
Oyster Creek and the GPU Companies jointly own TMI-1 in the
following percentages: JCP&L - 25%; Met-Ed - 50%; and Penelec -
25%. The initial terms of the Oyster Creek and TMI-1 Lease
Agreements will be for three years, subject to annual renewal
upon the satisfaction of certain conditions. The total amount of
acquisition costs for nuclear fuel, assemblies and component
parts ("Nuclear Material") which may be outstanding at any one
time under the Lease Agreements may not exceed $100 million in
the case of the Oyster Creek Lease Agreement and $110 million in
the case of the TMI-1 Lease Agreements. The fuel lessors would
establish a new credit facility with Union Bank of Switzerland,
New York Branch, to provide financing for the acquisition of
Nuclear Material for Oyster Creek and TMI-1.<PAGE>
Securities and Exchange Commission
November 29, 1995
Page 2
In addition to the matters recited in our aforesaid
opinion, dated October 13, 1995, we have examined a signed copy
of the order of the Pennsylvania Public Utility Commission
registering the Company's Securities Certificate filed with the
Pennsylvania Public Utility Commission. We also attended the
closing on November 17, 1995 of the transactions contemplated by
the Application and examined the various instruments, agreements
and other documents executed and delivered at the closing,
pertaining to Met-Ed's participation in the transactions.
In addition, we have examined a copy of the Certificate
Pursuant to Rule 24 of Completion of Transactions, with which
this opinion is being filed as an exhibit, certifying as to the
completion of the transactions contemplated by the Application.
We have also examined such other instruments, agreements and
other documents and made such further investigation as we have
deemed necessary as a basis for this opinion.
We have been counsel to Met-Ed, a Pennsylvania
corporation, for many years. In such capacity, we have
participated in various proceedings relating to Met-Ed and we are
familiar with the terms of its outstanding securities.
Based upon the foregoing, we are of the opinion that,
(a) all Pennsylvania laws applicable to Met-Ed's
participation in the proposed transactions have been
complied with;
(b) the Lease Agreement to which Met-Ed is a party is
a valid and binding obligation of Met-Ed in accordance with
its terms, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other
similar laws affecting creditors' rights generally and the
Atomic Energy Act of 1954, as amended, and the regulations
thereunder and general principles of equity; and
(c) the consummation of the transactions proposed in
the Application did not violate the legal rights of the
holders of any securities issued by Met-Ed.
We hereby consent to the filing of this opinion as an
exhibit to the aforesaid Certificate Pursuant to Rule 24 and in
any proceedings before the Commission that may be held in
connection therewith.
Very truly yours,
RYAN, RUSSELL, OGDEN & SELTZER<PAGE>
Exhibit F-1(a)(iv)
November 29, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Jersey Central Power & Light Company
Metropolitan Edison Company
Pennsylvania Electric Company
SEC File No. 70-7862
Ladies and Gentlemen:
We refer to our opinion dated October 13, 1995 filed as
Exhibit F-4(a) to Post-Effective Amendment No. 2 to the
Application on Form U-1, dated July 15, 1995, under the Public
Utility Holding Company Act of 1935 (the "Act"), filed with the
Securities and Exchange Commission ("Commission") by Jersey
Central Power & Light Company ("JCP&L"), Metropolitan Edison
Company ("Met-Ed") and Pennsylvania Electric Company ("Penelec")
(collectively, the "GPU Companies"), subsidiaries of General
Public Utilities Corporation ("GPU"), which has been docketed in
SEC File No. 70-7862. The Application, as so amended, is
hereinafter referred to as the "Application".
The Application contemplated, among other things, that
the GPU Companies would amend and/or restate their existing lease
agreements with lessor fuel corporations (as so amended, the
"Lease Agreements") to provide for the future acquisition and
leasing of nuclear fuel, assemblies and component parts ("Nuclear
Material") for use at Oyster Creek nuclear generating station
("Oyster Creek") and Three Mile Island Unit 1 nuclear generating
station ("TMI-1"). JCP&L owns 100% of Oyster Creek and the GPU
Companies jointly own TMI-1 in the following percentages: JCP&L
- 25%; Met-Ed - 50%; and Penelec - 25%. The initial terms of the
Oyster Creek and TMI-1 Lease Agreements are for three years,
subject to annual renewal upon the satisfaction of certain
conditions. The total amount of acquisition costs for Nuclear
Material which may be outstanding at any one time under the Lease
Agreements may not exceed $100 million in the case of the Oyster
Creek Lease Agreement and $110 million in the case of the TMI-1
Lease Agreements. The fuel lessors have established new credit
facilities with Union Bank of Switzerland, New York Branch, to
provide financing for the acquisition of Nuclear Material for
Oyster Creek and TMI-1.<PAGE>
Securities and Exchange Commission
November 29, 1995
Page 2
We have been counsel to Penelec, a Pennsylvania
corporation, for many years and are familiar with the terms of
its outstanding securities. We have also acted as Pennsylvania
counsel in connection with the transactions contemplated by the
Application to JCP&L, a New Jersey corporation which is qualified
to do business in Pennsylvania as a foreign corporation and owns
certain utility facilities in Pennsylvania.
In addition to the matters recited in our aforesaid
opinion dated October 13, 1995, we have examined a signed copy of
the order of the Pennsylvania Public Utility Commission
registering the Company's Securities Certificate filed with the
Pennsylvania Public Utility Commission. We also attended the
closing on November 17, 1995 of the transactions contemplated by
the Application and examined the various instruments, agreements
and other documents executed and delivered at the closing.
In addition, we have examined a copy of the Certificate
Pursuant to Rule 24 of Completion of Transactions, with which
this opinion is being filed as an exhibit, certifying as to the
completion of the transactions contemplated by the Application.
We have also examined such other instruments, agreements and
documents and made such other investigation as we have deemed
necessary as a basis for this opinion.
Based upon the foregoing, we are of the opinion,
insofar as matters of Pennsylvania law are concerned, that
(a) all Pennsylvania laws applicable to the
proposed transactions to be undertaken by Penelec and
JCP&L have been complied with;
(b) the Lease Agreement to which Penelec is a
party is a valid and binding obligation of Penelec in
accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other laws affecting
creditors' rights generally and the Atomic Energy Act
of 1954, as amended, and the regulations thereunder and
general principles of equity;
(c) the consummation of the transactions proposed
to be undertaken by Penelec in the Application did not
violate the legal rights of the holders of any
securities issued by Penelec or its subsidiaries
Ninevah Water Company and Penelec Capital, L.P.
We hereby consent to the filing of this opinion as an
exhibit to the Application and in any proceedings before the
Commission that may be held in connection therewith.
Very truly yours,
BALLARD SPAHR ANDREWS & INGERSOLL<PAGE>
