<PAGE>
File No. 70-7715
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM U-1
APPLICATION OR DECLARATION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
* * *
INDIANA MICHIGAN POWER COMPANY
One Summit Square, Fort Wayne, Indiana 46801
(Name of company or companies filing this statement
and addresses of principal executive offices)
* * *
AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of top registered holding company
parent of each applicant or declarant)
* * *
Susan Tomasky, General Counsel
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
(Name and address of agent for service)
Indiana Michigan Power Company, Inc. ("I&M"), an Indiana corporation and
a subsidiary company of American Electric Power Company, Inc. ("AEP"), a
holding company registered under the Public Utility Holding Company Act of
1935 ("1935 Act"), hereby amends its Application or Declaration on Form U-1
in File No. 70-7715 as follows:
1. By adding the following paragraphs to the end of Item 1.
DESCRIPTION OF PROPOSED TRANSACTION:
"By Order dated December 21, 1990 (HCAR No. 25222), the Commission, among
other things, authorized I&M to enter into a Nuclear Material Lease Agreement,
dated as of December 1, 1990 ('Existing Lease'), with DCC Fuel Corporation
('DCC'), under which I&M leases certain nuclear material ('Nuclear Fuel')
required for use at its Donald C. Cook Nuclear Plant ('Cook Plant'). DCC is a
special purpose corporation formed under the laws of the State of Ohio, all the
stock of which is held by The Huntington Trust Company, N.A., as Trustee (the
'Trustee') of DCC Fuel Trust (the 'Trust'). The Trust was formed under the laws
of the State of Ohio pursuant to a Trust Agreement among I&M, as trustor, the
Trustee and I&M, as trust beneficiary.
Under the terms of the Existing Lease, DCC is responsible for all payments
to suppliers, processors and manufacturers necessary to provide Nuclear Fuel for
the Cook Plant, and I&M is responsible for operating, maintaining, repairing,
replacing, and insuring the Nuclear Fuel and for paying all taxes and costs
arising out of the ownership, possession or use thereof. The maximum value of
Nuclear Fuel under the Existing Lease cannot exceed $110,000,000
Basic Rent under the Existing Lease is payable monthly and includes (A) a
Monthly Finance Charge, which includes allocated operational and financing costs
of DCC, and (B) a Monthly Rent Component equal to the cost of the Nuclear Fuel
consumed while the Nuclear Fuel is in the reactor and producing heat. In
addition, I&M pays Additional Rent which includes among other things all
expenses and taxes incurred by DCC to the extent not paid as part of Basic Rent.
In accordance with the terms of the Credit Agreement between DCC and
PruLease, the Note Purchase Agreement between DCC and various note purchasers
and the other relevant transaction documents, on March 1, 1999 PruLease and the
note purchasers notified I&M that they had elected to terminate their
obligations effective March 1, 2001 or such earlier date as is mutually
acceptable to the parties. I&M now proposes to enter into a new arrangement with
Bank of America for the financing and lease of the Nuclear Fuel ('New Lease').
Pursuant to the terms of a Loan Agreement among DCC, a special purpose
commercial paper funding entity ('CP Funding Vehicle') and one or more financial
institutions ('Liquidity Purchasers'), either the CP Funding Vehicle or the
Liquidity Purchasers will agree to make loans ('Loans') to DCC from time to time
commencing on the date the transaction documents are entered into and ending 30
days prior to the scheduled last day of the term of the New Lease. DCC may from
time to time borrow, prepay and reborrow amounts pursuant to the Loan Agreement.
If on any advance date the CP Funding Vehicle chooses not to fund an advance
request, then such amount will be funded by the Liquidity Purchasers directly to
DCC. DCC's obligations under the Loan Agreement will be evidenced by notes
('Notes'). The maturity date of the Notes will be coterminous with the term of
the New Lease. Pursuant to the terms of the Loan Agreement, the CP Funding
Vehicle and the Liquidity Purchasers will be obligated from time to time to make
revolving loans to DCC up to a maximum aggregate commitment of $140,000,000. The
form of the Loan Agreement is attached hereto as Exhibit B-8.
Notes will bear interest (i) if funded by the CP Funding Vehicle, at the
commercial paper rate quoted including dealer fees plus a program fee and (ii)
if funded by the Liquidity Purchasers, at LIBOR plus a margin. The principal
amount of each Loan will amortize monthly based upon the heat production of the
Nuclear Fuel, commencing on the date the parties enter into a final leasing
record and ending when the Nuclear Fuel is removed from service. Each group of
fuel assemblies inserted into a nuclear reactor as a group (a 'Batch') will be
amortized to zero (other than Batches still in heat production on the last day
of the lease term)
I&M also proposes to enter into a new lease with DCC ('New Lease'). Under
the terms of the New Lease, which is substantially the same as the Existing
Lease except for the determination of the monthly lease payments and other minor
changes, DCC will be responsible for all payments to suppliers, processors and
manufacturers necessary to provide Nuclear Fuel for the Cook Plant, and I&M will
be responsible for operating, maintaining, repairing, replacing, and insuring
the Nuclear Fuel and for paying all taxes and costs arising out of the
ownership, possession or use thereof. The form of the New Lease is attached
hereto as Exhibit B-9.
During the term of the New Lease, I&M will pay rent monthly in arrears in
amounts equal to (i) interest and principal due and payable with respect to the
Notes and (ii) other operational and financing costs paid or due and payable by
DCC.
Unless earlier terminated or extended, the New Lease will terminate on the
fifth anniversary of its inception. The lease term may be extended by additional
two-year terms by notice given at least 180 days prior to the expiration of the
lease term or any renewal thereof by mutual agreement of I&M, DCC, the Liquidity
Purchasers and the CP Funding Vehicle. I&M may terminate the New Lease upon 30
days' prior written notice at any time after the second anniversary of the
inception of the New Lease. DCC may terminate the New Lease prior to the
scheduled termination date under certain circumstances, including, among others,
if it becomes subject to certain adverse rules, regulations or declarations with
respect to its status or the conduct of its business, if certain changes occur
in the Price-Anderson Act or Atomic Energy Act, if there is a nuclear incident
of sufficient magnitude, or if certain adverse regulatory events occur in
connection with the New Lease or the Cook Plant.
At termination of the New Lease, I&M will purchase all of DCC's interests
in and to the Nuclear Fuel then subject to the New Lease. Title to the Nuclear
Fuel will be transferred to I&M or, under certain circumstances, a party
designated by I&M and approved by DCC. I&M will be obligated to pay DCC a
purchase price equal to the sum of the then outstanding principal amount of the
Notes, and, among other things, all other amounts due under the Loan Agreement.
Upon consummation of such purchase, all obligations of I&M under the New Lease
will terminate except to the extent provided therein. In addition, in the event
that borrowings of DCC mature and DCC otherwise cannot obtain funds to pay such
borrowings, I&M will be required to purchase Nuclear Fuel from DCC in such
amount as will enable DCC to pay such borrowings.
Upon the occurrence of certain events of default, DCC may terminate the
New Lease, or whether or not it has terminated the New Lease, may take
possession of the Nuclear Fuel and sell it. In the event of such a termination,
DCC may recover from I&M damages and expenses resulting from the breach of the
New Lease, all accrued and unpaid amounts owed to it by I&M, and liquidated
damages.
The parties will also enter into a Participation Agreement and a Security
Agreement, forms of which are attached hereto as Exhibits B-10 and B-11,
respectively.
Compliance with Rule 54
Rule 54 provides that in determining whether to approve certain
transactions other than those involving an exempt wholesale generator ('EWG') or
a foreign utility company ('FUCO'), as defined in the 1935 Act, the Commission
will not consider the effect of the capitalization or earnings of any subsidiary
which is an EWG or FUCO if Rule 53(a), (b) and (c) are satisfied. All applicable
conditions of Rule 53(a) are currently satisfied except for clause (1). As of
December 31, 1999, AEP, through its subsidiary, AEP Resources, Inc.
('Resources'), had aggregate investment in FUCOs of $885,141,000. This
investment represents approximately 51.3% of $1,725,274,000, the average of the
consolidated retained earnings of AEP reported on Forms 10-Q and 10-K for the
four consecutive quarters ended December 31, 1999. However, AEP was authorized
to invest up to 100% of its consolidated retained earnings in EWGs and FUCOs
(HCAR No. 26864, April 27, 1998) (the '100% Order') in File No. 70-9021.
Although AEP's aggregate investment exceeds the 50% 'safe harbor' limitation
contained in Rule 53, AEP's aggregate investment is below the 100% limitation
authorized under the 100% Order.
Since the date of the 100% Order, there has been no material change in
AEP's consolidated capitalization ratios. As of September 30, 1997, the most
recent period for which financial statement information was evaluated in the
100% Order, AEP's consolidated capitalization consisted of 47.4% common and
preferred equity and 52.6% debt. As of December 31, 1999, AEP's consolidated
capitalization consisted of 41.0% common and preferred equity and 59.0% debt.
The requested authorization will have no impact on AEP's consolidated
capitalization ratios on a pro forma basis. AEP believes this ratio remains
within acceptable ranges and limits. Further, AEP's interests in EWGs and FUCOs
have contributed positively to its consolidated earnings.
AEP will continue to maintain in conformity with United States generally
accepted accounting principles and make available the books and records required
by Rule 53(a)(2). AEP does, and will continue to, comply with the requirement
that no more than 2% of the employees of AEP's electric utility subsidiaries
shall, at any one time, directly or indirectly, render services to an EWG or
FUCO in which AEP directly or indirectly owns an interest, satisfying Rule
53(a)(3). And lastly, AEP will continue to submit a copy of Item 9 and Exhibits
G and H of AEP's Form U5S to each of the public service commissions having
jurisdiction over the retail rates of AEP's electric utility subsidiaries,
satisfying Rule 53(a)(4). Rule 53(c) is inapplicable by its terms because the
proposals contained herein do not involve the issue and sale of securities
(including any guarantees) to finance an acquisition of an EWG or FUCO.
Rule 53(b). (i) Neither AEP nor any subsidiary of AEP is the subject of
any pending bankruptcy or similar proceeding; (ii) AEP's average consolidated
retained earnings for the four most recent quarterly periods ($1,725,274,000)
represented an increase of approximately $51,053,000 (or 3.0%) in the average
consolidated retained earnings from the previous four quarterly periods
($1,674,221,000); and (iii) for the fiscal year ended December 31, 1999, AEP did
not report operating losses attributable to AEP's direct or indirect investments
in EWGs and FUCOs.
As noted, AEP was authorized to invest up to 100% of its consolidated
retained earnings in EWGs and FUCOs. In connection with its consideration of
AEP's application for the 100% Order, the Commission reviewed AEP's procedures
for evaluating EWG or FUCO investments. Based on projected financial ratios and
on procedures and conditions established to limit the risks to AEP involved with
investments in EWGs and FUCOs, the Commission determined that permitting AEP to
invest up to 100% of its consolidated retained earnings in EWGs and FUCOs would
not have a substantial adverse impact upon the financial integrity of the AEP,
nor would it have an adverse impact on any of the utility subsidiaries or their
customers, or on the ability of state commissions to protect the utility
subsidiaries or their customers.
2. By adding the following paragraph to the end of Item 2. FEES,
COMMISSIONS AND EXPENSES:
"No fees, commissions and expenses are expected to be incurred with
respect to the transaction proposed in this Application or Declaration, except
for legal fees and expenses of counsels for the Trustee, Company, Bank of
America and the CP Funding Vehicle not in excess of $250,000, and fees and
expenses to be billed at cost by American Electric Power Service Corporation and
not to exceed $20,000 in the aggregate."
3. By adding the following paragraph to the end of Item 4. REGULATORY
APPROVAL:
"No Federal or State commission or regulatory body, other than this
Commission and the Indiana Utility Regulatory Commission, has jurisdiction over
the proposed transactions for which authorization is requested herein, except
that the Nuclear Regulatory Commission (the 'NRC') has licensing and regulatory
jurisdiction over the ownership, possession, storage and handling of the Nuclear
Fuel and has licensing and regulatory jurisdiction over the operation of the
Cook Plant."
4. By adding the following paragraph to the end of Item 5. PROCEDURE: "It
is requested, pursuant to Rule 23(c) of the Rules and Regulations of
the Commission, that the Commission's order granting, and permitting to become
effective this Post-Effective Amendment No. 1 be issued on or before June 30,
2000. I&M waives any recommended decision by a hearing officer of or by any
other responsible officer of the Commission and waives the 30-day waiting period
between the issuance of the Commission's order and the date it is to become
effective, since it is desired that the Commission's order, when issued, becomes
effective forthwith. I&M consents to the Office of Public Utility Regulation
assisting in the preparation of the Commission's decision and/or order in this
matter, unless the Office opposes the matter covered by this Post-Effective
Amendment No. 1."
5. By adding the following Exhibits to ITEM 6. EXHIBITS:
B-8 Form of Loan Agreement to be entered into among DCC, the CP
Funding Vehicle and the Liquidity Purchasers (to be filed by
amendment)
B-9 Form of Nuclear Material Lease to be entered into between DCC
and I&M
B-10 Form of Participation Agreement to be entered into among DCC,
I&M, the CP Funding Vehicle and the Liquidity Purchasers
B-11 Form of Security Agreement to be entered into between DCC, the
CP Funding Vehicle and the Liquidity Purchasers (to be filed by
amendment)
D-5 Petition to Indiana Utility Regulatory Commission (to be filed
by amendment)
D-6 Order of Indiana Utility Regulatory Commission (to be filed by
amendment)
SIGNATURE
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.
INDIANA MICHIGAN POWER COMPANY
By: _/s/ A. A. Pena___________
A. A. Pena
Vice President
Dated: May 15, 2000
<PAGE>
Exhibit B-9
COUNTERPART NO.
FORM OF
NUCLEAR MATERIAL LEASE
Dated as of ________ __, 2000
between
DCC FUEL CORPORATION,
as Lessor
and
INDIANA MICHIGAN POWER COMPANY,
as Lessee
AS OF THE DATE OF THIS LEASE, THE LESSOR UNDER THIS LEASE (THE "LESSOR") HAS
GRANTED TO THE SECURED PARTIES, AS DEFINED HEREIN, A SECURITY INTEREST IN THIS
LEASE AND IN ALL OF THE LESSOR'S RIGHTS AND INTERESTS UNDER THIS LEASE,
INCLUDING, WITHOUT LIMITATION, ALL OF THE LESSOR'S RIGHTS TO AND INTERESTS IN
NUCLEAR MATERIAL AS DEFINED IN THIS LEASE.
THIS LEASE HAS BEEN MANUALLY EXECUTED IN [INSERT NUMBER OF COUNTERPARTS] (__)
COUNTERPARTS, NUMBERED CONSECUTIVELY FROM 1 TO [__]. NO SECURITY INTEREST IN
THIS LEASE OR IN ANY OF THE LESSOR'S RIGHTS AND INTERESTS UNDER THIS LEASE MAY
BE PERFECTED BY THE POSSESSION OF ANY SUCH COUNTERPART OTHER THAN COUNTERPART
NO. 1.
I N D E X
1. Definitions 4
2. Notices 4
3. Title to Remain in the Lessor; Quiet Enjoyment; Fuel Management;
Location 4
4. Agreement for Lease of Nuclear Material 5
5. Orders for Nuclear Material and Services; Assigned Agreements5
6. Leasing Records; Payment of Costs of Lessor 7
7. No Warranties or Representation by Lessor 8
8. Lease Term; Early Termination; Termination of Leasing Records9
9. Payment of Rent; Payments with Respect to the Lessor's Transaction
Costs 11
10. Compliance with Laws; Restricted Use of Nuclear Material;
Assignments; Permitted Liens; Spent Fuel 11
11. Permitted Contests 15
12. Insurance; Compliance with Insurance Requirements 16
13. [Intentionally Omitted] 18
14. Casualty and Events of Loss 18
15. Nuclear Material to Remain Personal Property. 19
16. Events of Default 19
17. Rights of the Lessor Upon Default of the Lessee 20
18. Termination After Certain Events 21
19. Investment Tax Credit 23
20. [Intentionally Omitted.] 23
21. Obligation of the Lessee to Pay Rent 23
22. Miscellaneous 24
APPENDIX A DEFINITIONS
EXHIBIT A INTERIM LEASING RECORD
EXHIBIT B FINAL LEASING RECORD
EXHIBIT C NUCLEAR MATERIAL CONTRACTS
EXHIBIT D ASSIGNMENT AGREEMENT
EXHIBIT E BILL OF SALE TO INDIANA MICHIGAN POWER COMPANY
EXHIBIT F FORM OF BASIC RENT AND OTHER RENT DUE SCHEDULE AND SCV
CONFIRMATION SCHEDULE
EXHIBIT G BTU CHARGE AGREEMENT
NUCLEAR MATERIAL LEASE
LEASE dated as of the __ day of _____________, 2000, by and between DCC
FUEL CORPORATION, an Ohio corporation (herein called the "Lessor"), and
INDIANA MICHIGAN POWER COMPANY, an Indiana corporation (herein called the
"Lessee")
In consideration of the mutual covenants contained herein, the parties
covenant and agree as follows:
1. Definitions.
Except as otherwise provided herein, defined terms when used in this Lease
(including the Exhibits hereto) shall have the respective meanings set
forth in Appendix 1 to the Participation Agreement dated as of even date
herewith among Lessor, Lessee, Huntington Trust Company, as Owner Trustee,
First Security Bank, National Association, as Collateral Agent, Bank of
America, National Association, as Administrator and Liquidity Agent, the
Liquidity Banks from time to time party thereto, and Hatteras Funding
Corporation, as CP Lender (the "Participation Agreement").
2. Notices.
Any notice, demand or other communication which by any provision of this
Lease 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, overnight courier or facsimile at the following addresses:
(i) If to the Lessor, DCC Fuel Corporation, c/o The Huntington Trust
Company, N.A., 917 Euclid Avenue, Cleveland, Ohio 44115, marked for
the attention of [__________,] or at such other address as it may
have furnished to the Lessee and the Secured Parties; or (ii) If to
the Lessee, Indiana Michigan Power Company, c/o American Electric
Power Service Corporation, 1 Riverside Plaza, Columbus, Ohio 43215,
marked for the attention of the Senior Vice President-Finance, or at
such other address as it may have furnished the Lessor and the
Secured Parties in writing; or (iii)except as otherwise requested in
writing by any Secured Party, any notice, demand or communication
which by any provision of this Lease is required or provided 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
each of (a) the Collateral Agent, (b) the Liquidity Agent and (c) the
Lender at the address for each as identified in the Participation
Agreement.
3. Title to Remain in the Lessor; Quiet Enjoyment; Fuel Management;Location
(a) The Lessor and the Lessee hereby acknowledge that this Lease is a
lease and is intended to secure the obligations of the Lessee to pay
installments of Rent hereunder as the same become due; that, subject to
the provisions of Section 10(h) and (j) hereof, 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 the Lessor
and the Lessee.
(b) The Lessor 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 hereunder, the Lessor shall not hinder or
interfere with the Lessee's peaceable and quiet enjoyment of the
possession and use of Nuclear Material leased hereunder, for the term or
terms herein provided, subject, however, to the terms of this Lease.
(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 full right and
lawful authority to engage in Fuel Management. The Lessee is hereby
designated the lawful representative of the Lessor in all dealings with
Manufacturers and any regulatory agency having jurisdiction over the
ownership or possession of the Nuclear Material.
(d) The Lessee covenants to the Lessor that the location of the Nuclear
Material will be limited to: (x) the Manufacturers' facilities, (y)
transit between Manufacturers' facilities and other Manufacturers'
facilities or a Generating Facility and (z) a Generating Facility. Each
assembly of the Nuclear Material will be located during its Heat
Production and "cooling-off" stage at a Generating Facility.
4. Agreement for Lease of Nuclear Material.
The Lessor shall lease to the Lessee and the Lessee shall lease from the
Lessor such Nuclear Material as may be mutually agreed upon, provided that
the total Stipulated Casualty Value of all Nuclear Material leased
hereunder at any one time shall not exceed the Aggregate Commitment Amount
in the aggregate ("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 by signing and
delivering to each other, from time to time, Leasing Records,
substantially in the form of Exhibit A or Exhibit B hereto, as applicable,
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 any Generating Facility,
subject to the provisions with respect to intermingling contained in
Section 6 hereof.
5. Orders for Nuclear Material and Services; Assigned Agreements.
(a) The Nuclear Material Contracts listed in Exhibit C hereto, relating,
among other things, to the purchase of, and services to be performed with
respect to, Nuclear Material were entered into by the Lessee prior to the
date of this Lease. Any further agreements which the Lessee deems
necessary or desirable with respect to the purchase of or services to be
performed on Nuclear Material to be leased hereunder may be negotiated by
the Lessee and executed by the Lessee in its own name, or, where
permitted, 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 Nuclear Material
contained in Section 4, the interests of the Lessee under the agreements
listed in Exhibit C, and the interests of the Lessee under any further
Nuclear Material Contracts (whether executed and delivered before or after
the date of this agreement) pursuant to which the Lessee desires to
purchase Nuclear Material or have services performed on any Nuclear
Material leased or to be leased hereunder, may be assigned to the Lessor
under an Assignment Agreement substantially in the form of Exhibit D
hereto or in such form, approved by the Lessor, as shall be required
pursuant to the applicable terms of the agreements listed in Exhibit C.
The Lessee shall use its best efforts to cause the other parties to such
agreements to consent to such assignment. Upon such assignment and consent
with respect to any Nuclear Material Contract, the Lessor, subject to the
limitation on the Maximum Stipulated Casualty Value of Nuclear Material
contained in Section 4, shall make all payments which are required
thereunder for the purchase of Nuclear Material or for services to be
performed thereon, such payments to be made as provided 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 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.
(d) Notwithstanding any other provision of this Lease or any other Basic
Document, the Lessee shall not be obligated to provide the Lessor or the
Secured Parties with a copy of, or any information relating to, any
portion of an Assigned Agreement other than as permitted by the Assignment
Agreement related to such Assigned Agreement.
6. Leasing Records; Payment of Costs of Lessor.
(a) Interim Leasing Records.
An Interim Leasing Record shall be dated the date that the Lessor
first makes any payment with respect to the Acquisition Cost of
Nuclear Material, and shall set forth the full description of the
Nuclear Material specified therein, the Acquisition Cost and location
thereof, and such other details with respect to such Nuclear Material
as 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 receives any payment or payments
representing a credit against the Acquisition Cost previously paid
with respect to such Nuclear Material, a supplemental Interim Leasing
Record dated the date that the Lessor makes each such further payment
or the date of receipt of any such credit shall be signed by the
Lessor and the Lessee to record the revised Acquisition Cost, after
giving effect to any such payments or credits with respect to such
Nuclear Material, any change in location and such additional details
as the parties may agree.
(b) Final Leasing Records.
For Nuclear Material previously covered by an Interim Leasing Record,
the Final Leasing Record shall be dated the first day of the month
following the date of completion of the first 200 full power hours of
Heat Production of such Nuclear Material, unless such completion date
is the first day of a calendar month, in which case the Final Leasing
Record shall be dated such date. For Nuclear Material not previously
covered by an Interim Leasing Record, (which Nuclear Material shall
include such Nuclear Material that is leased as of the first day of
the Lease Term and that has completed the first 200 full power hours
of Heat Production), 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 the Nuclear Material specified
therein, the Acquisition Cost thereof, the BTU Charge, the location,
and such other details with respect to such Nuclear Material as the
parties may agree. The BTU Charge for any Nuclear Material may be
revised by Lessee at any time during the lease thereof to reflect any
reasonably anticipated change in its operating life, heat output or
utilization in each case so that at the end of the operating life of
the Nuclear Material the principal amount of the outstanding Notes
allocable to the Acquisition Cost of such Nuclear Material would be
paid in full. Such revision shall be affected by Lessee executing and
forwarding to the Lessor a revised Final Leasing Record dated the
first day of the following calendar month and setting forth such
revised BTU Charge. Upon receipt of such revised Final Leasing
Record, 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.
(c) Payment of Nuclear Material Costs.
Invoices of Manufacturers, or of other persons performing services,
covering Nuclear Material to be leased hereunder 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 to be
leased hereunder, 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, together with a Leasing
Record completed and signed by a Lessee Representative covering such
costs. After receipt of such invoice or invoices and Leasing Record,
the Lessor, subject to the limitation on the Maximum Stipulated
Casualty Value of Nuclear Material contained in Section 4 shall pay
such invoice as provided therein or in the related purchase agreement
and shall execute the Leasing Record and return a copy thereof to the
Lessee and the Secured Parties. The Leasing Record shall be dated as
provided for in this Lease. To the extent 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 Nuclear Material contained in
Section 4 shall promptly reimburse the Lessee in accordance with
Article III of the Participation Agreement. 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.
(d) Intermingling of Fuel Assemblies.
Nuclear Material specified in a Leasing Record and leased hereunder
shall, subject to the provisions of Section 10 (h) and (i) hereof, be
owned exclusively by the Lessor and leased to the Lessee hereunder.
The Lessee agrees that in no case will it cause or permit nuclear
material owned by any Person other than the Lessor to be included in
an assembly or sub-assembly which is owned by the Lessor and leased
hereunder. However, fuel assemblies or sub-assemblies owned by the
Lessor and leased to the Lessee hereunder may be intermingled in a
Generating Facility with fuel assemblies or sub-assemblies not owned
by the Lessor and leased to the Lessee hereunder, provided that the
Nuclear Material constituting assemblies or sub-assemblies owned by
the Lessor shall be readily identifiable by serial number or other
distinguishing marks. The Lessor shall not be liable to the Lessee
for any failure or delay in obtaining Nuclear Material or making
delivery thereof.
(e) Delivery of Leasing Records.
Each of Lessor and Lessee shall deliver to the Collateral Agent a
copy of any Leasing Record or other document, instrument or writing
required to be delivered by it to any other Person pursuant to this
Section 6.
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, IN EACH CASE AS IN EXISTENCE WHEN THE SAME FIRST
BECOMES SUBJECT TO THIS LEASE, WITHOUT REPRESENTATIONS OR WARRANTIES OF
ANY KIND BY THE LESSOR, OR ANY PERSON ACTING ON ITS BEHALF. THE LESSEE
ACKNOWLEDGES AND AGREES THAT NEITHER THE LESSOR, ITS DIRECTORS, OFFICERS
AND 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 LESSOR 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 LEASED OR TO BE LEASED HEREUNDER 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,
ITS DIRECTORS, OFFICERS AND EMPLOYEES, ANY COMPANY, PERSON OR FIRM
CONTROLLING, CONTROLLED BY OR UNDER COMMON CONTROL WITH ANY OF THEM, NOR
ANYONE ACTING ON BEHALF OF THE LESSOR HAS MADE ANY WARRANTY OR OTHER
REPRESENTATION, EXPRESS OR IMPLIED, THAT THE NUCLEAR MATERIAL LEASED OR TO
BE LEASED UNDER THIS LEASE (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 THE LESSOR, ITS DIRECTORS, OFFICERS AND EMPLOYEES, ANY COMPANY,
PERSON OR FIRM CONTROLLING, CONTROLLED BY OR UNDER COMMON CONTROL WITH ANY
OF THEM (EXCEPT LESSEE ITSELF), AND ANYONE ACTING ON BEHALF OF ANY OF THEM
IS NOT A MANUFACTURER OR ENGAGED IN THE SALE OR DISTRIBUTION OF NUCLEAR
MATERIAL AND HAS NOT MADE AND DOES NOT 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 Records.
(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 and subject to the terms and provisions hereof.
(b) The term of this Lease shall begin at 12:01 A.M., Cleveland, Ohio
time, on [insert month and date], 2000, and, unless earlier terminated
as provided in this Section 8 or in Sections 17 or 18 hereof, shall end
at the close of business in Cleveland, Ohio on the Scheduled Termination
Date.
(c) (i) The Lessee may at any time on or after the second anniversary of
the date of the initial Leasing Record or within 60 days of a Burdensome
Buyout Event, in each case as to either or both Generating Facilities,
terminate the Lease and the lease of all, but not less than all, of the
Nuclear Material as is then used in or specifically designed for use in
such Generating Facility, by giving written notice ("Notice of Lease
Termination") thereof to the Lessor, the Secured Parties and the Agents.
Such Notice of Lease Termination shall specify (x) a Termination
Settlement Date, which shall be the Payment Date of the calendar month
next following the date of said Notice of Lease Termination, and not later
than the Scheduled Termination Date in effect on the date such notice is
given, and (y) the Nuclear Material as to which this Lease is being
terminated.
(ii) If a Burdensome Buyout Event shall occur, Lessee may not give a
Notice of Lease Termination unless it shall have provided to the
Lessor and the Secured Parties written notice describing in
reasonable detail such change in law or unforeseeable event or
condition and how such event or condition has resulted in the leasing
transaction becoming burdensome to Lessee ("Burdensome Buyout
Notice"). Upon receipt of Lessee's Burdensome Buyout Notice, Lessor
shall reasonably cooperate with Lessee, at the sole cost and expense
of Lessee, to eliminate, reduce or recover the costs, obligations,
restrictions or prohibitions resulting from the Burdensome Buyout
Event, in each case in a manner not adverse to Lessor, any Secured
Party or either Agent; provided that Lessee shall not be required to
cooperate with the Secured Parties and either Agent if the Burdensome
Buyout Event cannot be mitigated or avoided, in which case Lessee may
give a Notice of Lease Termination concurrently with its Burdensome
Buyout Notice. (iii)If the Lessee, the Secured Parties and Agents
cannot, within 30 days of delivery of the Burdensome Buyout Notice,
mutually agree on how to mitigate or avoid the burdensome effects to
Lessee of the Burdensome Buyout Event, Lessee shall deliver to the
Secured Parties and the Agents, as well as Lessor, a Notice of Lease
Termination.
(d) Following the giving of a Notice of Lease Termination under Section
8(c) hereof, all obligations of the Lessor and Lessee hereunder with
respect to the relevant Generating Facility, including the obligations of
the Lessee to pay Basic Rent and Additional Rent, and of the Lessor to
acquire and pay for Nuclear Material and lease the same to the Lessee in
respect of such Generating Facility, shall continue until the Termination
Settlement Date. On such Termination Settlement Date, the Lessee shall be
obligated to pay to the Lessor, as the purchase price for the Nuclear
Material as to which this Lease is being terminated, an amount equal to
the sum of (x) the Stipulated Casualty Value of such Nuclear Material
leased hereunder as of the Termination Settlement Date and (y) the
Termination Rent on the Termination Settlement Date. The Lessor shall be
obligated to deliver to the Lessee or to any designee of the Lessee a Bill
of Sale substantially in the form of Exhibit E hereto vesting title to and
ownership of such Nuclear Material in the Lessee or in the Lessee's
designee free and clear of all Liens under the Collateral Documents (but
only if the Secured Parties are obligated to release such liens in
accordance with Section 11 of the Security Agreement).
(e) The Lessee shall deliver to the Lessor and to the Secured Parties an
SCV Confirmation Schedule in the form of Exhibit F hereto on or within 30
days following the date on which any Nuclear Material leased hereunder is
removed from the reactor of either Generating Facility for purposes of
"cooling-off" preliminary to reprocessing (to the extent permitted by
Applicable Laws) or permanent on-site safe storage and/or off-site
disposal. If the Lessee elects within 30 days following the receipt by
Lessor of such SCV Confirmation Schedule to extend the Lease Term thereof
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
shall be terminated and the Lessee shall immediately pay to the Lessor all
amounts, including Stipulated Casualty Value, with respect to such Nuclear
Material, and, upon receipt thereof, the Lessor shall transfer title to
such Nuclear Material, free and clear of the Liens created by the
Collateral Documents (but only if the Secured Parties are obligated to
release such Liens in accordance with Section 11 of the Security
Agreement), to the Lessee or to any third party designated by Lessee by
executing and delivering to the Lessee or any such designee a Bill of
Sale.
9. Payment of Rent; Payments with Respect to the Lessor's Transaction Costs.
(a) Basic Rent.
The Lessee shall pay Basic Rent monthly on each Basic Rent Payment
Date.
(b) Additional Rent.
In addition to the Basic Rent, the Lessee will also pay from time to
time as provided in this Lease or on demand of the Lessor, all
Additional Rent on the due date thereof; provided, however, that any
amount of Additional Rent due with respect to Additional Costs shall
be paid to the Lessor on the same date that the Lessor is obligated
to make such payment under the Participation Agreement. 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 the Monthly Rent Component on the date set
forth in a written notice delivered at least [30 days] prior to such
prepayment. Such payment shall be credited against subsequent amounts
owed by the Lessee on account of the Monthly Rent Component.]
(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 shall be paid to the Lessor (or, at
the Lessor's request, to the Secured Parties) in Federal funds or in
other funds immediately available at such address. The Lessee shall
furnish to the Lessor and the Collateral Agent five Business Days
prior to each Basic Rent Payment Date a summary of the rental
calculations for the preceding calendar month (or portion thereof)
covering all outstanding Leasing Records. On each Basic Rent Payment
Date, the Lessee shall deliver to the Lessor and the Collateral Agent
a signed and completed SCV Confirmation Schedule. All such schedules
delivered by the Lessee pursuant to the provisions of this Lease
shall constitute representations of the Lessee as to the accuracy of
the matters contained therein.
(e) Purchase of Nuclear Material by Lessee.
The Lessee shall, upon the Scheduled Termination Date, under
circumstances where the Lessor cannot obtain funds to meet the
maturities of the Notes through the proceeds of borrowings by the
Lessor under the Loan Agreement and the LAPA, purchase an amount of
Nuclear Material to be designated by the Lessee not less than three
Business Days prior to such purchase, by delivering to the Lessor an
SCV Confirmation Schedule in the form of Exhibit F hereto showing
that the Stipulated Casualty Value of the designated Nuclear Material
is not less than the amount of the Lessor's borrowings maturing under
the circumstances set forth above. On the date specified for such
purchase, the Lessee shall pay an amount equal to the Stipulated
Casualty Value thereof, together with any Additional Rent then due
and payable to the Lessor. Thereupon, the Lessor shall deliver to the
Lessee a Bill of Sale transferring to the Lessee for no additional
consideration, all right, title, interest and claim of the Lessor to
such portion of the Nuclear Material free and clear of the Liens
under the Collateral Documents (but only if the Secured Parties are
obligated to release such Liens in accordance with Section 11 of the
Security Agreement). Thereupon, such portion of the Nuclear Material
shall cease to be subject to any provision of this Lease and, if the
Secured Parties are obligated to release such Liens pursuant to such
section, of the Collateral Documents. Upon delivery of such Bill of
Sale, the Lessor and the Lessee shall execute a supplemental Leasing
Record eliminating such portion of the Nuclear Material from the
description of the Nuclear Material leased hereunder and making other
necessary changes to the Leasing Record.
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 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 hereunder and the Lessor's title to and interest
in the Nuclear Material as against the Lessee or any third party in
any applicable jurisdiction in the United States of America.
(c) Exclusive Use of Nuclear Material.
So long as no Lease Event of 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 may, subject to Section 3(d) hereof and
after notice in writing to the Lessor 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 other location for the purpose of having
services performed thereon in connection with any stage of the
Nuclear Material Cycle other than Heat Production and the
"cooling-off" stage, provided that (i) no such action 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, (iii) all Legal Requirements
(including, without limitation, all necessary government approvals)
shall have been met or obtained, and all necessary or advisable
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 and the security
interest created in the Security Agreement, and (iv) in the case of
any movement of Nuclear Material to any location outside the
continental United States, the Lessee shall have delivered to the
Lessor and the Secured Parties evidence reasonably satisfactory to
the Lessor and Secured Parties (including, if requested, an opinion
of independent outside counsel to the Lessee) that insurance and/or
indemnification against liability to third persons for death or
injury or damage to property exists protecting the interests of the
Lessor, the Lessee, and the Secured Parties. 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 leased by the Lessee.
(d) Additional Lessee Covenants.
The Lessee agrees to use every reasonable precaution to prevent loss
or damage to the Nuclear Material leased hereunder. 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, utilization, and reprocessing of
the Nuclear Material. To the extent required by any Applicable Laws,
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. Lessor hereby assigns and transfers to
the Lessee all of its rights under any Manufacturer's warranty on
Nuclear Material, provided that if a Lease Event of Default shall
have occurred and be continuing, upon receipt of notice from Lessor
or either Agent Lessee shall be deemed to have automatically
reassigned all manufacturers' warranties to Lessor. 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
Nuclear Material leased hereunder during the Lease Term 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 or in any other Basic Documents,
the Lessor may not, without the prior written consent of the Lessee
(not to be unreasonably withheld), sell, assign, transfer or convey
the Nuclear Material or any interest therein or in the Lease, 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 and in any Nuclear Material leased hereunder, provided
that such consent shall not be required if: (i) the Lessor shall
advise the Lessee of such action, (ii) any such security interest,
lien, encumbrance or assignment shall be expressly subject and
subordinate to the interest of the Lessee in such Nuclear Material
and in this Lease, and to all terms and provisions of this Lease, and
(iii) the Lessor shall be and remain responsible for the performance
of all terms, conditions and obligations under this Lease required to
be performed by the Lessor, including but not limited to Lessor's
obligations under Section 3 hereof. After receipt by the Lessee of
written notice from the Lessor of any assignment by the Lessor of
Rents or other sums payable by Lessee under this Lease, 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.
(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 imposed on 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, other than Permitted
Liens.
(g) Assignment by Lessee.
Subject to all Applicable Laws, the Lessee may assign any right or
interest which it may have under this Lease or in any Nuclear
Material to a Subsidiary or Affiliate of the Lessee in which case
such Subsidiary or Affiliate shall, except as otherwise provided in
this sentence, be deemed to be the Lessee hereunder, provided,
however, that in any such case the Lessee shall give prior written
notice of such assignment to the Lessor and to the Secured Parties,
and provided further that no such assignment shall in any way limit
or affect the Lessee's obligations and duties hereunder.
(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
Facilities for the production of power, the Manufacturer performing
services on the Nuclear Material may require that title thereto be
transferred to such Manufacturer and/or that the Nuclear Material be
commingled with other nuclear material, with an obligation for the
Manufacturer, upon completion of the services, to reconvey a
specified amount of nuclear material that will become Nuclear
Material hereunder. The standard enrichment contracts of the
Department of Energy contain such provisions. Therefore, the parties
hereto agree that Nuclear Material leased hereunder may become
subject to such a contract provision, and that the action
contemplated by such provision may be taken, notwithstanding any
provision of this Lease to the contrary, that, as between the Lessor
and the Lessee, such Nuclear Material shall be deemed to be still
leased hereunder while title thereto is in the Manufacturer, and that
the nuclear material exchanged by the Manufacturer upon completion of
its services shall be automatically leased hereunder in substitution
for the Nuclear Material originally delivered to the Manufacturer.
(i) Spent Fuel.
Without the consent of the Lessor [and subject to Section 3(d),] the
Lessee shall not permit any Nuclear Material leased hereunder, 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 Facilities 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 law, rule or regulation, or (ii) the lease of such Nuclear
Material shall, concurrently with its removal from the Generating
Facilities, 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(d) or Section 18(d) , as
applicable.
(j) Intent of the Parties.
Lessee hereby acknowledges it is the intent of the parties hereto for
federal and state tax and bankruptcy purposes that Lessee is the
beneficial owner of the Nuclear Material now or hereafter acquired
and that the obligations of the Lessee to pay the interest component
of the Monthly Finance Charge and the Monthly Rent Component will be
treated as payments of interest and principal, respectively.
11. Permitted Contests.
The Lessee, at its expense, may in its own name or, if necessary and
permitted, in the name of the Lessor or Secured Parties (and, if necessary
but not so permitted, the Lessee may require the Lessor or the Secured
Parties to) contest after prior notice to the Lessor, by appropriate legal
proceedings conducted in good faith and with due diligence, the amount,
validity or application, in whole or in part, of any Imposition or Lien
therefor, or any Legal Requirements or Insurance Requirements, or any
matter underlying Lessee's indemnity obligations under Section 9.1 of the
Participation Agreement, or any other Lien, referred to in Section 10
hereof (each a "Permitted Contest"); provided that (i) in the case of an
unpaid Imposition or Lien therefor, such proceedings shall suspend the
collection thereof from the Lessor, (ii) neither the Nuclear Material or
any portion thereof, nor the taking of any step necessary or proper with
respect thereto in the management thereof through any stage of the Nuclear
Material Cycle, nor the performance of any other act required to be
performed by the Lessee under this Lease 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 mortgage, lien, encumbrance, charge, contract or agreement,
(iv) such contest shall not interfere with the right of Lessor (or any
permitted assignee of Lessor) to receive payment of all or any portion of
Rent; and (v) the Lessee shall have set aside on its books adequate
reserves (in accordance with GAAP) with respect thereto 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 Agents 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 therein, together
with all penalties, fines, interest, costs and expenses thereon or in
connection therewith and such indemnification and each other
indemnification obligation in favor of the Lessor hereunder, shall survive
any termination of this Lease in whole or in part.
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, the Lessee shall:
(a) [Nuclear] Liability Insurance.
At its own cost and expense, procure and maintain, or cause to be
procured and maintained, [nuclear] liability insurance and
indemnification with respect to Nuclear Material leased hereunder
insuring and indemnifying the Lessor, the Lessee, the Agents, and the
Secured Parties with policy limits equal to the greater of (i) to the
full extent required or available under the Atomic Energy Act or
under any other law, rule or regulation and (ii) amounts customarily
carried or maintained by owners or operators of nuclear generating
facilities in the United States for generating facilities of similar
type, nature and size to the Generating Facilities and which
generating facilities have risks associated with them which are
substantially similar to those connected with the operation,
maintenance and use of the Generating Facilities. In the event the
provisions of the Atomic Energy Act with respect to liability
insurance and the indemnification of licensees and operators of
Nuclear Material thereunder or any other provisions of the Atomic
Energy Act which benefit the Lessor, the Agents or the Secured
Parties shall change, then the Lessee shall use its best efforts to
obtain equivalent insurance and indemnification from the Nuclear
Regulatory Commission or from such other public and/or private
sources from whom such coverage is available.
(b) Casualty Insurance.
At its own cost and expense, procure and maintain physical damage
insurance with respect to the Nuclear Material insuring the Lessor,
the Agents and the Secured Parties against loss or damage to the
Nuclear Material to the extent that such insurance coverage may be
available from public and private sources with insurance limits at
all times at least equal to the total SCV's for Nuclear Material
subject to the Lease. The Lessee may self-insure with respect to
liability and physical damage insurance to the extent of $2,500,000,
which amount may be increased from time to time as the Lessor and the
Lessee may agree in writing, provided that such self-insurance is
permitted under all Applicable Laws.
(c) Third Parties - Insurance Requirements.
At its own expense, provide that Nuclear Material, while in the
possession of third parties, is covered for liability insurance 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 hereunder to do so.
(d) Additional Insureds; Loss Payees.
Provide for the Lessor, Agents and the Secured Parties to be
additional insureds where possible (but without any obligation or
liability for premiums for such insurance), and, with respect to
physical damage coverage, name the Collateral Agent as sole loss
payee 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 (A) for at least ten (10) days prior written notice to the
Lessor, the Agents and the Secured Parties of any cancellation or
material alteration of such policies, (B) for the insurer to waive
any rights of subrogation against the additional insureds, (C) for
the insurance to be primary, without rights of contribution from any
other insurance carried by an other additional insured with respect
to Nuclear Materials, and (D) that no additional insureds shall have
any obligation or liability for premiums in connection with such
insurance.
(e) Insurance Certificates.
Upon request of the Lessor, Collateral Agent or the Secured Parties,
provide Lessor, the Secured Parties and the Collateral Agent with
copies of the policies or insurance certificates in respect of the
insurance procured pursuant to the provisions of this Section, and
will advise the Lessor, the Collateral Agent, and the Secured Parties
of all expirations and renewals of policies and all notices issued by
the insurers thereunder. Within a six-month period from the execution
of this Lease and at yearly intervals thereafter, the Lessee will
furnish to the Lessor, the Collateral Agent and the Secured Parties a
certificate as to the insurance coverage provided pursuant to this
Section and will further give notice as to any material change in the
nature of such coverage, including, to the best of the Lessee's
knowledge, any material change in the provisions of the Atomic Energy
Act or applicable rule or regulation thereunder with respect to
liability insurance and indemnification, or in the application,
interpretation or enforcement thereof. The Lessor 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.
(f) Insurance by Lessor, Agents or any Secured Party.
Each of Lessor, each Agent and each Secured Party may at its own
expense carry insurance with respect to its interest in the Nuclear
Material, provided that (i) Lessee's insurance is designated as
primary and in no event excess or contributory to any insurance
Lessor, any Agent or any Secured Party may have in force which
would apply to a loss covered under Lessee's policy, (ii) each such
insurance policy will not cause Lessee's insurance required under
this Section 12 to be subject to a coinsurance exception of any
kind and (iii) each such insurance policy shall contain a waiver of
any right of subrogation, set-off, counterclaim, or other
deduction, whether by attachment or otherwise against Lessee. Any
insurance payments received from policies maintained by Lessor, any
Agent or any Secured Party shall be retained by Lessor, such Agent
or such Secured Party, as the case may be, without reducing or
otherwise affecting Lessee's obligations hereunder.
13. [Intentionally Omitted]
14. Casualty and Events of Loss.
(a) In the case of an Event of Loss or (ii) a Casualty resulting in
damages to the Nuclear Materials in excess of $1,000,000, the Lessee shall
promptly deliver written notice thereof to Collateral Agent and Lessor,
and shall otherwise act in accordance with this Section 14.
(b) Lessee shall promptly repair all Casualties (other than a Casualty to
a nuclear fuel assembly if the Lessee replaces the damaged assembly with a
substitute assembly).
(c) In the case of an Event of Loss with respect to a Generating Facility,
the Lessee shall repay the Stipulated Casualty Value of that portion of
the Nuclear Materials suffering the Event of Loss, plus all other amounts
then due and payable on the earlier of (i) the next scheduled Payment Date
at least 60 days after such Event of Loss and (ii) the last day of the
Lease Term. Such payment shall include all Additional Costs, if any, and
all other fees and expenses then due and payable.
(d) The lease hereunder of any Nuclear Material suffering an Event of
Loss, 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 receipt of such payment, the Lessor
shall deliver to the Lessee a Bill of Sale transferring all right, title,
interest and claim of the Lessor to such Nuclear Material, free and clear
of the Liens created by the Collateral Documents (but only if the Secured
Parties are obligated to release such Liens in accordance with Section 11
of the Security Agreement), and thereupon the lease with respect to such
Nuclear Material shall terminate.
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, the Agents and the
Secured Parties against and to hold the Lessor, the Agents 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, the Agents
and the Secured Parties shall not be liable for any physical damage caused
to any realty or any building by reason of the removal of the Nuclear
Material therefrom.
16. Events of Default.
Each of the following events of default by the Lessee shall constitute a
"Lease Event of Default" and give rise to the rights on the part of the
Lessor described in Section 17 hereof:
(a) Default in the payment of Basic Rent on the date on which such
payment is due, or default in the payment of Additional Rent, if any,
on the date on which such payment is due and in each case the
continuance of such default of payment of Additional Rent for three
days; or
(b) Default in the payment of Termination Rent or any amount required
to be paid under Section 9(e) on the date on which such payment is
due;
(c) Default in the payment or performance of any other liability or
obligation or covenant of the Lessee under any Basic Document and the
continuance of such default for thirty (30) days after written notice
to the Lessee sent by registered or certified mail; provided that, no
such default shall be deemed a Lease Event of Default if (i) such
default is curable but cannot be cured within such thirty (30) day
period, (ii) the Lessee is diligently pursuing such cure and effects
such cure within 180 days of the date of such default, and (iii)
during the continuance thereof, such default does not impair in any
material respect the rights of the Lessor or the Secured Parties in
the Collateral or subject the Lessor or the Secured Parties to
onerous regulation or to any material liabilities under law;
(d) The admission of insolvency or bankruptcy, inability to pay debts
as they mature, or entering into receivership on the part of Lessee;
(e) The institution of bankruptcy, reorganization, liquidation or
receivership proceedings by or against the Lessee and, if instituted
against the Lessee, its consent thereto or the pendency of such
proceedings for sixty (60) days; or
(f) Other than pursuant to a condemnation proceeding, any court,
governmental officer or agency shall, under color of legal authority,
take and hold possession of any substantial part of the property or
assets of the Lessee.
17. Rights of the Lessor Upon Default of the Lessee.
Upon the occurrence of any Lease Event of Default, the Lessor may, in its
discretion, and shall, at the direction of the Secured Parties, do one or
more of the following:
(a) Terminate the lease of any 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 Laws, take immediate possession of any or all
Nuclear Material or cause such Nuclear Material to be taken from the
possession of the Lessee, 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 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 Laws, sell any Nuclear Material (with or without
the concurrence or request of the Lessee) for cash 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;
(d) Subject to any Applicable Laws, sell in a commercially reasonable
manner, dispose of, hold, use, operate, remove, lease or keep idle any
Nuclear Material as the Lessor (acting at the direction of the Secured
Parties in their sole discretion) may decide, without any obligation to
account to the Lessee with respect to such action or inaction or 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 amount due to the Lessor from the Lessee hereunder;
(e) Terminate this Lease as to any or all of the Nuclear Material, or
exercise any other right or remedy which may be available under Applicable
Laws 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, use 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, the then Stipulated Casualty Value of such Nuclear Material,
plus any loss, damage and expense (including without limitation reasonable
attorneys' fees and disbursements) sustained by the Lessor, any Agent or any
Secured Party 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
Loan Agreement, the LAPA, 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 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, plus any loss, damage and expense
(including without limitation reasonable attorneys' fees and disbursements)
sustained by the Lessor, any Agent or any Secured Party 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 hereunder 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 shall, at the direction of the Majority Secured Parties,
terminate prior to the expiration of its term upon the happening of any of
the following "Terminating Events":
(i) any change in, or new interpretation by an 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, as a result of which, in the opinion of independent counsel
selected by the Collateral Agent and reasonably satisfactory to the
Lessee and the Secured Parties, the Lessor is prohibited from
asserting any material right, protection or defense available under
Applicable Laws as of the date of this Lease with respect to civil or
criminal actions brought in connection with a Nuclear Incident;
(ii) the occurrence of a Deemed Loss Event;
(iii)the failure of Unit 1 to average greater than 90% of the
"Maximum Dependable Capacity" (1000 Mwe thereof), as reported in the
NRC monthly operating report, for a period of 30 consecutive days
within six months of the Scheduled Restart Date; (iv) the occurrence
of a Nuclear Incident at either Generating Facility;
(v) the failure of either Generating Facility to return to service
within six months after being shutdown and the Lessee receives an
order of the NRC pursuant to 10 CFR 2.202(a) relating to the
shutdown;
(vi) the failure of either Generating Facility to return to service
within nine months after being shutdown for any reason other than (x)
the occurrence of a Nuclear Incident or (y) receipt by Lessee of an
order of the NRC pursuant to 10 CFR 2.202(a); or
(vii)any law or regulation or interpretation (judicial, regulatory or
otherwise) of any law or regulation shall be adopted or enforced by
any Authority, and as a result of such adoption or enforcement,
approval of the transactions contemplated by this Lease 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 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 shall be rendered
impracticable in any material way; or
(viii) there shall occur the revocation or material adverse
modification of any authorization, consent, exemption or approval
theretofore obtained from any Authority necessary for the carrying
out of the intent and purposes of this Lease, 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.
(b) Upon the happening of any of the events listed in Section 18(a)
hereof, this Lease shall cease and terminate, except with respect to
obligations and liabilities of the Lessee, actual or contingent, which
arose under the Lease on or prior to the date of termination and except
for the Lessee's obligations set forth in Sections 10 and 12 and Section
9.1 of the Participation Agreement, 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
9.1 of the Participation Agreement shall continue as therein set forth as
shall all of Lessee's indemnification obligations set forth in other
sections of this Lease and the other Basic Documents. Notwithstanding the
foregoing, if a Terminating Event described in either Section 18(a)(iv),
(vii) or (viii) shall occur with respect to one but not both of the
Generating Facilities, then the lease of Nuclear Material hereunder shall
terminate only with respect to such Nuclear Material as is then used in or
specially designed for use in the Generating Facility affected.
(c) Upon such termination, the entire interest of the Lessor in the
Nuclear Material, or in the case of a Terminating Event described in
Section 18(a)(iv), (vii) or (viii), the portion thereof determined in
accordance with Section 18(b), 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
shall, upon such termination, automatically transfer to and be vested in
any person designated by the Lessee.
(d) Promptly after either party hereto shall learn of the happening of any
of the events listed in Section 18(a) hereof, such party shall give notice
thereof to the other party hereto and to Agents and the Secured Parties,
which notice shall (x) acknowledge that the Lease has terminated, or, in
the case of a Terminating Event described in Section 18(a)(iv), (vii) or
(viii), that the lease with respect to a portion of the Nuclear Material
hereunder shall have terminated, subject to the continuing obligations of
the Lessee mentioned above, and that title to and ownership of such
Nuclear Material has transferred to and vested in the Lessee or such other
person, and (y) specify a Termination Settlement Date occurring, if the
notice is given by the Lessor, 270 days after the giving of such notice
or, if the notice is given by the Lessee, not less than 90 nor more than
270 days after the giving of such notice. After such termination of this
Lease and until such Termination Settlement Date, the Lessee shall
continue to pay Basic Rent and Additional Rent. On such Termination
Settlement Date, the Lessee shall be obligated to pay to the Lessor as the
purchase price for the Nuclear Material, an amount equal to the sum of (x)
Stipulated Casualty Value of the Nuclear Material as of the Termination
Settlement Date, and (y) the Termination Rent on the Termination
Settlement Date. The Lessor shall be obligated to deliver to the Lessee a
Bill of Sale on an as-is, where-is, noninstallment, cash sale basis,
without recourse to or warranty or agreement of any kind by the Lessor
acknowledging the above-described transfer and vesting of title and
ownership of the Nuclear Material, free and clear of the Liens created by
the Collateral Documents (but only if any Agent or the Secured Parties are
obligated to release such Liens in accordance with Section 11 of the
Security Agreement).
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
which is leased hereunder, and, if permitted to do so under the Code and
under any other Applicable Laws, 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.
20. [Intentionally Omitted.]
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 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 any other Person 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 removal, abandonment, salvage,
contamination, requisition, taking, loss or destruction of, any Nuclear
Material, (iii) any interruption or cessation in the use or possession of
any Nuclear Material by the Lessee for any reason whatsoever, (iv) the
institution of bankruptcy, reorganization, liquidation or receivership
proceedings by or against the Lessee, (v) the impairment of any Lien
granted under any Basic Document or the invalidity, unenforceability or
lack of binding nature of this Lease, the Security Agreement or any other
Basic Document to which Lessee is a party, or (vi) any termination of the
Lease so long as the last Payment Date has not occurred. The Lessee hereby
waives, to the extent permitted by Applicable Laws, 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 except in accordance with the express terms hereof. 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.
Nothing contained herein shall be construed to waive any claim which
Lessee might have under any of the Basic Documents or otherwise, including
without limitation Section 3(b) hereof, or to limit the right of Lessee to
independently make any claim it might have against Lessor or any other
Person or to independently pursue such claims in such manner as Lessee
shall deem appropriate.
22. Miscellaneous.
(a) Successors and Assigns.
This Lease 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) Waivers.
The parties hereto agree that either party shall not 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, 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 hereto 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 hereto, or by any
one else with respect to this Lease or the Nuclear Material leased
hereunder, except as may be expressly provided for herein or therein.
Any change or modification of this Lease must be in writing and duly
executed by the parties hereto.
(d) Descriptive Headings.
The captions in this Lease are for convenience of reference only and
shall not be deemed to affect the meaning or construction of any of
the provisions hereof.
(e) Severability.
Any provision of this Lease 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 Laws, the Lessee
hereby waives any provision of law which renders any provision hereof
prohibited or unenforceable in any respect.
(f) Governing Law.
This Lease and the rights and obligations of the parties hereunder
shall be construed in accordance with and be governed by the law of
the State of New York.
(g) No Recourse.
This Lease is intended to be a corporate obligation of the Lessor
only, and all of the statements, representations, covenants and
agreements made by the Lessor contained herein are made and intended
only for the purpose of binding the Lessor and establishing the
existence of rights and remedies provided for herein which can be
exercised and enforced against the Lessor. Therefore, anything
contained in this Lease to the contrary notwithstanding, no recourse
may be made against any incorporator, shareholder (direct or
indirect), affiliate, director, officer, employee or agent of the
Lessor with respect to claims against the Lessor arising under or
relating to this Lease; provided, however, that nothing in this
Section 20(g) shall relieve the Lessor from its corporate obligations
under this Lease.
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this Lease to be
executed and delivered by their duly authorized officers as of the day and
year first above written.
DCC FUEL CORPORATION,
Lessor
ATTEST
___________________________ By:_________________________________
Secretary Vice President
INDIANA MICHIGAN POWER COMPANY,
Lessee
ATTEST
___________________________ By:_________________________________
Assistant Secretary Vice President
<PAGE>
Exhibit B-10
PARTICIPATION AGREEMENT
(Indiana Michigan Power Company)
Dated as of [__________ __], 2000
among
INDIANA MICHIGAN POWER COMPANY,
as Lessee
DCC FUEL CORPORATION,
as Lessor
HUNTINGTON TRUST COMPANY, N.A.,
as Owner Trustee,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Collateral Agent
BANK OF AMERICA, NATIONAL ASSOCIATION,
as Liquidity Agent and Administrator
HATTERAS FUNDING CORPORATION,
as CP Lender
and
THE FINANCIAL INSTITUTIONS NAMED ON SCHEDULE 1-A HERETO,
as Liquidity Banks
BANC OF AMERICA LEASING & CAPITAL, LLC,
as Arranger
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS
SECTION 1.1 Definitions 2
ARTICLE II. DOCUMENT CLOSING DATE
SECTION 2.1 Document Closing Date 2
ARTICLE III. ADVANCES AND FUNDINGS
SECTION 3.1 Advance Date 2
SECTION 3.2 CP Lender's Commitment 2
SECTION 3.3 Limitations 3
SECTION 3.4 Procedures for Loans 3
SECTION 3.5 Notes 5
SECTION 3.6 Reduction in Commitments 5
ARTICLE IV. INTEREST
SECTION 4.1 Interest Rate 5
SECTION 4.2 Monthly Notice of Interest Rate 6
SECTION 4.3 Payments and Prepayments of Loans 6
SECTION 4.4 Rates 6
SECTION 4.5 Fees 6
ARTICLE V. GENERAL PROVISIONS
SECTION 5.1 Nature of Transaction 8
SECTION 5.2 Amounts Due Under Lease 8
SECTION 5.3 Release of Lien 8
SECTION 5.4 Extension of Scheduled Termination Date and
Maturity Date 8
ARTICLE VI. CONDITIONS PRECEDENT TO LOANS
SECTION 6.1 Conditions to the Advance Dates 10
ARTICLE VII. REPRESENTATIONS AND WARRANTIES
SECTION 7.1 Representations and Warranties of Lessee 10
SECTION 7.2 Representations and Warranties of Lessor 14
SECTION 7.3 Representations and Warranties of the Trust
Company and the Agents 18
SECTION 7.4 Representations of the Liquidity Banks 19
SECTION 7.5 Representations of the CP Lender 21
SECTION 7.6 Representations and Warranties of the Owner
Trustee 21
ARTICLE VIII. COVENANTS
SECTION 8.1 Covenants of Lessee 22
SECTION 8.2 Covenants of Lessor 28
SECTION 8.3 Covenants of each of the Agents, the
Participants and the Owner Trustee 31
ARTICLE IX. INDEMNITIES
SECTION 9.1 General Indemnification 32
SECTION 9.2 Claims Procedure 34
SECTION 9.3 General Tax Indemnity 35
SECTION 9.4 No Contest 36
SECTION 9.5 Payments 36
SECTION 9.6 Reports 37
SECTION 9.7 Gross Up 37
SECTION 9.8 Lessor Breach 37
SECTION 9.9 Funding Losses 37
SECTION 9.10 Reserve Requirements; Change in Circumstances 38
SECTION 9.11 Change in Legality 39
SECTION 9.12 Non-U.S. Lender Taxes 39
SECTION 9.13 Assignment of Commitments Under Certain
Circumstances; Duty to Mitigate 40
ARTICLE X. DISTRIBUTIONS OF PAYMENTS AND COLLATERAL PROCEEDS
SECTION 10.1 Upfront Fees and Facility Fees 40
SECTION 10.2 Basic Rent Payments 41
SECTION 10.3 Payments for the Repurchase of All of the
Nuclear Material 41
SECTION 10.4 Payments for Less than All of the Nuclear
Material 41
SECTION 10.5 Payments of Additional Rent 41
SECTION 10.6 Payments After a Lease Event of Default 41
SECTION 10.7 Payments of Excluded Amounts 42
SECTION 10.8 Payments for other Specific Purposes 42
SECTION 10.9 Payment of Interest Before Principal 42
ARTICLE XI. COLLATERAL AGENT
SECTION 11.1 Appointment of Collateral Agent; Powers and
Authorization to Take Certain Actions 42
SECTION 11.2 Reliance 44
SECTION 11.3 Action Upon Instructions Generally 44
SECTION 11.4 Indemnification 44
SECTION 11.5 Independent Credit Investigation 45
SECTION 11.6 Refusal to Act 45
SECTION 11.7 Resignation or Removal of Collateral Agent;
Appointment of Successor 45
SECTION 11.8 Separate Collateral Agent 46
SECTION 11.9 Termination of Agency 46
SECTION 11.10 Compensation of Collateral Agent 46
SECTION 11.11 Limitations 46
ARTICLE XII. AMENDMENTS TO BASIC DOCUMENTS
SECTION 12.1 Amendments to Basic Documents With Consent of
Participants 47
SECTION 12.2 Amendments to Basic Documents Affecting Any
Agent 48
ARTICLE XIII. MISCELLANEOUS
SECTION 13.1 Survival of Covenants 48
SECTION 13.2 APPLICABLE LAW 48
SECTION 13.3 Effect and Modification of Agreement 48
SECTION 13.4 Notices 48
SECTION 13.5 Transaction Costs 49
SECTION 13.6 Counterparts 49
SECTION 13.7 Severability 49
SECTION 13.8 Successors and Assigns 49
SECTION 13.9 Brokers 49
SECTION 13.10 JURY TRIAL 49
SECTION 13.11 Captions; Table of Contents 50
SECTION 13.12 FINAL AGREEMENT 50
SECTION 13.13 No Third-Party Beneficiaries 50
SECTION 13.14 Limitations on Recourse to the CP Lender 50
SECTION 13.15 Reproduction of Documents 50
SECTION 13.16 Consideration for Consents to Waivers and
Amendments 51
SECTION 13.17 Liabilities of Participants 51
SECTION 13.18 Liabilities of Agents 51
SECTION 13.19 Limited Liability of Lessor 51
SECTION 13.20 Submission to Jurisdiction 51
SECTION 13.21 Non-Petition 52
SECTION 13.22 Role of Arranger 52
SECTION 13.23 Assignment of CP Lender's Interest in Loan
Agreement to Liquidity Banks or SPC Assignee 52
SECTION 13.24 Non-Consenting Liquidity Bank 52
APPENDICES
APPENDIX 1 Definitions
SCHEDULES
SCHEDULE 1-A Participant Addresses, Commitments, etc.
SCHEDULE 1-B Conditions Precedent to Document Closing Date and Advance
Dates
SCHEDULE 2 Addresses and Funding Instructions SCHEDULE 3 Consents and Permits
SCHEDULE 4 List of Disclosed Litigation SCHEDULE 5 Filings and Recordings
[SCHEDULE 6.1 Lessee Obligations] SCHEDULE 6.2 Prudential Financing Documents
SCHEDULE 7 Amortization Schedule for Notes
APPENDICES AND EXHIBITS
EXHIBIT A Form of Advance Request
EXHIBIT B Form of Release Certificate
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (Indiana Michigan Power Company), dated as of
[___________ __,] 2000 (this "Agreement"), is among INDIANA MICHIGAN POWER
COMPANY, as Lessee, DCC FUEL CORPORATION (in its corporate capacity, "DCC
Fuel"), as Lessor, HUNTINGTON TRUST COMPANY, N.A.,(in its corporate
capacity, the "Trust Company") as trustee of the DCC Fuel Trust (in such
capacity, the "Owner Trustee"), FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as collateral agent (in such capacity, the "Collateral Agent"), HATTERAS
FUNDING CORPORATION (in its corporate capacity, "HFC"), as CP Lender, BANK
OF AMERICA, NATIONAL ASSOCIATION (in its corporate capacity, "Bank of
America"), as administrator for the CP Lender (in such capacity, the
"Administrator") and as liquidity agent for the Liquidity Banks (in such
capacity, the "Liquidity Agent"), and the persons named on Schedule 1-A
hereto, as Liquidity Banks (the Liquidity Banks, together with the CP
Lender, the "Participants").
W I T N E S S E T H:
WHEREAS, subject to the terms of this Agreement and the Loan Agreement,
the CP Lender is willing from time to time to make Loans consisting of
proceeds from the issuance of commercial paper (the "Commercial Paper") in
an aggregate amount not to exceed the Aggregate Commitment Amount to
Lessor at the request of Lessee, as agent for Lessor, pursuant to the Loan
Agreement, for the purpose of enabling Lessor to finance up to 100% of the
Acquisition Cost of Nuclear Material for the Generating Facilities;
WHEREAS, if, for any reason, the CP Lender elects not to issue commercial
paper and lend such proceeds, the Liquidity Banks are willing to make
Loans in an aggregate amount not to exceed the Aggregate Commitment Amount
to Lessor for up to 100% of the Acquisition Cost of Nuclear Material for
the Generating facilities;
WHEREAS, immediately after the initial Loan is made, the Prudential Lease
will be terminated and the nuclear material subject thereto will be leased
by Lessor to Lessee as Nuclear Material under and pursuant to the Lease
(and any lease supplements) entered into by each party as of the date
hereof;
WHEREAS, on the initial Advance Date, Lessor will use the proceeds of the
initial Loan to pay in full all outstanding principal and accrued interest
and other fees and expenses due and payable on (i) the $140,000,000
Floating Rate Credit Agreement, dated as of December 1, 1990 between DCC
Fuel and PruLease, Inc., as amended, (ii) the $125,000,000 Note Purchase
Agreement, dated as of December 1, 1990 between DCC Fuel and various note
purchasers named therein, as amended, and (iii) all other debt obligations
of DCC Fuel then outstanding, in all cases in the aggregate not to exceed
the Aggregate Commitment Amount;
WHEREAS, at each refueling of a Generating Facility, subject to the
Aggregate Commitment Amount, the terms of the Loan Agreement and the other
Basic Documents, either the CP Lender or the Liquidity Banks will make
Loans to Lessor, the proceeds of which will be used by Lessor to purchase
additional Nuclear Material and, concurrently with Lessor's purchase,
Lessor will lease such Nuclear Material to Lessee pursuant to the Lease;
WHEREAS, as of the date hereof, the CP Lender, the Liquidity Banks and the
Liquidity Agent have entered into the LAPA, pursuant to which the
Liquidity Banks may from time to time purchase Percentage Interests from
the CP Lender;
WHEREAS, the Collateral Agent for the benefit of the Participants shall
have a first perfected security interest and lien in all of Lessor's
right, title and interest in the Collateral, including the Nuclear
Material and all of Lessor's rights against Lessee under the Lease;
NOW, THEREFORE, in consideration of the mutual terms and conditions herein
contained, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION I.1 Definitions. Capitalized terms used but not defined herein
(including those used in the foregoing recitals) shall have the meanings
specified in Appendix 1 hereto unless herein defined or the context
otherwise requires, which Appendix 1 shall for all purposes constitute a
part of this Agreement.
ARTICLE II
DOCUMENT CLOSING DATE
SECTION II.1 Document Closing Date. The Document Closing Date shall occur
as of the date hereof, if all of the conditions precedent set forth in
Item 1 of Schedule 1-B attached hereto shall have been satisfied or waived
by the applicable parties. All documents and instruments required to be
delivered on the Document Closing Date shall be delivered at the offices
of Mayer, Brown & Platt, 1675 Broadway, New York, New York 10019-5820, or
at such other location as may be determined by the Collateral Agent and
Lessee.
ARTICLE III
ADVANCES AND FUNDINGS
SECTION III.1 Advance Date. Subject to the terms and conditions of this
Agreement, on each Advance Date, (i) the CP Lender may or, if the CP
Lender elects in its sole discretion not to make such Loans then the
Liquidity Banks shall, make a Loan, the proceeds of which shall be used by
Lessor to fund the Acquisition Cost of the Nuclear Material funded by such
Loan for the Generating Facilities, (ii) Lessor shall acquire such Nuclear
Material and (iii) Lessor and Lessee shall have entered into a Leasing
Record pursuant to which Lessor shall lease to Lessee the Nuclear Material
funded by such Loan.
SECTION III.2 CP Lender's Commitment. Subject to the conditions and terms
hereof and of the Loan Agreement, the CP Lender shall make Loans to
Lessor, as Borrower, at the request of Lessee on each Advance Date for the
purpose of enabling Lessor to acquire or retain Nuclear Materials and to
pay the Acquisition Cost thereof, in an aggregate principal amount not to
exceed the amount of the CP Lender's Commitment Amount less the then
aggregate outstanding principal amount of the CP Loans. Subject to the
terms of the Loan Agreement, Lessor, as Borrower thereunder, may from time
to time borrow, prepay and reborrow Loans.
SECTION III.3 Limitations. The parties acknowledge that the CP Lender
shall not be obligated to make a CP Loan on any Advance Date
notwithstanding the use of the terms "Commitment" or "Commitment Amount"
in relation to the CP Lender, or any other language indicating an
obligation of the CP Lender to make a CP Loan on any Advance Date.
SECTION III.4 Procedures for Loans.
(a) With respect to each Loan, Lessee shall give Lessor and the Collateral
Agent irrevocable written notice not later than 11:00 a.m., New York time,
at least three Business Days prior to the proposed Advance Date, by
delivery of an advance request substantially in the form of Exhibit A
hereto (an "Advance Request") (which Advance Request the Collateral Agent
shall promptly forward to the Administrator, the Liquidity Agent and the
Participants) specifying:
(i) the proposed Advance Date;
(ii) the amount of the Loan requested;
(iii) a description of the Nuclear Material to be acquired on the
proposed Advance Date;
(iv) a listing of the Acquisition Costs of the Nuclear Materials to
be acquired, setting forth in reasonable detail the amount of each
category of Acquisition Costs;
(v) that Lessee certifies that such Loan complies with the
limitations and conditions set forth at Sections 3.2, 3.3 and 3.4;
and
(vi) wire transfer instructions for the disbursement of funds.
All documents and instruments required to be delivered pursuant to this
Agreement (i) with respect to the initial Advance Date, shall be delivered
at the offices of Mayer, Brown & Platt, 1675 Broadway, New York, New York
10019-5820 and (ii) with respect to each subsequent Advance Date, to the
Collateral Agent at its address set forth in Schedule 2 or at such other
location as the Liquidity Agent and Lessee may agree.
(b) All remittances made by the CP Lender and Liquidity Banks for the
funding of the Loans shall be made on the related Advance Date in
immediately available funds by wire transfer to the account maintained by
the Collateral Agent for such purpose and identified in Schedule 2 hereto.
Subject to the prior satisfaction or waiver of all the applicable
conditions set forth in Section 6.1, the Participants will fund the
applicable Loan prior to 12:00 noon, New York City time, on the Advance
Date. Collateral Agent on behalf of Lessor shall wire transfer in
immediately available funds the proceeds of the Loan to the Persons
entitled thereto in accordance with the Advance Request promptly upon
receipt thereof and in accordance with the Advance Request.
(c) (i) If the CP Lender elects not to, or otherwise fails to, make
available to the Collateral Agent on the applicable Advance Date an amount
equal to the amount of the Advance requested by Lessee pursuant to the
terms hereof to be funded on such Advance Date, the Administrator shall
notify each of the Liquidity Banks and Lessee. Upon receipt by the
Liquidity Banks of the notice from the Administrator, the Liquidity Banks
shall make available to the Collateral Agent amounts equal to their
respective Commitment Percentages of the amount of the Advance required by
the terms hereof to be funded on such Advance Date pursuant to the Loan
Agreement or, if applicable, the Advance shall be made from the accounts
maintained pursuant to Sections 3.2(g), 3.6 or 3.7 of the LAPA.
(ii)(A) In the event that any Liquidity Bank (a "Defaulting Liquidity
Bank") fails to make available to the Collateral Agent on the
applicable Advance Date an amount equal to such Liquidity Bank's
Commitment Percentage of the amount of the Advance required by the
terms hereof to be funded on such Advance Date, or the Collateral
Agent determines that a Liquidity Bank will become a Defaulting
Liquidity Bank on the applicable Advance Date, the Collateral Agent
shall promptly notify the Lessee thereof and the Lessee shall have
the following options (provided that Lessee shall not be required to
make such election if such Advance is funded pursuant to Sections
3.2(g), 3.6(d) or 3.7(c) of the LAPA): (y) except in respect of any
Advance pursuant to the initial Advance Date and without in any way
waiving the occurrence of any Payment Default, the Lessee may elect
to postpone the funding of the entire Advance (provided, however,
that such postponement shall in no event relieve Lessee of its
obligation to pay as Additional Rent any Additional Costs suffered or
incurred by any Participant (other than the Defaulting Liquidity
Bank, against which Lessee may exercise any rights to recover any
[___________________]) as required by and pursuant to Article IX) or
(z) to have the provisions of clause (i)(B) of this Section 3.4(c) be
applicable. In any event, Lessee or the Collateral Agent may elect to
have the Defaulting Liquidity Bank replaced with a new Liquidity Bank
acceptable to the Lessee, so long as such replacement satisfies the
requirements of Section 10.1 of the LAPA and the Liquidity Agent and
the Defaulting Liquidity Bank shall cooperate (at no cost to the
Lessee) in replacing such Defaulting Liquidity Bank.
(B) At Lessee's option, the Liquidity Agent shall (1) promptly notify
each other Liquidity Bank (each, a "Non-Defaulting Liquidity Bank"),
(2) specify the then Available Commitment (as used in this Section
3.4(c), the "Defaulted Commitment Amount") of the Defaulting
Liquidity Bank and (3) give to all Non-Defaulting Liquidity Banks the
opportunity to increase their respective Commitment Amounts by notice
in writing to Liquidity Agent. If the Non-Defaulting Liquidity Banks
offer to increase their Commitment Amounts in an amount in the
aggregate greater than the Defaulted Commitment Amount, Liquidity
Agent shall increase the Commitment Amounts of the participating
Non-Defaulting Liquidity Banks on a pro rata basis in accordance with
the respective amounts by which such Non-Defaulting Liquidity Banks
have offered to participate, it being understood that in no event
shall the aggregate amount funded by any Liquidity Bank exceed the
amount of such Liquidity Bank's Commitment Amount after giving effect
to any increase in such Commitment Amount pursuant to this sentence.
The Administrator shall promptly provide the Liquidity Agent (with a
copy to Lessee) with such information as is necessary for the
Liquidity Agent to give such notification.
(C) As soon as practical after receipt of notices from Non-Defaulting
Liquidity Banks electing to participate in the Defaulted Commitment
Amount in an amount equal to or greater than the Defaulted Commitment
Amount, Liquidity Agent shall notify each participating
Non-Defaulting Liquidity Bank of its revised Commitment Amount,
Lessee may resubmit such Advance Request and each Liquidity Bank
shall transfer to Collateral Agent, in immediately available funds,
its pro rata share of the requested Loan, determined in proportion to
the revised Commitment Amount of the Liquidity Banks. Following a
revision of the Commitment Amounts as described above, a Defaulting
Liquidity Bank shall not have the right to fund its Defaulted
Commitment Amount. The right of the Defaulting Liquidity Bank to
receive any payments made under the Facility Notes or otherwise in
accordance with the Basic Documents shall be subordinate in all
respects to the right of the Non-Defaulting Liquidity Banks to
receive payments of amounts due under the Facility Notes or otherwise
in accordance with the Basic Documents, and no such payments shall be
made to the Defaulting Liquidity Bank until each Non-Defaulting
Liquidity Bank shall have received all such sums then due to it.
(D) Unless either (A) the Defaulting Liquidity Bank cures its default
or (B) the Non-Defaulting Liquidity Banks offer to increase their
Commitment Amount in an amount equal to or greater than the Defaulted
Commitment Amount, or the Defaulting Liquidity Bank is replaced
pursuant to clause (i) of this Section 3.4, such that the aggregate
Available Commitment of the Non-Defaulting Liquidity Bank are equal
to the remaining unfunded Loan Commitment, no Non-Defaulting
Liquidity Bank shall be obligated to fund any Loans.
SECTION III.5 Notes. Each Loan shall be evidenced on the Note issued to
the applicable Participant pursuant to Section 2.3 of the Loan Agreement
and shall be repayable in accordance with, and with interest accruing
pursuant to, the terms of the Loan Agreement. Each Participant is
authorized and entitled to make notations on their respective Notes in
accordance with the Loan Documents each of which notations shall
constitute prima facie evidence of the accuracy of the information so
noted, absent manifest error.
SECTION III.6 Reduction in Commitments. The Lessee may, on any one
occasion on any Business Day occurring after the time of the initial
Advance Date hereunder, voluntarily instruct the Lessor to reduce, and
upon receipt of such instructions Lessor shall reduce, the Aggregate
Commitment Amount; provided, however, that such a reduction shall require
at least three Business' Days prior notice to the Collateral Agent (which
notice the Collateral Agent shall promptly forward to the Administrator,
the Liquidity Agent and Participants) and be permanent, and any reduction
of any Commitment Amount shall be no greater than the amount of
$30,000,000.
ARTICLE IV
INTEREST
SECTION IV.1 Interest Rate.
(a) Notes or any interest capitalized therein shall bear interest (i) if
owned by the CP Lender and funded or maintained by the issuance of
Commercial Paper, at the CP Rate and (ii) if owned by the Liquidity Banks,
at the applicable rate set forth in Section 4.1(b) below.
(b) Upon the conversion of a CP Loan to a Facility Loan pursuant to
Section 2.9(a) of the Loan Agreement, the interest rate of such Facility
Loan shall be automatically converted to the Alternate Base Rate at the
effective date of such conversion. On any such conversion date, the
Administrator shall notify the Collateral Agent by telephone, with written
confirmation by overnight delivery service or facsimile transmission, of
such conversion, the applicable Alternate Base Rate for such period, and
the principal amount of the Loan so converted, and the Collateral Agent
shall determine the LIBO Rate on the next succeeding Business Day. The
Collateral Agent shall notify the Administrator, Lessor, Lessee and the
Liquidity Banks as to the LIBO Rate plus the Drawn Margin on such
succeeding Business Day by telephone, with written confirmation by
overnight delivery service or facsimile transmission. If the Drawn Rate is
determined for all or a portion of the Facility Loan, the initial Interest
Period for such Facility Loan shall commence two Business Days after the
date of the setting of the LIBO Rate (or such other rate as set in
accordance with this Section) and shall end on, but exclude, the Payment
Date next following the commencement of such Interest Period and,
thereafter, the Interest Period shall commence on the last day of the
preceding Interest Period and end on the next Payment Date, unless earlier
terminated by a prepayment or sale of such Facility Loan to the CP Lender,
provided, that if the LIBO Rate is unavailable for any reason, the
Alternate Base Rate shall continue to apply. Upon prepayment of all or a
portion of a Facility Loan owned by the Liquidity Banks on a date other
than a Payment Date, Section 9.9 shall apply. The conversion of the
interest rate on all or a portion of the outstanding principal amount of a
Facility Loan shall be automatic and not require any notice from any
Liquidity Bank, the CP Lender or any Agent. Administrator shall notify the
Collateral Agent and Lessee at any time a CP Loan is converted to a
Facility Loan, and vice versa.
(c) Interest shall be payable in arrears on each Payment Date in
accordance with the Loan Agreement.
SECTION IV.2 Monthly Notice of Interest Rate. The Administrator shall
deliver to the Collateral Agent by the fifth Business Day of each calendar
month, commencing on the fifth Business Day of the first calendar month
following the initial Advance Date, and each calendar month thereafter,
until and including the first and, if necessary, the second calendar month
following the end of the Lease Term, a report setting forth the amount of
interest at the CP Rate or the Alternate Base Rate for the immediately
preceding calendar month (or portion thereof). The Collateral Agent shall
deliver to Lessee, Lessor and the Administrator no later than the seventh
Business Day prior to the next Payment Date, an invoice setting forth the
amount of interest at the Drawn Rate, with respect to LIBO Rate Loans, at
the CP Rate, with respect to CP Loans (or at the Alternate Base Rate, with
respect to Alternate Base Rate Loans), and any Fees described in Section
4.5, in each case for the Interest Period ending on such Payment Date.
Within two Business Days thereafter, Lessee shall deliver to Lessor,
Collateral Agent and Administrator a Basic Rent Schedule setting forth all
Rent payable by Lessee on the next Payment Date, and the Collateral Agent
shall no later than the second Business Day thereafter notify the Agents
and the Participants of such amount of Rent.
SECTION IV.3 Payments and Prepayments of Loans.
(a) Lessor hereby directs Lessee to pay to the Collateral Agent on each
Payment Date the Rent due on such Payment Date no later than 12:00 noon
New York time on such date (other than Excluded Amounts, which Lessor
hereby directs Lessee to make directly to the applicable person entitled
thereto). Lessee hereby consents to the payment of Rent to the Collateral
Agent.
(b) If Lessee terminates the Lease for any reason, Lessor will prepay the
entire Lease Balance and other amounts due and owing under this Agreement
or any other Basic Document (including but not limited to any funding
losses payable under Section 9.9 hereof).
(c) Principal payments on the Notes shall be made for each Basic Rent
Period in amounts equal to, and at times determined by the calculation of,
the aggregate Monthly Rent Component as shown on each Basic Rent Schedule
for such Basic Rent Period.
SECTION IV.4 Rates. With respect to each determination of interest
pursuant to this Agreement and the Loan Agreement and Basic Rent under the
Lease, Lessee agrees to be bound by Sections 2.5 and 2.6 of the Loan
Agreement.
SECTION IV.5 Fees. Lessee agrees to pay the fees set forth in this Section
4.5 (each, a "Fee", and collectively, the "Fees"). Lessee may request Fees to be
paid with the proceeds of Loans pursuant to the terms and conditions set forth
at Section 3.4.
(a) Lessee agrees to pay the following fees to the Persons indicated below
(provided, however, that any Fees payable to the Participants shall be
paid to the Liquidity Agent on their behalf) from time to time during the
Lease Term (such fees representing the "Program Fee" (as described in the
Conduit Fee Letter) and the "Facility Fees", each to begin accruing from
the Document Closing Date):
(i) The "Program Fee" (specifically excluding the Facility Fee, which
is payable as described in the immediately succeeding clause (ii),
the Upfront Fee, which is payable as described in the immediately
succeeding clause (iii), and the Dealer Fee, which is payable in
accordance with the definition of "CP Rate") to the Administrator,
for its own account, in the amounts and on the dates set forth in the
Conduit Fee Letter.
(ii) A "Facility Fee" to the Administrator for the benefit of each of
the Liquidity Banks (A) during any period that clause (B) is not
applicable, at a rate per annum equal to the Facility Fee on such
Liquidity Bank's Commitment Amount (as defined in the LAPA) under the
LAPA or (B) during any period that such Liquidity Bank's Commitment
Amount (as defined in the LAPA) has been paid into an account
provided for at 3.2(g), Section 3.6 or 3.7 of the LAPA, in an amount
equal to the Cash Collateral Fee (as defined in the LAPA).
(iii) An "Upfront Fee" to the Administrator for the benefit of each
Participant payable on the initial Advance Date.
Subject to Section 4.2, the Collateral Agent shall provide to the Lessee
from time to time not less than seven (7) Business Days prior to the due
date for each Fee, a written statement of the amount of the Fee then due,
the due date therefor and the calculation thereof (which statement may be
based on and shall include the information provided by the Administrator
under the LAPA with respect to the amount and basis for calculation of the
Cash Collateral Fee (as defined in the LAPA), if any); provided, however,
that Collateral Agent's failure to give such notice shall not relieve
Lessee of its obligation to pay all Fees. The Program Fee and the Facility
Fees shall be payable quarterly in arrears (on a date which is otherwise a
Payment Date), and shall be computed on the basis of the actual number of
days occurring during each calendar quarter, or portion thereof, ending on
the last day of the calendar quarter immediately preceding such Payment
Date (with the initial period for the Program Fee and the Facility Fees
being the period from and including the Document Closing Date to and
including the last day of the calendar quarter in which the Document
Closing Date occurs), and thereafter, during each calendar quarter, or
portion thereof, ending on the last day of the calendar quarter
immediately preceding such Payment Date, for which such Program Fee and
the Facility Fees are payable over a year of 360 days and shall be
distributed by the Liquidity Agent to the Liquidity Banks in accordance
with their respective interests therein.
(b) Other Fees. The Lessee also agrees to pay (i) to the Collateral Agent,
for its own account, the fees set forth in the Collateral Agent Fee
Letter, and (ii) to the Arranger, the Arrangement Fee as set forth in the
Arranger Fee Letter. The Fees payable pursuant to this clause (b) shall be
payable in the amounts and on the dates set forth therein.
ARTICLE V
GENERAL PROVISIONS
SECTION V.1 Nature of Transaction. It is the intent of the parties that:
(a) the Overall Transaction constitutes a capital lease from Lessor to
Lessee for purposes of Lessee's financial reporting treatment under GAAP;
(b) for Federal and state income tax, bankruptcy and Uniform Commercial
Code and financial accounting purposes:
(i) the Overall Transaction constitutes a financing by the
Participants to Lessee and preserves beneficial ownership in the
Nuclear Material in Lessee, and the obligations of Lessee to pay
Basic Rent shall be treated as payments of principal and interest to
the Participants, and the payment by Lessee of any amounts in respect
of the Monthly Rent Component shall be treated as payments of
principal to Participants;
(ii) the Lease grants a security interest or a lien, as the case may
be, in the Nuclear Material and the other Collateral in favor of
Lessor and Collateral Agent for the benefit of the Participants; and
(iii) the Security Agreement creates liens and security interests in
the Collateral for the benefit of the Participants.
Lessee acknowledges and agrees that none of Lessor, any Agent, Arranger,
or any Participant has made any representations or warranties concerning
the tax, accounting or legal characteristics of the Basic Documents or any
aspect of the Overall Transaction and that Lessee has obtained and relied
upon such tax, accounting and legal advice concerning the Basic Documents
as Lessee deems appropriate.
SECTION V.2 Amounts Due Under Lease. Anything else herein or elsewhere to
the contrary notwithstanding, it is the intention of Lessor and the
Participants that the amount and timing of installments of Basic Rent due
and payable from time to time from Lessee under the Lease shall be equal
to the aggregate payments due and payable in respect of principal and
interest on the Loans, plus any other amounts payable thereunder, on each
Payment Date.
SECTION V.3 Release of Lien. Collateral Agent and Lessor shall release
within three Business Days the Lien on any Nuclear Material that is
covered by a Financing Statement, in each case upon receipt of a release
certificate (the "Release Certificate") substantially in the form of
Exhibit B attached hereto, with appropriate insertions, signed by Lessee.
SECTION V.4 Extension of Scheduled Termination Date and Maturity Date.
(a) Lessee may request in writing (an "Extension Request") to Lessor, CP
Lender and each Liquidity Bank (with a copy to each Agent) that Lessor and
each Participant agree to extend the Lease Term (a "Lease Extension") for
additional two-year periods commencing on the last day of the then current
Lease Term, as applicable (each, a "Lease Renewal Term") and that the
Maturity Date be correspondingly extended to the extended Scheduled
Termination Date. Any such Extension Request must be delivered in writing
to Lessor and each Participant not later than 180 days nor more than 360
days prior to the expiration of the then current Lease Term. Subject to
the foregoing limitations, Lessee may deliver one or more than one
Extension Request and each Extension Request may request a Lease Extension
of one or more than one two-year period. Lessor and each Participant will
notify each Agent and Lessee in writing of whether or not it has consented
to such Extension Request not later than 45 days after receipt of the
Extension Request (the "Extension Response Date"). Any Liquidity Bank that
consents to such Extension Request shall be deemed to have extended its
Commitment accordingly. Any Liquidity Bank who does not so notify the
Agents and Lessee by the Extension Response Date will be deemed to be, and
any Liquidity Bank that has notified the Agents and Lessee that it has not
consented to an Extension Request will be, a "Non-Consenting Liquidity
Bank." Each Participant's determination with respect to an Extension
Request shall be a new credit determination and within such Participant's
sole and absolute discretion and may be conditioned upon such terms and
conditions as deemed appropriate by the consenting Participants, including
receipt of such financial information, documentation or other information
or conditions as may be reasonably requested by such Participant.
The Lease Extension shall become effective as of the first date (the
"Extension Effective Date") on or after the Extension Response Date on
which Lessor and all of the Participants (other than Non-Consenting
Liquidity Banks who have been replaced by Replacement Liquidity Banks in
accordance with Section 5.4(b)) and Replacement Liquidity Banks shall have
consented to such Lease Extension; provided, that on both the date of the
Extension Request and the Extension Effective Date: (w) each of the
representations and warranties made by Lessor and Lessee in or pursuant to
any Basic Document shall be true and correct in all material respects as
if made on and as of each such date (except to the extent any such
representation or warranty specifically relates to an earlier date), (x)
Lessee shall not have delivered a Notice of Lease Termination or a
Burdensome Buyout Notice, (y) no Lease Default or Lease Event of Default
shall have occurred and be continuing, and (z) on each of such dates, the
Collateral Agent shall have received a certificate of Lessee as to the
matters set forth in clauses (w) and (y) above; and provided, further,
that in no event shall the Extension Effective Date occur unless each of
the Participants (other than Non-Consenting Liquidity Banks who have been
replaced in accordance with Section 5.4(b)) and the Replacement Liquidity
Banks shall have consented to the Extension Request on or before the
expiration of the then current Lease Term.
(b) At any time after the Extension Response Date, Lessee shall be
permitted to replace any Non-Consenting Liquidity Bank with a replacement
bank or other financial institution (a "Replacement Liquidity Bank"), and
such Non-Consenting Liquidity Bank shall sell (without recourse) to the
Replacement Liquidity Bank all Loans of such Non-Consenting Liquidity Bank
for an amount equal to the aggregate outstanding principal amount of such
Loans plus accrued interest to (but not including) the date of sale,
provided that: (i) such replacement does not conflict with any Applicable
Laws, (ii) Lessee shall pay to such Non-Consenting Liquidity Bank any
amounts arising under Section 9.9 if any Loan owing to such Non-Consenting
Liquidity Bank shall be purchased other than on the last day of the
Interest Period relating thereto, (iii) such replacement shall be made in
accordance with the provisions of Section 10.1 of the LAPA (provided that
the relevant Replacement Liquidity Bank or Lessee shall be obligated to
pay the transaction costs arising in connection therewith), (iv) the
Replacement Liquidity Bank shall have agreed to be subject to all of the
terms and conditions of the relevant Basic Documents, and (v) such
replacement must be consummated no later than thirty (30) days prior to
the expiration of the Lease Term. Upon replacement of a Non-Consenting
Liquidity Bank in accordance with this subsection (b), the Replacement
Liquidity Bank shall be a party hereto and the other Basic Documents to
which the Non-Consenting Liquidity Bank was a party and shall have the
rights and obligations of a Liquidity Bank hereunder and under such other
Basic Documents, and the Non-Consenting Liquidity Bank shall relinquish
its rights and be released from its obligations hereunder and under such
other Basic Documents; provided, that a Non-Consenting Liquidity Bank's
rights under the indemnification provisions of the Basic Documents shall
survive any sale of its Loans to a Replacement Liquidity Bank.
ARTICLE VI
CONDITIONS PRECEDENT TO LOANS
SECTION VI.1 Conditions to the Advance Dates. The obligation of each
Participant to perform its respective obligations on each Advance Date
shall be subject to the satisfaction (including, with respect to writings,
such writings being in substance reasonably satisfactory to the addressee
or beneficiary thereof), or the waiver in writing by such Participant, of
the conditions precedent set forth on Items 2 and 3 of Schedule 1-B hereto
on or prior to such Advance Date (except that the obligation of any party
hereto shall not be subject to such party's own performance or
compliance).
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION VII.1 Representations and Warranties of Lessee. Lessee represents
and warrants to each of the other parties hereto as follows:
(a) Organization and Standing. Lessee is a corporation duly
organized, validly existing and in good standing under the laws of
the jurisdiction of the State of Indiana, and is qualified to do
business in each state or other jurisdiction in which the character
of its properties or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified
would, individually or in the aggregate, not have a Material Adverse
Effect on its ability to perform its obligations under this
Agreement.
(b) Corporate Authority. Lessee has the corporate power and authority
to execute and perform this Agreement and the Lease and to lease the
Nuclear Material from Lessor.
(c) Compliance with Other Instruments, etc. The execution, delivery
and performance of the Basic Documents to which Lessee is a party,
and other related instruments, documents and agreements, and the
compliance by Lessee with the terms thereof, (i) have been duly and
legally authorized by appropriate corporate action taken by Lessee,
(ii) are not in contravention of, and will not result in a violation
or breach of, any of the terms of Lessee's certificate or articles of
incorporation or other constitutive documents, its by-laws or of any
provisions relating to shares of capital stock of Lessee and (iii)
will not violate or constitute a breach of any provision of law, any
order of any court or any order, rule or regulation of any other
agency of government applicable to or binding on Lessee, or any
indenture, agreement or other instruments to which Lessee is a party,
or by or under which Lessee or any of Lessee's property is bound, or
be in conflict with, result in a 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 Lessee's property or assets or any Nuclear
Material, other than Permitted Liens.
(d) Legal Obligations. This Agreement and the Lease have been
executed by a Responsible Officer of Lessee, and this Agreement and
the Lease constitute, and each Leasing Record, when executed by a
Responsible Officer of Lessee and delivered to Lessor, will
constitute, the legal, valid and binding obligations of Lessee,
enforceable in accordance with their 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, fraudulent conveyance 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) and subject to
requirements of reasonableness, good faith and fair dealing.
(e) Governmental Consents. Neither the execution and delivery of this
Agreement, the Lease or any Leasing Record by Lessee, nor the
performance by 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 SEC, dated ___________, 2000, the order
of the Indiana Utility Regulatory Commission, dated _______________,
2000, and for the filing of any statement or other instrument
pursuant to Section 10 of the Lease.
(f) Consents and Permits. Lessee possesses all licenses, permits,
franchises and certificates and all other approvals, orders,
authorizations and consents and has made all declarations, filings
and registrations which are necessary or appropriate for the
ownership of its properties and assets and for the conduct of its
business as now conducted and proposed to be conducted (except as
otherwise disclosed in Schedule 3 hereto and except for those
licenses, permits, franchises, certificates, approvals, orders,
authorizations and consents which the failure to possess, and such
declarations, filings and registrations which the failure to make,
would not have a Material Adverse Effect upon the condition,
financial or otherwise, of Lessee, and would not have a Material
Adverse Effect upon Lessee's ability to carry out its obligations,
under the Basic Documents to which Lessee is a party, or the existing
Bills of Sale or Leasing Records executed by Lessee).
(g) Litigation. Except as disclosed in Schedule 4 hereto or as
otherwise disclosed in Lessee's most recent current SEC Report, there
is no litigation or other proceeding now pending or, to the best of
Lessee's knowledge, threatened, against or affecting Lessee, before
any court, arbitrator or administrative or governmental agency (i)
which would adversely affect or impair title of Lessor to the Nuclear
Material, (ii) which questions the validity or enforceability of any
Basic Document to which Lessee is a party or any action taken or to
be taken by Lessee pursuant to or in connection with this Agreement,
or (iii) which, if decided adversely to Lessee, would materially
adversely affect the condition, financial or otherwise, of Lessee.
(h) Taxes. 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 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 GAAP.
(i) No Defaults. Lessee is not in material default under any bond,
debenture, note or any other evidence of Obligation for Borrowed
Money or Deferred Purchase Price or any mortgage, deed of trust,
indenture, loan agreement or other agreement relating thereto.
(j) 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 Lessee to be, incurred with respect to any
plan (other than a multiemployer plan) by Lessee which is or would be
materially adverse to Lessee. 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 Lessee. Neither the execution and delivery by
Lessor of the Basic Documents, and the funding of the Loans and the
purchase of the Notes thereunder, nor the execution and delivery by
Lessee of this Agreement, the Trust Agreement and each other Basic
Document to which 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. The representation by Lessee in the next preceding sentence is
made in reliance upon and subject to the accuracy of (i) the CP
Lender's representation in Section 7.5 of this Agreement as to the
source of the funds to be used to fund the Loans and (ii) the
Liquidity Banks' representation in Section 7.4 of this Agreement as
to the source of funds to be used to purchase the Notes. 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
Lessee or by any trade or business, whether or not incorporated,
which, together with 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).
(k) Financial Statements. The balance sheet of Lessee as of December
31, 1999, and the related statements of income and cash flows of
Lessee for the year then ended, copies of which have been delivered
to Lessor and the Participants, and all other annual or quarterly
statements so delivered fairly present the financial condition of
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 GAAP consistently applied. There has been
no material adverse change in Lessee's condition, financial or
otherwise, since the most recent annual or quarterly financial
statements so delivered.
(l) Liens. Immediately after the termination of the Prudential Lease
and the effectiveness of the Lease, the Nuclear Material shall be
free and clear of any Lien in favor of any Person claiming by,
through or under Lessee or any Affiliate thereof, other than
Permitted Liens.
(m) Disclosure. None of the representations in this Agreement, or in
any other document, certificate, or statement furnished to any
Participant or Agent by or on behalf of Lessee in connection with the
transactions contemplated hereby including the Annual Report on Form
10-K for the year ended December 31, 1999, contained as of its date,
any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein in
light of the circumstances under which they were made, not untrue.
There is no fact within the knowledge of Lessee which has not been
disclosed herein or therein and which materially adversely affects
the condition, financial or otherwise, of Lessee.
(n) Collateral Equivalence Test. The aggregate Stipulated Casualty
Value of the Nuclear Material leased under the Lease equals or
exceeds the sum of the outstanding aggregate principal amount of all
Loans.
(o) Filings. No filing, recordation or registration is necessary in
order to perfect the security interest in the Nuclear Material,
except for the filing of Financing Statements in the jurisdictions
listed in Schedule 3 hereto, and that upon such filings, the security
interest in the Nuclear Material is enforceable and properly
perfected./
(p) Federal Reserve Regulations.
(i) Lessee is not engaged principally, or as one of its
important activities, in the business of extending credit for
the purpose of buying or carrying "margin securities" within the
meaning of Regulation U of the Board of Governors of the Federal
Reserve System (the "Board") or any regulations, interpretations
or rulings thereunder.
(ii) No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or
ultimately for any purpose that entails a violation of, or that
is inconsistent with, the provisions of the Regulations of the
Board, including Regulation U or X. Margin securities do not
constitute 25% or more of the fair market value of the assets of
Lessee, subject to the restrictions of Section 8.1(a).
(q) Principal Place of Business. The principal place of business and
chief executive office (as such term is used in Article 9 of the UCC)
of Lessee is set forth on Schedule 2.
(r) No Prohibited Transactions. The execution and delivery of the
Basic Documents, and the consummation of the transactions
contemplated hereby and thereby, will not involve any prohibited
transactions, within the meaning of Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section 4975
of the Code.
(s) No Lease Event of Default; Deemed Loss Event. No Lease Event of
Default or Deemed Loss Event has occurred and is continuing.
(t) Personal Property. The Nuclear Material is at all times personal
property within the meaning of the laws of the State of Michigan
where the Nuclear Material is located on the Document Closing Date;
and the Nuclear Material is "goods" or "fixtures" (as defined in the
Uniform Commercial Code as in effect in such State).
(u) No Registration. Neither Lessee nor any of its Affiliates has
undertaken, or caused any other person (other than the Arranger) to
undertake, any solicitation, sale or distribution of the Notes or any
interest in the LAPA.
(v) No Transfer Taxes. No sales, use, excise, transfer or other tax,
fee or imposition shall result from the transaction effected on the
Document Closing Date, except such amounts that have been paid in
full on or prior to the date hereof.
(w) Not Subject to Regulation. Neither of the Agents, the
Participants, nor Lessor will, solely by reason of entering into the
Basic Documents or consummating the transactions contemplated
thereby, (i) become subject to ongoing regulation of its operations
by any government authority (other than upon exercise of remedies
(excluding, however, foreclosure against, or the taking of possession
or control of, Nuclear Material) under this Agreement or any of the
other Basic Documents); or (ii) become subject to ongoing regulation
of its operations by any government authority upon exercise of
remedies under the Lease or upon the expiration thereof.
(x) Lessor Representations True and Correct. The representations and
warranties made by Lessor in each Basic Document are or were true and
correct as of the date such representations and warranties are or
were made, as applicable.
SECTION VII.2 Representations and Warranties of Lessor. DCC Fuel
represents and warrants to each of the other parties hereto as follows:
(aii Due Organization, etc. DCC Fuel is a corporation duly organized,
validly existing and in good standing under the laws of the state of
Ohio, is duly qualified as a foreign corporation and is in good
standing under the laws of each jurisdiction in which the conduct of
its business or ownership of its assets requires such qualification,
and has the corporate power and authority to conduct its business as
now conducted, to own or hold under the lease its properties and to
enter into and perform its obligations under this Agreement and each
of the other Basic Documents to which it is a party and any other
agreements, instruments, certificates and documents executed by DCC
Fuel in connection herewith and therewith or by which DCC Fuel is
bound.
(bii Due Authorization; Enforceability, etc. This Agreement and each
other Basic Document to which DCC Fuel is or will be a party have
been or will be (to the extent it is to be a party thereto in its
individual capacity), duly authorized, executed and delivered by or
on behalf of DCC Fuel (in its individual capacity) and are, or upon
execution and delivery will be, legal, valid and binding obligations
of DCC Fuel (in its individual capacity), enforceable against it in
accordance with their respective terms, except as such enforceability
may be limited by the Atomic Energy Act or applicable bankruptcy,
insolvency, fraudulent conveyance, or similar laws affecting
creditors' rights generally and by general principles of equity and
subject to requirements of reasonableness, good faith and fair
dealing.
(cii No Conflict. The execution and delivery by DCC Fuel of this
Agreement and each other Basic Document to which DCC Fuel is or will
be a party, are not and will not be, and the performance by DCC Fuel
of its obligations under each are not and will not be, inconsistent
with its certificate or articles of incorporation or other
constitutive documents, its by-laws, or of any provisions relating to
shares of capital stock of DCC Fuel, do not and will not contravene
any Applicable Laws of the United States of America or the State of
Ohio relating to the banking or trust powers of DCC Fuel and do not
and will not contravene any provision of, or constitute a default
under, any indenture, mortgage, chattel mortgage, deed of trust,
lease, conditional sales contract, loan or credit arrangement or
other agreement or instrument to which DCC Fuel is a party or by
which it or its properties may be bound or affected.
(dii Consents or Permits. DCC Fuel possesses all licenses, permits
and certificates and all approvals, orders, authorizations and
consents and has made all declarations, filings and registrations
which are necessary or appropriate for the ownership of its
properties and assets and for the conduct of its business as now
conducted and proposed to be conducted (except for those licenses,
permits, certificates, approvals, orders, authorizations and consents
which the failure to obtain, and such declarations, filings and
registrations which the failure to make, would not have a material
adverse effect upon either (i) the business, operations, prospects,
properties or condition, financial or otherwise, of DCC Fuel, or (ii)
DCC Fuel's ability to carry out its obligations under this Agreement,
the Lease or the other Basic Documents to which DCC Fuel is a party).
Except for the following: (a) licenses, orders, approvals or filings
all of which have been obtained or made: (i) a general license to own
Nuclear Material from the Nuclear Regulatory Commission (currently
granted under 10 C.F.R. Section 40.21 and 70.20; (ii) a license to
possess and use special nuclear material granted by the NRC to DCC
Fuel; (iii) an order of the SEC obtained by Lessee under the Public
Utility Holding Company Act; (iv) approval of the IURC and (v) a
certificate on Form U-7D filed by DCC Fuel with the SEC pursuant to
the SEC's Rule 7(d) under the Public Utility Holding Company Act; (b)
a license to possess and use special nuclear material which must be
granted by the NRC prior to the time DCC Fuel or any other Person may
possess or use any special nuclear material as a result of the
exercise of provisions contained in the Security Agreement or the
Lease providing for such use or possession; and (c) necessary
Manufacturer's Consents, all of which have been obtained; no consent,
license, approval, order or authorization of, or filing, registration
or declaration with, any governmental authority, or any court or
other Person is required to be obtained or made by DCC Fuel or Lessee
in connection with the execution, delivery, acceptance, validity or
enforceability of this Agreement, the Notes, the Lease or any other
Basic Documents to which DCC Fuel is a party, or in connection with
the performance thereof, except, solely in the case of performance,
for any consents, licenses, approvals, orders, filings, registrations
or declarations which are necessary relative to the conduct of DCC
Fuel's or Lessee's business or the ownership of its assets, none of
which are necessary to authorize DCC Fuel's or Lessee's ability to
carry out its obligations under this Agreement, the Notes, the Lease
or any other Basic Documents to which DCC Fuel or Lessee is a party.
All licenses, orders, approvals and filings referred to in clause (i)
above have been duly obtained or made, are final and are in full
force and effect. None of such licenses, orders, approvals, or
filings is the subject of any pending or, to the best of DCC Fuel's
knowledge, any threatened attack by direct proceedings or otherwise.
(eii Financial Statements. The most recent quarterly statement of
assets and liabilities, and receipts and disbursements, which has
been delivered to the Participants presents fairly the financial
condition of DCC Fuel as of its date and the results of DCC Fuel's
operations for the quarter ended on such date. There is no known
contingent liability, or material liability for taxes or material
commitments of DCC Fuel which is not reflected in such financial
statements. Since the later of (i) the date of DCC Fuel's
incorporation or (ii) the date of the most recent quarterly statement
of DCC Fuel which has been delivered to the Participants, there has
not been any material adverse change in the business, operations,
properties or condition, financial or otherwise, of DCC Fuel or any
condition, event or act which would materially and adversely affect
the business, condition or operation of DCC Fuel. DCC Fuel is not a
party to any instrument providing for the incurrence by DCC Fuel of
Obligations for Borrowed Money or Deferred Purchase Price, (including
any financing lease, conditional sale contract or arrangement,
sale-leaseback, guarantee or other similar financing arrangement)
other than the Basic Documents (it being understood that the
Prudential Financing Documents listed in Schedule 6.2 hereto will be
terminated, or released as applicable, as a condition to the initial
Advance Date). DCC Fuel has not, directly or indirectly, created,
incurred, assumed or suffered to exist any Obligations for Borrowed
Money or Deferred Purchase Price other than pursuant to this
Agreement, the Loan Agreement or the Prudential Financing Documents.
After applying the proceeds of the Loans made hereunder on the
initial Advance Date, any Obligations of DCC Fuel for Borrowed Money
or Deferred Purchase Price or any other obligations incurred in
connection with or arising out of the Basic Documents and the
agreements referred to therein will have been paid in full. DCC Fuel
has transacted no business prior to the date hereof except for the
carrying out of the transactions contemplated by the Basic Documents
and the Prudential Financing Documents and the agreements referred to
therein to be carried out prior to the date hereof and except in
connection with its organization. DCC Fuel's only place of business
and the place where it keeps its records concerning its accounts,
contract rights, chattel paper and general intangibles is in
[Columbus], Ohio.
(fii Shareholders; Subsidiaries; Title to Properties. The only issued
and outstanding shares of capital stock of DCC Fuel are [______]
shares of common stock, [_____] par value, owned by the Owner
Trustee. No shares of capital stock are held in treasury. DCC Fuel
has no subsidiaries and owns no capital stock of any other Person.
DCC Fuel has good title to all of DCC Fuel's assets owned or
purported to be owned by it as of the date hereof, including without
limitation the Nuclear Material referred to in the Leasing Record
most recently delivered to the CP Lender. All such assets are free of
any Liens, except Permitted Liens.
(gii Private Offering. Neither DCC Fuel, Lessee nor any Person
authorized or employed by either of them as agent, broker, dealer or
otherwise in connection with the offering or sale of the Notes has
directly or indirectly offered any of the Notes or any similar
securities for sale to, or solicited offers to buy thereof from, or
otherwise approached or negotiated with respect thereto with, any
prospective purchaser other than the CP Lender and the Liquidity
Banks. DCC Fuel agrees that it will not, either directly or
indirectly through Lessee or any Person acting on behalf of either of
them, offer the Notes or any part thereof or any similar securities
for issue or sale to, or solicit any offer to acquire any of the same
from, anyone, or take any other action which would subject the
issuance and sale of the Notes to the registration provisions of
Section 5 of the Securities Act.
(hii Disclosure. None of the representations of DCC Fuel in this
Agreement, in each SCV Confirmation Schedule, in each Leasing Record
or in any other document, certificate, or statement furnished to the
Participants by or on behalf of DCC Fuel in connection with the
transactions contemplated hereby contained as of its date any untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not untrue. There is no
fact within the knowledge of DCC Fuel which has not been disclosed
herein or therein and which materially adversely affects the
business, operations, properties or condition, financial or
otherwise, of DCC Fuel.
(iii Regulatory Status of DCC Fuel; Trust Indenture Act. DCC Fuel is
not an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company
Act. DCC Fuel is not a "public-utility company", or a "holding
company," or an "affiliate" of a "holding company,"or a "subsidiary
company" of a "holding company" within the meaning of the Public
Utility Holding Company Act. DCC Fuel is not a " public utility"
within the meaning of the Federal Power Act, as amended, and is not a
"utility," "public utility," "public service company" or other
similar entity which is subject to the jurisdiction of the IURC or
MPSC. The Security Agreement is not required to be qualified under
the Trust Indenture Act of 1939, as amended, and the creation of the
security interest in the Collateral in favor of the Secured Parties
under the Security Agreement does not require an indenture to be
qualified under said Act.
(jii Basic Documents in Full Force. Each of the Basic Documents
in existence on the date hereof is in full force and effect.
(kii Absence of Certain Events. No Terminating Event, Deemed Loss
Event or Lease Event of Default has occurred nor has any event
occurred which would, with the lapse of time or the giving of notice
or both, constitute a Terminating Event, Deemed Loss Event or Lease
Event of Default. No Loan Agreement Default or Loan Agreement Event
of Default has occurred.
(lii First Perfected Security Interest. The Security Agreement is
effective to create in favor of the Secured Parties a legal, valid
and enforceable first lien on and security interest in all of the
Collateral, including without limitation all Nuclear Material,
Assigned Agreements, cash, securities now owned by DCC Fuel or any
Nuclear Material being acquired, stored, fabricated or processed
after the date hereof, securing the Secured Obligations, and all
filings, recordings and other actions that are necessary in order to
establish and perfect the Secured Parties' lien on, and security
interest in, the Collateral as a legal, valid and enforceable first
lien and security interest, have been duly effected, except that the
foregoing representation shall not be deemed to be violated as a
result of the existence or priority of any Permitted Lien./
(mii Litigation. Except as set forth on Schedule 4, there is no
action, suit or proceeding pending or, to the knowledge of DCC Fuel,
threatened, against DCC Fuel before or by any governmental authority
that questions the validity or enforceability of this Agreement, the
Notes, any of the other Basic Documents and any other agreements,
instruments, certificates and documents executed by DCC Fuel in
connection herewith and therewith or by which DCC Fuel is bound or of
any action taken or to be taken by DCC Fuel pursuant to or in
connection with this Agreement or any of the other Basic Documents,
or that, if determined adversely to DCC Fuel, would materially
adversely affect the ability of DCC Fuel to perform its obligations
hereunder or thereunder.
(nii Compliance with Other Agreements and with Law. DCC Fuel is in
compliance in all material respects with the terms and provisions of
this Agreement and in all material respects with the terms and
provisions of the other Basic Documents and of all of the agreements
and other instruments and of all statutes, rules, regulations,
judgments, decrees and governmental orders or other legal
requirements by which it is bound.
(oii No Other Business. Except as contemplated by this Agreement,
each of the other Basic Document and the Prudential Lease and the
agreements referred to therein, DCC Fuel has not engaged in any
business or activity of any type or kind whatsoever.
(pii 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 DCC Fuel to be, incurred with respect to any
plan (other than a multiemployer plan) by DCC Fuel. DCC Fuel has not
incurred and presently does not expect to incur any withdrawal
liability under Title IV of ERISA with respect to any multiemployer
plan. The execution and delivery of this Agreement and the other
Basic Documents and the funding of the Loans will not 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. The representation by DCC Fuel in the next preceding
sentence is made in reliance upon and subject to the accuracy of the
CP Lender's representation in Section 7.4 as to the source of the
funds to be used to fund the Loans. 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 DCC Fuel or by any
trade or business, whether or not incorporated, which, together with
DCC Fuel 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).
(qii Taxes. DCC Fuel has filed all tax returns which are required to
be filed and has 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 an 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 GAAP.
(rii Margin Stock. DCC Fuel does not own any "margin securities"
within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or any regulations, interpretations or rulings
thereunder.
(sii No Finders Fee. No broker or finder has been retained by DCC
Fuel nor has DCC Fuel incurred any liability for brokerage fees,
finder's fees, agents' commissions or other similar forms of
compensation in connection with this Agreement or any transaction
contemplated hereby.
(tii Collateral Equivalence Test. The aggregate Stipulated
Casualty Value of the Nuclear Material leased under the Lease
equals or exceeds the sum of outstanding aggregate principal amount
of all Loans.
(uii Lessor Liens. The Nuclear Material is free and clear of all
Lessor Liens attributable to DCC Fuel and no act or omission by it
has occurred which would give rise to a Lessor Lien attributable to
it.
SECTION VII.3 Representations and Warranties of the Trust Company and the
Agents. Each of the Trust Company, the Collateral Agent, the Liquidity
Agent and the Administrator represents and warrants severally but not
jointly to each of the other parties hereto that, as to itself only:
(aii Organization and Authority. It is duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its organization and has the corporate power and authority to enter
into and perform its obligations under the Basic Documents to which
it is, or is to be, a party.
(bii Authorization; Binding Effect. The Basic Documents to which it
is or will be a party have been or will be, on the date required to
be delivered hereby, duly authorized, executed and delivered by it,
and this Agreement is, and such other Basic Documents are, or, when
so executed and delivered by it will be, valid, legal and binding
agreements of it, enforceable against it in accordance with their
respective terms, except as enforcement may be limited by the Atomic
Energy Act or bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity and subject to
requirements of reasonableness, good faith and fair dealing.
(cii Non-Contravention. Neither the execution and delivery by it of
the Basic Documents to which it is or will be a party, either in its
individual capacity or as trustee or agent or both, as the case may
be, nor compliance with the terms and provisions thereof, conflicts
with, results in a breach of, constitutes a default under (with or
without the giving of notice or lapse of time or both), or violates
any of the terms, conditions or provisions of: (i) its charter
documents or bylaws; (ii) any bond, debenture, note, mortgage,
indenture, agreement, lease or other instrument to which it is now a
party or by which it or its property, either in its individual
capacity or as trustee or agent or both, as the case may be, is bound
or affected, where such conflict, breach, default or violation would
be reasonably likely to materially and adversely affect the ability
of it, either in its individual capacity or as trustee or agent or
both, as the case may be, to perform its obligations under any Basic
Document to which it is or will be a party, either in its individual
capacity or as trustee or agent or both, as the case may be; or (iii)
any of the terms, conditions or provisions of any law, rule,
regulation, order, injunction or decree of any federal or state
authority applicable to it in its individual capacity or as trustee
or agent or both, as the case may be, where such conflict, breach,
default or violation would be reasonably likely to materially and
adversely affect its ability either in its individual capacity or as
trustee or agent or both, as the case may be, to perform its
obligations under any Basic Document to which it is or will be a
party.
(dii Absence of Litigation, etc. There is no litigation (including
derivative actions), arbitration or governmental proceedings pending
or, to its best knowledge, threatened against it which would be
reasonably likely to adversely affect the Owner Trust Estate or it's
ability to enter into or perform its obligations under the Basic
Documents to which it is party.
(eii Lessor Liens. The Nuclear Material is free and clear of all
Lessor Liens attributable to it.
(fii Title to the Owner Trust Estate. The Owner Trust Estate is free
and clear of any Liens which result from claims against Trust Company
in its individual capacity not related to the transactions
contemplated by the Basic Documents to which it is a party, the
administration of the Owner Trust Estate, the ownership of the
Nuclear Materials or the leasing of the Nuclear Materials, and Trust
Company has not by affirmative act, either in its individual capacity
or as Trustee, conveyed any interest in the Owner Trust Estate to any
Person or subjected the Owner Trust Estate to any Lien (except
Permitted Liens) except pursuant to the Basic Documents.
SECTION VII.4 Representations of the Liquidity Banks. Each of the
Liquidity Banks hereby represents and warrants severally but not jointly
to Lessee, Lessor, Liquidity Agent and the CP Lender that, as to itself
only:
(aii Statement of Sources. It will not be funding the Loans or
acquiring the Notes with the assets of a separate account or an
employee benefit plan (or its related trust) as defined in Section 3
of ERISA, or with the assets of a plan (or its related trust) as
defined in Section 4975(e)(1) of the Code, or with any assets which
are "plan assets" within the meaning of Department of Labor
regulation Section 2510.3-101, unless the acquisition qualifies for
an exemption from the prohibited transaction rules under Section 406
of ERISA and Section 4975 of the Code other than assets allocated to
an insurance company pooled separate account as defined in ERISA
Section 3(17) maintained by a Lessor which satisfies the requirements
of U.S. Department of Labor Prohibited Transaction Class Exemption
90-1 within respect to the transactions contemplated by the Basic
Documents in order for such transactions to be exempt from the
prohibitions of Section 406 of ERISA and Section 4975 of the Code.
(bii Due Organization, etc. It (i) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of
(x) the state of its organization or of the United States, or (y)
another country that is a member of the Organization for Economic
Cooperation and Development ("OECD"), (ii) is duly licensed or
qualified to do business and in good standing in each jurisdiction
where the failure to be so licensed or qualified could have a
material adverse effect on its assets or could impair its ability to
perform any of its obligations hereunder and (iii) has all requisite
power and authority to conduct its business as contemplated hereby
and to execute, deliver and perform its obligations under, this
Agreement and each other Basic Document to which it is a party.
(cii Non-Contravention. Neither the execution and delivery by it of
the Basic Documents to which it is or will be a party nor compliance
with the terms and provisions thereof, conflicts with, results in a
breach of, constitutes a default under (with or without the giving of
notice or lapse of time or both), or violates any of the terms,
conditions or provisions of: (i) its charter documents or bylaws;
(ii) any bond, debenture, note, mortgage, indenture, agreement, lease
or other instrument to which it is now a party or by which it or its
property is bound or affected, where such conflict, breach, default
or violation would be reasonably likely to materially and adversely
affect its ability to perform its obligations under any Basic
Document to which it is or will be a party; or (iii) any of the
terms, conditions or provisions of any law, rule, regulation, order,
injunction or decree of any federal or state authority applicable to
it, where such conflict, breach, default or violation would be
reasonably likely to materially and adversely affect its ability to
perform its obligations under any Basic Document to which it is or
will be a party.
(dii Binding Agreement. The execution, delivery and performance of
the Basic Documents to which it is a party have been duly authorized
by all necessary corporate action. The Basic Documents to which it is
a party have been duly executed and delivered by it and each such
Basic Document constitutes a legal, valid and binding obligation,
enforceable against it according to such Basic Document's terms,
subject, as to enforceability, to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally and to general
principles of equity (regardless of whether enforcement is sought in
a proceeding in equity or at law).
(eii Authorizations. All authorizations, consents, approvals,
registrations, filings, exemptions and licenses with or from any
governmental or regulatory authorities which are necessary for the
purchases hereunder, for the execution and delivery of the Basic
Documents to which it is a party, or for the performance by it of its
obligations hereunder or under the other Basic Documents have been
effected and obtained and, so long as may be required for it to
comply with this Agreement or any Basic Document, will remain in full
force and effect.
(fii Ratings. As of the date hereof, it has a short-term unsecured
debt or deposit rating at least equal to the then existing rating of
the Commercial Paper Notes from each Rating Agency.
(gii Investment in Notes. It is acquiring its interest in the Notes
for its own account for investment purposes and not with a view
toward, or sale in connection with, any distribution thereof (as such
term is used in Section 2(11) of the Securities Act), and has no
present intention of selling, negotiating or otherwise disposing of
the Notes and if in the future it should decide to dispose of its
interest in the Notes, it understands that it may do so only in
compliance with the Securities Act and the rules and regulations of
the SEC thereunder and any other applicable securities laws. Each
Liquidity Bank acknowledges that the Notes have not been registered
under the Securities Act or qualified or registered under any state
or other jurisdiction's securities laws and that neither Lessor nor
Lessee contemplate filing, or is legally required to file, any such
registration and such Liquidity Bank has been advised that the Notes
must be held indefinitely unless the Notes are subsequently
registered under the Securities Act or an exemption from such
registration is available. Neither it nor anyone authorized to act on
its behalf has taken or will take any action which would subject the
issuance or sale of any Note or any interest in the Nuclear Material
and other Collateral or the Lease to the registration requirements of
Section 5 of the Securities Act. Each transferee or purchaser of a
Note, by its acceptance thereof, shall be deemed to have made the
representations and warranties of the Liquidity Banks contained in
this Section 7.4(g). No representation or warranty contained in this
Section 7.4(g) shall include or cover any action or inaction of
Lessee or any Affiliate thereof whether or not purportedly on behalf
of any Participant, Agent, Lessor or any of their Affiliates.
Notwithstanding the foregoing, it is understood among the parties
that the disposition of each Liquidity Bank's property shall be at
all times within its control.
(hii Lessor Liens. The Nuclear Material is free and clear of all
Lessor Liens attributable to it.
SECTION VII.5 Representations of the CP Lender. The CP Lender hereby
represents and warrants severally but not jointly to Lessee, Lessor,
Collateral Agent, Liquidity Agent and each Liquidity Bank that, as to
itself only:
(aii Statement of Sources. It will not be funding the Loans or
acquiring the Notes with the assets of a separate account or an
employee benefit plan (or its related trust) as defined in Section 3
of ERISA, or with the assets of a plan (or its related trust) as
defined in Section 4975(e)(1) of the Code, or with any assets which
are "plan assets" within the meaning of Department of Labor
regulation Section 2510.3-101, unless the acquisition qualifies for
an exemption from the prohibited transaction rules under Section 406
of ERISA and Section 4975 of the Code other than assets allocated to
an insurance company pooled separate account as defined in ERISA
Section 3(17) maintained by a Lessor which satisfies the requirements
of U.S. Department of Labor Prohibited Transaction Class Exemption
90-1 within respect to the transactions contemplated by the Basic
Documents in order for such transactions to be exempt from the
prohibitions of Section 406 of ERISA and Section 4975 of the Code.
(bii Status. The CP Lender (a) is a corporation duly organized and
validly existing under the laws of the state of Delaware, (b) is duly
licensed or qualified to do business and in good standing in each
jurisdiction where the failure to be so licensed or qualified could
have a material adverse effect on its assets or could impair its
ability to perform any of its obligations hereunder and (c) has all
requisite power and authority to conduct its business as contemplated
hereby and to execute, deliver and perform its obligations under,
this Agreement and the other Basic Documents and Program Documents to
which it is a party.
SECTION VII.6 Representations and Warranties of the Owner Trustee. The
Owner Trustee represents and warrants to each of the other parties hereto
as follows:
(aii Chief Executive Office. The Owner Trustee's chief executive
office and principal place of business and the place where the
documents, accounts and records relating to the Overall Transaction
are kept is located at [__________________].
(bii Due Organization, etc. The Owner Trustee is a national banking
association duly organized and validly existing in good standing
under the laws of the United States and has full corporate power and
authority to execute, deliver and perform its obligations under the
Trust Agreement and, to the extent it is a party hereto, this
Agreement.
(cii Authorization; Binding Effect. This Agreement and each other
Basic Document to which the Owner Trustee is or will be a party have
been or will be duly authorized, executed and delivered by or on
behalf of the Owner Trustee and are, or upon execution and delivery
will be, legal, valid and binding obligations of the Owner Trustee,
enforceable against it in accordance with their respective terms,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting creditors' rights
generally and by general equitable principles and subject to
requirements of reasonableness, good faith and fair dealing.
(dii Non-Contravention. The execution and delivery by the Owner
Trustee of the Trust Agreement and, to the extent it is a party
hereto in its individual capacity, this Agreement, and the
performance by the Owner Trustee of its obligations under each are
not and will not be, inconsistent with the certificate or articles of
incorporation or other constitutive documents or by-laws of the Owner
Trustee, do not and will not contravene any Applicable Laws of the
United States of America or the state of its incorporation relating
to the banking or trust powers of the Owner Trustee and do not and
will not contravene any provision of, or constitute a default under,
any indenture, mortgage, chattel mortgage, deed of trust, lease,
conditional sales contract, loan or credit arrangement or other
agreement or instrument to which the Owner Trustee is a party or by
which it or its properties may be bound or affected.
(eii No Approvals, etc. Neither the execution and delivery by the
Owner Trustee of any of the Basic Documents to which it is a party
requires the consent or approval of, or the giving of notice to or
registration with, or the taking of any other action in respect of,
any federal or state authority governing its banking practices.
(fii Lessor Liens. The Nuclear Material is free and clear of all
Lessor Liens attributable to the Owner Trustee and no act or omission
by it has occurred which would give rise to a Lessor Lien
attributable to it.
ARTICLE VIII
COVENANTS
SECTION VIII.1 Covenants of Lessee.
(aii Information. Lessee shall furnish to Lessor and each Secured
Party:
(iii0 Notice of Defaults and Claimed Defaults, Events of
Default. Immediately upon Lessee becoming aware of the
existence of any condition or event which constitutes any
(x) Loan Agreement Default or Loan Agreement Event of
Default or (y) any Lease Event of Default, Deemed Loss
Event or a Terminating Event, or the occurrence of any
event or condition which would, with the lapse of time or
the giving of notice or both, become a Lease Event of
Default or a Terminating Event, a written notice specifying
the nature and period of existence thereof and what action
Lessee is taking or proposes to take with respect thereto;
(iv0 Notice of Litigation. Immediately upon 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 Lease in order that such representations
and warranties would be true and correct on a continuing
basis; and (ii) any dispute (other than disputes with a
Manufacturer which do not raise a possibility that the
Nuclear Material covered by any Assigned Agreement will
neither be processed and delivered, nor stored and
delivered, as the case may be, by the Manufacturer which is
a party thereto pursuant to the applicable Assigned
Agreement nor returned by such Manufacturer in the form
delivered to such Manufacturer or in another form which
does not cause a reduction in the fair market value of the
Nuclear Material and other than rate proceedings to the
extent related to the recovery by Lessee of payments under
the Lease) between Lessee and any governmental authority or
other party relating to any part of the transactions
contemplated by this Agreement, the Lease, any of the other
Basic Documents (including any Assigned Agreement) to which
Lessee is a party, or which would have a material adverse
effect on the ability of Lessee to carry out its
obligations hereunder, under the Lease, any other Basic
Document (including any Assigned Agreement) which Lessee is
a party.
(b General Obligations. Subject to the last sentence of this Section
8.1(b), Lessee shall (i) duly comply with all valid requirements of
any governmental authority necessary to the conduct of its business
or to its properties or assets, noncompliance with which would have a
Material Adverse Effect upon the transactions contemplated by this
Agreement, the Lease or any other Basic Document, or upon the
condition, financial or otherwise, of Lessee, or the ability of
Lessee to carry out its obligations under this Agreement, the Lease
or any other Basic Document; (ii) continue to engage principally in
the business contemplated by this Agreement and the other Basic
Documents; (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 Agreement, the Lease, the Assigned Agreements or
any other Basic Document to which Lessee is a party, or upon the
condition financial or otherwise, of Lessee, or the ability of Lessee
to carry out its obligations under this Agreement, the Lease, the
Assigned Agreements or any other Basic Document to which Lessee is a
party; (iv) maintain its properties used or useful in its business in
good repair, working order and condition; provided, however, that
without diminishing Lessee's obligations under the Lease, 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 GAAP; (vi) except as permitted by Section 8.1(b)(vii)
of this Agreement, 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; and (vii) will not merge into or consolidate with any
corporation or other entity, or permit any corporation or other
entity to merge into or consolidate with it, or sell or otherwise
dispose of all or substantially all of its assets to any other
corporation or entity, if, in any such case, (a) either before or
after any such merger, consolidation or disposition, a Lease Default
shall occur or be continuing or (b) in the case of a merger or
consolidation, such successor corporation or entity (if other than
Lessee) shall fail to assume the obligations of Lessee under the
terms of this Agreement and the other Basic Documents, which
assumption shall be in a manner reasonably satisfactory to the CP
Lender and the Majority Secured Parties. Notwithstanding the
foregoing provisions of this Section 8.1(b), Lessee may contest by
appropriate proceedings conducted in good faith and due diligence,
the amount, validity or application, in whole or in party of any fee,
tax, assessment or government charge or levy, or any legal
requirement, provided that Lessee shall have set aside on its books
adequate reserves, if required in accordance with GAAP with respect
thereto and shall furnish such security, if any, as may be required
in the proceeding.
(c Performance of Lease and Liens. Lessee acknowledges that, except
as otherwise provided in the Lease, its obligations as set forth
under the Lease are absolute and unconditional. Lessee shall not
directly or indirectly create or permit to be created or to remain,
and shall discharge, any Lien with respect to any Nuclear Material,
except Permitted Liens.
(d Notification. Lessee shall notify the Collateral Agent immediately
upon the happening of any of the following: (i) the Unit 1 Generating
Facility reaching the Second Operational Date, (ii) a Casualty in
respect of any Nuclear Materials in excess of $1,000,000, (iii) an
Event of Loss in respect of any Nuclear Materials and (iv) a
Termination Event.
(e Sale of Nuclear Material and Assignment of Rights under
Nuclear Material Contracts.
(i) In the event that Lessee delivers a Bill of Sale to
Lessor conveying title to Nuclear Material from Lessee to
Lessor, on or before the date of such delivery Lessee shall
provide Lessor with an Assignment Agreement, substantially
in the form of Exhibit D to the Lease, and a Manufacturer's
Consent with respect to all Nuclear Material contracts,
relating to such Nuclear Material. Notwithstanding the
foregoing, 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 has expired, and Lessee has
delivered to Lessor, the Liquidity Banks and the CP Lender
a certificate to such effect.
(ii) Except to the extent that any action or non-action
does not materially adversely affect Lessor or the Secured
Parties or their respective interests in the Collateral,
Lessee at its expense shall perform and comply with all the
terms and provisions of each Assigned Agreement to be
performed or complied with by it (other than Lessor's
payment obligations pursuant to Section 5(b) of the Lease),
shall maintain each Assigned Agreement in full force and
effect, shall enforce each of the Assigned Agreements in
accordance with their respective terms, and shall take all
such action to that end as from time to time may reasonably
be requested by the CP Lender or the Liquidity Banks.
(iii) 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, except as permitted by the Assignment Agreement
related to such Assigned Agreement.
(iv) Lessee shall from time to time, upon request of the CP
Lender or the Liquidity Banks, furnish the CP Lender and
the Liquidity Banks such information concerning the Nuclear
Material or, subject to the terms of the Assignment
Agreement and related Consent and Agreement with respect to
any Assigned Agreement containing provisions which, under
its terms, are required to be kept confidential, any
Assigned Agreement, as the CP Lender or the Liquidity Banks
may reasonably request.
(f Financial Statements, Reports, etc. Lessee shall furnish to
the Collateral Agent and Administrator (with sufficient number of
copies for each Participant):
(i0 within 120 days after the close of its fiscal year, an
annual report of the Lessee consisting of its audited financial
statements, including a balance sheet as of the end of such
fiscal year and statements of income and cash flows for the year
then ended with all notes thereto, together with a report
thereon of a recognized firm of certified public accountants;
(ii0 within 60 days after the close of each of the first three
quarterly periods of the Lessee's fiscal year, a balance sheet
of the Lessee as of the end of such quarter and detailed
comparative statements of income and cash flows for such
quarter;
(iii0within the period set forth in (i) above, a certificate of
an authorized officer of the Lessee stating that such officer
has reviewed the activities of the Lessee and that, to the best
of such officer's knowledge, there exists no Lease Event of
Default under the Lease; and
(iv0 from time to time such other information relating to the
Lessee, including non-financial information, as may be
reasonably requested.
(g Employee Benefits. Lessee shall (i) comply in all material
respects with the applicable provisions of ERISA and the Code and
(ii) furnish to the Collateral Agent and the Administrator as soon as
possible after, and in any event within 30 days after any Responsible
Officer of Lessee or any ERISA Affiliate knows that, any ERISA Event
has occurred that, alone or together with any other ERISA Event known
to have occurred, could reasonably be expected to result in liability
of Lessee in an aggregate amount exceeding $10,000,000 in any year, a
statement of a Financial Officer of Lessee setting forth details as
to such ERISA Event and the action, if any, that Lessee proposes to
take with respect thereto.
(h Maintaining Records; Access to Properties and Inspections. Lessee
shall maintain financial records in accordance with GAAP and, upon
reasonable notice, permit any representatives designated by the
Administrator or any Participant to visit and inspect the financial
records and the properties of Lessee or a Subsidiary, if any, during
normal business hours and to discuss the affairs, finances and
condition of Lessee with the officers thereof and independent
accountants therefor.
(i Chief Executive Office. Lessee shall furnish to the Administrator
and Collateral Agent notice on or before the 30th day prior to any
relocation of its chief executive office (as such term is used in
Article 9 of the UCC) if the refiling of the Financing Statements is
necessary to maintain Lessor's and Collateral Agent's perfected
security interest in the Collateral.
(j Further Assurances. At its expense, Lessee shall cause, as soon as
possible, but in any event no later than the 10th day after any
request, Financing Statements (and continuation statements with
respect thereto) and all other documents necessary or reasonably
requested by Administrator or the Collateral Agent in connection with
the establishment and perfection of the interest of Lessor and the
Collateral Agent in the Collateral, to be recorded or filed at such
places (within the United States only) and times, and in such manner,
and, at its expense, take, or shall cause to be taken, all such other
action as may be necessary or reasonably requested by Lessor or the
Collateral Agent in order to establish, preserve, protect and perfect
the rights, titles and interests of Lessor and the Collateral Agent
to the Collateral.
(k Collateral Equivalence Test; No Additional Collateral or
Covenants; Condemnation Statements; Exercise of Rights of Secured
Parties.
(i) Lessee shall not permit the aggregate Stipulated
Casualty Value of the Nuclear Material leased under the
Lease to be less than the outstanding aggregate principal
amount of Notes.
(ii) Lessee shall not provide to any Person (other than the
Participants), in order to induce such Person to extend
credit to Lessor, any collateral or any guarantee or other
assurance against loss or non-payment, nor shall Lessee
consent to the provision thereof by Lessor.
(iii) Lessee shall not agree to any affirmative or negative
covenant with respect to the condition, financial or
otherwise, of Lessee with any Person in order to induce
such Person to extend credit to Lessor.
(iv) Lessee shall at all times remain the sole beneficiary
of the Trust and shall not sell, assign, convey, pledge or
otherwise dispose of or encumber in any manner its
beneficial interest in the Trust except to the extent such
interest may be subject to the Mortgage and Deed of Trust,
dated as of June 1, 1939, as amended and supplemented, from
Lessee to the Bank of New York, as trustee. Lessee shall
not direct the Owner Trustee to liquidate, dissolve, merge
or consolidate] Lessor except if such transaction is
consented to in writing by the Participants. Lessee shall
not direct the Owner Trustee to take any action under the
Trust Agreement which is inconsistent with the duties
imposed upon Lessor 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.
(v) As provided in the Security Agreement, (i) the
Collateral Agent for its benefit and the benefit of the
Secured Parties may, on and after the occurrence of a Loan
Agreement Default or Loan Agreement Event of Default,
pursuant to Section 3 of the Security Agreement, exercise
any and all of Lessor's rights, powers and privileges under
the Lease, the Assigned Agreements and each other Basic
Document to which Lessee is a party; (ii) if a Loan
Agreement Event of Default occurs and is continuing, the
Collateral Agent may, at its election and in its sole
discretion, pursuant to Section 8 of the Security
Agreement, enforce and exercise any and all the rights and
remedies of the Secured Parties under the Uniform
Commercial Code; and (iii) if a Lease Event of Default
occurs and is continuing, the Collateral Agent may, at its
election and in its sole discretion, pursuant to Section 8
of the Security Agreement, enforce and exercise any and all
of Lessor's rights under Section 17 of the Lease and Lessee
agrees that such Collateral Agent may do so either in
concert with or in place of Lessor, and Lessee shall assist
in, comply with and perform in accordance with all rights
or remedies so enforced or exercised by such Collateral
Agent for its benefit and the ratable benefit of the
Secured Parties.
(l) Fuel Management; Quiet Enjoyment. The occurrence of a Loan
Agreement Default or a Loan Agreement Event of Default or the
occurrence of any Lease Event of Default, Deemed Loss Event or a
Terminating Event, or the occurrence of any event or condition which
would, with the lapse of time or the giving of notice or both, become
a Lease Event of Default or a Terminating Event, shall not affect
Lessee's sole obligation to engage in the generation of Nuclear
Energy and Fuel Management; provided that, upon the occurrence of a
Lease Event of Default, the Majority Secured Parties may, at their
option, by written notice to Lessee, elect to revoke such power and
authority, in which case the Secured Party or Parties from time to
time designated by the Majority Secured Parties may (but shall not be
obligated to), to the extent that the 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
Lessee. In the event the Majority Secured Parties, in accordance with
the preceding sentence, shall revoke Lessee's power and authority to
engage in Fuel Management, all rights conferred by Lessor to Lessee
pursuant to Sections 3 and 10 of the Lease shall be deemed to be
automatically reassigned to Lessor and Lessee shall execute such
documents and instruments as the Secured Parties shall request to
further confirm such assignment.
(m) Consent to Assignment. Lessee acknowledges and consents to the
present assignment and transfer, and any future assignments and
transfers to the Collateral Agent by Lessor of Lessor's right to
exercise any and all of its rights, remedies, powers and privileges
(but none of its obligations, duties or liabilities) under the Lease,
the Assigned Agreements and each other Basic Document to which Lessee
is a party. Lessee hereby agrees with the Secured Parties to comply
with any exercise by the Collateral Agent, either directly or through
Lessor, of any rights, remedies, powers or privileges pursuant to the
Security Agreement. Notwithstanding the foregoing, so long as no
Lease Event of Default shall have occurred and be continuing, Lessee
shall have exclusive right to possession and use of the Nuclear
Material in accordance with the Lease and may use such Nuclear
Material for any lawful purpose consistent with the Lease.
(n) Direct Payment of Payments Under the Lease. Lessee acknowledges
that it has been directed by Lessor to, and agrees that it shall,
make all payments of monies due and to become due to Lessor under the
Lease, the Assigned Agreements and each other Basic Document to which
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(d) and 9(e) of the Lease,
payments pursuant to Section 9(e) of the Lease, payments of the
Stipulated Casualty Value of Nuclear Material pursuant to Section 14
of the Lease, payments pursuant to Section 17 of the Lease and
payments pursuant to Section 18(d) of the Lease (other than any
portion of any payment described in this Section 8.1(o) consisting of
Excluded Amounts or other amounts owed by Lessor to Persons other
than the Secured Parties).
(o) Lessor Actions. Lessee shall take all actions necessary to
ensure, and shall not take any actions to prevent or hinder, Lessor's
due performance of its obligations under this Agreement and each
other Basic Document to which Lessor is a party.
SECTION VIII.2 Covenants of Lessor.
(a) Termination of Lease. Lessor shall not, without the prior written
consent of each of the Liquidity Banks, deliver to Lessee and the
Collateral Agent notice of the occurrence of a Terminating Event
under Section 18(a) of the Lease, and, if a Terminating Event occurs,
Lessor shall, promptly upon receipt of written direction from any
Liquidity Bank, deliver such notice of the occurrence of such
Terminating Event under Section 18(d) of the Lease to Lessee and the
Collateral Agent.
(b) Liens. Lessor shall not create, incur, assume or suffer to exist
any Lessor Lien upon or with respect to any of its Property, whether
now owned or hereafter acquired, or assign or otherwise convey any
right to receive income, except Permitted Liens.
(c) Actions Affecting the Basic Documents, the Assigned Agreements
and the Collateral. Unless Lessor has obtained the prior written
consent of the Participants, it shall not (i) modify, supplement or
amend any of the Basic Documents or waive any provisions, defaults or
breaches thereof, or permit Lessee to do any of the foregoing or (ii)
take any action (or fail to take any action) in connection with any
Basic Document or any Collateral which would materially adversely
affect the Secured Parties, or impair the rights or interests of the
Secured Parties under any Basic Document or in the Collateral, or
permit Lessee to take or fail to take any such action.
Notwithstanding the foregoing, (x) Lessor may effect, and may permit
Lessee to effect, any modification of, supplement or amendment to any
Leasing Record necessary in order to subject additional Nuclear
Material to the Lease or in order to effect any release or
substitution of Collateral permitted by the terms of the Security
Agreement and (y) Lessor may, and may permit Lessee to, enter into or
consent to or permit any cancellation, termination, amendment,
supplement or modification of or waiver with respect to any Assigned
Agreement but only as permitted by the Assignment Agreement related
to such Assigned Agreements.
(d) Collateral Equivalence Test. Lessor shall not permit at any time
the aggregate Stipulated Casualty Value of all Nuclear Material
leased under the Lease to be less than the sum of the outstanding
aggregate principal amount of the Loans.
(e) General Obligations. Lessor shall (i) duly observe and conform to
all Legal Requirements and all other valid requirements of any
governmental authorities relative to the conduct of its business or
to the ownership of its assets unless (a) the same shall be contested
in good faith by appropriate proceedings diligently prosecuted, (b)
Lessor shall have provided reserves with respect thereto which are
adequate in accordance with generally accepted accounting principles
and (c) no foreclosure, distraint, sale or other similar proceedings
relating to any of the Collateral shall have commenced, and (ii)
obtain, maintain and keep in full force and effect all consents,
permits, licenses, approvals, orders and authorizations which are
necessary to properly carry out the transactions contemplated to be
performed by it by this Agreement, the Notes and the other Basic
Documents to which it is a party.
(f) Expenses and Indemnity. Whether or not the transactions
contemplated hereby shall be consummated, Lessor shall pay all
reasonable expenses (including the reasonable fees and expenses of
the Participants' special counsel) in connection with the preparation
and reproduction of this Agreement, the Notes and each other Basic
Document, and also in connection with any amendments or extensions
of, or waivers under, this Agreement, the Notes or any other Basic
Document, shall indemnify the Participants and their Affiliates and
any other holder of any Note and hold each harmless against all
expenses incurred in connection with this Agreement, the Notes and
each other Basic Document, and shall pay their out-of-pocket expenses
reasonably incurred in connection with the matters contemplated
hereby and thereby, and, at the election of any Liquidity Bank or its
Affiliates or any holder of any Note, shall reimburse such Liquidity
Bank and its Affiliates or such holder of any Note for any such
expenses paid by it; provided, however, Lessor shall not be obligated
to indemnify the Liquidity Banks or their Affiliates or any other
holder of any Note against expenses incurred, or pay their
out-of-pocket expenses incurred, in connection with (i) the routine
administration of this Agreement, (ii) the assignment of any Note or
(iii) the granting of a participation in all or any part of any Note
to any Person.
In the event that it subsequently is determined that any tax is due
on the issue of Notes or on the acquisition thereof by the
Participants, or on any modification of the Notes, of this Agreement
or any other Basic Document, Lessor shall pay or cause to be paid all
such taxes and interest and penalties, if any (excluding, however,
any transfer taxes), and shall indemnify and save the Participants
and their Affiliates and any other holder of any Note harmless from
any loss or damage of any kind whatsoever resulting from or arising
out of the nonpayment or delay in the payment of such taxes. The
obligations of Lessor under this Section 8.2(f) shall survive the
payment of the Notes. In no event shall Lessor be required to pay any
taxes based upon the net income or profits of the Participants and
their Affiliates, or upon interest income arising out of the Notes.
(g) Corporate Books. Lessor shall keep books of record and accounts
in relation to its business and activities which are prepared in a
manner consistent with prudent business practice.
(h) Governmental Permits. Lessor shall, to the extent obtained or
received by it, furnish or cause to be furnished to the Collateral
Agent a copy of any authorization, license, permit, consent, order or
approval of any governmental authority obtained or required to be
obtained in connection with the transactions contemplated by this
Agreement, the Notes or any of the other Basic Documents.
(i) Copies of Documents. Lessor shall promptly deliver to the
Collateral Agent copies of all notices, requests, agreements and
other documents received or delivered by Lessor under or with respect
to any of the Basic Documents to the extent that the same shall not
have been delivered to the CP Lender pursuant thereto.
(j) Notices. Upon an officer of Lessor obtaining knowledge thereof,
Lessor shall promptly give written notice to the Collateral Agent of
(i) the occurrence of any Lease Event of Default, Deemed Loss Event
or a Terminating Event, or the occurrence of any event or condition
which would, with the lapse of time or the giving of notice or both,
become a Lease Event of Default or a Terminating Event; (ii) the
occurrence of any Loan Agreement Default or Loan Agreement Event of
Default; (iii) any litigation or proceedings with respect to Lessor
or affecting Lessor or any of its assets; and (iv) such other
information concerning the business, operations, properties or
condition, financial or otherwise, of Lessor as the CP Lender may
from time to time reasonably request.
(k) Payment of Taxes. Lessor shall pay or cause to be paid and
discharged when due all taxes, assessments and other governmental
charges or levies imposed upon it, or upon its income or assets,
prior to the day on which penalties are attached thereto.
(l) Inspection. Lessor shall permit the Participants to inspect any
of the Property (subject to applicable laws and regulations and to
Lessee's security requirements with respect to a Generating Facility)
or any of the books or financial records of Lessor and to discuss the
affairs, finances and accounts of Lessor with Lessor's officers, all
at such reasonable times and as often as the Participants may
reasonably request.
(m) Financial Statements. Lessor shall furnish to the Collateral
Agent (for distribution to the Participants) within 45 days after the
close of each calendar quarter a quarterly statement of assets and
liabilities, and receipts and disbursements, relating to Lessor.
(n) Activities of Lessor. Lessor shall not engage in any business or
activity of any kind or enter into any transaction which is not
directly related to the purchase and sale and leasing of Nuclear
Material pursuant to the Lease and the financing thereof in the
manner contemplated by this Agreement and the other Basic Documents.
(o) Obligations. Lessor shall not, directly or indirectly, create,
incur, assume or suffer to exist any Obligations for Borrowed Money
or Deferred Purchase Price of any kind or extensions of credit
(including any financing lease, conditional sale contract or
arrangement, sale-leaseback or other similar financing arrangement),
except the indebtedness evidenced by the Notes, the obligations and
liabilities of Lessor arising out of or in connection with the
Prudential Financing Documents, this Agreement, the Loan Agreement
and each of the other Basic Documents.
(p) Guarantees. Lessor shall not become or remain liable, directly or
contingently, in connection with any obligation of any Person,
whether by guaranty, endorsement (other than endorsements of
negotiable instruments for deposit or collection in the ordinary
course of business), agreement to purchase or repurchase, agreement
to supply or advance funds or otherwise.
(q) Additional Capital Stock; Distributions. Lessor shall not issue
any additional shares of its capital stock to any Person. Lessor
shall not declare or pay any dividend or redeem, purchase or
otherwise acquire, directly or indirectly, any shares of its stock,
or make any other distribution (whether in cash or in Property) with
respect to the profits, assets or capital of Lessor.
(r) Investments; Loans. Lessor shall not make or suffer to exist any
loans or advances (other than prepayments for services in the
ordinary course of Lessor's business) to, or make any investments (by
way of transfer of Property, contributions to capital, purchase of
stock or securities or evidences of indebtedness, acquisition of
business or assets, or otherwise) in, any Person except for the
purchase of Nuclear Material as contemplated by the Lease.
(s) Merger; Sales. Lessor shall not enter into any transaction of
merger or consolidation, or terminate, liquidate or dissolve itself
(or suffer any termination, liquidation or dissolution), or acquire
or be acquired by any Person, or otherwise change the form or
organization of its business, or convey, sell, lease or otherwise
dispose of any of the Collateral except (i) for transactions
permitted by this Agreement, the Security Agreement or the Lease and
(ii) Permitted Liens.
(t) Compliance With Agreements. Lessor shall promptly take any and
all actions as may be necessary to enforce its rights under the
Lease, the Bills of Sale and Leasing Records executed and delivered
by Lessee and to enforce or secure the performance by Lessee of its
obligations thereunder. Without limiting the generality of the
foregoing, Lessor shall file or cause to be filed all continuation
statements required under the Uniform Commercial Code, as from time
to time in effect in each applicable jurisdiction, with respect to
the liens and security interests granted under the Security Agreement
in order to maintain a first perfected lien upon and security
interest in the Collateral. Not earlier than six months nor later
than three months prior to the end of the 5-year period from the
filing of UCC-l Financing Statements, Lessor shall provide to the
Collateral Agent evidence satisfactory to it of the due recordation
of such continuation statements.
(u) Acceptance of Additional Nuclear Material Contracts. Lessor shall
not accept the assignment by Lessee of all or any part of Lessee's
rights in and to any additional Nuclear Material Contracts except in
accordance with the terms and provisions of the Lease.
(v) Deemed Loss Event. Lessor shall take all reasonable steps to
prevent the occurrence of a Deemed Loss Event.
(w) Salaries. Lessor shall not pay any salaries or wages.
SECTION VIII.3 Covenants of each of the Agents, the Participants and the
Owner Trustee.
(a) Discharge of Liens. Each of the Participants, in its individual
capacity, and each Agent, in its respective individual capacity,
covenants as to itself, and not jointly with any such other person,
that it shall not create or permit to exist at any time, and shall,
at its own cost and expense, promptly take such action as may be
necessary duly to discharge, or to cause to be discharged, all Lessor
Liens attributable to it and shall cause restitution to be made to
the Owner Trust Estate in the amount of any diminution of the value
thereof as a result of its failure to comply with the obligations
under this Section 8.3(a). Notwithstanding the foregoing, none of the
Participants or each Agent, as the case may be, shall be required to
so discharge any such Lessor Lien while the same is being contested
in good faith by appropriate proceedings diligently prosecuted so
long as such proceedings shall not involve any meaningful danger of
the sale, forfeiture or loss of, and shall not interfere with the use
or disposition of, any part of the Nuclear Material, the Lease or the
Owner Trust Estate or title thereto or any interest therein or the
payment of Rent.
(b) Trust Agreement. Without prejudice to any right under the Trust
Agreement of Owner Trustee to resign, Owner Trustee hereby agrees
with Lessee, Lessor, the Administrator and each Agent: (i) except as
permitted by the Trust Agreement, not to terminate or revoke the
trust created by the Trust Agreement prior to the end of the Lease
Term; (ii) not to amend, supplement, terminate or revoke or otherwise
modify any provision of the Trust Agreement prior to the end of the
Lease Term in such a manner as to adversely affect the rights of any
such party; (iii) except as otherwise expressly authorized under the
Basic Documents, not to withdraw from the Owner Trust Estate any
funds without the prior written consent of each such party; and (iv)
to comply with all of the terms of the Trust Agreement and the Loan
Agreement applicable to it the nonperformance of which would
adversely affect such party.
(c) Successor Owner Trustee. Owner Trustee or any successor may
resign or be removed by the Owner Trust Beneficiary, with or without
cause (and, if a Lease Event of Default has occurred and is
continuing, such removal is effective only with the consent of the
Secured Parties), a successor Owner Trustee may be appointed, and a
Qualified Institution may become Owner Trustee under the Trust
Agreement, only in accordance with the provisions set forth in the
Trust Agreement.
(d) Indebtedness; Other Business. Owner Trustee on behalf of the
Trust shall not contract for, create, incur or assume any
indebtedness, or enter into any business or other activity, other
than pursuant to or under the Basic Documents and, for the benefit of
the Owner Trust Beneficiary, agrees to be bound by Section 2.4 of the
Trust Agreement.
(e) Change of Principal Place of Business. Owner Trustee shall give
prompt advance notice to the Participants and Lessee if the Owner
Trustee's principal place of business or chief executive office, or
the office where the records concerning the accounts or contract
rights relating to the Nuclear Material or the Overall Transaction
are kept, shall cease to be located at its address indicated on the
signature page hereto or if it shall change its name or identity.
(f) Transfer of Liquidity Bank Interests. Each Liquidity Bank shall
not assign, transfer, convey or otherwise dispose of any of its
interest in the LAPA, except in accordance with the LAPA.
(g) Transfer of Capital Stock of Lessor. Owner Trustee shall not
assign, transfer, convey or otherwise dispose of any of its interests
in the shares of capital stock of Lessor without the prior written
consent of the Collateral Agent.
(h) Quiet Enjoyment. Each of the Participants, each Agent and the
Owner Trustee covenants that, so long as Lessee makes timely payments
of Rent and fully performs all the other obligations to be performed
by Lessee hereunder and under the Lease, it will not hinder or
interfere with Lessee's peaceable and quiet enjoyment of the
possession and use of Nuclear Material leased under the Lease,
subject, however, to the terms thereof and hereof.
ARTICLE IX
INDEMNITIES
SECTION IX.1 General Indemnification. Whether or not the transactions
contemplated hereby are consummated, to the fullest extent permitted by
Applicable Laws, Lessee hereby agrees to indemnify and hold harmless each
Indemnitee against any and all claims, demands and liabilities of
whatsoever nature, and all costs, losses, damages, obligations, penalties,
causes of action, judgments and expenses (including reasonable attorneys'
fees and expenses) directly or indirectly relating to or in any way
arising out of any of the following, whether such events, conditions or
circumstances occurred before, on or after the date hereof:
(a) defects in title to Nuclear Material on acquisition by Lessor,
ownership of and interest in the Nuclear Material leased or to be
leased hereunder (the term "Nuclear Material" when used in this
Section 9.1 shall include, in addition to all other Nuclear Material,
nuclear material the lease of which has been terminated hereunder and
which is in storage, or is being transported to storage, and which
has not been sold or disposed of by Lessor to Lessee or to a third
party) or the licensing, ordering, rejection, use, nonuse, misuse,
possession, control, installation, acquisition, storage,
containerization, transportation, blending, transfer, consumption,
leasing, insuring, operating, disposing, fabricating, refining,
milling, enriching, conversion, cooling, processing, condition,
operation, repair and reprocessing thereof, 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
Nuclear Material leased or to be leased hereunder within the
Stipulated Casualty Value specified within the limits provided by
Section 4 of the Lease and except for any general administrative
expenses of the Secured Parties and of such representative;
(b) all costs, charges, damages or expenses and royalties and/or
claims and expenses of litigation (including, but not limited to,
reasonable attorneys' fees), arising out of or necessitated by the
assertion of any claim or demand based upon any infringement or
alleged infringement of any patent or other right, by or in respect
of any Nuclear Material; provided, however, that Lessor shall make
available to Lessee all of Lessor's rights under any similar
indemnification from a Manufacturer under any Nuclear Material
Contract;
(c) 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;
(d) any violation, or alleged violation, of any Basic Document or any
Prudential Financing Document by Lessee or of any contracts or
agreements to which 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 Lessee with respect thereto or pursuant to any Basic
Document or any Prudential Financing Document;
(e) 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 Stipulated Casualty Value
specified within the limits provided in Section 4 of the Lease;
(f) liabilities based upon a theory of strict liability in tort,
negligence or willful acts to the extent that such liabilities relate
to the Nuclear Material or any action or transaction with respect
thereto or pursuant to the Lease; or
(g) the Lease, the Nuclear Material, the Prudential Lease or any
related transactions or documents.
Lessee shall, forthwith, upon demand, reimburse Lessor, 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 Lessor,
the Secured Parties or such other party for payment thereof; provided, however,
that Lessee shall not indemnify any party seeking indemnification under this
Section 9.1, for any claims, demands, liabilities, costs or expenses (other than
any such claims, demands, liabilities, costs, or expenses arising out of the
gross negligence or willful misconduct of Lessee) which arise or result from, or
relate to obligations of such party as an insurer under contracts or agreements
of insurance or reinsurance. Without limiting any of the foregoing provisions of
this Section 9.1, to the extent that Lessee in fact indemnifies an Indemnitee,
Lessee shall be subrogated to the rights of such Indemnitee and shall have a
right to determine the settlement of claims therein, provided that any such
rights to which Lessee shall be subrogated shall be subordinate and subject in
right of payment to the prior payment in full of all liabilities to Lessor of
the person or entity in respect of which such rights exist. The foregoing
indemnity shall not be affected by any termination of this Agreement, or of the
lease of any Nuclear Material hereunder.
SECTION IX.2 Claims Procedure. An Indemnitee shall, after obtaining
knowledge thereof, promptly notify Lessee in writing of any Claim as to
which indemnification is sought; provided, however, that the failure to
give such notice shall not release Lessee from any of its obligations
under this Article IX, except to the extent that failure to give notice of
any action, suit or proceeding against Indemnitee shall preclude Lessee's
ability to defend such Claim or recover proceeds under any insurance
policies maintained by Lessee hereunder. Lessee shall, after obtaining
knowledge thereof, promptly notify each Indemnitee in writing of any
indemnified Claim affecting such person. Subject to the provisions of the
following paragraph and to the rights of insurers under policies of
insurance maintained by Lessee, Lessee shall at its sole cost and expense
be entitled to investigate any Claim and control the defense of each such
Claim [and shall not be required to pay or discharge any Claim so long as
the validity or the amount thereof shall be contested in good faith and by
appropriate legal proceedings in any reasonable manner ; provided, that
Lessee shall keep the Indemnitee which is the subject of such proceeding
fully apprised of the status of such proceeding and shall provide such
Indemnitee with all information with respect to such proceeding as such
Indemnitee shall reasonably request. If Lessee does not elect to direct or
assume such defense, the Indemnitee, at Lessee's expense, may direct such
defense and select and employ such counsel as it chooses, and in such
case, may settle such action on any reasonable basis. Lessee shall not, in
connection with any action, be liable for the reasonable fees and expenses
of more than one separate firm of attorneys for the Indemnitees selected
by the Indemnitees.
Notwithstanding any of the foregoing to the contrary, Lessee shall not be
entitled to control and assume responsibility for the defense of such
claim or liability if in good faith opinion of counsel of such Indemnitee,
there exists a conflict of interest such that it is advisable for such
Indemnitee to retain control of such proceeding or such claim or liability
involves the possibility of criminal sanctions or criminal liability to
such Indemnitee or the Indemnitee shall have been advised by its counsel
that there may be one or more legal defenses available to such Indemnitee
which are different from or additional to those available to such Lessee.
In such circumstances, the Indemnitee shall be entitled to control and
assume responsibility for the defense of such claim or liability and
Lessee shall pay the reasonable costs and expenses of such defense. In
addition, any Indemnitee may participate in any proceeding controlled by
Lessee pursuant to this Section 9.2 at its own expense. Lessee may in any
event participate in all such proceedings at its own costs. Nothing
contained in this Section 9.2 shall be deemed to require an Indemnitee to
contest any Claim or assume responsibility for or control of any judicial
proceeding with respect thereto.
The Indemnitee shall supply Lessee, at Lessee's sole cost and expense,
with such information as is available to the Indemnitee and is requested
by Lessee as in the reasonable Opinion of Counsel to Lessee is necessary
or advisable for Lessee to control or participate in any proceeding to the
extent permitted by this Section 9.2. Unless such Indemnitee waives its
right to be indemnified with respect to a Claim under this Article IX or
such Claim, in the reasonable opinion of the Indemnitee, exposes such
Indemnitee to any risk of criminal liability, no Indemnitee shall enter
into a settlement or other compromise with respect to such Claim without
the prior written consent of Lessee, which consent shall not be
unreasonably withheld or delayed. Lessee shall not be liable in the event
of any settlement of any such action in which it is not entitled to assume
the defense effected without its consent, which consent shall not be
unreasonably withheld or delayed. In all actions in which Lessee has
assumed the defense, Lessee shall not be liable in the event of any
settlement of any such action effected without Lessee's consent, which
consent shall not be unreasonably withheld or delayed. Each Indemnitee
further agrees, in the case of any Claim covered by any policy of
insurance maintained pursuant to Section 12 of the Lease, to cooperate
with the insurers in the exercise of their rights to investigate, defend
or compromise such Claim as may be reasonably required by such policy to
maintain the insurance coverage provided. In the event Lessee proposes to
settle the defense of any Claim and such Indemnitee determines in its good
faith reasonable judgment that such proposed settlement would have a
material adverse effect on such Indemnitee unrelated to the transactions
contemplated by the Basic Documents, then such Indemnitee shall have the
right to not enter into such proposed settlement and to assume the contest
of such Claim, at its sole cost and expense. In such event, Lessee shall
be relieved of any further obligation to defend such Claim and shall be
released of any obligation to indemnify in respect of such Claim in excess
of the liability Lessee would have accepted if such proposed settlement
had been consummated. To the extent that any Indemnitee, in fact receives
complete and full indemnification payments from or on behalf of Lessee
under the indemnification provisions of this Article IX (or its insurers),
Lessee shall, without any further action, be subrogated to the extent of
such payment to such Indemnitee's rights (other than rights in respect of
insurance policies maintained by such Indemnitee at its own expense), with
respect to the transaction or event requiring or giving rise to such
Claim. If an Indemnitee shall obtain repayment of any Claim paid by Lessee
pursuant to this Article IX, such Indemnitee shall promptly pay to Lessee
the amount of such repayment actually received by such Indemnitee;
provided, however, that such amount shall in no event be payable before
such time as Lessee shall have made all payments and indemnities then due
under the Basic Documents to such Indemnitee.
The indemnities and assumptions of liability in this Article IX shall
continue in full force and effect notwithstanding the assignment of the
Lease or the termination of the Lease, in whole or in part, whether by
expiration of time or otherwise, for any action or inaction during the
Lease Term in contravention of the terms of the Lease. The indemnities
contained in this Article IX are expressly made for the benefit of and
shall be enforceable by each Indemnitee.
SECTION IX.3 General Tax Indemnity. Lessee agrees to pay, and indemnify
and hold Indemnitees and their respective successors and assigns harmless
on a net after-tax basis from, any and all federal, state, county,
municipal or other fees and taxes of whatsoever 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 Indemnitees or to which the Indemnitees are subject with
respect to the Nuclear Material or the 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, 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 Lessor with respect
thereto; provided, however, that Lessee shall not be obligated to
indemnify the Indemnitees for any taxes, whether federal, state or local,
based on or measured by net income of the Indemnitees where taxable income
is computed in substantially the same manner as taxable income is computed
under the Code;
Each Indemnitee shall furnish Lessee with copies of any requests for
information received by such Indemnitee from any taxing authority relating
to any taxes or other impositions with respect to which such Lessee is
required to indemnify hereunder, and if claim is made against any
Indemnitee for any such taxes or other impositions, with respect to which
such Lessee is liable for a payment or indemnity hereunder, such
Indemnitee shall give such Lessee notice in writing of such claim. Lessee
may, at its sole cost and expense, either in its own name if permitted by
law or otherwise in the name of the relevant Indemnitee, with such
Indemnitee's consent (such consent not to be unreasonably withheld or
delayed), contest the validity, applicability or amount of any such tax or
other imposition by (i) resisting payment thereof if practicable, (ii) not
paying the same except under protest, if protest is necessary or advisable
and proper, or (iii) if the payment be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial
proceedings, provided, however, that in the case of any claim for refund,
Lessee shall have paid the Indemnitee an amount, on a net after-tax basis,
sufficient to pay the tax or other imposition; provided, further, that
such contest shall be permitted only if no Lease Event of Default has
occurred and is continuing hereunder and only if and to the extent that
such contest is being conducted in good faith, is being diligently
prosecuted by Lessee by appropriate legal proceedings, and Lessor shall
have determined in its sole judgment that the action to be taken in
connection with such contest will not result in any criminal penalty or in
any risk of the sale, forfeiture or loss of, or the creation of a Lien
(other than a Permitted Lien) on, the Nuclear Material or any interest of
Lessor therein. Furthermore, as a condition to any right to contest any
claim, Lessee must pay on demand all reasonable costs and expenses of the
Indemnitee (including reasonable attorney's fees and expenses, including
the allocated costs of internal counsel). If any Indemnitee shall obtain a
refund of any amount paid by Lessee pursuant to this Section 9.3, such
Indemnitee shall pay to such Lessee the amount of such refund (but not in
excess of the amount paid by Lessee), together with the amount of any
interest actually received by such Indemnitee on account of such refund.
Lessee shall promptly notify Lessor of all reports or returns required to
be made with respect to any tax or other imposition with respect to which
Lessee is required to indemnify hereunder, and shall promptly provide
Lessor with all information necessary for the making and timely filing of
such reports or returns by Lessor. If Lessor requests that any such
reports or returns be prepared and filed by Lessee, Lessee shall prepare
and file the same if permitted by applicable law to file the same, and if
not so permitted, Lessee shall prepare such reports or returns for
signature by Lessor, and shall forward the same, together with immediately
available funds for payment of any tax or other imposition due, to Lessor,
at least ten (10) Business Days in advance of the date such payment is to
be made. Upon written request, Lessee shall furnish Lessor with copies of
all paid receipts or other appropriate evidence of payment for all taxes
or other impositions paid by such Lessee pursuant to this Section 9.3. All
of the indemnities contained in this Section 9.3 shall apply from the date
of the execution of this Agreement notwithstanding that the term has not
yet commenced with respect to any Nuclear Material and shall continue in
full force and effect notwithstanding the expiration or other termination
of the Lease, and are expressly made for the benefit of, and shall be
enforceable by, Lessor and the other Indemnitees.
SECTION IX.4 No Contest. Lessee shall pay on or before the time or times
prescribed by law any tax which is subject to indemnification pursuant to
Section 9.3. Notwithstanding the foregoing, Lessee shall not be required
to discharge any Lien while the same is being contested in good faith by
appropriate proceedings diligently prosecuted so long as such proceedings
shall not involve any meaningful danger of the sale, forfeiture or loss
of, and shall not interfere with the use or disposition of, any part of
the Nuclear Materials, the Lease or the Owner Trust Estate or title
thereto or any interest therein or the payment of Rent.
SECTION IX.5 Payments. Any tax indemnifiable under Section 9.3 shall be
paid by Lessee directly when due to the applicable taxing authority if
direct payment is practicable and permitted. If direct payment to the
applicable taxing authority is not permitted or is otherwise not made, any
amount payable to an Indemnitee pursuant to Section 9.3 shall be paid
within thirty (30) days after receipt of a written demand therefor from
such Indemnitee accompanied by a written statement describing in
reasonable detail the amount so payable , but not before the date that the
relevant tax is due. Any payments made pursuant to Section 9.3 directly to
the Indemnitee entitled thereto shall be made in immediately available
funds at such bank or to such account as specified by the payee in written
directions to the payor, or, if no such direction shall have been given,
by check of the payor payable to the order of the payee by certified mail,
postage prepaid at its address as set forth in this Agreement. Upon the
request of any Indemnitee with respect to an indemnifiable tax paid by
Lessee directly to the applicable taxing authority, Lessee shall furnish
to such Indemnitee the original or a certified copy of a receipt for
Lessee's payment of such tax or such other evidence of payment as is
reasonably acceptable to such Indemnitee.
SECTION IX.6 Reports. Except as otherwise provided in the third sentence
below, Lessee shall prepare and file (whether or not it is a legal
obligation of an Indemnitee) all tax returns or reports that may be
required with respect to any taxes that are subject to indemnification
pursuant to Section 9.3. Lessee may notify in writing all applicable
governmental authorities having jurisdiction with respect to personal
property taxes that Lessee is the appropriate party for receiving notices
of (or copies of, if such governmental authority is required by law to
notify Lessor) assessment, appeal and payment with respect to the Nuclear
Material. If an Indemnitee is obligated by law to file any such reports or
returns, then Lessee shall at least 15 days before the same are due to
prepare the same and forward them to the Indemnitee, as appropriate, with
detailed instructions as to how to comply with all applicable filing
requirements, together with funds in the amount of any payment required
pursuant thereto. Indemnitee shall forward to Lessee at its address listed
on the signature page hereto copies of all assessment and valuation
notices it receives within 10 days of receipt; provided that Indemnitee's
failure to deliver on a timely basis such notices shall not relieve Lessee
of any obligations hereunder.
SECTION IX.7 Gross Up. If an Indemnitee shall not be entitled to a
corresponding and equal deduction with respect to any payment or tax which
Lessee is required to pay or reimburse under any other provision of this
Article IX (each such payment or reimbursement under this Article IX, an
"original payment") and such original payment constitutes income to such
Indemnitee, then Lessee shall pay to such Indemnitee on demand the amount
of such original payment on a gross-up basis so that, after subtracting
all taxes imposed on such Indemnitee with respect to such original payment
by Lessee (including any taxes otherwise excluded by Section 9.3 and
assuming for this purpose that such Indemnitee was subject to taxation at
the applicable Federal, state or local marginal rates used to compute such
Indemnitee's tax return for the year in which such income is taxable),
such payments shall be equal to the original payment to be received (net
of any credits, deductions or other tax benefits then actually recognized
that arise from the payment by such Indemnitee of any amount, including
taxes, for which the payment to be received is made).
SECTION IX.8 Lessor Breach. Lessee shall indemnify each Secured Party, the
Owner Trustee, each Agent, the Arranger, the Administrator and their
respective Affiliates, successors and assigns for any costs and expenses
imposed upon such Secured Party, Owner Trustee, Agent, Arranger,
Administrator, Affiliate, successor or assign, to the extent that such
costs and expenses arise out of or are caused by the inaccuracy or breach
of a representation, warranty, covenant or any undertaking contained in
this Agreement or any Basic Document of Lessor.
SECTION IX.9 Funding Losses. Lessee shall indemnify each Participant
against any loss or expense (other than loss of the Drawn Margin in
respect of a LIBO Rate Loan) that such Participant may sustain or incur as
a consequence of any event, other than a default by such Participant in
the performance of its obligations hereunder, that results in (i) such
Participant receiving or being deemed to receive any amount on account of
the principal of any LIBO Rate Loan prior to the end of the Interest
Period in effect therefor, (ii) a failure to fund a LIBO Rate Loan on the
date requested in accordance with the Advance Request or (iii) the
conversion of any LIBO Rate Loan to an Alternate Base Rate Loan, or the
conversion of the Interest Period with respect to any LIBO Rate Loan, in
each case prior to the end of the Interest Period (or maturity date, as
the case may be) in effect therefor (any of the events referred to in this
sentence being called a "Breakage Event"). In the case of any Breakage
Event, such loss shall include an amount equal to the excess, as
reasonably determined by Participant, of (x) its cost of the liquidity or
reemployment of deposits or other funds required for the LIBO Rate Loan
that is the subject of such Breakage Event for the period from the date of
such Breakage Event to the last day of the Interest Period in effect (or
that would have been in effect) for such Loan over (y) the amount of
interest realized or likely to be realized by Participant in redeploying
the funds released or not utilized by reason of such Breakage Event for
such period. A certificate of Participant setting forth any amount or
amounts that Participant is entitled to receive pursuant to this Section
9.10 shall be delivered to Lessee and shall be conclusive absent manifest
error.
SECTION IX.10 Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision of this Agreement or any other Basic
Document, if after the date of this Agreement any change in applicable law
or regulation or in the interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof (whether or not having the force of law) shall impose, modify or
deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of or credit extended
by any Participant or shall impose on such Participant or the London
interbank market any other condition affecting this Agreement or any other
Basic Document or Loans (excluding, for purposes of this Section 9.10, any
such changes that affect taxes required to be withheld or deducted from,
or otherwise directly payable by Lessee in connection with, any payment,
with respect to which Section 9.3 shall govern), and the result of any of
the foregoing shall be to increase the cost to such Participant of making
or maintaining any Loan, or to reduce the amount of any sum received or
receivable by such Participant hereunder (whether of principal, interest
or otherwise) by an amount deemed by such Participant to be material, then
Lessee shall pay to such Participant within ten days of written demand
therefor, in the case of those applicable to prior periods, and the dates
specified, in the case of those applicable to future periods, such
additional amount or amounts as will compensate such Participant for such
additional costs incurred or reduction suffered.
(b) If any Participant shall have determined that the adoption after the
date hereof of any law, rule, regulation, agreement or guideline regarding
capital adequacy, or any change after the date hereof in any such law,
rule, regulation, agreement or guideline (whether such law, rule,
regulation, agreement or guideline has been adopted) or in the
interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof, or compliance
by any Participant (or any lending office of such Participant) or any
Participant's holding company with any request or directive regarding
capital adequacy (whether or not having the force of law) of any
governmental authority has or would have the effect of reducing the rate
of return on such Participant's capital or on the capital of such
Participant's holding company, if any, as a consequence of this Agreement
or the Loans made by such Participant pursuant hereto (or in the case of
any Liquidity Bank, any commitment to provide funding in connection
therewith) to a level below that which such Participant or such
Participant's holding company could have achieved but for such
applicability, adoption, change or compliance (taking into consideration
such Participant's policies and the policies of such Participant's holding
company with respect to capital adequacy) by an amount deemed by such
Person to be material, then from time to time Lessee shall pay to such
Participant such additional amount or amounts as will compensate such
Participant or such Participant's holding company for any such reduction
suffered.
(c) Each Participant shall furnish Lessee with a certificate setting forth
the amount or amounts necessary to compensate such Participant or its
holding company (including the calculation thereof) as specified in
paragraph (a) or (b) above, which shall be conclusive absent manifest
error. In making the determinations contemplated by this Section 9.10,
each Participant may make such estimates, assumptions, allocations and the
like that such Participant in good faith determines to be appropriate.
Lessee shall pay such Participant the amount shown as due on any such
certificate delivered by it within 10 days after its receipt of the same.
(d) Failure or delay on the part of any Participant to demand compensation
for any increased costs or reduction in amounts received or receivable or
reduction in return on capital shall not constitute a waiver of such
Participant's right to demand such compensation. The protection of this
Section shall be available to each Participant regardless of any possible
contention of the invalidity or inapplicability of the law, rule,
regulation, agreement, guideline or other change or condition that shall
have occurred or been imposed.
SECTION IX.11 Change in Legality. (a) Notwithstanding any other provision
of this Agreement or any other Basic Document, if, after the date hereof,
any change in any law or regulation or in the interpretation thereof by
any governmental authority charged with the administration or
interpretation thereof shall make it unlawful for any Participant to make
or maintain any LIBO Rate Loan or to give effect to its obligations as
contemplated hereby with respect to any LIBO Rate Loan, then, by written
notice to Lessee and to the Liquidity Agent such Participant may require
that all outstanding LIBO Rate Loans made by it be converted to Alternate
Base Rate Loans, in which event all such LIBO Rate Loans shall be
automatically converted to Alternate Base Rate Loans as of the effective
date of such notice as provided in paragraph (b) below. In the event any
Participant shall exercise its rights hereunder under all payments and
prepayments of principal that would otherwise have been applied to repay
the LIBO Rate Loans that would have been made by such Participant or the
converted LIBO Rate Loans of such Participant shall instead be applied to
repay the Alternate Base Rate Loans made by such Participant in lieu of,
or resulting from the conversion of, such LIBO Rate Loans.
(b) For purposes of this Section 9.11, a notice to Lessee by any
Participant shall be effective as to each LIBO Rate Loan made by such
Participant, if lawful, on the last day of the Interest Period currently
applicable to such LIBO Rate Loan; in all other cases such notice shall be
effective on the date of receipt by Lessee.
SECTION IX.12 Non-U.S. Lender Taxes. Each Participant (or permitted
transferee) that is organized under the laws of a jurisdiction other than
the United States, any State thereof or the District of Columbia (a
"Non-U.S. Lender") shall deliver to each of Lessee and the Liquidity Agent
two copies of (a) Internal Revenue Service Form W-8ECI or W-8BEN, as
appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Non-U.S. Lender is entitled to benefits
under an income tax treaty to which the United States of America is a
party that reduces the rate of withholding tax on payments of interest or
certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the
United States of America, and (b) any other form or certificate required
by any taxing authority (including any certificate required by Sections
871(h) and 881(c) of the Code certifying that such Non-U.S. Lender is
entitled to an exemption from or a reduced rate of tax on payments
pursuant to this Agreement or any of the other Basic Documents, or a
certificate representing that such Non-U.S. Lender is not a bank for
purposes of Section 881(c) of the Code, is not a 10-percent shareholder
(within the meaning of Section 871(h)(3)(B) of the Code) of the [Lessee]
and is not a controlled foreign corporation related to the [Lessee]
(within the meaning of Section 864(d)(4) of the Code)), properly completed
and duly executed by such Non-U.S. Lender claiming complete exemption
from, or reduced rate of, U.S. Federal withholding tax on payments by the
[Lessee] under this Agreement. Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement
(or, in the case of a transferee that is a participation holder, on or
before the date such participation holder becomes a Transferee hereunder)
and on or before the date, if any, such Non-U.S. Lender changes its
applicable lending office by designating a different lending office (a
"New Lending Office"). In addition, each Non-U.S. Lender shall deliver
such forms promptly upon the obsolescence or invalidity of any form
previously delivered by such Non-U.S. Lender. Notwithstanding any other
provision of this Section 9.12, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this Section 9.12 that such Non-U.S. Lender
is not legally able to deliver.
SECTION IX.13 Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate.
(a) In the event (i) any Liquidity Bank delivers a certificate
requesting compensation pursuant to Section 9.10 or (ii) any
Liquidity Bank delivers a notice described in Section 9.11, Lessee
may, at its sole expense and effort, upon notice to such Liquidity
Bank and the Liquidity Agent, require such Liquidity Bank to transfer
and assign, without recourse (in accordance with and subject to the
restrictions contained in the LAPA), all of its interests, rights and
obligations under this Agreement and the Basic Documents to an
assignee which shall assume such assigned obligations (which assignee
may be another Liquidity Bank, if the Liquidity Bank accepts such
assignment); provided that (x) such assignment shall not conflict
with any law, rule or regulation or order of any court or other
governmental authority having jurisdiction, (y) Lessee shall have
received the prior written consent of the Liquidity Agent, which
consent shall not unreasonably be withheld, and (z) Lessee or such
assignee shall have paid to the affected Liquidity Bank in
immediately available funds an amount equal to the sum of the
principal of and interest accrued to the date of such payment on the
outstanding LIBO Rate Loans or Alternate Base Rate Loans of the
Liquidity Bank plus all fees and other amounts accrued for the
account of the Liquidity Bank hereunder (including any amounts under
Section 9.10 and Section 9.11); further provided that if prior to any
such transfer and assignment the circumstances or event that resulted
in the Liquidity Bank's claim for compensation under Section 9.10 or
notice under Section 9.11, as the case may be, cease to cause such
Liquidity Bank to suffer increased costs or reductions in amounts
received or receivable or reduction in return on capital, or cease to
have the consequences specified in Section 9.12, or cease to result
in amounts being payable under Section 9.3, as the case may be
(including as a result of any action taken by such Liquidity Bank
pursuant to paragraph (b) below), or if such Liquidity Bank shall
waive its right to claim further compensation under Section 9.10 in
respect of such circumstances or event or shall withdraw its notice
under Section 9.11, as the case may be, then such Liquidity Bank
shall not thereafter be required to make any such transfer and
assignment hereunder.
(b) If (i) such Liquidity Bank shall request compensation under
Section 9.10, or (ii) such Liquidity Bank delivers a notice described
in Section 9.11, then such Liquidity Bank shall use reasonable
efforts (which shall not require such Liquidity Bank to incur an
unreimbursed loss or unreimbursed cost or expense or otherwise take
any action inconsistent with its internal policies or legal or
regulatory restrictions or suffer any disadvantage or burden deemed
by it to be significant) (x) to file any certificate or document
reasonably requested in writing by Lessee and (y) to assign its
rights and delegate and transfer its obligations hereunder to another
of its offices, branches or affiliates, if such filing or assignment
would reduce or eliminate its claims for compensation under Section
9.10 or enable it to withdraw its notice pursuant to Section 9.11, as
the case may be, in the future. Lessee hereby agrees to pay all
reasonable costs and expenses incurred by such Liquidity Bank in
connection with any such filing, assignment, delegation and transfer.
ARTICLE X
DISTRIBUTIONS OF PAYMENTS AND COLLATERAL PROCEEDS
SECTION X.1 Upfront Fees and Facility Fees. Except as otherwise provided
in Section 10.6, each payment of the Facility Fee and Upfront Fee received
by the Collateral Agent shall be distributed by the Collateral Agent
promptly upon receipt to the Liquidity Banks based upon each Liquidity
Banks respective Commitment.
SECTION X.2 Basic Rent Payments. Except as otherwise provided in Section
10.6, each installment of Basic Rent received by the Collateral Agent
shall be distributed by the Collateral Agent promptly upon receipt, in the
following order of priority:
first, so much of such payments as shall be required to pay in full
accrued but unpaid interest (including interest on overdue principal and
interest) shall be distributed to the Participants, ratably, without
priority of one over the other, in the proportion that the amount of
accrued but unpaid interest due each Participant bears to the aggregate
amount of such payments then due all the Participants;
second, so much of such payments as shall be required to pay in full the
outstanding principal amount of the CP Loans then owned by the CP Lender
(excluding any CP Loans that have been converted to Facility Loans
pursuant to Section 2.9(a) of the Loan Agreement) shall be distributed to
the CP Lender; and
third, so much of such payments as shall be required to pay in full the
outstanding principal amount of the Facility Loans then owned by the
Liquidity Banks, shall be distributed to the Liquidity Banks, ratably,
without priority of one over the other, in the proportion that the
principal amount of each Liquidity Bank's Facility Loans bears to the
aggregate principal amount of the Facility Loans then held by the
Liquidity Banks.
SECTION X.3 Payments for the Repurchase of All of the Nuclear Material.
Except as otherwise provided in Section 10.6, each payment of the entire
Lease Balance received by the Collateral Agent shall be distributed by the
Collateral Agent promptly upon receipt to all of the Participants,
ratably, in proportion that the principal amount of each Participant's
Loans bears to the aggregate principal amount of the Loans then
outstanding.
SECTION X.4 Payments for Less than All of the Nuclear Material. Except as
otherwise provided in Section 10.7, each payment of less than all of the
Lease Balance received by the Collateral Agent shall be distributed by the
Collateral Agent promptly upon receipt first in accordance with clause
"second" of Section 10.2 and next to the CP Lender.
SECTION X.5 Payments of Additional Rent. All payments of Additional Rent
received by the Collateral Agent (excluding amounts paid by the Lessee to
the Person entitled thereto) shall be distributed promptly by the
Collateral Agent upon receipt thereof to the Persons entitled thereto
pursuant to the Basic Documents.
SECTION X.6 Payments After a Lease Event of Default. All amounts received
by the Collateral Agent in connection with (x) any sale of all the Nuclear
Material as a result of a Lease Event of Default, (y) any casualty after
the occurrence and continuance of a Lease Event of Default or (z) payments
received after the occurrence and continuance of a Lease Event of Default
and the acceleration of the CP Notes or the Facility Notes shall be
distributed by the Collateral Agent, after payment of all amounts due and
unpaid to the Collateral Agent under the Basic Documents, in the following
order of priority:
first, so much of such payments or amounts as shall be required to
pay the then existing or prior Participants the amounts payable to
them pursuant to any expense reimbursement or indemnification or fee
provisions of the Basic Documents shall be distributed to each such
Participant without priority of one over the other in accordance with
the amount of such payment or payments payable to each such Person;
second, so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid principal amount of, and
all accrued and to be accrued but unpaid interest (including interest
on interest) on all of the CP Loans then owned by the CP Lender
(excluding any CP Loans that have been converted to Facility Loans
pursuant to Section 2.9(a) of the Loan Agreement) shall be
distributed to the CP Lender; and
third, so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid principal amount of, and
all accrued but unpaid interest (including interest on interest) on
all of the Facility Loans, shall be distributed, ratably, in
proportion that the principal amount of each Liquidity Bank's
Facility Loans bears to the aggregate amount of the Facility Loans
then outstanding.
SECTION X.7 Payments of Excluded Amounts. Notwithstanding any other
provision of this Section 10, any Excluded Amounts received at any time by
the Collateral Agent shall be distributed promptly to the Person entitled
to receive such Excluded Amounts pursuant to the Basic Documents.
SECTION X.8 Payments for other Specific Purposes. (a) Subject to Sections
10.8(b) and (c), any payment received by the Collateral Agent for which no
provision as to the application thereof is made in the Basic Documents or
elsewhere in this Section 10 shall be distributed pro rata among the
Participants, without priority of one over the other, in the proportion
that each Participants' share of the Lease Balance bears to the Lease
Balance.
(b) Except as otherwise provided in Sections 10.1 and 10.2, all
payments received and amounts realized by the Collateral Agent under
the Lease or otherwise with respect to the Nuclear Material, or any
Proceeds thereof to the extent received or realized at any time after
an indefeasible payment in full of the Lease Balance to the
Participants and any other amounts due and owing to the Participants,
shall be distributed forthwith by the Collateral Agent in the order
of priority set forth in clause "first" of Section 10.6; and
(c) Any payment received by the Collateral Agent for which provision
as to the application thereof is made in a Basic Document but not
elsewhere in this Section 10 shall be distributed promptly by the
Collateral Agent to the person and for the purpose for which such
payment was made in accordance with the terms of such Basic Document.
SECTION X.9 Payment of Interest Before Principal. To the extent any
payment made to the CP Lender, personally, is insufficient to pay in full
its share of the principal and accrued and unpaid interest on outstanding
CP Loans, then each such payment shall first be applied to accrued
interest and then to principal.
ARTICLE XI
COLLATERAL AGENT
SECTION XI.1 Appointment of Collateral Agent; Powers and Authorization
to Take Certain Actions.
(a) Each Participant irrevocably appoints and authorizes [_______________]
to act as its Collateral Agent hereunder, with such powers as are
specifically delegated to Collateral Agent by the terms hereof, together
with such other powers as are reasonably incidental thereto. Each
Participant authorizes and directs the Collateral Agent to, and Collateral
Agent agrees for the benefit of the Participants, that, on the Document
Closing Date it shall accept the Basic Documents. Collateral Agent accepts
the agency hereby created applicable to it and agrees to hold security
interests granted by Lessor in the Owner Trust Estate for the benefit of
the CP Lender and Liquidity Banks, to receive all payments and proceeds
pursuant to the Basic Documents and disburse such payments or proceeds in
accordance with the Basic Documents. Collateral Agent shall have no duties
or responsibilities except those expressly set forth in this Agreement.
Collateral Agent shall not be responsible to any Participant (or to any
other person) (i) for any recitals, statements, representations or
warranties of any party contained in this Agreement, or in any certificate
or other document referred to or provided for in, or received by any of
them under, the Basic Documents, other than the representations and
warranties made by Collateral Agent in Section 7.3, or (ii) for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of the
Collateral or the title thereto (subject to Collateral Agent's obligations
under Section 7.3 hereto) or of any other document referred to or provided
for therein or (iii) for any failure by any Lessee, Lessor or any other
third party (other than Collateral Agent) to perform any of its
obligations under any Basic Document. Collateral Agent may employ
collateral agents, trustees or attorneys-in-fact, may vest any of them
with any property, title, right or power deemed necessary for the purposes
of such appointment and shall not be responsible for the negligence or
misconduct of any of them selected by it with reasonable care. Neither
Collateral Agent nor any of its directors, officers, employees or agents
shall be liable or responsible for any action taken or omitted to be taken
by it or them hereunder, or in connection herewith, except for its or
their own gross negligence, willful misconduct or in the case of
Collateral Agent's handling of funds, the failure to act with the same
care as Collateral Agent uses in handling its own funds.
(b) Collateral Agent shall not have any duty or obligation to manage,
control, use, operate, store, lease, sell, dispose of or otherwise deal
with the Nuclear Material, any Collateral or the Lease, or to otherwise
take or refrain from taking any action under, or in connection with, this
Agreement or any related document to which such Collateral Agent is a
party, except as expressly provided by the terms hereof, and no implied
duties of any kind shall be read into any Basic Document against any
Collateral Agent. The permissive right of Collateral Agent to take actions
enumerated in this Agreement or any other Basic Document shall never be
construed as a duty, unless Collateral Agent is instructed or directed to
exercise, perform or enforce one or more rights by the Majority Secured
Parties (provided that Collateral Agent has received indemnification
reasonably satisfactory to it). Subject to Section 11.1(c) below, no
provision of the Basic Documents shall require Collateral Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its obligations under the Basic Documents, or in the
exercise of any of its rights or powers thereunder. It is understood and
agreed that the duties of Collateral Agent are ministerial in nature.
(c) Except as specifically provided herein, Collateral Agent is acting
hereunder solely as Collateral Agent and, except as specifically provided
herein, Collateral Agent is not responsible to any party hereto in its
individual capacity, except with respect to any claim arising from
Collateral Agent's gross negligence or willful misconduct or any breach of
a representation or covenant made in its individual capacity or in the
case of Collateral Agent's handling of funds, the failure to act with the
same care as Collateral Agent uses in handling its own funds.
(d) Collateral Agent may accept deposits from, lend money to and otherwise
deal with Lessee or any of its Affiliates, if any, with the same rights as
it would have if it were not the named Collateral Agent hereunder.
SECTION XI.2 Reliance. Collateral Agent may rely upon, and shall not be
bound or obligated to make any investigation into the facts or matters
stated in, any certificate, notice or other communication (including any
communication by telephone, telecopy, telex, telegram or cable) reasonably
believed by it to be genuine and correct and to have been made, signed or
sent by or on behalf of the proper person or persons, and upon advice and
statements of legal counsel, independent accountants and other experts
selected by Collateral Agent with due care (including any expert selected
by Collateral Agent to aid Collateral Agent in any calculations required
in connection with its duties under the Basic Documents).
SECTION XI.3 Action Upon Instructions Generally. Subject to Sections 11.4
and 11.6, upon written instructions of the Majority Secured Parties,
Collateral Agent shall, on behalf of the Participants, give such notice or
direction, exercise such right, remedy or power hereunder or in respect of
the Nuclear Material, and give such consent or enter into such amendment
to any document to which it is a party as Collateral Agent as may be
specified in such instructions. Collateral Agent shall deliver to each
Participant a copy of each notice, report and certificate received by
Collateral Agent pursuant to the Basic Documents. Collateral Agent shall
not have any obligation to investigate or determine whether there has been
a Lease Event of Default. Collateral Agent shall not be deemed to have
notice or knowledge of a Lease Event of Default unless an officer of
Collateral Agent is notified in writing of such Lease Event of Default. If
Collateral Agent receives notice of a Lease Event of Default, Collateral
Agent shall give prompt notice thereof, at Lessee's expense, to each
Participant. Subject to Section 11.4, Section 11.6 and Article XIII,
Collateral Agent shall take action or refrain from taking action with
respect to such Lease Event of Default as directed by the Majority Secured
Parties or, in the case of a Payment Default, as directed by any
Participant; provided that, unless and until Collateral Agent receives
such directions, Collateral Agent may refrain from taking any action, or
may act in its discretion, with respect to such Lease Event of Default or
Payment Default. Prior to the date the Lease Balance shall have become due
and payable by acceleration pursuant to [Section 9.2] of the Lease, the
Majority Secured Parties may deliver written instructions to Collateral
Agent to waive, and Collateral Agent shall waive pursuant thereto, any
Lease Event of Default and its consequences; provided that in the absence
of written instructions from all Participants, Collateral Agent shall not
waive any (i) Payment Default or (ii) covenant or provision which cannot
be modified or amended without the consent of all Participants. As to any
matters not expressly provided for by this Agreement, Collateral Agent
shall in all cases be fully protected in acting, or in refraining from
acting, hereunder in accordance with instructions signed by the Majority
Secured Parties and such instructions of the Majority Secured Parties and
any action taken or failure to act pursuant thereto shall be binding on
each Participant.
SECTION XI.4 Indemnification. Each Participant (other than the CP Lender)
shall reimburse and hold Collateral Agent harmless, ratably in accordance
with its Commitment at the time the indemnification is required to be
given, (but only to the extent that any such indemnified amounts have not
in fact been paid to Collateral Agent by, or on behalf of, Lessee in
accordance with Section 9.1) from any and all claims, losses, damages,
obligations, penalties, liabilities, demands, suits, judgments, or causes
of action, and all legal proceedings, and any reasonable costs or expenses
in connection therewith, including allocated charges, costs and expenses
of internal counsel of Collateral Agent and all other reasonable
attorneys' fees and expenses incurred by Collateral Agent, in any way
relating to or arising in any manner out of (i) any Basic Document, the
enforcement hereof or thereof or the consummation of the transactions
contemplated thereby, or (ii) instructions from the Majority Secured
Parties (including, without limitation, the costs and expenses that Lessee
is obligated to and does not pay hereunder, but excluding normal
administrative costs and expenses incident to the performance by such
Collateral Agent of its agency duties hereunder other than materially
increased administrative costs and expenses incurred as a result of a
Lease Event of Default); provided that no Participant shall be liable for
any of the foregoing to the extent they arise from (a) the gross
negligence or willful misconduct of such Collateral Agent, (b) the
inaccuracy of any representation or warranty or breach of any covenant
given by Collateral Agent in Section 7.3 or in the Loan Agreement, (c) in
the case of Collateral Agent's handling of funds, the failure to act with
the same care as Collateral Agent uses in handling its own funds or (d)
any taxes, fees or other charges payable by Collateral Agent based on or
measured by any fees, commissions or compensation received by it for
acting as Collateral Agent in connection with the transactions
contemplated by the Basic Documents.
SECTION XI.5 Independent Credit Investigation. Each Participant by
entering into this Agreement agrees that it has, independently and without
reliance on Arranger, Collateral Agent or any other Participant and based
on such documents and information as it has deemed appropriate, made its
own credit analysis of Lessee and its own decision to enter into this
Agreement and each of the other Basic Documents to which it is a party and
that it shall, independently and without reliance upon Arranger,
Collateral Agent or any other Participant and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking action under this Agreement and any
related documents to which it is a party. Collateral Agent shall not be
required to keep itself informed as to the performance or observance by
Lessee of any other document referred to (directly or indirectly) or
provided for herein or to inspect the properties or books of Lessee.
Except for notices or statements which Collateral Agent is expressly
required to give under this Agreement and for notices, reports and other
documents and information expressly required to be furnished to Collateral
Agent alone (and not also to each Participant, it being understood that
Collateral Agent shall forward copies of same to each Participant)
hereunder or under any other Basic Document, Collateral Agent shall not
have any duty or responsibility to provide any Participant with copies of
notices or with any credit or other information concerning the affairs,
financial condition or business of Lessee (or any of its Affiliates) that
may come into the possession of Collateral Agent or any of its Affiliates.
SECTION XI.6 Refusal to Act. Except for notices and actions expressly
required of Collateral Agent hereunder and except for the performance of
its obligations under Section 7.3 hereto, Collateral Agent shall in all
cases be fully justified in failing or refusing to act unless (a) it is
indemnified to its reasonable satisfaction by the Participants, subject to
the terms and conditions of Section 11.4(b) above, against any and all
liability and reasonable expense which may be incurred by it by reason of
taking or continuing to take any such action (provided that such indemnity
shall not be required to extend to liability or expense arising from any
matter described in clauses (a) through (d) of Section 11.4(a), it being
understood that no action taken by Collateral Agent in accordance with the
instructions of the Majority Secured Parties shall be deemed to constitute
any such matter) and (b) it is reasonably satisfied that such action is
not contrary to any Basic Document or to any Applicable Laws.
SECTION XI.7 Resignation or Removal of Collateral Agent; Appointment of
Successor. Subject to the appointment and acceptance of a successor
Collateral Agent as provided below, Collateral Agent may resign at any
time by giving notice thereof to each Participant, Lessor and Lessee or
may be removed at any time by written notice from the Majority Secured
Parties. Upon any such resignation or removal, the Majority Secured
Parties at the time of the resignation or removal shall have the right to
appoint a successor Collateral Agent which shall be a financial
institution having a combined capital and surplus of not less than
$100,000,000, and which (unless a Lease Event of Default exists) shall be
reasonably acceptable to Lessee. If, within 30 calendar days after the
retiring Collateral Agent's giving of notice of resignation or receipt of
a written notice of removal, a successor Collateral Agent is not so
appointed and does not accept such appointment, then the retiring or
removed Collateral Agent may appoint a successor Collateral Agent which
(unless a Lease Event of Default exists) shall be reasonably acceptable to
Lessee and transfer to such successor Collateral Agent all rights and
obligations of the retiring Collateral Agent. Such successor Collateral
Agent shall be a financial institution having combined capital and surplus
of not less than $100,000,000. Upon the acceptance of any appointment as a
Collateral Agent hereunder by a successor Collateral Agent, such successor
Collateral Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed
Collateral Agent and the retiring or removed Collateral Agent shall be
discharged from duties and obligations as Collateral Agent thereafter
arising hereunder and under any related document. If the retiring
Collateral Agent does not appoint a successor, any Participant shall be
entitled to apply to a court of competent jurisdiction for such
appointment, and such court may thereupon appoint a successor to act until
such time, if any, as a successor shall have been appointed as above
provided.
SECTION XI.8 Separate Collateral Agent. The Majority Secured Parties may,
and if they fail to do so at any time when they are so required,
Collateral Agent may, for the purpose of meeting any legal requirements of
any jurisdiction in which the Collateral may be located, appoint one or
more individuals or corporations either to act as co-Collateral Agent
jointly with Collateral Agent or to act as separate Collateral Agent of
all or any part of the Collateral, and vest in such individuals or
corporations, in such capacity, such title to such Collateral, or any part
thereof, and such rights or duties as Collateral Agent may consider
necessary or desirable. Collateral Agent shall not be required to qualify
to do business in any jurisdiction where it is not now so qualified.
Collateral Agent shall execute, acknowledge and deliver all such
instruments as may be required by any such co-Collateral Agent or separate
Collateral Agent more fully confirming such title, rights or duties to
such co-Collateral Agent or separate Collateral Agent. Upon the acceptance
in writing of such appointment by any such co-Collateral Agent or separate
Collateral Agent, it, she or he shall be vested with such interest in the
Collateral or any part thereof, and with such rights and duties, not
inconsistent with the provisions of the Basic Documents, as shall be
specified in the instrument of appointment, jointly with Collateral Agent
(except insofar as local law makes it necessary for any such co-Collateral
Agent or separate Collateral Agent to act alone), subject to all terms of
the Basic Documents. Any co-Collateral Agent or separate Collateral Agent,
to the fullest extent permitted by legal requirements of the relevant
jurisdiction, at any time, by an instrument in writing, shall constitute
Collateral Agent its attorney-in-fact and Collateral Agent, with full
power and authority to do all acts and things and to exercise all
discretion on its behalf and in its name. If any co-Collateral Agent or
separate Collateral Agent shall die, become incapable of acting, resign or
be removed, the interest in the Collateral and all rights and duties of
such co-Collateral Agent or separate Collateral Agent shall, so far as
permitted by law, vest in and be exercised by Collateral Agent, without
the appointment of a successor to such co-Collateral Agent or separate
Collateral Agent.
SECTION XI.9 Termination of Agency. The agencies created hereby shall
terminate upon the final disposition by Collateral Agent of all Collateral
at any time subject hereto and the final distribution by Collateral Agent
of all monies or other property or proceeds received pursuant to the Lease
in accordance with their terms; provided, that at such time Lessee shall
have complied fully with all the terms hereof.
SECTION XI.10 Compensation of Collateral Agent. Lessee shall pay
Collateral Agent its reasonable fees, costs and expenses for the
performance of Collateral Agent's obligations hereunder as set forth in
the Collateral Agent Fee Letter.
SECTION XI.11 Limitations. It is expressly understood and agreed by and
among the parties hereto that, except as otherwise provided herein or in
the other Basic Documents: (a) this Agreement and the other Basic
Documents to which a Collateral Agent is a party are executed by such
Collateral Agent, not in its individual capacity (except with respect to
the representations and warranties of such Collateral Agent in Section
7.3), but solely as Collateral Agent under the Basic Documents in the
exercise of the power and authority conferred and vested in it as
Collateral Agent; (b) each and all of the undertakings and agreements
herein made on the part of Collateral Agent are each and every one of them
made and intended not as personal undertakings and agreements by
Collateral Agent, or for the purpose or with the intention of binding
Collateral Agent personally, but are made and intended for the purpose of
binding only the Collateral Agent unless expressly provided otherwise; (c)
actions to be taken by Collateral Agent pursuant to its obligations under
the Basic Documents may, in certain circumstances, be taken by Collateral
Agent only upon specific authority of the Participants; (d) nothing
contained in the Basic Documents shall be construed as creating any
liability on Collateral Agent, individually or personally, or any
incorporator or any past, present or future subscriber to the capital
stock of, or stockholder, officer or director, employee or Collateral
Agent of, Collateral Agent to perform any covenants either express or
implied contained herein, all such liability, if any, being expressly
waived by the other parties hereto and by any person claiming by, through
or under them; and (e) so far as Collateral Agent, individually or
personally, is concerned, the other parties hereto and any person claiming
by, through or under them shall look solely to the Collateral and Lessee
for the performance of any obligation under any of the instruments
referred to herein; provided, however, that nothing in this Section 11.11
shall be construed to limit in scope or substance the general corporate
liability of Collateral Agent in respect of its gross negligence, willful
misconduct, those representations, warranties and covenants of Collateral
Agent in its individual capacity set forth herein or in any of the other
Basic Documents or, in the case of the Collateral Agent's handling of
funds, the failure to act with the same care as Collateral Agent uses in
handling its own funds.
ARTICLE XII
AMENDMENTS TO BASIC DOCUMENTS
SECTION XII.1 Amendments to Basic Documents With Consent of Participants.
At any time and from time to time, but only with the consent of the
Majority Secured Parties, Lessor shall enter into such written amendment
of, supplement to, or waiver or modification of, the Lease or any other
Basic Document to which it is party as Lessee may agree to and as may be
specified in such consent; provided, however, that, without the consent of
Lessor and each Participant, no amendment of, supplement to, or waiver or
modification of, any Basic Document, shall:
(i) modify any of the provisions of this Section 12.1, change the
definition of "Majority Secured Parties", Additional Costs, or modify
or waive any provision of an Basic Document requiring action by the
foregoing, or release any Collateral (except as otherwise
specifically provided in any Basic Document);
(ii) modify, amend, waive or supplement any of the provisions of
Sections 3.6, 3.7, 4.1, 4.4, 8.1, 8.2, or 10.1 of the Participation
Agreement;
(iii) reduce, modify, amend or waive any indemnities in favor of
Lessor or any Participant (except that any person may consent to any
reduction, modification, amendment or waiver of any indemnity payable
to it);
(iv) postpone, reduce or forgive, in whole or in part, any payment of
Rent, interest or, subject to clause (iii) above, other amounts
payable under the Lease or this Agreement, or modify the definition
or method of calculation of any payment of Rent, Lease Balance or
other amount payable hereunder;
(v) consent to any assignment of the Lease releasing Lessee from its
obligations in respect of the payments of Rent or changing the
absolute and unconditional character of such obligations;3/
(vi) permit the creation of any Lien on the Collateral or any part
thereof except as contemplated in the Basic Documents, or deprive
Lessor or any Participant of the benefit of the security interest in
the Collateral granted by each Lessee; or
and provided, further, that no amendment of, supplement to, or waiver or
modification of, any Basic Document shall amend, supplement, waive or modify any
provisions of any Basic Document limiting rights of any person against the CP
Lender without the written consent of the Administrator.
SECTION XII.2 Amendments to Basic Documents Affecting Any Agent. Without
the prior written consent of such Agent, no amendment of, supplement to,
or waiver or modification of, any Basic Document shall adversely affect
any Agent's rights or immunities or modify or increase the duties or
obligations of any Agent with respect to, any Basic Document.
ARTICLE XIII
MISCELLANEOUS
SECTION XIII.1 Survival of Covenants. All claims pertaining to the
representations, warranties, covenants or indemnities of Lessee contained
herein shall survive the termination of the Lease to the extent such
claims arose out of events occurring or conditions existing prior to any
such termination.
SECTION XIII.2 APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES EXCEPT TO THE MAXIMUM
EXTENT PERMITTED BY LAW SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW.
SECTION XIII.3 Effect and Modification of Agreement. No variation,
modification, amendment or waiver of this Agreement, including any
Schedules or Exhibits hereto, or any other Basic Document to which Lessor
is a party shall be valid unless in writing and signed by each of Lessee
and Lessor with the consent of Participants pursuant to this Agreement. No
variation, modification, amendment or waiver of any Note shall be valid
unless in writing and signed by Lessor with the consent of the registered
holder of such Note.
SECTION XIII.4 Notices. All notices, demands, declarations, consents,
directions, approvals, instructions, requests and other communications
required or permitted by the terms hereof shall be in writing and shall be
deemed to have been duly given when delivered personally, delivered by
facsimile (and confirmed, which confirmation may be mechanical), upon
delivery by a nationally recognized overnight delivery service or
otherwise actually received to such party at their respective addresses
set forth on Schedule 2 or Schedule 1-A hereto, as applicable; or at such
other place in the United States as any such party may designate by notice
given in accordance with this Section 13.4.
SECTION XIII.5 Transaction Costs. Lessee shall pay all Transaction Costs
whether or not the transactions contemplated hereby close. Lessee shall
pay on each Advance Date Transaction Costs invoiced and received no less
than five days before such Advance Date. In addition, Lessee agrees to pay
or reimburse Lessor, the Agents, the Administrator and the Participants,
who shall be entitled to reimbursement for only one law firm each
(including, but not limited to: Mayer, Brown & Platt; Cadwalader,
Wickersham & Taft; and any local counsel specifically retained) except in
the case of clauses (c) and (d) below, for all other reasonable
out-of-pocket costs and expenses reasonably incurred by it in connection
with: (a) negotiating and entering into the Basic Documents or entering
into, or the giving or withholding of, any future amendments, supplements,
waivers or consents with respect to the Basic Documents; (b) any casualty
or termination of the Lease or any other Basic Document; (c) the
negotiation and documentation of any restructuring or "workout," whether
or not consummated, of any Basic Document; (d) the enforcement of the
rights or remedies under the Basic Documents; (e) any transfer by Lessor,
Collateral Agent or a Participant of any interest in the Lease or a Note
during the continuance of a Lease Event of Default or Loan Agreement Event
of Default; (f) any extension of the LAPA; or (g) the transfer of the
Nuclear Material in accordance with the Lease.
SECTION XIII.6 Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto on separate counterparts,
each executed counterpart constituting an original but all together one
agreement.
SECTION XIII.7 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law; but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions
of this Agreement.
SECTION XIII.8 Successors and Assigns. [This Agreement shall be binding
upon the parties hereto and their respective successors and assigns, and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.]4/ Assignments and participations in
respect of a Liquidity Bank's interests hereunder and under the other
Basic Documents shall be governed by Section ___ of the Loan Agreement and
Section 10.1 of the LAPA.
SECTION XIII.9 Brokers. None of Lessee, Lessor or the Participants has
engaged or authorized any broker, finder, investment banker or other third
party to act on its behalf, directly or indirectly, as a broker, finder,
investment banker, agent or any other like capacity in connection with
this Agreement or the transactions contemplated hereby, except that Lessee
and its Affiliates have retained Arranger as arranger in connection with
the transactions contemplated hereby and Lessee shall be responsible for
any and all claims, liabilities, or demands by Lessee for fees or other
entitlements with respect to the Lease or the transactions contemplated
hereby.
SECTION XIII.10 JURY TRIAL. THE PARTIES HERETO WAIVE ANY RIGHT TO A TRIAL
BY JURY IN ANY CIVIL ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS AGREEMENT OR ANY OTHER BASIC DOCUMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY BASIC
DOCUMENT AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY.
SECTION XIII.11 Captions; Table of Contents. Section captions and the
table of contents used in this Agreement (including the exhibits and
schedules) are for convenience of reference only and shall not affect the
construction of this Agreement.
SECTION XIII.12 FINAL AGREEMENT. THIS AGREEMENT, TOGETHER WITH THE OTHER
BASIC DOCUMENTS, REPRESENT THE ENTIRE FINAL AGREEMENT BETWEEN THE PARTIES
WITH RESPECT TO THE OVERALL TRANSACTION. THIS AGREEMENT CANNOT BE
MODIFIED, SUPPLEMENTED, AMENDED, RESCINDED OR CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES,
EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION XIII.13 No Third-Party Beneficiaries. Nothing in this Agreement or
the other Basic Documents shall be deemed to create any right in any
person not a party hereto or thereto (other than the permitted successors
and assigns of Lessee, Lessor, the Participants and the Agents), and such
agreements shall not be construed in any respect to be a contract in whole
or in part for the benefit of any third party except as aforesaid. Any
party to this Agreement shall be deemed to be a third party beneficiary of
any other Basic Document to the extent that such other Basic Document to
which it is not a signatory provides that such party shall be the
recipient of a notice or that such party's consent or approval is needed
before the taking of any required action.
SECTION XIII.14 Limitations on Recourse to the CP Lender. Notwithstanding
any provision of the Participation Agreement to the contrary, the Lessor,
Lessee, Collateral Agent, Administrator, Owner Trustee and Liquidity Banks
agree that the CP Lender shall only be required to pay (a) any fees or
liabilities that it may incur hereunder only to the extent the CP Lender
has Excess Funds (as defined in the LAPA) and (b) any expenses,
indemnities or other liabilities under any other Basic Document only to
the extent the CP Lender has Excess Funds; provided, however, that if the
CP Lender has insufficient funds to make any payments required by this
Participation Agreement to the Lessor, Lessee, Collateral Agent,
Administrator, Owner Trustee or Liquidity Banks, such Persons shall not be
excused from the performance of their respective obligations hereunder. In
addition, no amount owing by the CP Lender hereunder in excess of the
liabilities that the CP Lender is required to pay in accordance with the
preceding sentence shall constitute a claim (as defined in Section 101 to
Title 11 of the United States Code) against the CP Lender. No recourse
shall be had for the payment of any amount owing hereunder or for the
payment of any fee hereunder or any other obligation of or claim against,
the CP Lender arising out of or based upon this Participation Agreement,
against any stockholder, employee, officer, director, manager or
incorporator of the CP Lender or Affiliate thereof; provided, however,
that the foregoing shall not relieve any such person or entity of any
liability they might otherwise have as a result of fraudulent actions or
omissions taken by them. Any and all claims against the CP Lender by any
other Person shall be subordinate to the claims of the holders of the
Commercial Paper Notes. The obligations of Lessor, Lessee, Collateral
Agent, Administrator, Owner Trustee and Liquidity Banks under this Section
13.25 shall survive the termination of this Participation Agreement.
SECTION XIII.15 Reproduction of Documents. This Agreement, all documents
constituting Schedules or Exhibits hereto, and all documents relating
hereto received by a party hereto, including, without limitation: (a)
consents, waivers and modifications that may hereafter be executed; (b)
documents received by the Participants in connection with the Basic
Documents; (c) documents received by Lessor in connection with Lessor's
receipt and/or acquisition of the Nuclear Material; and (d) financial
statements, certificates, and other information previously or hereafter
furnished to Collateral Agent or any Participant may be reproduced by the
party receiving the same by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. Each of the
Participants agrees and stipulates that, to the extent permitted by law,
any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by
such party in the regular course of business) and that, to the extent
permitted by law, any enlargement, facsimile, or further reproduction of
such reproduction shall likewise be admissible in evidence.
SECTION XIII.16 Consideration for Consents to Waivers and Amendments.
Lessee agrees that it shall not, and that it shall not permit any of its
Affiliates to, offer or give any consideration or benefit of any kind
whatsoever to Lessor or any Participant in connection with, in exchange
for, or as an inducement to, Lessor's or such Participant's consent to any
waiver in respect of, any modification or amendment of, any supplement to,
or any other consent or approval under, any Basic Document unless such
consideration or benefit is offered ratably to Lessor and all
Participants.
SECTION XIII.17 Liabilities of Participants. No Participant shall have any
obligation to any other Participant or to each Lessee, Lessor or any Agent
with respect to the transactions contemplated by the Basic Documents
except those obligations of such Participant expressly set forth in the
Basic Documents or except as set forth in the instruments delivered in
connection therewith, and no Participant shall be liable for performance
by any other party hereto of such other party's obligations under the
Basic Documents except as otherwise so set forth.
SECTION XIII.18 Liabilities of Agents. Agents shall not have any duty,
liability or obligation to any party to this Agreement with respect to the
transactions contemplated hereby except those duties, liabilities, or
obligations expressly set forth in this Agreement, and any such duty,
liability or obligation of such Agent shall be as expressly limited by
this Agreement, as the case may be.
SECTION XIII.19 Limited Liability of Lessor. The parties hereto agree that
Lessor shall have no personal liability whatsoever to Lessee, the CP
Lender, the Liquidity Banks, any Agent or any of their respective
successors and assigns for any Claim based on or in respect of this
Agreement or any of the other Basic Documents or arising in any way from
the transactions contemplated hereby or thereby; provided, however, that
Lessor shall be liable in its individual capacity (a) for its own willful
misconduct or gross negligence or (b) negligence in the handling of funds.
SECTION XIII.20 Submission to Jurisdiction. Lessor, any Agent, the
Administrator and the Participants may bring suit to enforce any claim
arising out of the Basic Documents in any state or Federal court located
in New York, New York having subject matter jurisdiction, and with respect
to any such claim, Lessee hereby irrevocably: (a) submits to the
jurisdiction of such courts; and (b) consents to the service of process
out of said courts by mailing a copy thereof, by registered mail, postage
prepaid, to Lessee at its respective address specified in this Agreement,
and agrees that such service, to the fullest extent permitted by law: (i)
shall be deemed in every respect effective service of process upon it in
any such suit, action or proceeding; and (ii) shall be taken and held to
be valid personal service upon and personal delivery to it. Each Lessee
irrevocably waives, to the fullest extent permitted by law: (A) any claim,
or any objection, that it now or hereafter may have, that venue is not
proper with respect to any such suit, action or proceeding brought in such
a court located in New York, New York including, without limitation, any
claim that any such suit, action or proceeding brought in such court has
been brought in an inconvenient forum; and (B) any claim that Lessee is
not subject to personal jurisdiction or service of process in such forum.
Nothing herein contained shall preclude Lessor or any Participant from
bringing an action or proceeding in respect hereof in any other state or
federal court within the United States having subject matter jurisdiction
with respect to such action and personal jurisdiction over the parties to
such action. Lessee agrees that a final judgment in any action or
proceeding in a state or Federal court within the United States may be
enforced in any other jurisdiction by suit on the judgment or in any other
manner provided by law.
SECTION XIII.21 Non-Petition. Each of Lessee, Lessor, each Liquidity Bank,
the Collateral Agent, the Owner Trustee and the Liquidity Agent hereby
agrees that it shall not institute against, or join or assist any other
person in instituting against, the CP Lender any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding or other
proceedings under any federal or state bankruptcy or similar law, for one
year and a day after the latest maturing commercial paper note issued by
that CP Lender is paid. This Section 13.21 shall survive the termination
of this Agreement.
SECTION XIII.22 Role of Arranger. Each party hereto acknowledges hereby
that it is aware of the fact that Arranger has acted as an "arranger" with
respect to the transactions contemplated by the Basic Documents. The
parties hereto acknowledge and agree that Arranger and its Affiliates,
have not made any representations or warranties concerning, and that they
have not relied upon Arranger as to, the tax, accounting or legal
characterization or validity of (i) the Basic Documents or (ii) any aspect
of the Overall Transaction. The parties hereto acknowledge and agree that
Arranger has no duties, express or implied, under the Basic Documents in
its capacity as Arranger.
SECTION XIII.23 Assignment of CP Lender's Interest in Loan Agreement to
Liquidity Banks or SPC Assignee. In the event the CP Lender exercises its
option to sell all of its interests under the Loan Documents to the
Liquidity Banks pursuant to Section 3.2 of the LAPA, the CP Lender,
without further act, shall be deemed to have assigned to the Liquidity
Banks on a several basis in accordance with their Percentage Interests all
of their right, title and interest in the Basic Documents and the
Liquidity Banks shall be deemed to have assumed as of the date of transfer
on a several basis as aforesaid all obligations of the CP Lender arising
on or after the date of transfer. In the event the CP Lender assigns all
or a portion of its Loan and its rights and interests under the LAPA to an
"SPC Assignee" in accordance with Section 10.1 (or an equivalent
provision) of the LAPA, then the CP Lender, without further act, shall be
deemed to have assigned to such SPC Assignee all or a portion, as
applicable, of its right, title and interest in the Basic Documents and
such SPC Assignee shall be deemed to have assumed all or a portion, as
applicable, of the obligations of the CP Lender arising on or after the
date of such assignment.
SECTION XIII.24 Non-Consenting Liquidity Bank. The CP Lender shall draw
down on any non-consenting Liquidity Bank's Commitment Amount if it has
not been replaced in accordance with the LAPA, at least two Business Days
before the purchase termination date thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
Lessee: INDIANA MICHIGAN POWER COMPANY, as Lessee
By:
Name Printed:
Title:
Lessor: DCC FUEL CORPORATION, as Lessor
By:
Name Printed:
Title:
Owner Trustee: HUNTINGTON TRUST COMPANY,
N.A., not in its individual capacity, but
solely as Owner Trustee
By:
Name Printed:
Title:
Collateral Agent: [________________], as Collateral Agent
By:
Name Printed:
Title:
Administrator and Liquidity Agent: BANK OF AMERICA, NATIONAL ASSOCIATION, as
Administrator and Liquidity Agent
By:
Name Printed:
Title:
CP Lender: HATTERAS FUNDING CORPORATION, as CP Lender
By:
Name Printed:
Title:
Liquidity Banks:
