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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
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(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____________ to
______________
---------------
Commission Registrant; State of Incorporation; I.R.S. Employer
File Number Address; and Telephone Number Identification
No.
1-6543 Ohio Power Company 31-4271000
(An Ohio Corporation)
301 Cleveland Avenue, S.W.
Canton, Ohio 44702
Telephone (216) 456-8173
---------------<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K of the Annual Report on Form 10-K of Ohio Power Company
for the year ended December 31, 1994 is amended to read as
follows:
"ITEM 14. EXHIBITS, FINANCIAL SCHEDULES, AND REPORT ON FORM 8-K
(a) The following documents are filed as a part of this report:
1. Financial Statements: Page
The following financial statements have been incorporated
herein by reference pursuant to Item 8.
Consolidated Statements of Income for the years ended
December 31, 1994, 1993 and 1992; Consolidated
Balance Sheets as of December 31, 1994 and 1993;
Consolidated Statements of Cash Flows for the years
ended December 31, 1994, 1993 and 1992;
Consolidated Statements of Retained Earnings for
the years ended December 31, 1994, 1993 and 1992;
Notes to Consolidated Financial Statements;
Independent Auditors' Report.
2. Financial Statement Schedules:
Financial Statement Schedules are listed in the Index
to
Financial Statement Schedules (Certain schedules
have been omitted because the required information
is contained in the notes to financial statements
or because such schedules are not required or are
not applicable.) (previously filed)
Independent Auditors' Report (previously filed)
3. Exhibits:
Exhibits for OPCo are listed in the Exhibit Index and
are incorporated herein by reference. E-1
(b) No Reports on Form 8-K were filed during the quarter ended
December 31, 1994."<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED
THIS AMENDMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED. THE SIGNATURE OF THE UNDERSIGNED
COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF.
Ohio Power Company
By:_/s/ G. P. Maloney____
(G. P. Maloney,
Vice President)
Date: May 24, 1995
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT
OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON
THE DATES INDICATED. THE SIGNATURE OF EACH OF THE UNDERSIGNED
SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE TO THE
ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF.
SIGNATURE TITLE DATE
(i) PRINCIPAL EXECUTIVE OFFICER:
*E. Linn Draper, Jr. Chairman of the Board, May 24, 1995
Chief Executive Officer
and Director
(ii) PRINCIPAL FINANCIAL OFFICER:
_/s/ G. P. Maloney__ Vice President May 24, 1995
(G. P. Maloney) and Director
(iii) PRINCIPAL ACCOUNTING OFFICER:
*P. J. DeMaria Vice President May 24, 1995
Treasurer and
Director
(iv) A MAJORITY OF THE DIRECTORS:
*C. A. Erikson
*Henry Fayne
*Wm. J. Lhota
*James J. Markowsky
*By:_/s/ G. P. Maloney_______ May 24, 1995
(G. P. Maloney, Attorney-in-Fact)<PAGE>
EXHIBIT INDEX
Certain of the following exhibits, designated with an
asterisk(*), were previously filed with the Annual Report on Form
10-K of Ohio Power Company for the year ended December 31, 1994.
Certain of the following exhibits, designated with a double
asterisk (**), are filed herewith. The exhibits not so
designated have heretofore been filed with the Commission and,
pursuant to 17 C.F.R. Sections 201.24 and 240.12b-32, are
incorporated herein by reference to the documents indicated
in brackets following the descriptions of such exhibits.
Exhibits, designated with a plus (+), are management contracts
or compensatory plans or arrangements required to be filed as an
exhibit to this form pursuant to Item 14(c) of this report.
OPCo++
Exhibit Number Description
3(a) -- Copy of Amended Articles of Incorporation of OPCo,
and amendments thereto to December 31, 1993
[Registration Statement No. 33-50139, Exhibit
4(a); Annual Report on Form 10-K of OPCo for the
fiscal year ended December 31, 1993, File No. 1-
6543, Exhibit 3(b)].
*3(b) -- Certificate of Amendment to Amended Articles of
Incorporation of OPCo, dated May 3, 1994.
*3(c) -- Composite copy of the Amended Articles of
Incorporation of OPCo, as amended.
3(d) -- Copy of Code of Regulations of OPCo [Annual Report
on Form 10-K of OPCo for the fiscal year ended
December 31, 1990, File No. 1-6543, Exhibit 3(d)].
4(a) -- Copy of Mortgage and Deed of Trust, dated as of
October 1, 1938, between OPCo and Manufacturers
Hanover Trust Company (now Chemical Bank), as
Trustee, as amended and supplemented [Registration
Statement No. 2-3828, Exhibit B-4; Registration
Statement No. 2-60721, Exhibits 2(c)(2), 2(c)(3),
2(c)(4), 2(c)(5), 2(c)(6), 2(c)(7), 2(c)(8),
2(c)(9), 2(c)(10), 2(c)(11), 2(c)(12), 2(c)(13),
2(c)(14), 2(c)(15), 2(c)(16), 2(c)(17), 2(c)(18),
2(c)(19), 2(c)(20), 2(c)(21), 2(c)(22), 2(c)(23),
2(c)(24), 2(c)(25), 2(c)(26), 2(c)(27), 2(c)(28),
2(c)(29), 2(c)(30), and 2(c)(31); Registration
Statement No. 2-83591, Exhibit 4(b); Registration
Statement No. 33-21208, Exhibits 4(a)(ii),
4(a)(iii) and 4(a)(vi); Registration Statement No.
33-31069, Exhibit 4(a)(ii); Registration Statement
No. 33-44995, Exhibit 4(a)(ii); Registration
Statement No. 33-59006, Exhibits 4(a)(ii),
4(a)(iii) and 4(a)(iv); Registration Statement No.
33-50373, Exhibits 4(a)(ii), 4(a)(iii) and
4(a)(iv); Annual Report on Form 10-K of OPCo for<PAGE>
the fiscal year ended December 31, 1993, File No.
1-6543, Exhibit 4(b)].
10(a)(1) -- Copy of Power Agreement, dated October 15, 1952,
between OVEC and United States of America, acting
by and through the United States Atomic Energy
Commission, and, subsequent to January 18, 1975,
the Administrator of the Energy Research and
Development Administration, as amended
[Registration Statement No. 2-60015, Exhibit 5(a);
Registration Statement No. 2-63234, Exhibit
5(a)(1)(B); Registration Statement No. 2-66301,
Exhibit 5(a)(1)(C); Registration Statement No. 2-
67728, Exhibit 5(a)(1)(D); Annual Report on Form
10-K of APCo for the fiscal year ended December
31, 1989, File No. 1-3457, Exhibit 10(a)(1)(F);
Annual Report on Form 10-K of APCo for the fiscal
year ended December 31, 1992, File No. 1-3457,
Exhibit 10(a)(1)(B)].
10(a)(2) -- Copy of Inter-Company Power Agreement, dated July
10, 1953, among OVEC and the Sponsoring Companies,
as amended [Registration Statement No. 2-60015,
Exhibit 5(c); Registration Statement No. 2-67728,
Exhibit 5(a)(3)(B); Annual Report on Form 10-K of
APCo for the fiscal year ended December 31, 1992,
File No. 1-3457, Exhibit 10(a)(2)(B)].
10(a)(3) -- Copy of Power Agreement, dated July 10, 1953,
between OVEC and Indiana-Kentucky Electric
Corporation, as amended [Registration Statement
No. 2-60015, Exhibit 5(e)].
10(b) -- Copy of Interconnection Agreement, dated July 6,
1951, between APCo, CSPCo, KEPCo, I&M and OPCo and
with the Service Corporation, as amended
[Registration Statement No. 2-52910, Exhibit 5(a);
Registration Statement No. 2-61009, Exhibit 5(b);
Annual Report on Form 10-K of AEP for the fiscal
year ended December 31, 1990, File 1-3525, Exhibit
10(a)(3)].
10(c) -- Copy of Transmission Agreement, dated April 1,
1984, among APCo, CSPCo, I&M, KEPCo, OPCo and with
the Service Corporation as agent [Annual Report on
Form 10-K of AEP for the fiscal year ended
December 31, 1985, File No. 1-3525, Exhibit 10(b);
Annual Report on Form 10-K of AEP for the fiscal
year ended December 31, 1988, File No. 1-3525,
Exhibit 10(b)(2)].
10(d) -- Copy of Interim Allowance Agreement [Annual Report
on Form 10-K of APCo for the fiscal year ended
December 31, 1994, File No. 1-3457, Exhibit
10(d)].
10(e) -- Copy of Agreement, dated June 18, 1968, between
OPCo and Kaiser Aluminum & Chemical Corporation
(now known as Ravenswood Aluminum Corporation) and
First Supplemental Agreement thereto [Registration
Statement No. 2-31625, Exhibit 4(c); Annual Report<PAGE>
on Form 10-K of OPCo for the fiscal year ended
December 31, 1986, File No. 1-6543, Exhibit
10(d)(2)].
10(f) -- Copy of Power Agreement, dated November 16, 1966,
between OPCo and Ormet Generating Corporation and
First Supplemental Agreement thereto [Annual
Report on Form 10-K of OPCo for the fiscal year
ended December 31, 1993, File No. 1-6543, Exhibit
10(e)].
10(g) -- Copy of Amendment No. 1, dated October 1, 1973, to
Station Agreement dated January 1, 1968, among
OPCo, Buckeye and Cardinal Operating Company, and
amendments thereto [Annual Report on Form 10-K of
OPCo for the fiscal year ended December 31, 1993,
File No. 1-6543, Exhibit 10(f)].
+10(h)(1) -- AEP Deferred Compensation Agreement for certain
executive officers [Annual Report on Form 10-K of
AEP for the fiscal year ended December 31, 1985,
File No. 1-3525, Exhibit 10(e)].
+10(h)(2) -- Amendment to AEP Deferred Compensation Agreement
for certain executive officers [Annual Report on
Form 10-K of AEP for the fiscal year ended
December 31, 1986, File No. 1-3525, Exhibit
10(d)(2)].
+10(i)(1) -- Management Incentive Compensation Plan [Annual
Report on Form 10-K of AEP for the fiscal year
ended December 31, 1994, File No. 1-3525, Exhibit
10(i)(1)].
+10(i)(2) -- American Electric Power System Performance Share
Incentive Plan, as Amended and Restated through
January 1, 1995 [Annual Report on Form 10-K of AEP
for the fiscal year ended December 31, 1994, File
No. 1-3525, Exhibit 10(i)(2)].
+10(j)(1) -- Excess Benefits Plan [Annual Report on Form 10-K
of AEP for the fiscal year ended December 31,
1993, File No. 1-3525, Exhibit 10(g)(1)(A)].
+10(j)(2) -- AEP System Supplemental Savings Plan (Non-
Qualified) [Annual Report on Form 10-K of AEP for
the fiscal year ended December 31, 1993, File No.
1-3525, Exhibit 10(g)(2)].
+10(j)(3) -- Umbrella Trust for Executives [Annual Report on
Form 10-K of AEP for the fiscal year ended
December 31, 1993, File No. 1-3525, Exhibit
10(g)(3)].
+10(k)(1) -- Employment Agreement between E. Linn Draper, Jr.
and AEP and the Service Corporation [Annual Report
on Form 10-K of AEGCo for the fiscal year ended
December 31, 1991, File No. 0-18135, Exhibit
10(g)(2)].
10(l)(1) -- Agreement for Lease dated as of September 17, 1992
between JMG Funding, Limited Partnership and OPCo
[Annual Report on Form 10-K of OPCo for the fiscal
year ended December 31, 1992, File No. 1-6543,
Exhibit 10(l)].<PAGE>
**10(l)(2) -- Lease Agreement dated January 20, 1995 between
OPCo and JMG Funding, Limited Partnership, and
amendment thereto.
*12 -- Statement re: Computation of Ratios.
*13 -- Copy of those portions of the OPCo 1994 Annual
Report (for the fiscal year ended December 31,
1994) which are incorporated by reference in this
filing.
21 -- List of subsidiaries of OPCo [Annual Report on
Form 10-K of AEP for the fiscal year ended
December 31, 1994, File No. 1-3525, Exhibit 21].
*23 -- Consent of Deloitte & Touche LLP.
*24 -- Power of Attorney.
*27 -- Financial Data Schedules.
--------------
++Certain instruments defining the rights of holders of long-term
debt of the registrant included in the financial statements of
registrant filed herewith have been omitted because the total
amount of securities authorized thereunder does not exceed 10% of
the total assets of registrant. The registrant hereby agrees to
furnish a copy of any such omitted instrument to the SEC upon
request.<PAGE>
<PAGE>
CONFIDENTIAL AND PROPRIETARY
LEASE AGREEMENT
Dated as of January 20, 1995
BETWEEN
JMG Funding, Limited Partnership
as Lessor
AND
Ohio Power Company
as Lessee
THIS LEASE HAS BEEN ASSIGNED AS SECURITY
FOR INDEBTEDNESS OF THE LESSOR. SEE SECTION 21.
This Lease has been manually executed in 6 counterparts, numbered
consecutively from 1 through 6 of which this is No. __. To the
extent, if any, that this Lease constitutes chattel paper (as
such term is defined in the Uniform Commercial Code as in effect
in any applicable jurisdiction) no security interest in this
Lease may be created or perfected through the transfer or
possession of any counterpart other than the original executed
counterpart which shall be the counterpart identified as
counterpart No. 1.<PAGE>
TABLE OF CONTENTS
Section Heading Page
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Defined Terms . . . . . . . . . . . . . . . . . . 1
2. Representations, Warranties and Covenants of Lessee 9
3. Lease of the Project . . . . . . . . . . . . . . . 14
4. Covenant of Quiet Enjoyment . . . . . . . . . . . 15
5. Absolute Obligation . . . . . . . . . . . . . . . 15
6. Initial Term; Extended Term . . . . . . . . . . . 17
7. Rent and Other Payments . . . . . . . . . . . . . 17
8. Restricted Use; Compliance with Laws . . . . . . . 19
9. Maintenance, Improvement and Repair of the Project. 21
10. Insurance . . . . . . . . . . . . . . . . . . . . 24
11. Indemnities . . . . . . . . . . . . . . . . . . . 27
12. Lessee's Right to Terminate. . . . . . . . . . . . 33
13. Lessee's Rights of Purchase and Renewal. . . . . . 34
14. Lessor's Right to Terminate; Termination Events. . 34
15. Loss of or Damage to the Project or Equipment. . . 37
16. Condemnation and Dedication of the Project; Easements38
17. Surrender of Equipment. . . . . . . . . . . . . . 39
18. Events of Default. . . . . . . . . . . . . . . . 39
19. Rights upon Default. . . . . . . . . . . . . . . 40
20. Equipment to be Personal Property. . . . . . . . 42
21. Sale or Assignment by Lessor. . . . . . . . . . . 43
22. Income Taxes. . . . . . . . . . . . . . . . . . . 43
23. Notices and Requests. . . . . . . . . . . . . . . 44
24. Relationship of Parties. . . . . . . . . . . . . 45 <PAGE>
Section Heading Page
25. Right to Perform for Lessee. . . . . . . . . . . 45
26. Merger, Consolidation or Sale of Assets. . . . . 46
27. No Merger. . . . . . . . . . . . . . . . . . . . 46
28. Permitted Contests. . . . . . . . . . . . . . . . 46
29. Leasehold Interests. . . . . . . . . . . . . . . 48
30. Miscellaneous. . . . . . . . . . . . . . . . . . 49
31. No Recourse. . . . . . . . . . . . . . . . . . . 51
Exhibit A - Description of Project
Exhibit B - Calculation of Fixed Rent and Related
Definitions
Exhibit C - Fixed Rent Schedule
Exhibit D - Calculation of Basic Rent and Related
Definitions
Exhibit E - Form of Certification of Contingency Hours
(ii)<PAGE>
CONFIDENTIAL
LEASE AGREEMENT
Lease Agreement, dated as of January 20, 1995 (as the same
may be amended, restated, modified or supplemented from time to
time, "this Lease"), between JMG Funding, Limited Partnership, a
Delaware limited partnership, Lessor (the "Lessor"), and Ohio
Power Company, an Ohio corporation, Lessee (the "Lessee").
SECTION 1. Defined Terms.
Unless the context otherwise requires, each term defined in
this Section 1 shall, when used in this Lease, have the meaning
indicated:
"Accrued Default Obligations" has the meaning set forth in
Section 19 hereof.
"Acquisition Cost" means an amount equal to the costs
incurred by the Lessor in connection with the acquisition,
construction and financing of the Project pursuant to the
Agreement for Lease, as the same may be modified in accordance
with paragraphs (b) and (c) of Section 3 and paragraph (e) of
Section 9 of this Lease.
"Additional Rent" has the meaning set forth in paragraph (d)
of Section 7 hereof.
"Adjusted Acquisition Cost" means, at any time, with respect
to the Project, its aggregate Acquisition Cost less the aggregate
amount of all Quarterly Rent Amortization Components constituting
a portion of Fixed Rent at or prior to the time of determination,
as the same may be modified in accordance with paragraphs (b) and
(c) of Section 3 and paragraph (e) of Section 9 of this Lease.
"AEP" means American Electric Power Company, Inc., a New
York corporation.
"Affiliate" of any Person means any other Person
controlling, controlled by or under direct or indirect common
control with such Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means
the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Agreement for Lease" means the Agreement for Lease, between
the Lessor, as owner, and the Lessee, as agent, providing for the
acquisition and construction of the Project, as the same may be
amended, restated, modified or supplemented from time to time.<PAGE>
"Air Benefits" has the meaning set forth in paragraph (j) of
Section 30 hereof.
"Appraisal Procedure" means an independent appraiser
appointed by the Lessor and the Lessee, with the consent of the
Assignee, to determine the fair market value of the Project, if
such determination is required under paragraph (a) of Section 13
of this Lease. If no such appraiser is appointed by the Lessor
and the Lessee within ten (10) days of the written request of
either the Lessor or the Lessee that an appraiser be appointed,
the Lessor and the Lessee shall each appoint an independent
appraiser within fifteen (15) days thereafter, and the two
appraisers so appointed shall appoint a third independent
appraiser within an additional ten (10) days. Each appraiser
appointed pursuant to the foregoing procedure shall, within ten
(10) days after appointment of the last appraiser, independently
determine the fair market value, as the case may be. If the
Lessor or the Lessee shall fail to appoint an independent
appraiser within the above-mentioned fifteen (15) day period, the
appraiser appointed by the other party shall determine such
amount or value. If a single appraiser is appointed, such
appraiser's determination shall be final. If three appraisers
are appointed, the amounts or values determined by the three
appraisers shall be averaged, the amount or value which differs
the most from such average shall be excluded, the remaining two
amounts or values shall be averaged and such average shall be
final. The expenses of all appraisers shall be paid by the
Lessee.
"Assignee" means the Collateral Trustee to which any part of
the Lessor's interest under this Lease shall at the time have
been assigned, conditionally or otherwise, by the Lessor in
accordance with Section 21 of this Lease. For purposes of
paragraphs (h) and (n) of Section 2A, paragraphs (d) and (e) of
Section 2B, paragraph (a) of Section 10 and Section 11 hereof,
the term "Assignee" shall include any lender to the Lessor or
other person providing credit support to the Lessor pursuant to a
Financing Arrangement.
"Assignment" means each assignment agreement referred to in
Section 21 hereof, between the Lessor and a third party, pursuant
to which the Lessor assigns certain of its rights under this
Lease or in the Project to such third party, as the same may be
amended, restated, modified or supplemented from time to time.
"Atomic Energy Act" means the Atomic Energy Act of 1954, as
amended from time to time, and the regulations from time to time
issued, published or promulgated pursuant thereto.
"Basic Rent" means the amount calculated in accordance with
Exhibit D hereto.
-2-<PAGE>
"Basic Rent Payment Date" means the last Business Day of
each March, June, September and December during the Lease Term or
Renewal Term, and the last day of the Lease Term or Renewal Term,
or if such day is not a Business Day, the next succeeding
Business Day.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions in the City of New York or
Chicago, Illinois are authorized by law to close.
"Capitalization" has the meaning set forth in Section 26
hereof.
"Certificate of Substantia] Completion" has the meaning set
forth opposite such term in Section 1 of the Agreement for Lease.
"Claim" has the meaning set forth in Section 11 hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Trustee" means Bank One, Columbus, N.A., a
national banking association, and its successors.
"Commercial Paper" means all promissory notes of the Lessor
issued pursuant to a Financing Arrangement maturing not more than
one hundred twenty (120) days from the date of issuance thereof.
"Computation Period" means with respect to (i) the first
Quarterly Rent Period hereunder, the period beginning on the
Effective Date and ending on the 22nd day of the last calendar
month of the Quarterly Rent Period for which Basic Rent is being
computed and (ii) any subsequent Quarterly Rent Period, the
period beginning on the 23rd day of the last calendar month of
the immediately preceding Quarterly Rent Period and ending on the
22nd day of the last calendar month of the Quarterly Rent Period
for which Basic Rent is being computed.
"Consent" means each consent of the Lessee to an Assignment,
pursuant to which the Lessee consents to the terms of such
Assignment insofar as they relate to this Lease, as the same may
be amended, restated, modified or supplemented from time to time.
[ PORTION OMITTED AND FILED SEPARATELY PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT ]
[ PORTION OMITTED AND FILED SEPARATELY PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT ]
"Effective Date" means the date provided in Section 3(a) of
this Lease.
-3-<PAGE>
"Equipment" means the personal property constituting a
portion of the Project, as described in Exhibit A hereto.
"Unit", when referring to the personal property leased under this
Lease, means a particular item of Equipment, as the context may
require.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations from time
to time issued, published or promulgated pursuant thereto.
"ERISA Affiliate" means any corporation or trade or business
which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code) as the Lessee
or is under common control (within the meaning of Section 414(c)
of the Code) with the Lessee.
"Event of Default" has the meaning set forth in Section 18
hereof.
"Extended Term" has the meaning set forth in paragraph (b)
of Section 6 hereof.
"Facility" means the Lessee's General James M. Gavin steam
electric generating station.
"Facility Event of Loss" shall mean any of the following
events: (i) a Final Shutdown; (ii) a Requisition of Title; or
(iii) a Requisition of Use that would significantly interfere
with the use of the Facility for a period that will exceed the
earlier of (A) twenty-four (24) months or (B) the expiration of
the Lease Term or any Renewal Term.
"Federal Power Act" means the Federal Power Act, as amended
from time to time, and the regulations from time to time issued,
published or promulgated pursuant thereto.
"FERC" means the Federal Energy Regulatory Commission, or
any successor agency thereto.
"Final Shutdown" shall mean the occurrence of any of the
following events: (i) the destruction of the Facility; (ii)
damage to the Facility and the failure of the Lessee to complete
the repair, restoration or reconstruction of the Facility by the
date that is twenty-four (24) months after such damage, or, if
earlier, by the expiration of the Lease Term or any Renewal Term;
or (iii) the cessation of operation of the Facility as a result
of damage to the Facility for a period that will exceed the
earlier of (A) twenty-four (24) months or (B) the expiration of
the Lease Term or any Renewal Term.
"Financing Arrangement" means each credit agreement, loan
agreement, each Indenture, each other indenture or deed of trust
-4-<PAGE>
and each other agreement or arrangement between the Lessor and a
lender to the Lessor or other person providing credit support to
the Lessor or to debt issued by or on behalf of the Lessor
related to the financing of the Project, as each may be amended,
restated, modified or supplemented from time to time.
"Fixed Rent" means the amount calculated in accordance with
Exhibit B hereto.
"Force Majeure Event" means a Requisition of Title, a
Requisition of Use and any event, occurrence or circumstance not
reasonably foreseen which results in the Facility being incapable
of generating electricity, which includes, but is not limited to,
acts of God, war, riot or insurrection, blockades, embargoes,
sabotage, epidemics, fires, hurricane, floods, failure of
contractors or suppliers, strikes, lockouts or other labor
disputes or difficulties, acts of Governmental Authorities or
change in law or regulation relating to the ownership and
operation of the Facility, acts of Persons other than the Lessor
and the Lessee which interfere with or prohibit the operation of
the Facility, nuclear emergency, unavailability of labor, fuel,
power or raw materials or other cataclysmic events, occurrences
or circumstances. [ PORTION OMITTED AND FILED SEPARATELY
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ]
"Governmental Action" has the meaning set forth in paragraph
(d) of Section 2(A) hereof.
"Governmental Authority" means any Federal, state or other
political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Ground Lease" means the amended and restated ground lease,
dated as of September 17, 1992, between Ohio Power Company, as
ground lessor, and JMG Funding, Limited Partnership, as ground
lessee, as the same may be amended, restated, modified or
supplemented from time to time.
"Indemnified Person" has the meaning set forth in Section 11
hereof.
"Indenture" means, at the time of determination, the trust
indenture or trust indentures entered into by the Ohio Air
Quality Development Authority and Bank One, Columbus, NA,
relating to securities issued in connection with the acquisition
and financing of the Project, which securities remain outstanding
at such time.
-5-<PAGE>
"Initial Term" has the meaning set forth in paragraph (a) of
Section 6 hereof.
"Insurance Requirements" means all terms of any insurance
policy covering or applicable to the Project, all requirements of
the issuer of any such policy, all statutory requirements and all
orders, rules, regulations and other requirements of any
governmental body related to insurance applicable to the Project.
"Lease Rate Date" has the meaning set forth in paragraph (b)
of Section 7 hereof.
"Lease Term" means the Initial Term plus the Extended Term
thereof.
"Legal Requirements" means all laws, judgments, decrees,
ordinances, permits and regulations and any other governmental
rules, orders and determinations and all requirements having the
force of law, now or hereinafter enacted, made or issued, whether
or not presently contemplated, and all material agreements,
covenants, conditions and restrictions, applicable to the Project
or any component thereof and/or the construction, ownership,
operation or use thereof, including, without limitation,
compliance with all requirements of labor laws and environmental
statutes, compliance with which is required at any time from the
date hereof through the Lease Term and any Renewal Term, whether
or not such compliance shall require structural, unforeseen or
extraordinary changes to the Project or the operation, occupancy
or use thereof.
"Lessee" means Ohio Power Company and its successors and
assigns under this Lease.
"Lessor" means JMG Funding, Limited Partnership or any
successor or successors to all of its rights and obligations as
the Lessor hereunder and, for purposes of Section 11 hereof,
shall include any partnership (general or limited), corporation,
trust, individual or other entity which computes its liability
for income or other taxes on a consolidated basis with the Lessor
or the income of which for purposes of such taxes is, or may be,
determined or affected directly or indirectly by the income of
the Lessor or its successor or successors.
"Lessor's Cost of Commercial Paper" has the meaning set
forth in Exhibit B hereto.
"Lessor's Cost of Debt" has the meaning set forth in Exhibit
B hereto.
"Lien" means any security interest, mortgage, pledge,
hypothecation, assignment, mechanics liens, encumbrance, lien
(statutory or other), chattel mortgage or other security
-6-<PAGE>
agreement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any
financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction in respect of any of the
foregoing).
"Merrill" means Merrill Lynch Money Markets Inc., a Delaware
corporation.
"Merrill Leasing" means ML Leasing Equipment Corp., a
Delaware corporation.
"Merrill Lynch" means Merrill Lynch & Co., Inc., a Delaware
corporation.
"Multi-employer Plan" means a plan which is a multi-employer
plan as defined in Section 4001(a)(3) of ERISA and to which
contributions have been made by the Lessee or any ERISA
Affiliate.
"Natural Gas Act" means the Natural Gas Act, as amended from
time to time, and the regulations from time to time issued,
published or promulgated pursuant thereto.
"1935 Act" means the Public Utility Holding Company Act of
1935, as amended from time to time, and the regulations from time
to time issued, published or promulgated pursuant thereto.
"NRC" means the Nuclear Regulatory Commission, or any
successor agency thereto.
"Pension Plan" means a single employer plan as defined in
Section 4001(a)(15) of ERISA or an individual account plan which
is subject to the funding standards of Section 302 of ERISA with
respect to which the Lessee or any ERISA Affiliate at any time
during which the Agreement for Lease or this Lease is in effect
maintains, has an obligation to contribute to or has liability
under.
"Permitted Contest" has the meaning set forth in paragraph
(a) of Section 28 hereof.
"Permitted Liens" means: (i) the rights of any sublessee
under a sublease permitted by the terms of this Lease; (ii) Liens
for taxes, assessments and other governmental charges or levies
which are not yet due or are being contested as a Permitted
Contest; (iii) materialmen's, mechanics', workmen's, repairmen's,
employees', carriers', warehousemen's and other like Liens
relating to the construction of the Project or in connection with
any maintenance, repair, improvement, addition, alteration to, or
-7-<PAGE>
other services or materials relating to the Project or any
Equipment, or arising in the ordinary course of business for
amounts in respect of the foregoing that either are not more than
thirty (30) days past due or are being contested as a Permitted
Contest; (iv) Liens of any of the types referred to in clause
(iii) above that have been bonded for the full amount in dispute
(or as to which other security arrangements satisfactory to the
Lessor have been made); (v) Liens arising out of judgments or
awards with respect to which appeals or other proceedings for
review are being prosecuted in good faith and for the payment of
which adequate reserves have been provided as required by
generally accepted accounting principles or other appropriate
provisions have been made, so long as such proceedings have the
effect of staying the execution of such judgments or awards and
satisfy the conditions for Permitted Contests; (vi) the rights
and interests of the Lessee under the Ground Lease; (vii) rights
reserved to or vested in any Governmental Authority to condemn or
appropriate the Project or any Equipment or to control or
regulate any of the foregoing or the use thereof in any manner;
(viii) all restrictions, defects, encumbrances and irregularities
in the title to the Premises (as defined in the Agreement for
Lease) shown in the title report delivered with the Initial
Advance Certificate (as defined in the Agreement for Lease); (ix)
Liens on the Facility; (x) Liens on the additions or alterations
to the Project, title to which is retained by the Lessee as
provided in Section 9(d) of this Lease; (xi) Liens on any
replacement part for a period not exceeding ninety (90) days from
the date such part is incorporated into the Project; (xii) Liens
which do not secure any indebtedness for borrowed money not
otherwise provided for in this definition of "Permitted Liens"
that, in the aggregate, do not materially impair the use of the
Project or materially and adversely affect the value thereof;
(xiii) Liens created pursuant to any Financing Arrangement; and
(xiv) such other or additional matters as may be approved in
writing by the Lessor and any Assignee.
"Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or
political subdivision thereof.
"Potential Default" means any event which, but for the lapse
of time, or giving of notice, or both, would constitute an Event
of Default.
"Project" means the parcel of land in which the Lessor has
acquired a leasehold interest and the related improvements and
Equipment constituting the flue gas desulfurization system which
is located on or about such parcel and used in connection with
the Facility, as described in Exhibit A hereto.
-8-<PAGE>
"Quarterly Rent Amortization Component" means the amount
determined in accordance with Exhibits B and C to this Lease, as
amended from time to time. Exhibit C shall reflect mortgage
amortization during the Initial Term and straight-line
amortization during the Extended Term. This total of all
Quarterly Rent Amortization Components shall fully amortize the
Acquisition Cost of the Project over the Lease Term.
"Quarterly Rent Period" means each quarterly period of each
year of the Lease Term beginning January 1 and ending March 31,
beginning April 1 and ending June 30, beginning July 1 and ending
September 30, and beginning October 1 and ending December 31, as
the case may be; provided, however, that (i) the first such
period shall commence on the Effective Date and end on the next
succeeding March 31, June 30, September 30 or December 31, as
applicable, and (ii) the last such period shall end on the last
day of the Lease Term or Renewal Term, if any, as the case may
be.
"Renewal Term" has the meaning set forth in paragraph (b) of
Section 13 hereof.
"Reports" has the meaning set forth in Section 2(e) hereof.
"Requisition of Title" shall mean any circumstance or event
in consequence of which the Facility or any portion thereof, the
loss of which would significantly interfere with the use of the
Facility, shall be condemned or seized or title thereto shall be
requisitioned or taken by any Governmental Authority under power
of eminent domain or otherwise.
"Requisition of Use" shall mean any circumstance or event
other than a Requisition of Title in consequence of which the use
of the Facility, or any portion thereof, shall be requisitioned
or taken by any Governmental Authority under power of eminent
domain or otherwise.
"Responsible Officer" shall mean the Chairman of the Board,
President, any Vice President, the Treasurer or Assistant
Treasurer of the Lessee.
"SEC" means the Securities and Exchange Commission, or any
successor agency thereto.
"Short-Term Debt" has the meaning set forth in Section 26
hereof.
"Taking" has the meaning set forth in paragraph (a) of
Section 16 hereof.
"Termination Event" has the meaning set forth in paragraph
(b) of Section 14 hereof.
-9-<PAGE>
"Termination Event Date" has the meaning set forth in
paragraph (d) of Section 14 hereof.
"Termination Settlement Date" has the meaning set forth in
paragraph (d) of Section 14 hereof.
"Transaction Document" has the meaning set forth in
subparagraph (9) following paragraph (d) of Section 11 hereof.
"Unitary Method of Taxation" means a method of taxation
under which the business income of individual corporations in a
commonly controlled enterprise which may be deemed to operate in
the same general line of business as an entity or entities
subject to a taxing jurisdiction is aggregated regardless of
whether the individual corporations have a tax nexus with, or
presence in, such taxing jurisdiction and is then apportioned to
such taxing jurisdiction based on an apportionment formula.
"Variable Component of Fixed Rent" means the amount
determined in accordance with clause (A)(x) under "Calculation"
on Exhibit B to this Lease.
SECTION 2. Representations, Warranties and Covenants of
Lessee.
(A) The Lessee represents and warrants to the Lessor as of
the Effective Date and on each subsequent date upon which the
representations and warranties are made or deemed made pursuant
to the terms of this Lease:
(a) Corporate Matters. The Lessee (i) has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Ohio, (ii) has full
power, authority and legal right to own and operate its
properties and to conduct its business as presently conducted and
to execute, deliver and perform its obligations under this Lease
and any Consent, and the Construction Documents (as defined in
the Agreement for Lease) and (iii) is duly qualified to do
business as a foreign corporation in good standing in each
jurisdiction in which its ownership or leasing of properties or
the conduct of its business requires such qualification.
(b) Binding Agreement. Each of this Lease and any Consent
has been duly authorized, executed and delivered by the Lessee
and, assuming the due authorization, execution and delivery of
this Lease and any Consent by the other parties thereto, each of
this Lease and any Consent is a legal, valid and binding
obligation of the Lessee, enforceable according to its terms.
(c) Compliance with Other Instruments. The execution,
delivery and performance by the Lessee of this Lease and any
Consent will not result in any violation of any term of the
-10-<PAGE>
articles of incorporation or the code of regulations of the
Lessee, do not require stockholder approval or the approval or
consent of any trustee or holders of indebtedness of the Lessee
except such as have been obtained prior to the date hereof and
will not conflict with or result in a breach of any terms or
provisions of, or constitute a default under, or result in the
creation or imposition of any Lien (other than a Permitted Lien)
upon any property or assets of the Lessee under, any indenture,
mortgage or other agreement or instrument to which the Lessee is
a party or by which it or any of its property is bound, or any
existing applicable law, rule, regulation, license, judgment,
order or decree of any government, governmental body or court
having jurisdiction over the Lessee or any of its activities or
properties.
(d) Governmental Consents. There are no consents,
licenses, orders, authorizations, approvals, waivers, extensions
or variances of, or notices to or registrations or filings with
(each a "Governmental Action"), any governmental or public body
or authority which are or will be required in connection with the
valid execution, delivery and performance of this Lease or any
Consent, or any Governmental Action (i) which is or will be
required in connection with any participation by the Lessor in
the transaction contemplated by this Lease or (ii) which is or
will be required to be obtained by the Lessor, the Lessee,
Merrill, Merrill Leasing, any Assignee or any Affiliate of the
foregoing, during the term of this Lease, with respect to the
Project or any Unit of Equipment, except for the filing of a Form
U-7D under the 1935 Act and except such Governmental Actions (A)
as have been duly obtained, given or accomplished, with true
copies thereof delivered to the Lessor, (B) as may be required
for the construction or operation of the Project and have been or
will be timely obtained, and (C) as may be required by applicable
law not now in effect.
(e) Financial Statements. The Lessee has furnished to the
Lessor copies of its Annual Report on Form 10-K for its fiscal
year ending December 31, 1993 and its Quarterly Reports on Form
10-Q for the quarters ending March 31, 1994, June 30, 1994 and
September 30, 1994 (such Annual Report and Quarterly Reports are
herein collectively referred to as the "Reports"). The
consolidated financial statements contained in such Reports
present fairly the financial position of the Lessee and its
subsidiaries and the results of their operations and changes in
their cash flows as of the dates and for the periods indicated
therein and have been prepared in conformity with generally
accepted accounting principles.
(f) Changes. Since September 30, 1994, there has been no
material adverse change in the financial condition or business of
the Lessee nor any change which would materially impair the
-11-<PAGE>
ability of the Lessee to perform its obligations under this
Lease.
(g) Litigation. There is no action, suit, proceeding or
investigation at law or in equity by or before any court,
governmental body, agency, commission or other tribunal now
pending or threatened against or affecting the Lessee or any
property or rights of the Lessee (i) which questions the validity
of this Lease or any Consent, (ii) which affects the Lessor's
interest in, or the Lessee's lease or use of, the Project or any
Unit of Equipment, (iii) which may have a material adverse impact
on the financial condition or business of the Lessee or (iv)
which, if adversely determined, would materially impair the
ability of the Lessee to perform its obligations hereunder,
except, with respect to clause (iii), as set forth in the
Reports.
(h) Compliance with Legal Requirements and Insurance
Requirements. The operation, use and physical condition of the
Project is in full compliance with all Legal Requirements and
Insurance Requirements, except any Legal Requirements the
noncompliance with which, individually or in the aggregate, (i)
will not subject the Lessor or any Assignee to any reasonable
likelihood of civil liability for which the Lessor or any
Assignee is not adequately bonded against or indemnified for (the
obligations under Section 11 of this Lease shall be deemed to be
adequate indemnification if no Event of Default by the Lessee
exists hereunder and if such civil liability is reasonably likely
to be less than $2,500,000) or subject the Lessor or any Assignee
to any criminal liability as a result of a failure to comply
therewith and (ii) will not result in a material diminution in
value of the Project.
(i) Regulation. Assuming the proper filing of a Form U-7D
under the 1935 Act within 30 days of the Effective Date, the
Lessor will not be nor become, solely by reason of either its
entering into this Lease or any other agreement or document
contemplated hereby or entered into in connection herewith to
which it is, or is to become, a party, or the transactions
contemplated hereby or thereby (including, without limitation,
the acquisition, construction, ownership or leasing of the
Project or any Equipment), subject to regulation (A) under the
1935 Act, the Federal Power Act, the Natural Gas Act or the
Atomic Energy Act, (B) by any state or local public utility
commission or other similar regulatory body, authority or group
in the State of Ohio or (C) in any manner by the NRC or the FERC.
(j) Liens. Neither the Project nor any Equipment is
subject to any Lien, except Permitted Liens.
(k) Agreement for Lease. The Project was acquired,
assembled and built in accordance with the terms of the Agreement
-12-<PAGE>
for Lease. The representations and warranties of the Lessee, as
agent, in the Agreement for Lease are true and correct in all
material respects.
(l) Nature of Business. The Lessee is an "electric utility
company" as defined under the 1935 Act and is neither (i) a "gas
utility company" as defined under the 1935 Act, (ii) subject to
regulation under the Natural Gas Act nor (iii) subject to
regulation as a gas utility company under any state or local law,
rule, regulation, license, judgment, order or decree.
(m) Wholly-Owned Subsidiary. The Lessee is a wholly-owned
subsidiary of AEP, a holding company registered under Section 5
of the 1935 Act.
(n) ERISA. The Lessee and the ERISA Affiliates are in
compliance in all material respects with ERISA. 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 Pension Plan or, to the Lessee's knowledge and
except as otherwise disclosed in the Reports or as otherwise
reported to the Lessor and each Assignee, any Multi-employer
Plan. Except as otherwise disclosed in the Reports or as
otherwise reported to the Lessor and each Assignee, no liability
to the Pension Benefit Guaranty Corporation has been or is
expected to be incurred by the Lessee with respect to any Pension
Plan or any Multi-employer Plan which is or would be materially
adverse to the Lessee.
(B) The Lessee covenants to the Lessor:
(a) Corporate Matters; Nature of Business; Maintenance of
Properties; Insurance. The Lessee shall preserve and maintain
its corporate existence in the jurisdiction of its incorporation
(except as provided in Section 26 hereof) and the rights,
franchises and privileges necessary for the ordinary conduct of
its business, continue to engage principally in the electric
utility business, maintain its properties and assets in good
working order and condition and maintain, with respect to its
properties and assets and its business, insurance with
financially sound and reputable insurers against loss or damage
of the kinds and in the amounts customarily carried under similar
circumstances by other corporations engaged in the same or
similar businesses and similarly situated. Notwithstanding the
provisions of the foregoing sentence, however, the Lessee may,
subject to Section 10 hereof with respect to the Project,
self-insure by deductible provisions in an amount which the
Lessee reasonably believes to be prudent with respect to each
loss.
(b) Compliance with Laws. The Lessee shall use its best
efforts to comply in all material respects with all applicable
-13-<PAGE>
laws, rules and regulations and orders of any Governmental
Authority, noncompliance with which would have a material adverse
effect on its business, financial condition or results of
operations or would materially affect the Lessee's ability to
perform its obligations hereunder, except laws, rules,
regulations or orders being contested in good faith.
(c) Taxes. The Lessee shall file or cause to be filed all
tax returns which are required to be filed, and shall pay or
cause to be paid all taxes as shown on said returns and all
assessments received by the Lessee 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.
(d) Delivery of Information. The Lessee shall deliver to
the Lessor and each Assignee from time to time, (i) within one
hundred thirty (130) days of the end of the Lessee's fiscal year,
copies of the Lessee's Annual Reports on Form 10-K, within ninety
(90) days of the end of each quarter, copies of the Lessee's
Quarterly Reports on Form 10-Q and promptly after filing, copies
of the Lessee's Current Reports on Form 8-K, (ii) promptly upon
request, such other information with respect to the Lessee's
operations, business, properties, assets, financial condition or
litigation as the Lessor or each Assignee shall reasonably
request and (iii) promptly after a Responsible Officer of the
Lessee obtains knowledge of any Event of Default, Potential
Default or Termination Event hereunder, a certificate of a
Responsible Officer of the Lessee either specifying (A) the
nature and period of existence of such Event of Default or
Potential Default, and what action, if any, the Lessee has taken,
is taking, or proposes to take with respect thereto or (B) the
nature of the Termination Event.
(e) Notices. The Lessee shall give notice to the Lessor
and each Assignee promptly upon the occurrence of any (i) notice
given or required to be given by the Lessee or any ERISA
Affiliate, or knowledge by the Lessee that the plan administrator
of any Pension Plan has given or is required to give, notice to
the Pension Benefit Guaranty Corporation of any "reportable
event" (as defined in Section 4043 of ERISA) with respect to any
Pension Plan which might constitute grounds for a termination of
such Pension Plan under Title IV of ERISA, (ii) complete or
partial withdrawal by the Lessee, or to the Lessee's knowledge,
any ERISA Affiliate, from any Multi-employer Plan, or notice
received by the Lessee, or to the Lessee's knowledge, any ERISA
Affiliate, from any Multi-employer Plan that any Multi-employer
Plan is in reorganization, is insolvent or has been terminated,
(iii) notice received by the Lessee, or to the Lessee's knowledge
by any ERISA Affiliate, from the Pension Benefit Guaranty
Corporation under Title IV of ERISA of an intent to terminate,
impose liability (other than for premiums under Section 4007 of
-14-<PAGE>
ERISA) in respect of, or appoint a trustee to administer, any
Pension Plan, or from a Multi-employer Plan that such action has
been taken by the Pension Benefit Guaranty Corporation with
respect to such Multi-employer Plan, (iv) notice given by the
Lessee of intent to terminate any Pension Plan pursuant to
Section 401(c) of ERISA, (v) notice given by the Lessee of
withdrawal from any Pension Plan pursuant to Section 4063 of
ERISA, or (vi) action, suit, proceeding or investigation at law
or in equity by or before any court, governmental body, agency,
commission or other tribunal against or affecting the Lessee of
any property or rights of the Lessee (A) which questions the
validity of this Lease, (B) which affects the Lessor's interest
in, or the Lessee's use of, the Project, (C) which may have a
material adverse impact on the financial condition or business of
the Lessee, or (D) in which there is a reasonable likelihood of
an adverse determination, and which, if adversely determined,
would materially impair the ability of the Lessee to perform its
obligations hereunder, except with respect to clause (C), as
otherwise disclosed in the Reports or in any subsequent reports
of the Lessee on Form 10-K, Form 10-Q or Form 8-K that are
delivered by the Lessee to the Lessor pursuant to clause (i) of
paragraph (d) of Section 2(B) hereof.
SECTION 3. Lease of the Project.
(a) The date upon which the Lessee receives the Final
Advance (as defined in the Agreement for Lease) under the
Agreement for Lease, shall be the Effective Date. From and after
the Effective Date, the Project and the rights and obligations of
the Lessor and the Lessee shall be governed by this Lease, except
to the extent otherwise expressly provided in the Agreement for
Lease. On the Effective Date, the Lessee shall be deemed to have
certified that all representations and warranties of the Lessee
contained in this Lease are true and correct on and as of the
Effective Date. The Lessor and the Lessee agree that all
Equipment (including Equipment which becomes a part of the
Project and subject to this Lease pursuant to Section 9(e)
hereof) shall be amortized over a period of time such that the
last day of the Lease Term of the Project shall also be the last
day of the Lease Term for all Equipment.
(b) Up to two (2) years after the Effective Date, the
Lessee may deliver a Certificate of Increased Cost (as defined in
the Agreement for Lease). Such Certificate of Increased Cost
shall reflect all costs incurred by the Lessee since the
Effective Date to complete the Project, to discharge all
retentions and to dispose of excess construction materials. Any
proceeds received from the disposition of excess construction
materials shall be applied against the amount of the Completion
Advance (as defined in the Agreement for Lease) otherwise payable
or, if such amount exceeds the amount otherwise payable as a
Completion Advance, shall be paid to the Lessor. If a Completion
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Advance is made, or if the amount of proceeds received from the
disposition of excess construction materials exceeds the amount
that would otherwise be payable as a Completion Advance, the
Adjusted Acquisition Cost of the Project will be amended to
reflect either (i) an increase in Adjusted Acquisition Cost in
the amount of the Completion Advance made or (ii) a decrease in
Adjusted Acquisition Cost in the amount by which the proceeds
received from the sale of excess construction materials exceeds
the amount otherwise payable as a Completion Advance. At such
time Exhibit C to this Lease shall be amended to reflect such
change in Adjusted Acquisition Cost.
(c) In addition to the Completion Advance, the Lessee may
from time to time until the fifth anniversary of the Effective
Date request advances from the Lessor to develop the landfill
constituting a part of the Project. So long as no Event of
Default, Potential Default, Termination Event or Force Majeure
Event has occurred and is continuing and so long as the
representations and warranties contained herein are true and
correct on the date of each such advance, the Lessor shall
advance the amount requested to the extent that the Lessor has
the ability to borrow such funds under a Financing Arrangement.
If an advance is made pursuant to the terms of this paragraph
(c), the Adjusted Acquisition Cost of the Project will be amended
to reflect an increase in Adjusted Acquisition Cost in the amount
of such advance, and Exhibit C to this Lease shall be amended
accordingly.
SECTION 4. Covenant of Quiet Enjoyment.
During the Lease Term or Renewal Term, if any, of the
Project hereunder and so long as no Event of Default shall have
occurred and be continuing, the Lessor recognizes the Lessee's
right to quiet enjoyment of the Project on the terms and
conditions provided in this Lease without any interference from
the Lessor or anyone claiming through or under the Lessor.
SECTION 5. Absolute Obligation.
(a) The obligations of the Lessee to pay all amounts
payable pursuant to this Lease (including specifically and
without limitation amounts payable under Sections 7 and 11
hereof) shall be absolute and unconditional under any and all
circumstances of any character, and such amounts shall be paid
without notice, demand, defense, setoff, deduction or
counterclaim and without abatement, suspension, deferment,
diminution or reduction of any kind whatsoever, except as herein
expressly otherwise provided. The obligation of the Lessee to
lease and pay Basic Rent for the Project and Additional Rent is
without any warranty or representation, express or implied, as to
any matter whatsoever on the part of the Lessor or any Assignee
-16-<PAGE>
or any Affiliate of either, or anyone acting on behalf of any of
them.
THE LESSEE HAS SELECTED AND SHALL SELECT THE PROJECT AND ALL
EQUIPMENT ACQUIRED OR ORDERED ON THE BASIS OF ITS OWN JUDGMENT.
NEITHER THE LESSOR NOR ANY ASSIGNEE NOR ANY AFFILIATE OF EITHER,
NOR ANYONE ACTING ON BEHALF OF ANY OF THEM MAKES ANY
REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, AS TO THE SAFETY, TITLE,
CONDITION, QUALITY, QUANTITY, FITNESS FOR USE, MERCHANTABILITY,
CONFORMITY TO SPECIFICATION, OR ANY OTHER CHARACTERISTIC, OF THE
PROJECT OR ANY EQUIPMENT, OR AS TO WHETHER THE PROJECT OR
EQUIPMENT OR THE OWNERSHIP, USE OR POSSESSION THEREOF COMPLIES
WITH ANY LAWS, RULES, REGULATIONS OR REQUIREMENTS OF ANY KIND.
AS BETWEEN THE LESSEE AND THE LESSOR, ANY ASSIGNEE OR ANY
INDEMNIFIED PERSON, THE LESSEE ASSUMES ALL RISKS AND WAIVES ANY
AND ALL DEFENSES, SET-OFFS, DEDUCTIONS, COUNTERCLAIMS (OR OTHER
RIGHTS), EXISTING OR FUTURE, AS TO THE LESSEE'S OBLIGATION TO PAY
BASIC RENT AND ALL OTHER AMOUNTS PAYABLE HEREUNDER, INCLUDING,
WITHOUT LIMITATION, ANY RELATING TO:
(A) THE SAFETY, TITLE, CONDITION, QUALITY, QUANTITY,
FITNESS FOR USE, MERCHANTABILITY, CONFORMITY TO SPECIFICATION, OR
ANY OTHER QUALITY OR CHARACTERISTIC OF THE PROJECT OR ANY
EQUIPMENT, LATENT OR NOT;
(B) ANY SET-OFF, COUNTERCLAIM, RECOUPMENT, ABATEMENT,
DEFENSE OR OTHER RIGHT WHICH THE LESSEE MAY HAVE AGAINST THE
LESSOR, ANY ASSIGNEE OR ANY INDEMNIFIED PERSON FOR ANY REASON
WHATSOEVER ARISING OUT OF THIS OR ANY OTHER TRANSACTION OR
MATTER;
(C) ANY DEFECT IN TITLE OR OWNERSHIP OF THE PROJECT OR ANY
EQUIPMENT OR ANY TITLE ENCUMBRANCE NOW OR HEREAFTER EXISTING WITH
RESPECT TO THE PROJECT OR ANY EQUIPMENT;
(D) ANY FAILURE OR DELAY IN DELIVERY OR ANY LOSS, THEFT OR
DESTRUCTION OF, OR DAMAGE TO, THE PROJECT OR ANY EQUIPMENT, IN
WHOLE OR IN PART, OR CESSATION OF THE USE OR POSSESSION OF THE
PROJECT OR ANY EQUIPMENT BY THE LESSEE FOR ANY REASON WHATSOEVER
AND OF WHATEVER DURATION, OR ANY CONDEMNATION, CONFISCATION,
REQUISITION, SEIZURE, PURCHASE, TAKING OR FORFEITURE OF THE
PROJECT OR ANY EQUIPMENT, IN WHOLE OR IN PART;
(E) ANY INABILITY OR ILLEGALITY WITH RESPECT TO THE USE,
OWNERSHIP, OR POSSESSION OF THE PROJECT OR EQUIPMENT BY THE
LESSEE;
(F) ANY INSOLVENCY, BANKRUPTCY, REORGANIZATION OR SIMILAR
PROCEEDING BY OR AGAINST THE LESSEE OR THE LESSOR OR ANY
ASSIGNEE;
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(G) ANY FAILURE TO OBTAIN, OR EXPIRATION, SUSPENSION OR
OTHER TERMINATION OF, OR INTERRUPTION TO, ANY REQUIRED LICENSES,
PERMITS, CONSENTS, AUTHORIZATIONS, APPROVALS OR OTHER LEGAL
REQUIREMENTS;
(H) THE INVALIDITY OR UNENFORCEABILITY OF THIS LEASE OR ANY
OTHER INFIRMITY HEREIN OR ANY LACK OF POWER OR AUTHORITY OF THE
LESSOR OR THE LESSEE TO ENTER INTO THIS CONTRACT;
(I) THE INVALIDITY OR UNENFORCEABILITY OF ANY BILL OF SALE
OF THE PROJECT OR ANY EQUIPMENT EXECUTED IN CONNECTION WITH THIS
LEASE OR ANY OTHER INFIRMITY THEREIN OR LACK OF POWER OR
AUTHORITY OF ANY PARTY THERETO TO ENTER INTO SUCH BILL OF SALE;
OR
(J) ANY OTHER CIRCUMSTANCES OR HAPPENING WHATSOEVER,
WHETHER OR NOT SIMILAR TO ANY OF THE FOREGOING.
THE LESSEE HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHTS WHICH IT MAY NOW HAVE OR WHICH
AT ANY TIME HEREAFTER MAY BE CONFERRED UPON IT, BY STATUTE OR
OTHERWISE, TO TERMINATE, CANCEL, QUIT, RESCIND OR SURRENDER THIS
LEASE EXCEPT IN ACCORDANCE WITH THE EXPRESS TERMS HEREOF. Each
payment of Basic Rent, Additional Rent and any other amount due
hereunder made by the Lessee shall be final, and the Lessee,
without waiving any other remedies it may have, will not seek or
have any right to recover all or any part of such payment from
the Lessor or any Assignee for any reason whatsoever.
(b) Notwithstanding any other provision contained in this
Lease, it is specifically understood and agreed that neither the
Lessor nor any Assignee nor any Affiliate of either, nor anyone
acting on behalf of any of them makes any warranties or
representations or has any responsibility to disclose any
relevant information, or has any other responsibility or duty,
nor, except as expressly set forth in this Lease, has the Lessor
or any Assignee or any Affiliate of either, or anyone acting on
behalf of any of them made any covenants or undertakings, as to
the accounting treatment to be accorded the Lessee or as to the
U.S. Federal or any state income or any other tax consequences,
if any, to the Lessee as a result of or by virtue of the
transactions contemplated by this Lease.
SECTION 6. Initial Term; Extended Term.
(a) The "Initial Term" with respect to the Project shall
commence on the Effective Date and shall continue for any partial
first calendar month plus the next succeeding one hundred eighty
(180) calendar months, unless terminated earlier pursuant to
Section 14, 15, 16, 19 or 20 hereof.
-18-<PAGE>
(b) The "Extended Term" shall commence on the first day of
the calendar month following the last day of the Initial Term of
the Project and shall continue for two hundred twenty-eight (228)
calendar months, unless terminated earlier pursuant to Section
12, 13, 14, 15, 16, 19 or 20 hereof.
SECTION 7. Rent and Other Payments.
(a) The Lessee hereby agrees to pay Basic Rent quarterly in
arrears to the Lessor on each Basic Rent Payment Date in respect
of the Quarterly Rent Period ending on or about such Basic Rent
Payment Date.
(b) The Lessor shall furnish to the Lessee on the 23rd day
of the last calendar month of each Quarterly Rent Period the
percentage equivalent of each of the Lessor's Cost of Commercial
Paper and the Lessor's Cost of Debt for the Quarterly Rent Period
to which such amounts relate, or, if such day is not a Business
Day, on the next succeeding Business Day (the "Lease Rate
Date"). Prior to each Basic Rent Payment Date the Lessor shall
furnish the Lessee with a summary of the calculations of Basic
Rent payable on such Basic Rent Payment Date.
(c) The Lessee hereby agrees to pay when due all amounts
(other than Basic Rent) payable hereunder, including, without
limitation, all amounts payable to any Indemnified Person
pursuant to Section 11 hereof.
(d) Without prejudice to the full exercise by the Lessor of
its rights under Sections 18 and 19 hereof, the Lessee shall pay
to the Lessor from time to time, on demand, as additional rent
("Additional Rent") (i) amounts required to reimburse the Lessor
for its obligations, costs and expenses (not previously included
in Basic Rent or deducted from Fixed Rent as all or a portion of
[PORTION OMITTED AND FILED SEPARATELY PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] ) incurred in acquiring, financing
(including equity financing) and leasing the Project, and (ii) to
the extent legally enforceable, an amount computed by multiplying
(A) all sums not paid by the Lessee to the Lessor as provided in
this Lease on or before the date such payments are due, by (B)
the decimal equivalent of the Lessor's Cost of Debt as most
recently furnished by the Lessor, and by (C) a fraction having a
numerator equal to the number of days in the period from but
excluding such due date to and including the date of payment
thereof and a denominator of 360. The Lessee shall also pay to
the Lessor on demand an amount equal to any expenses incurred by
the Lessor in collecting such unpaid sums. The Lessor and the
Lessee hereby agree that nothing contained in this paragraph (d)
shall be construed as a guaranty by the Lessee of any of the
Lessor's Financing Arrangements.
-19-<PAGE>
(e) Basic Rent and Additional Rent and any other amount
payable by the Lessee to the Lessor shall be paid sufficiently in
advance of the date due to assure that immediately available
funds in the full amount due are available on the date due, to
such account of the Lessor at such bank, or to such account of
such other Person at such bank, or otherwise as the Lessor may
from time to time designate. To the extent that the Lessor shall
earn interest on amounts paid as Basic Rent by virtue of the fact
that such Basic Rent is paid quarterly and the Lessor's
borrowings under a Financing Arrangement are paid less
frequently, the Lessor shall advise the Lessee of the amount of
such interest and shall credit the amount of such interest
against future Basic Rent payments of the Lessee.
(f) The Lessee shall provide to the Lessor, on or before
the nineteenth day of each March, June, September and December
during the Lease Term of the Project, a certificate of an officer
of the Lessee, substantially in the form of Exhibit E hereto,
certifying (i) [PORTION OMITTED AND FILED SEPARATELY PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT ] Quarterly Rent Period
which includes such March, June, September and December and (ii)
that no Event of Default, Potential Default, Termination Event or
Force Majeure Event shall have occurred during such Quarterly
Rent Period. In the event that, at any time, the Lessee is
required to pay Basic Rent for any Quarterly Rent Period in an
amount [PORTION OMITTED AND FILED SEPARATELY PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT], the Lessor may request that
[PORTION OMITTED AND FILED SEPARATELY PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] provided by the Lessee be verified by
such nationally recognized independent engineering firm as the
Lessee may designate with Lessor's consent, which consent will
not be unreasonably withheld or unreasonably delayed. The fees,
expenses and costs incurred in connection with such verification
shall be paid by the Lessee. If, as a result of such
verification or otherwise, it is determined that the Lessee has
paid to the Lessor an amount that is less or greater than the
Basic Rent due and payable under this Lease, (i) the Lessee shall
immediately pay to the Lessor the difference between the lesser
amount so paid and the Basic Rent due and payable or (ii) the
Lessor shall immediately pay the Lessee the difference between
the greater amount so paid and the Basic Rent due and payable, as
the case may be.
(g) During the Lease Term of the Project, the Lessor shall
calculate, on each Lease Rate Date, the difference, if any,
between (i) the Variable Component of Fixed Rent calculated for
the previous Quarterly Rent Period and (ii) an amount equal to
what the Variable Component of Fixed Rent would have been for
such Quarterly Rent Period had the Variable Component of Fixed
Rent been calculated using Lessor's Cost of Debt and Lessor's
Cost of Commercial Paper during the previous calendar quarter
(rather than during the applicable Computation Period), provided
-20-<PAGE>
that, with respect to the Variable Component of Basic Rent for
the last Quarterly Rent Period, such calculation shall occur on
the last day of the Lease Term. On or about March 23, 1996 (or
such other date that the Lessor so chooses), and thereafter on or
about March 23 of each year and on the last day of the Lease
Term, the Lessor shall furnish to the Lessee a calculation of the
aggregate difference between the amounts determined under clause
(i) above and the correlating amounts determined under clause
(ii) above (the "Reconciliation Amount") for each Quarterly Rent
Period since the date of this Lease or each Quarterly Rent Period
since the last time the Reconciliation Amount was calculated,
whichever is later. The Lessor and the Lessee agree that if the
Reconciliation Amount is a positive number, then such amount
shall be credited against the amount of Fixed Rent calculated for
the next Quarterly Rent Period (or Quarterly Rent Periods, if
such amount shall exceed the amount of Fixed Rent calculated for
the next Quarterly Rent Period), and if the Reconciliation Amount
is a negative number, then such amount shall be payable by the
Lessee on the next Basic Rent Payment Date in addition to the
amount of Basic Rent due and payable on such Basic Rent Payment
Date, except that with respect to the Reconciliation Amount
computed on the last day of the Lease Term, such amount shall be
paid by the Lessor to the Lessee (in the case of a positive
number) or by the Lessee to the Lessor (in the case of a negative
number) on the last day of the Lease Term. Any notices required
by this paragraph (g) which are furnished to the Lessee by the
Lessor shall be conclusive, absent manifest error, as to the
contents thereof.
SECTION 8. Restricted Use; Compliance with Laws.
(a) So long as no Event of Default shall have occurred and
be continuing, the Lessee may use the Project in the regular
course of its business for any lawful purpose. The Lessee at all
times during the Lease Term or Renewal Term, if any, shall own
and operate the Facility.
(b) The Lessee shall promptly and duly execute, deliver,
file and record, at the Lessee's expense, all such documents,
statements, filings and registrations, and take such further
action, as the Lessor shall from time to time reasonably request
in order to establish, perfect and maintain the Lessor's title to
and interest in the Project and any Equipment and any Assignee's
interest in this Lease as against the Lessee or any third party
in any applicable jurisdiction.
(c) The Lessee shall use reasonable efforts to prevent loss
or damage to the Project and shall use every commercially
reasonable precaution to prevent injury to third persons or
property of third persons. The Lessee and the Lessor shall
cooperate fully with each other and all insurance companies
providing insurance pursuant to Section 10 hereof in the
-21-<PAGE>
investigation and defense of any claims or suits arising from the
ownership, operation or use of any Equipment or ownership or use
of the Project; provided, that nothing contained in this
paragraph (c) shall be construed as imposing on the Lessor any
duty to investigate or defend any such claims or suits. The
Lessee shall comply and shall use reasonable efforts to cause all
Persons using or operating Equipment or the Project to comply
with all Insurance Requirements and Legal Requirements applicable
to the Project or such Equipment and to the acquiring, titling,
registering, leasing, insuring, using, operating and disposing of
the Project or Equipment, and the licensing of operators thereof,
except any Legal Requirements the noncompliance with which,
individually or in the aggregate, (i) will not subject the Lessor
or any Assignee to any reasonable likelihood of civil liability
for which the Lessor or any Assignee is not adequately bonded
against or indemnified for (the obligations under Section 11 of
this Lease shall be deemed to be adequate indemnification if no
Event of Default by the Lessee exists hereunder and if such civil
liability is reasonably likely to be less than $2,500,000) or
subject the Lessor or any Assignee to any criminal liability as a
result of a failure to comply therewith and (ii) will not result
in a material diminution in value of the Project.
(d) The Lessor or any Assignee or any authorized
representative of either may during reasonable business hours
from time to time inspect the Project and deeds, registration
certificates, certificates of title and related documents
covering the Project wherever the same may be located, but
neither the Lessor nor any Assignee shall have any duty to make
any such inspection.
(e) The Lessee shall not, without the prior written consent
of the Lessor, permit, or suffer to exist, any Lien on the
Project, other than Permitted Liens, nor may it assign any right
or interest herein or in the Project or any Equipment. The
Lessee shall not, without the prior written consent of the Lessor
(not to be unreasonably withheld), sublease or otherwise
relinquish possession of the Project or any Equipment, except
that (i) the Lessee may relinquish possession of any Equipment to
any contractor for use in performing work for the Lessee on such
Equipment; provided, that such relinquishment of possession shall
in no way affect the obligations of the Lessee or the rights of
the Lessor hereunder and with respect to such Equipment and (ii)
the Lessee may upon prior written notice to the Lessor sublease
the Project to an Affiliate of the Lessee; provided, that (A)
each such sublease shall expressly be made subject and
subordinate to the provisions hereof and shall, at the sole
option of the Lessor, by its terms be subject to termination upon
the termination for any reason of this Lease, (B) no such
sublease shall modify or limit any right or power of the Lessor
hereunder or affect or reduce any obligation of the Lessee
hereunder, and all such obligations shall continue in full force
-22-<PAGE>
and effect as obligations of a principal and not of a guarantor
or surety, as though no such subletting had been made, and (C)
any such sublease made otherwise than as expressly permitted by
this paragraph (e) shall be void and of no force and effect. As
additional security to the Lessor for the performance of the
Lessee's obligations under this Lease, the Lessee hereby assigns
to the Lessor all of its right, title and interest in and to all
subleases permitted hereby and agrees to cause any sublessee to
enter into attornment agreements with the Lessor as the Lessor
shall request and the Lessee hereby irrevocably assigns such
rents and other sums to the Lessor for the benefit and protection
of the Lessor. The Lessor agrees that until such time as an
Event of Default shall occur and be continuing under this Lease,
the Lessee shall have the present and continuing right to collect
and enjoy all rents and other sums of money payable under any
such sublease. The Lessee shall, within thirty (30) days after
the execution of any such sublease, deliver a conformed copy
thereof to the Lessor. Nothing contained in this Lease shall be
construed as constituting the consent or request of the Lessor,
express or implied, to or for the performance by any contractor,
laborer, materialman or vendor of any labor or services or for
the furnishing of any materials for any construction, alteration,
addition, repair or demolition of or to the Project or any
portion thereof. Notice is hereby given that the Lessor will not
be liable for any labor, services or materials furnished or to be
furnished to the Lessee, or to anyone holding the Project or any
portion thereof through or under the Lessee, and that no
mechanics' or other liens for any such labor, services or
materials shall attach to or affect the interest of the Lessor in
and to the Project.
(f) If any Lien or charge of any kind or any judgment,
decree or order of any court or other governmental authority
(including, without limitation, any state or local tax lien
affecting the Project or any Equipment), whether or not valid,
shall be asserted or entered which might interfere with the due
and timely payment of any sum payable or the exercise of any of
the rights or the performance of any of the duties or
responsibilities under this Lease, the Lessee shall, upon
obtaining knowledge thereof or upon receipt of notice to that
effect from the Lessor, promptly take such action as may be
necessary to prevent or terminate such interference.
SECTION 9. Maintenance, Improvement and Repair of the
Project.
(a) The Lessor, so long as no Event of Default shall have
occurred and be continuing hereunder, assigns and agrees to make
available to the Lessee any and all rights the Lessor may have
under any vendor's or manufacturer's warranties or undertakings
with respect to the Project or any Equipment. If an Event of
Default shall have occurred and be continuing hereunder, the
-23-<PAGE>
Lessor's assignment of such rights shall be rescinded and
terminated.
(b) The Lessee shall pay all costs, expenses, fees and
charges incurred in connection with the Lessor's ownership and
the Lessee's use and operation of the Project. Except as
otherwise provided in Section 15 hereof, the Lessee shall at all
times, at its own expense, and subject to reasonable wear and
tear, keep the Project in satisfactory operating order, repair,
condition and appearance. The foregoing undertaking to maintain
the Project in satisfactory repair shall apply regardless of the
cause necessitating repair and regardless of whether the Lessee
has possession of the Project, and as between the Lessor and the
Lessee all risks of damage to the Project are assumed by the
Lessee.
(c) Except as otherwise provided in Section 28 hereof, the
Lessee shall pay: (i) all taxes, assessments, levies, fees,
water and sewer rents and charges, and all other governmental
charges, general and special, ordinary and extraordinary,
foreseen and unforeseen, which are, at any time, imposed or
levied upon or assessed against (A) the Project, (B) any Basic
Rent, any Additional Rent or other sum payable hereunder or (C)
this Lease, the leasehold estate hereby created, or which arises
in respect of the ownership, operation, possession or use of the
Project; (ii) all gross receipts or similar taxes (i.e., taxes
based upon gross income which fail to take into account all
customary deductions (e.g., ordinary operating expenses,
depreciation and interest) relating to the Project) imposed or
levied upon, assessed against or measured by any Basic Rent, or
any Additional Rent or other sum payable hereunder; (iii) all
sales, value added, use and similar taxes at any time levied,
assessed or payable on account of the acquisition, leasing or use
of the Project; and (iv) all charges of utilities and
communications services serving the Project. The Lessee shall
not be required to pay any franchise, estate, inheritance,
transfer, income or similar tax of the Lessor (other than any tax
referred to in clause (ii) above) unless such tax is imposed,
levied or assessed in substitution for any other tax, assessment,
charge or levy which the Lessee is required to pay pursuant to
this paragraph (c); provided, however, that if at any time the
method of taxation shall be such that there shall be levied,
assessed or imposed on the Lessor a capital levy or other tax
directly on the rents received from the Project, or upon the
value of the Project or any present or any future improvement or
improvements on the Project, then all such taxes, assessments,
levies or charges or the part thereof so measured or based, shall
be payable by the Lessee, but only to the extent that such taxes
would be payable if the Project were the only property of the
Lessor, and the Lessee shall pay and discharge the same as herein
provided. The Lessee will furnish to the Lessor, promptly after
demand therefor, proof of payment of all items referred to above
-24-<PAGE>
which are payable by the Lessee. If any such assessments may
legally be paid in installments, the Lessee may pay such
assessment in installments; in such event, the Lessee shall be
liable only for installments which become due and payable during
the Lease Term and any Renewal Term. The Lessor agrees, if
requested by the Lessee, to file any necessary reports and to
provide the Lessee with any information required to prepare any
such reports.
(d) So long as no Event of Default shall have occurred and
be continuing, the Lessee may, at its expense, make additions to
and alterations to the Project; provided, that upon completion of
such additions or alterations (i) neither the fair market value
of the Project shall be lessened thereby nor the condition of the
Project impaired, below the value, utility or condition thereof
immediately prior to such action (assuming the Project was then
of a condition and repair required to be maintained pursuant to
paragraph (b) of Section 9 hereof), (ii) such additions or
alterations shall not result in a change of use of the Project,
(iii) such work shall be completed in a good and workmanlike
manner and in compliance with all applicable Legal Requirements
and Insurance Requirements and (iv) no exterior walls of any
building or other improvement constituting a part of the Project
shall be demolished unless the Lessee has made adequate provision
according to sound and prudent engineering and architectural
standards to preserve and maintain the structural integrity of
the Project and for the restoration of the Project to a
structurally sound architectural whole. Any and all such
additions and alterations shall be and remain part of the Project
and shall be subject to this Lease; provided, however, that any
such addition or alteration paid for by the Lessee shall remain
the Lessee's property and may be removed by the Lessee prior to
its return to the Lessor if it can be removed without resulting
in material damage to the Project.
(e) Upon the request of the Lessee the Lessor may, in its
sole discretion, attempt to arrange for the financing of capital
improvements or other additions or alterations to the Project,
which additions or alterations shall be made in accordance with
the terms and conditions of paragraph (d) of Section 9 of this
Lease. Any request by the Lessee for the Lessor to arrange such
financing shall set forth in reasonable detail the estimated
amount of such costs and expenses. No such financing shall be
arranged unless:
(i) the aggregate cost of constructing the additions or
alterations is more than $5,000,000 in any twelve
month period;
(ii) at such time no Event of Default, Potential Default
or Termination Event has occurred and is continuing;
-25-<PAGE>
(iii) the representations and warranties of the Lessee
contained in Section 2(A) of this Lease shall
continue to be true and correct in all material
respects;
(iv) the construction and completion of the additions or
alterations in question will be in compliance with
all Legal Requirements and Insurance Requirements;
(v) the Lessee shall enter into an amendment to this
Lease, providing, among other things, for a revised
description of the Project set forth in Exhibit A
hereto, the lease of such additions or alterations,
an increase in the rent payable, an increase in the
Acquisition Cost or Adjusted Acquisition Cost
(whichever is appropriate) and such other
modifications and amendments of the terms hereof as
shall be appropriate and as may be necessary to
enable the Lessor to arrange for the issuance of
such additional indebtedness;
(vi) the Lessor shall have received a certificate of the
Lessee certifying that the conditions set forth in
clauses (i) through (v) have been satisfied; and
(vii) the Lessor shall have received such documents,
certificates, opinions of counsel and such other
instruments as the Lessor may reasonably require.
The Lessor and the Lessee shall negotiate in good faith
concerning the financing of any such additions or alterations and
any such amendment of this Lease. The Lessor shall incur no
liability under this Lease by reason of its inability or failure
to arrange for such financing, and this Lease shall continue in
full force and effect notwithstanding such inability or failure.
(f) The Lessee shall (i) maintain the Facility in a
condition (ordinary wear and tear excepted) such that the
Facility will have the capacity and functional ability to
perform, on a continuing basis in normal commercial operation,
the functions for which it was designed and (ii) operate,
service, maintain and repair the Facility and replace all
necessary components thereof [PORTION OMITTED AND FILED
SEPARATELY PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] (B)
in accordance with such operating standards as shall be required
to take economic advantage of and enforce all available
warranties to the extent such warranties are material to the
value or operation of the Facility, (C) in accordance with all
Insurance Requirements applicable to the Facility and (D) in
accordance with all material Governmental Actions and Legal
Requirements relating thereto.
-26-<PAGE>
(g) The Lessee has obtained and shall maintain in full
force and effect all operating licenses, if any, relating to the
Facility issued by the FERC, The Public Utilities Commission of
Ohio or any other state or federal agency, which are required for
the operation of the Facility.
SECTION 10. Insurance.
(a) Required Insurance.
(i) The Lessee shall carry and maintain, or cause to be
carried and maintained, at least the following insurance
coverage, in each case with insurers of recognized
responsibility:
(A) "all risk" property insurance covering physical
loss with respect to the Project in such amounts and with
such other terms as are in accordance with general insurance
standards prevalent in the utility industry and are
comparable to the "all risk" property insurance covering
physical loss that is carried with respect to the other
1300-megawatt coal-fired electric generating units owned and
operated by Affiliates of the Lessee, endorsed to provide
that (1) losses shall be adjusted as provided in Section
10(a)(iii) hereof, (2) the Lessor, Merrill, Merrill Lynch,
Merrill Leasing, the general partner of the Lessor and its
shareholders, officers and directors, the limited partners
of the Lessor and each Assignee (the "Additional Insureds")
are included as additional insureds, as their interests may
appear, but shall not be liable for the payment of premiums,
(3) any payment thereunder for loss or damage shall be made
to the Assignee, if any, and otherwise to the Lessor, except
that payments of less than $5,000,000 made in respect of any
single casualty or other occurrence with respect to the
Project shall be paid solely to the Lessee, (4) the insurer
thereunder waives all rights to subrogation against the
Additional Insureds with respect to their respective
interests in the Project, and (5) such insurance shall be
primary without right of contribution of any other insurance
carried by or on behalf of any Additional Insured with
respect to its interest in the Project; and
(B) bodily injury and property damage liability
insurance (including product liability, completed operations
and personal injury insurance) covering claims arising out
of the ownership, operation, maintenance, condition or use
of the Project or any Equipment in such amounts and with
such other terms as are in accordance with prudent utility
practice and are comparable to the bodily injury and
property damage liability insurance which is carried with
respect to the other 1300-megawatt coal-fired electric
generating units owned and operated by Affiliates of the
-27-<PAGE>
Lessee (but the Lessee shall not be obligated to maintain
such insurance in an amount greater than $20,000,000
"single-limit" coverage), endorsed as provided in clauses
(2), (4) and (5) of Section 10(a)(i)(A) hereof.
(ii) On the Effective Date and on or prior to September
1 of each year commencing September 1, 1995, the Lessee shall
furnish the Lessor: (A) a report signed by the Lessee that
includes a copy of the certificate of insurance signed by the
insurer (which certificate shall indicate that all
endorsements required under Section 10(a) hereof are
applicable), describing in detail the insurance then
maintained pursuant to this Section 10 and stating that no
premiums are then delinquent; and (B) a certificate signed by
a Responsible Officer of the Lessee stating that such
insurance is in accordance with this Section 10.
(iii) All losses shall be adjusted with the insurance
companies and all insurance proceeds shall be collected,
including by the filing of appropriate proceedings, by or on
behalf of the Lessee, and all insurance proceeds paid in
respect of insurance maintained pursuant to Section 10(a)
shall be applied as provided in paragraph (c) or paragraph (d)
of this Section 10, as the case may be, subject, however, to
any priority allocations of such proceeds as set forth in the
insurance policies or as required under applicable law.
(iv) Provided that such endorsements are reasonably
available in the commercial insurance market, the Lessee shall
obtain endorsements to the insurance policies carried pursuant
to Section 10(a)(i) hereof providing that (A) the respective
interests of the Additional Insureds shall not be invalidated
by any act or neglect by the Lessee or any other Person,
including breach of any warranty contained in such policies,
except for violation of the terms of such policy by an
Indemnified Person and (B) no lapse, cancellation or material
change with respect to such policies shall be effective as to
an Additional Insured until at least 30 days after receipt by
such Additional Insured of written notice thereof.
(b) Other Insurance. Nothing in this Section 10 shall
prohibit the Lessee from maintaining at its expense insurance on
or with respect to the Project or any Equipment or with respect
to the cost of purchasing replacement power, naming the Lessee as
insured and/or loss payee, unless such insurance would conflict
with or otherwise limit the availability of insurance required to
be maintained under Section 10(a). Nothing in this Section 10
shall prohibit the Lessor from maintaining at its expense other
insurance on or with respect to the Project or any Equipment,
naming the Lessor or any Assignee as insured and/or loss payee,
unless such insurance would conflict with or otherwise limit the
insurance required to be maintained under Section 10(a) hereof.
-28-<PAGE>
(c) Application of Insurance Proceeds for Loss or Taking.
As between the Lessor and the Lessee it is agreed that any
insurance payments received as the result of the occurrence of
(i) any event of loss described in paragraph (c) of Section 15
hereof with respect to the Project, or (ii) any event of Taking
described in Section 16 hereof shall be paid to an account of the
Lessor and disposed of, as set forth in paragraph (c) of Section
15 hereof.
(d) Application of Insurance Proceeds for Other than Loss
or Taking. As between the Lessor and the Lessee, if the
insurance proceeds of any property damage loss to the Project are
less than $5,000,000, such proceeds will be paid to the Lessee.
If such proceeds equal or exceed $5,000,000, such proceeds will
be held in an account of the Lessor and applied in payment (or to
reimburse the Lessee) for repairs or replacement in accordance
with the terms of paragraph (b) of Section 15 hereof. The Lessee
shall be entitled (i) to receive the amounts so deposited against
certificates, invoices or bills satisfactory to the Lessor,
delivered to the Lessor from time to time as such work or repair
progresses, and (ii) to direct the investment of the amounts so
deposited as provided in paragraph (e) of this Section 10. To
the extent that the Lessor estimates that the cost of such work
or repair shall exceed the amount of proceeds, the Lessee shall
make adequate provisions for the payment thereof, which
provisions shall be acceptable to the Lessor. Any moneys
remaining in the aforesaid account after final payment for
repairs has been made shall be paid to the Lessee.
(e) Investment. The Lessor, at the Lessee's instruction,
may invest the amounts deposited with the Lessor pursuant to
paragraph (d) of this Section 10 in any investments permitted
under a Financing Arrangement. Such investments shall mature in
such amounts and on such dates so as to provide that amounts
shall be available on the draw dates sufficient to pay the
amounts requested by and due to the Lessee. Any interest earned
on investments of such funds shall be paid to the Lessee. The
Lessor shall not be liable for any loss resulting from the
liquidation of each and every such investment and the Lessee
shall bear the risk of such loss, if any.
(f) Application in Default. Any insurance proceeds
referred to in paragraph (a), (c) or (d) or investment earnings
referred to in paragraph (e) of this Section 10 which is payable
to the Lessee shall not be paid to the Lessee or, if it has been
previously paid to the Lessee, shall not be retained by the
Lessee, if at the time of such payment an Event of Default shall
have occurred and be continuing. In such event, all such amounts
shall be paid to and held by the Lessor as security for the
obligations of the Lessee hereunder or, at the Lessor's option,
applied by the Lessor toward payment of any of such obligations
of the Lessee at the time due hereunder as the Lessor may elect.
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At such time as there shall not be continuing any Event of
Default, all such amounts at the time held by the Lessor in
excess of the amount, if any, which the Lessor shall have elected
to apply as above provided shall be paid to the Lessee.
SECTION 11. Indemnities.
The Lessee shall indemnify and hold harmless the Lessor,
Merrill, Merrill Lynch, Merrill Leasing, each Assignee, any
successor or successors and any Affiliate of each of them, and
their respective officers, directors, incorporators,
shareholders, partners (general and limited, including, without
limitation, the general and limited partners of the Lessor),
employees, agents and servants (each of the foregoing an
"Indemnified Person") from and against all liabilities (including
strict liability in tort), taxes, losses (excluding the loss of
anticipated profits), obligations, claims (including strict
liability in tort), damages, penalties, causes of action, suits,
costs and expenses (including, without limitation, reasonable
attorneys' and accountants' fees and expenses) or judgments of
any nature relating to or in any way arising out of:
(a) The ordering, delivery, acquisition, construction,
title on acquisition, rejection, installation, possession,
titling, retitling, registration, reregistration, custody by the
Lessee of title and registration documents, ownership, use,
non-use, misuse, financing, operation, transportation, repair,
control or disposition, including, without limitation,
disposition at the end of any Extended or Renewal Term, of the
Project or any Equipment or the release of hazardous substances
on, under, to or from, or the generation or transportation of
hazardous substances to or from, the Project, (i) except to the
extent that such costs are included in the Acquisition Cost of
the Project and Equipment, (ii) except for any general
administrative expenses of the Lessor, and (iii) except the taxes
with respect to which indemnification is excluded under paragraph
(c) of this Section 11;
(b) 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 the Project or any Equipment;
provided, however, that upon request of the Lessee, the Lessor
will make available to the Lessee the Lessor's rights under any
similar indemnification arising from any manufacturer's or
vendor's warranties or undertakings with respect to the Project
or any Equipment;
(c) All U.S. Federal, state, county, municipal, foreign or
other fees and taxes of whatsoever nature, including but not
limited to license, qualification, franchise, sales, use, gross
income, gross receipts, ad valorem, business, personal property,
real estate, value added, excise, motor vehicle, occupation fees
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and stamp or other taxes or tolls of any nature whatsoever, and
penalties and interest thereon, whether assessed, levied against
or payable by the Lessor or otherwise, with respect to the
Project or any Equipment or the acquisition, purchase, sale,
rental, use, operation, control, ownership or disposition of the
Project or any Equipment (including, without limitation, any
claim by any Governmental Authority for transfer tax, transfer
gains tax, mortgage recording tax, filing or other similar taxes
or fees in connection with the acquisition of the Project or any
Equipment by the Lessor or otherwise in connection with this
Lease) or measured in any way by the value thereof or by the
business of, investment in, or ownership by the Lessor with
respect thereto; provided, however, that this Section 11(c) shall
not be deemed to obligate the Lessee to pay:
(1) taxes that are imposed on an Indemnified Person by the
United States Federal government based upon or measured by net
income (including any alternative minimum taxes, any
withholding taxes on net income, any taxes on or measured by
items of tax preference, surcharges, additions to tax,
penalties, fines or other charges in respect thereof);
(2) taxes (other than taxes in the nature of sales, use,
rental or utilities taxes) that are (a) imposed by any state
or local jurisdiction or taxing authority within the United
States or by any foreign country or governmental subdivision
thereof or by any possession, territory or commonwealth of the
United States and (b) that are based upon or measured by net
income (including any minimum taxes, withholding taxes on net
income or taxes on or measured by items of tax preference),
provided, however, that if net worth is an alternative base or
measure of the corporate franchise tax and is applicable to an
Indemnified Person because it is greater than the corporate
franchise tax calculated on net income, such tax shall be
excluded from indemnification to the extent of the amount of
tax that would have been imposed had the base or measure of
such tax been net income; and, provided further, that
notwithstanding any provision herein, this Section 11(c) shall
obligate the Lessee to indemnify and hold harmless (A)
Merrill, Merrill Lynch, Merrill Leasing and any Affiliate
thereof for state and local income taxes (or the net worth
taxes that would, but for this clause, be excluded from the
Lessee's indemnity obligation hereunder by the preceding
clause) to the extent of the excess of such taxes imposed by
the State of Ohio or any political subdivision thereof
pursuant to a Unitary Method of Taxation over the amount of
such taxes which would have been imposed by the State of Ohio
or any political subdivision thereof had such state or
political subdivision not utilized the Unitary Method of
Taxation and (B) Indemnified Persons for state and local
income taxes to the extent imposed as a result of the
inability to claim, disallowance or other loss by JMG Funding,
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Limited Partnership of deductions allowed in computing net
income for purposes of Federal net income taxation (e.g.,
interest expense, financing, administrative, ordinary
operating expenses and other fees and expenses);
(3) any taxes imposed on an Indemnified Person (other than
any Assignee) that are a result of such Indemnified Person not
being a citizen or resident of, or not being organized under
the laws of, the United States or any political subdivision
thereof;
(4) any tax that by its express terms or other clearly
ascertainable evidence is enacted or adopted as a direct
substitute for or in lieu of any tax that would not have been
indemnified against pursuant to this Section 11(c);
(5) taxes that have not been paid or credited and that are
being contested in accordance with the provisions of Section
28 hereof, during the pendency of such contest;
(6) taxes that are imposed on any Indemnified Person solely
as a result of the gross negligence or willful misconduct of
such Indemnified Person or its affiliate (other than gross
negligence or willful misconduct imputed to such Indemnified
Person solely by reason of its interest in the Project or its
participation in the transactions contemplated by this Lease);
(7) taxes that result solely from any act, event or
omission (other than the payment of amounts described in this
Lease), that occurs after the earliest of (a) so long as no
Event of Default shall have occurred and be continuing, the
expiration of the Lease Term of the Project and (b) the
termination of the lease of the Project as provided under
Sections 12, 13 and 14 hereof;
(8) taxes that result from any voluntary transfer by an
Indemnified Person of any interest in the Project or any part
thereof or any interest arising under this Lease (other than
as contemplated by Section 12, 13, 14, 15, 19, 20, 21 or 29 of
this Lease), or from any voluntary transfer of any interest in
an Indemnified Person or from any involuntary transfer of any
of the foregoing interests in connection with any bankruptcy
or other proceeding for the relief of debtors in which such
Indemnified Person is the debtor or any foreclosure by a
creditor of any Indemnified Person; provided, however, that
this exception shall not apply if any such transfer shall
occur at any time while an Event of Default shall have
occurred and be continuing;
(9) any taxes to the extent of the excess of such taxes
over the amount of such taxes that would have been payable had
there not been a transfer of the Project or any interest
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therein or an interest arising under any Transaction Documents
by a predecessor in interest of the Indemnified Person;
provided, however, that this exception shall not apply if any
such transfer shall occur at any time while an Event of
Default shall have occurred and be continuing or to such
transfer by Merrill Lynch or any Affiliate thereof to
individual investors and institutional investors who are
citizens or residents of, or are organized under the laws of,
the United States or any political subdivision thereof; and
(10) any tax on or with respect to an Indemnified Person
resulting solely from any amendment or modification entered
into by such Indemnified Person to any Transaction Document if
the Lessee is not a party to such amendment or modification or
has not consented to such amendment or modification, in each
case unless an Event of Default shall have occurred and be
continuing; or
(d) Any violation, or alleged violation by the Lessee, of
this Lease or of any contracts or agreements to which the Lessee
is a party or by which it is bound or of 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 Legal Requirements;
provided, however, that the foregoing indemnity shall not extend
to any amount to which an Indemnified Person would otherwise be
entitled to receive under paragraphs (a), (b) or (d) of this
Section 11 to the extent the same relates to or arises solely out
of one or more of the following circumstances:
(1) the Indemnified Person is Merrill, Merrill Lynch,
Merrill Leasing or any Affiliate thereof, and the obligation
to indemnify arises solely as a result of the incorrectness of
any representation or warranty of Merrill, Merrill Lynch,
Merrill Leasing or any Affiliate thereof contained in or made
pursuant to any of the Transaction Documents;
(2) the Indemnified Person is Merrill, Merrill Lynch,
Merrill Leasing or any Affiliate thereof, and the obligation
to indemnify arises solely as a result of the failure of
Merrill, Merrill Lynch, Merrill Leasing or any Affiliate
thereof to perform or observe any covenant, agreement or
condition on its part required to be performed or observed in
any of the Transaction Documents;
(3) the willful misconduct or gross negligence of such
Indemnified Person or of its successors, assigns, agents,
officers, directors or employees;
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(4) any voluntary transfer by an Indemnified Person of any
interest in the Project or any part hereof or any interest
arising under this Lease (other than as contemplated by
Section 12, 13, 14, 15, 19, 20, 21 or 29 of this Lease), or
from any voluntary transfer of any interest in an Indemnified
Person or from any involuntary transfer of any of the
foregoing interests in connection with any bankruptcy or other
proceeding for the relief of debtors in which such Indemnified
Person is the debtor or any foreclosure by a creditor of any
Indemnified Person; provided, however, that this exception
shall not apply if any such transfer shall occur at any time
while an Event of Default shall have occurred and be
continuing;
(5) acts or events that occur after the earlier of the
expiration or termination of the Lease Term;
(6) such amount is (x) included in Adjusted Acquisition
Cost or (y) incurred by any Indemnified Person (or any
successor, assign, agent, officer, director or employee of
such Indemnified Person) to the extent that such Indemnified
Person shall have expressly agreed in this Lease (including,
but not limited to, Contingent Rent), or any other Transaction
Document or otherwise to bear such expense without right of
reimbursement or indemnity under this Lease or any other
Transaction Document;
(7) any tax for which indemnification is not required under
paragraph (c) of Section 11 hereof;
(8) the violation by such Indemnified Person (other than
the Lessor) of any banking, insurance or securities law, rule
or regulation applicable to its business generally (unless
such violation shall be the result of a misrepresentation,
violation, act or omission of the Lessee or any Affiliate of
the Lessee); or
(9) any amendment or modification entered into by such
Indemnified Person to any agreement entered into in connection
with the transactions contemplated by this Lease, the
Agreement for Lease or a Financing Arrangement (each such
agreement, a "Transaction Document"), if the Lessee is not a
party to such amendment or modification or has not consented
to such amendment or modification, in each case unless an
Event of Default shall have occurred and be continuing.
The Lessee shall forthwith upon demand reimburse any
Indemnified Person for any sum or sums expended with respect to
any of the foregoing or, upon request from any Indemnified
Person, shall pay such amounts directly. Any payment made to or
on behalf of any Indemnified Person pursuant to this Section 11
shall be increased to such amount as will, after taking into
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account all taxes imposed with respect to the accrual or receipt
of such payment (as the same may be increased pursuant to this
sentence), equal the amount of the payment, reduced by the amount
of any savings in such taxes actually realized by the Indemnified
Person as a result of the payment or accrual of the amounts in
respect of which the payment to or on behalf of the Indemnified
Person hereunder is made. To the extent that the Lessee in fact
indemnifies any Indemnified Person under the indemnity provisions
of this Lease, the Lessee shall be subrogated to such Indemnified
Person's rights in the affected transaction and shall have a
right to determine the settlement of claims therein.
If an Indemnified Person claims entitlement to
indemnification under this Section 11, such Indemnified Person
shall provide the Lessee with a written notice of such claim
("Claim") which notice shall (i) state the amount of the Claim,
(ii) describe the basis for the Claim and (iii) provide either
sufficient evidence reasonably satisfactory to the Lessee of the
accuracy of the amount of such Claim or, at the Lessee's request
and expense, obtain confirmation to such effect from a nationally
recognized independent accounting firm (other than an accounting
firm then currently retained by either the Indemnified Person or
the Lessee) as agreed to by the Indemnified Person and Lessee.
If the amount of the Claim as calculated by such accounting firm
exceeds the amount of the Claim as calculated by the Indemnified
Person, the Lessee shall pay such greater amount. If the amount
of the Claim as calculated by such accounting firm is less than
the amount of the Claim as calculated by the Indemnified Person,
the Lessee shall pay such lower amount. In any case in which the
Lessee requests confirmation by an independent accounting firm of
an amount demanded under this Section 11, such confirmation shall
be undertaken promptly, and the Lessee agrees that in any event
the Lessee shall pay the amount required under this Section 11
within 30 days of demand, whether or not such amount has been so
confirmed.
Except as expressly provided herein, the indemnities
contained in this Section 11 shall not be affected by any
termination of this Lease as a whole or in respect of the Project
or any Unit of Equipment leased hereunder or any failure or
refusal of the Lessee to accept the Project or any equipment
acquired or ordered pursuant to the terms hereof.
In the event any claim, action, proceeding or suit is
brought against an Indemnified Person with respect to which the
Lessee would be required to indemnify such Indemnified Person,
the Indemnified Person shall promptly give written notice of any
such claim, action, proceeding or suit to the Lessee. The
Lessee, upon receipt of such notice, shall have the right to
assume the defense of any action, proceeding or suit or, with
respect to a claim, to determine whether payment should be made
or if the claim should be contested, including the employment of
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counsel and the payment of all costs of litigation; provided,
that the failure of the Indemnified Person to give such notice to
the Lessee shall not relieve the Lessee from any of its
obligations to provide indemnification under this Section 11,
except to the extent that any amount for which indemnity is
required hereunder is a direct result of such failure to give
notice, and provided further, that the Lessee shall not have such
right, to the extent that such Indemnified Person shall deliver
to the Lessee a written notice waiving the benefits of the
indemnification of such Indemnified Person provided by this
Section 11 in connection with such claim, action, proceeding or
suit.
Notwithstanding the preceding paragraph, if (a) the
employment of such counsel shall have been authorized in writing
by the Lessee or (b) the Lessee, after the aforementioned notice
of any claim, action, proceeding or suit, shall not have employed
counsel to have charge of such defense, then the Indemnified
Person shall have the right to employ its own counsel and to
assume its own defense, and all reasonable fees and expenses
incurred by the Indemnified Person in such defense shall be borne
by the Lessee.
Notwithstanding the foregoing, if (i) any criminal
proceeding is brought against an Indemnified Person who is an
individual, (ii) the action threatens to restrain or adversely
affect the conduct of the business of an Indemnified Person,
(iii) the claim, action, suit or proceeding seeks recovery of
more than $5,000,000, or (iv) independent counsel to an
Indemnified Person shall conclude that there may be defenses
available to the Indemnified Person which are different from, or
additional to, and may conflict with those available to the
Lessee, the Lessee shall not have the right to assume the defense
of any such action on behalf of the Indemnified Person if such
Indemnified Person chooses to defend such action, and all
reasonable costs, expenses and attorneys' fees incurred by the
Indemnified Person in defending such action shall be borne by the
Lessee.
If the Lessee has assumed the defense of any Indemnified
Person pursuant to this Section 11, such Indemnified Person shall
nevertheless have the right to employ separate counsel and to
participate in its defense, but the fees and expenses of such
counsel shall be borne by the Indemnified Person. Any decision
by an Indemnified Person to employ its own counsel rather than
counsel selected by the Lessee (whether or not at the Lessee's
expense) shall in no way affect any rights of such Indemnified
Person otherwise arising under this Section 11, except to the
extent that the Lessee or its counsel shall arrange a settlement
of any claim, action, proceeding or suit against an Indemnified
Person, which settlement provides relief against an Indemnified
Person only in the form of monetary damages, then in such event
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the Lessee shall be required to indemnify such Indemnified Person
on account of such claim, action, proceeding or suit only to the
extent of the amount required by such settlement, whether or not
the Indemnified Person shall agree to such settlement. The
Lessee shall have no liability under this Section 11 to any
Indemnified Person for any settlement or compromise of any claim,
action, proceeding or suit, unless the Lessee has consented to
such settlement or compromise in writing.
The Lessor and the Lessee hereby agree that nothing
contained in this Section 11 shall be construed as a guaranty by
the Lessee of any of the Lessor's Financing Arrangements.
SECTION 12. Lessee's Right to Terminate.
(a) So long as no Event of Default has occurred and is
continuing, and subject to the Lessor's ability to effect such
transaction under the Ground Lease, any Financing Arrangement and
any document relating thereto, the Lessee shall have the right,
upon one hundred twenty (120) days' notice to the Lessor, to
terminate the lease of the Project on the last Business Day of
the last month of the Initial Term or on the last Business Day in
each month during the Extended Term or the Renewal Term, if any,
by arranging, at its own cost and expense, for the sale of the
Project in an arms' length transaction on the date of termination
and the receipt by the Lessor of the proceeds of such sale. The
lease of the Project may be terminated pursuant to this Section
12 only as a whole.
(b) In the event the Lessee exercises its right to
terminate the lease of the Project pursuant to this Section 12 or
in the event a termination of the lease of the Project occurs
pursuant to Section 14 hereof and the Lessee chooses to effect a
sale pursuant to this Section:
(i) if the proceeds of sale received by the Lessor are
greater than the aggregate Adjusted Acquisition
Cost of the Project, the Lessor shall pay to the
Lessee the amount by which such proceeds exceed
such aggregate Adjusted Acquisition Cost; and
(ii) if the proceeds of sale received by the Lessor are
less than the aggregate Adjusted Acquisition Cost of
the Project, the Lessee shall pay to the Lessor an
amount equal to (A) such aggregate Adjusted
Acquisition Cost less (B) the proceeds of such sale.
(c) All payments and credits referred to in paragraph (b)
above shall be made on the termination date of the lease of the
Project pursuant to this Section 12, and the parties shall
account to each other for such payments and credits, and the
Lessee shall pay to the Lessor all Basic Rent payable, the
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Variable Component of Fixed Rent accrued with respect to the
Project and any Additional Rent and other amounts owing
hereunder. Upon receipt by the Lessor of the proceeds of sale
and all other amounts then due and owing hereunder, the Lessor
shall transfer title to the Project to the purchaser at the sale
designated by the Lessee, and this Lease shall terminate. The
"proceeds of sale" referred to in paragraph (b) above shall mean
the proceeds of sale without reduction for any amounts paid by
the Lessee.
SECTION 13. Lessee's Rights of Purchase and Renewal.
(a) So long as no Event of Default has occurred and is
continuing, and subject to the Lessor's ability to effect such
transaction under the Ground Lease, any Financing Arrangement and
documents relating thereto, the Lessee shall have the right, upon
one hundred twenty (120) days' written notice to the Lessor, to
purchase the Project on the Basic Rent Payment Date of the last
month of the Initial Term or on the last Business Day in each
month during the Extended Term or the Renewal Term, if any,
thereof for an amount equal to the greater of its Adjusted
Acquisition Cost or its fair market value, as agreed to between
the Lessor and the Lessee, or if they do not agree, as determined
pursuant to the Appraisal Procedure. The Lessee may revoke its
notice to purchase at any time up to three (3) Business Days
prior to the date of purchase. In connection with any purchase
under this paragraph (a), on the date upon which such purchase
occurs, the Lessee shall pay to the Lessor the purchase price,
all Basic Rent payable, the Variable Component of Fixed Rent
accrued with respect to the Project and any Additional Rent and
other amounts following hereunder. The Lessee may purchase the
Project pursuant to this Section 13 only as a whole.
(b) So long as no Event of Default has occurred and is
continuing, the Lessee shall have the right, upon one hundred
twenty (120) days' written notice to the Lessor, to renew the
lease of the Project for a term (the "Renewal Term") equal to two
hundred forty (240) calendar months, commencing on the first day
of the calendar month following the last day of the Lease Term
thereof.
SECTION 14. Lessor's Right to Terminate; Termination
Events.
(a) The Lessor shall have the right upon written notice to
the Lessee to terminate the lease of the Project as of a Basic
Rent Payment Date stipulated in such notice if at any time, for
any reason (other than an Event of Default by the Lessor under a
Financing Arrangement (as therein defined) which has not been
caused by or resulted from an Event of Default under this Lease
or from a breach by the Lessee of its obligations under any
agreement or document executed and delivered in connection with
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this Lease), the Lessor cannot arrange for financing upon terms
reasonably acceptable to the Lessor to finance or refinance the
Project. The Lessor agrees to make all reasonable efforts to
arrange for such financing, provided, that the failure to make
such reasonable efforts will not affect the Lessor's rights under
this paragraph (a) of this Section 14 and the Lessor's
determination of whether or not the Lessor can arrange for such
financing upon terms reasonably acceptable to the Lessor shall be
conclusive and binding upon the Lessee.
(b) This Lease shall terminate immediately upon the
happening of the following event ("Termination Event"): if, any
time from and including the Effective Date and before the lease
of the Project hereunder is terminated, the Lessor, solely by
reason of the acquisition or ownership of the Project or any part
thereof by the Lessor or the lease of the Project to the Lessee
or any of the other transactions contemplated by this Lease, or
solely as a consequence of any Governmental Action relating to
such ownership, acquisition, leasing or transactions, shall be
deemed by any Governmental Authority having jurisdiction to be,
or shall become subject to regulation as, an electric utility, a
public utility or a holding company of an electric utility or
public utility under any applicable law (other than the 1935 Act,
so long as by virtue of Rule 7D thereunder the Lessor is not
deemed to be a utility thereunder) and the effect thereof on the
Lessor or any Affiliate which controls the Lessor would be, in
the sole judgment of the Lessor, acting on the advice of counsel,
adverse; provided, however, that, if the Lessee is contesting
diligently and in good faith any Governmental Action that would
otherwise constitute a Termination Event, such Termination Event
shall be deemed not to have occurred so long as (i) such contest
does not involve any danger of the foreclosure, forfeiture or
loss of, or the creation of any Lien (other than a Permitted
Lien) on, the Project or any part thereof or interest therein or
any substantial danger of the sale of the Project or any part
thereof or interest therein, (ii) the Lessee shall have furnished
to the Lessor an opinion of independent counsel satisfactory to
the Lessor and any Assignee to the effect that (x) there exists a
reasonable basis for contesting such determination or (y) in the
case of any action arising from or related to the Lessor under
the 1935 Act, it is more likely than not that the Lessee will
contest such determination successfully, without the need for any
appeal, (iii) such determination shall be effectively stayed or
withdrawn during such contest (and shall not be subject to
retroactive application at the conclusion of such contest) in a
manner satisfactory to the Lessor, and the Lessor shall have
determined in its sole judgment that such contest and the
Lessor's continued ownership of the Project during the pendency
of such contest will not adversely affect its business or the
business of any of its Affiliates, and (iv) the Lessee shall have
indemnified the Lessor in a manner satisfactory to the Lessor for
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any liability or loss that it may incur as a result of such
determination and contest.
(c) In the event of a termination with respect to the
Project pursuant to paragraph (a) of this Section 14, the Lessee
shall be required, at its option, either (i) to arrange for the
Project to be sold under the terms and subject to the conditions
of Section 12 above and with the consequences therein provided,
except that such sale must occur on the Basic Rent Payment Date
stipulated in the written notice contemplated in paragraph (a) of
this Section 14, or (ii) to purchase, on the Basic Rent Payment
Date stipulated in the written notice contemplated by paragraph
(a) of this Section 14, Lessor's interest in the Project for cash
at its Adjusted Acquisition Cost. In connection with any
purchase or sale under this paragraph, on the Basic Rent Payment
Date upon which such purchase or sale occurs, the Lessee shall
pay to the Lessor, in addition to any purchase price payable, all
Basic Rent payable, the Variable Component of Fixed Rent accrued
with respect to the Project and any Additional Rent and other
amounts owing hereunder.
(d) Upon the date of the occurrence of any Termination
Event (the first such date being herein called the "Termination
Event Date"), this Lease shall terminate, except with respect to
obligations and liabilities of the Lessee, actual or contingent,
which arose under this Lease on or prior to the Termination Event
Date and except for the Lessee's obligations set forth in
Sections 7, 8, 9, 10, 15, 16, 17 and 19 hereof, and in this
Section 14(d), all of which obligations will continue until the
payment by the Lessee provided for below, and except that
Lessee's obligations under Sections 5 and 11 hereof shall
continue as set forth herein. Forthwith also upon such
termination, title to, and the entire interest of the Lessor in,
the Project shall automatically transfer to and be vested in the
Lessee, without the necessity of any action by either the Lessor
or the Lessee, but subject to the rights of any Assignee. As
soon as possible after either the Lessor or the Lessee shall
learn of the happening of any Termination Event, such party shall
give notice thereof to the other party hereto which notice shall
(i) acknowledge that this Lease has terminated, subject to the
continuing obligations of the Lessee mentioned above, and that
title to and ownership of the Project has transferred to and
vested in the Lessee, subject as aforesaid and (ii) state that on
the last day (or if such day is not a Business Day, on the next
succeeding Business Day) of the third calendar month next
succeeding the Termination Event Date, the Lessee shall be
obligated to pay to the Lessor, as the purchase price for the
Project, the sum of the Adjusted Acquisition Cost of the Project
as of such date. Any day on which the Lessee is obligated to pay
to the Lessor the Adjusted Acquisition Cost of the Project
pursuant to the preceding sentence or any day on which the Lessee
is required to pay the Adjusted Acquisition Cost of the Project
-40-<PAGE>
pursuant to paragraph (c) of Section 15, paragraph (a) of Section
16, Section 20 or paragraph (d) of Section 29 hereof is herein
called the "Termination Settlement Date". In connection with any
purchase under this paragraph (d), on the Termination Settlement
Date, the Lessee shall pay to the Lessor, in addition to any
purchase price payable, all Basic Rent payable, the Variable
Component of Fixed Rent accrued with respect to the Project and
any Additional Rent and other amounts owing hereunder. Upon the
delivery of notice as provided in this paragraph (d), the Lessee
shall become obligated to make the payment required on the
Termination Settlement Date to the same extent as if it had
acknowledged in writing its obligation so to do. The Lessee's
obligation to make such payment shall be unconditional and
unaffected by any event or matter whatsoever including, without
limitation, failure of the Lessor to deliver a bill of sale, a
deed or similar confirmatory documentation of the quality,
condition, existence, utility or title of or to the Project or
any Equipment. Any such payment made by Lessee shall not
prejudice, or constitute a waiver of, any right, claim or cause
of action which the Lessee shall have against the Lessor. Upon
payment by the Lessee of all amounts payable under this paragraph
(d), the Lessor shall deliver to the Lessee, at the Lessee's
expense, such deeds, bills of sale or other instrument of
transfer as the Lessee may reasonably request.
SECTION 15. Loss of or Damage to the Project or Equipment.
(a) The Lessee hereby assumes all risk of loss of or damage
to the Project and the Equipment, however caused. No loss of or
damage to the Project or the Equipment shall impair any
obligation of the Lessee under this Lease, which shall continue
in full force and effect with respect to the Project and any lost
or damaged Equipment.
(b) In the event of damage of any kind whatsoever to the
Project (unless the same is determined by the Lessee to be
damaged to such extent that the Project is unusable as a flue gas
desulfurization system) the Lessee, at its own cost and expense,
shall promptly proceed diligently to restore the Project to
satisfactory operating order, repair, condition and appearance.
In the event that such damage shall result in the Project being
unusable as a flue gas desulfurization system, the Lessee shall
promptly notify the Lessor of such fact and of the date such
damage occurred. Within one hundred eighty (180) days of the
date of such damage, the Lessee must give the Lessor further
notice whether or not the Project, in the reasonable judgment of
the Lessee, may be restored to satisfactory operating order,
repair, condition and appearance by the date which is twenty-four
(24) months from the date of such damage. If the Lessee
determines that the Project may be so restored, the Lessee shall
promptly commence such restoration and diligently proceed
therewith. If the Lessee determines that the Project may not be
-41-<PAGE>
so restored, the Project shall be deemed destroyed and shall be
subject to the provisions of paragraph (c) of this Section 15.
If, after giving the second notice contemplated by this paragraph
(b), the Lessee shall not complete restoration within twenty-four
(24) months of the date of such damage, shall fail to diligently
proceed with restoration of the Project, or shall determine that
restoration may not be completed within twenty-four (24) months
of the date of damage, the Project shall be deemed destroyed and
shall be subject to the provisions of paragraph (c) of this
Section 15. In the case that paragraph (c) of this Section 15
applies in any of the foregoing circumstances, the "date of such
event" in such paragraph shall be the date upon which the
provisions of the preceding sentence became applicable or the
date upon which notice that the Project is deemed destroyed
pursuant to this paragraph (b) is received by the Lessor. The
Lessee's right to any proceeds paid under any insurance policy or
policies required under Section 10 of this Lease with respect to
any such damage to the Project or Equipment which has been so
placed by the Lessee in satisfactory operating order, repair,
condition and appearance is governed by paragraph (d) of Section
10 hereof.
(c) If any Equipment is lost, stolen, destroyed, seized,
confiscated, rendered unfit for use or damaged beyond repair, the
Lessee shall promptly replace such Equipment. If the Project is
destroyed, seized, confiscated, rendered unfit for use or damaged
to an extent (in the reasonable judgment of the Lessee) such that
it is unusable as a flue gas desulfurization system and the
Lessee does not or does not intend to restore the Project as
provided by Section 15(b) hereof, or if the use thereof by the
Lessee in the ordinary course of business is prevented by the act
of any third Person or Persons other than a Governmental
Authority for a period exceeding forty-five (45) days, or if the
Project is attached (other than on a claim against the Lessor as
to which the Lessee is not obligated to indemnify the Lessor) and
the attachment is not removed within forty-five (45) days, or if
a Taking as described in Section 16 shall occur, or if a Facility
Event of Loss shall occur, then in any such event, (i) the Lessee
shall promptly notify the Lessor in writing of such event, (ii)
on the last Business Day of a calendar month within one hundred
twenty (120) days of the date of such event, the Lessee shall pay
to the Lessor an amount equal to the Adjusted Acquisition Cost of
the Project along with all Basic Rent payable, the Variable
Component of Fixed Rent accrued with respect to the Project and
any Additional Rent and other amounts owing hereunder, (iii) the
Lease Term or Renewal Term of the Project shall continue until
the date on which the Lessor receives payment from the Lessee
pursuant to the foregoing clause (ii) and shall thereupon
terminate and (iv) the Lessor shall on such payment date transfer
title to the Project to the Lessee, and the Lessee shall be
subrogated to the Lessor's rights resulting from such event.
Insurance and condemnation proceeds, if any, received by the
-42-<PAGE>
Lessor in excess of the Adjusted Acquisition Cost of the Project,
so long as all amounts due and owing by the Lessee pursuant to
Section 19 hereof have been paid to the Lessor, shall be paid by
the Lessor to the Lessee upon the payment by the Lessee of all
amounts referred to in the preceding sentence.
SECTION 16. Condemnation and Dedication of the Project;
Easements.
(a) If (i) the use of all or substantially all of the
Project is taken or requisitioned by or on account of any
Governmental Authority for a period that will exceed twenty-four
(24) months or end after the expiration of the Lease Term or any
Renewal Term, or (ii) the title to all or substantially all of
the Project is taken, requisitioned or sold in, by or on account
of actual or threatened eminent domain proceedings or other
action by any Governmental Authority having the power of eminent
domain (such events collectively referred to as a "Taking"), then
the Lease Term or Renewal Term shall terminate as provided in
paragraph (c) of Section 15 hereof. Upon receipt of proceeds
from any award or sale made in connection with such Taking, if
the Lessee has paid all amounts owing under paragraph (c) of
Section 15 hereof, so long as no Event of Default has occurred
and is continuing, the Lessor shall remit to the Lessee the net
amount of such proceeds remaining after reimbursement for all
costs and expenses (including, without limitation, reasonable
attorneys' fees) incurred by the Lessor in connection with the
negotiation and settlement of any proceedings related to such
Taking. A Taking shall be deemed substantial, after such Taking,
if the remainder of the Project is, or will be, unusable by the
Lessee as a flue gas desulfurization system at the Facility
within the scope contemplated by the Agreement for Lease.
(b) If less than substantially all of the Project is
subject to a Taking, then this Lease shall continue in effect as
to the portion of the Project not taken and any net proceeds, so
long as no Event of Default has occurred and is continuing, shall
be paid to the Lessee.
-43-<PAGE>
SECTION 17. Surrender of Equipment.
Subject to the provisions of Sections 12, 13, 14, 15, 19, 20
and 29 hereof, upon termination of the lease of the Project
hereunder, the Lessee shall surrender the Equipment to the
Lessor. Equipment shall be surrendered by delivering the same to
the Lessor at such location as the Lessor and the Lessee may
agree and, if they are unable to agree, at the location of the
Facility. The Equipment shall be surrendered in the condition
and appearance required by paragraph (b) of Section 9 of this
Lease. Any cost of removal of Equipment to the Lessor shall be
paid by the Lessee.
SECTION 18. Events of Default.
Any of the following events of default shall constitute an
"Event of Default" and shall give rise to the rights on the part
of the Lessor described in Section 19 hereof:
(a) Failure of the Lessee to pay amounts due to the Lessor
at the time of any scheduled sale of the Project hereunder,
failure of the Lessee to pay amounts due to the Lessor on any
Termination Settlement Date, failure of the Lessee to pay Basic
Rent for more than five (5) days after such payment is due
pursuant to Section 7 hereof, or failure of the Lessee to pay any
other amount payable by the Lessee hereunder for more than ten
(10) Business Days after such payment is due; or
(b) Failure to maintain the insurance required by Section
10(a)(i) hereof or default in the observance or performance of
Section 26 hereof; or
(c) Default in the performance or observance of any other
term, covenant, condition or obligation of the Lessee contained
in this Lease or any Consent and, in the case of such default
other than a default arising from the failure to maintain the
insurance required under Section 10(a)(i) hereof or to observe or
perform Section 26 hereof, such default shall continue for thirty
(30) days after written notice shall have been given to the
Lessee by the Lessor or any Assignee specifying such default and
requiring such default to be remedied; provided, that if such
default is of a nature that it is not capable of being cured by
the payment of money or cannot with diligence be cured within
such thirty (30) day period, and if the Lessee shall have
diligently commenced curing such default and proceeds diligently
and in good faith thereafter to complete curing such default then
the time within which such default may be cured shall be extended
for such period (not to exceed one hundred eighty (180) days) as
is necessary to cure such default; or
-44-<PAGE>
(d) The entry of a decree or order for relief in respect of
the Lessee by a court having jurisdiction in the premises in an
involuntary case under the Federal bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of the Lessee or of any substantial part of
the Lessee's property, or ordering the winding up or liquidation
of the Lessee's affairs, or the commencement against the Lessee
of any involuntary case under any such law and the continuance of
any such case unstayed and in effect for a period of sixty (60)
consecutive days; or
(e) The commencement by the Lessee of a voluntary case
under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy,
insolvency or other similar law, or the consent by it to the
appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar
official) of the Lessee or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the taking of corporate action by the Lessee in
furtherance of any such action; or
(f) Any representation or warranty made by the Lessee in
this Lease, any Consent or any document contemplated hereby or
thereby proves to be false or inaccurate in any material respect
on or as of the date made or deemed made; or
(g) An Event of Default (as defined in the Agreement for
Lease) shall occur under the Agreement for Lease on or before the
Effective Date; or
(h) The Lessee or an Affiliate of the Lessee shall not own
or operate the Facility.
SECTION 19. Rights upon Default.
Upon the occurrence and continuation of any Event of Default
the Lessor may in its discretion declare this Lease to be in
default and do any one or more of the following:
(a) Terminate the lease of the Project;
(b) Whether or not the lease of the Project is terminated,
take immediate possession of and remove any or all Equipment and
other equipment or property of the Lessor in the possession of
the Lessee, wherever situated, and for such purpose, enter upon
the Project without liability to the Lessee for so doing;
provided, however, that the Lessor shall be liable to the Lessee
for its entry upon the Project to the extent that such entry
-45-<PAGE>
results in damages to the Lessee which are directly caused by the
Lessor's gross negligence or intentional misconduct;
(c) Whether or not any action has been taken under
paragraph (a) or (b) above, sell the Project or any Equipment
(with or without the concurrence or request of the Lessee); and
(d) Exercise any other right or remedy which may be
available under applicable law and in general proceed by
appropriate judicial proceedings, either at law or in equity, to
enforce the terms hereof or to recover damages for the breach
hereof.
Suit or suits for the recovery of any default in the payment
of any sum due hereunder or for damages may be brought by the
Lessor from time to time at the Lessor's election, and nothing
herein contained shall be deemed to require the Lessor to await
the date whereon this Lease or the term hereof would have expired
by limitation had there been no such default by the Lessee or no
such termination or cancellation.
The receipt of any payments under this Lease by the Lessor
with knowledge of any breach of this Lease by the Lessee or of
any default by the Lessee in the performance of any of the terms,
covenants or conditions of this Lease, shall not be deemed to be
a waiver of any provision of this Lease.
No receipt of moneys by the Lessor from the Lessee after the
termination or cancellation hereof in any lawful manner shall
reinstate, continue or extend the Lease Term or any Renewal Term,
or affect any notice theretofore given to the Lessee, or operate
as a waiver of the right of the Lessor to enforce the payment of
Basic Rent or Additional Rent or other charges payable hereunder,
or operate as a waiver of the right of the Lessor to recover
possession of the Project or any Unit of Equipment by proper
suit, action, proceedings or remedy; it being agreed that, after
the service of notice to terminate or cancel this Lease, and the
expiration of the time therein specified, if the default has not
been cured in the meantime, or after the commencement of any
suit, action or summary proceedings or of any other remedy, or
after a final order, warrant or judgment for the possession of
the Project or any Unit of Equipment, the Lessor may demand,
receive and collect any moneys payable hereunder, without in any
manner affecting such notice, proceedings, suit, action, order,
warrant or judgment; and any and all such moneys so collected
shall be deemed to be payments on account for the use and
operation of the Project or any Unit of Equipment, or at the
election of the Lessor, on account of the Lessee's liability
hereunder. Acceptance of the keys to the Project, or any similar
act, by the Lessor, or any agent or employee of the Lessor,
during the term hereof, shall not be deemed to be an acceptance
-46-<PAGE>
of a surrender of the Project unless the Lessors shall consent
thereto in writing.
After any Event of Default, the Lessee shall be liable for,
and the Lessor may recover from the Lessee, (i) all Basic Rent
accrued to the date of termination of this Lease, (ii) any
Additional Rent owing, (iii) all amounts payable pursuant to
Sections 11 and 25 hereof and (iv) all losses, damages, costs and
expenses (including, without limitation, attorneys' fees and
expenses, commissions, filing fees and sales or transfer taxes)
sustained by the Lessor by reason of such Event of Default and
the exercise of the Lessor's remedies with respect thereto,
including, in the event of a sale by the Lessor of the Project or
Equipment pursuant to this Section 19, all costs and expenses
associated with such sale. The amounts payable in clauses (i)
through (iv) above are hereinafter sometimes referred to as the
"Accrued Default Obligations".
After an Event of Default, the Lessor may sell its interest
in the Project and Equipment upon any terms that the Lessor deems
satisfactory, free of any rights of the Lessee or any Person
claiming through or under the Lessee. In the event of any such
sale, in addition to the Accrued Default Obligations, the Lessor
shall be entitled to recover from the Lessee, as liquidated
damages, and not as a penalty, an amount equal to the Adjusted
Acquisition Cost of the Project, minus the proceeds of such sale
received by the Lessor. Proceeds of sale received by the Lessor
in excess of the Adjusted Acquisition Cost of the Project shall
be credited against the Accrued Default Obligations the Lessee is
required to pay under this Section 19. If such excess proceeds
exceed the Accrued Default Obligations, or, if the Lessee has
paid all amounts required to be paid under this Section 19, such
excess shall be paid by the Lessor to the Lessee. As an
alternative to any such sale, or if the Lessee converts the
Project or Equipment after an Event of Default, or if the Project
or Equipment is lost or destroyed, in addition to the Accrued
Default Obligations, the Lessor may immediately demand the Lessee
to pay to the Lessor, and the Lessee shall pay to the Lessor, as
liquidated damages and not as a penalty, an amount equal to the
Adjusted Acquisition Cost of the Project. In the event the
Lessor receives payment pursuant to the previous sentence of this
paragraph, the Lessor shall transfer all of the Lessor's right,
title and interest in and to the Project and Equipment to the
Lessee.
In the event of a sale pursuant to this Section 19, upon
receipt by the Lessor of the amounts payable hereunder, the
Lessor shall transfer all of the Lessor's right, title and
interest in and to the Project and Equipment to the Lessee or
purchaser other than the Lessee, as the case may be.
-47-<PAGE>
No remedy referred to in this Section 19 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 Event
of Default hereunder shall in any way be, or be construed to be,
a waiver of any future or subsequent Event of Default.
With respect to the termination of this Lease as to the
Project as a result of an Event of Default, the Lessee hereby
waives service of any notice of intention to re-enter. The
Lessee hereby waives any and all rights to recover or regain
possession of the Project or to reinstate this Lease as permitted
or provided by or under any statute, law or decision now or
hereafter in force and effect.
SECTION 20. Equipment to be Personal Property.
It is the intention and understanding of the Lessor and the
Lessee that all Equipment shall be and at all times remain
personal property. The Lessee shall obtain and record such
instruments and take such steps as may be necessary to prevent
any Person from acquiring any rights in Equipment paramount to
the rights of the Lessor by reason of such Equipment being deemed
to be real property. If, notwithstanding the intention of the
parties and the provisions of this Section 20, any Person
acquires or claims to have acquired any rights in any Equipment
superior to the rights of the Lessor, by reason of such Equipment
being deemed to be real property, the Lessee shall promptly
notify the Lessor in writing of such fact and (unless the basis
for such claim is waived or eliminated to the satisfaction of the
Lessor within a period of ninety (90) days from the date it is
asserted) the Lessee shall on the last Business Day of the
calendar month next following the expiration of the ninety (90)
day period referred to above in this sentence pay to the Lessor
an amount equal to the Adjusted Acquisition Cost of such
Equipment at the time of payment. On such payment date, in
addition to the payment of the Adjusted Acquisition Cost, the
Lessee shall pay to the Lessor Basic Rent payable, the Variable
Component of Fixed Rent accrued with respect to such Equipment
and any Additional Rent and other amounts owing hereunder and the
lease of such Equipment shall thereupon terminate. The Lessor
shall on such payment date transfer title to such Equipment to
the Lessee, and the Lessee shall be subrogated to the Lessor's
rights in the affected transaction. For purposes of this Section
20, if the lease of substantially all of the Project is
terminated pursuant to this Section 20, then the lease of the
Project as a whole shall be terminated in accordance with this
Section 20. A termination of substantially all of the Project
-48-<PAGE>
shall be deemed to occur if the remainder of the Project is
unusable as a flue gas desulfurization system.
SECTION 21. Sale or Assignment by Lessor.
(a) The Lessor shall have the right to finance the
acquisition and ownership of the Project by selling or assigning
its right, title and interest in any or all amounts due from the
Lessee or any third party under this Lease; provided, that any
such sale or assignment shall be subject to the rights and
interests of the Lessee under this Lease.
(b) Any Assignee shall, except as otherwise agreed by the
Lessor and such Assignee, have all the rights, powers, privileges
and remedies of the Lessor hereunder, and the Lessee's
obligations as between itself and such Assignee hereunder shall
not be subject to any claims or defense that the Lessee may have
against the Lessor. Upon written notice to the Lessee from the
Lessor of any such assignment, the Lessee shall thereafter make
payments of Basic Rent, Additional Rent and other sums due
hereunder to the Assignee, to the extent specified in such
notice, and such payments shall discharge the obligation of the
Lessee to the Lessor hereunder to the extent of such payments.
Anything contained herein to the contrary not withstanding, no
Assignee shall be obligated to perform any duty, covenant or
condition required to be performed by the Lessor hereunder, and
any such duty, covenant or condition shall be and remain the sole
obligation of the Lessor.
SECTION 22. Income Taxes.
(a) The Lessor agrees that it will not file any Federal,
state or local income tax returns during the Lease Term or
Renewal Term, if any, with respect to the Project that are
inconsistent with the treatment of the Lessee as owner of the
Project for Federal, state and local income tax purposes.
(b) Paragraph (a) of Section 22 above notwithstanding, the
Lessor agrees that, at the written request of the Lessee, it will
take all such action as may be required to be taken by a lessor
to elect under any provision of the Code substantially similar to
section 48(d) of the Internal Revenue Code of 1954, as amended
prior to the enactment of the Tax Reform Act of 1986, permitting
a pass-through of an investment tax credit to a lessee, to treat
the Lessor as having acquired any Unit of Equipment or any
qualifying appliances, equipment and machinery attached to the
Project that would qualify for such a credit (within the meaning
of section 48(b) of the Code); provided, that such request is
received by the Lessor reasonably in advance of the date on which
the Lessor is required to take such action, and the Lessee
provides the Lessor in a timely fashion with all information
(other than identifying information pertaining to the Lessor)
-49-<PAGE>
required to take such action. The Lessor does not represent or
warrant to the Lessee that credits will be allowable with respect
to any Unit of Equipment or other property under the Code or that
any election will be effective to transfer any such credits that
are allowable to the Lessee. The Lessor, Merrill, Merrill Lynch
and Merrill Leasing shall have no liability to the Lessee
resulting from the disallowance to the Lessee of credits under
the Code with respect to any Unit of Equipment or other property
unless such disallowance is directly and primarily attributable
to the failure of the Lessor to comply with its obligations under
the first sentence of this paragraph (b).
SECTION 23. Notices and Requests.
Any notice or request which by any provision of this Lease
is required or permitted to be given by either party to the other
shall be deemed to have been given when delivered by hand,
deposited in the mail, postage prepaid, by certified or
registered mail or, if promptly confirmed by mail as provided
above, when sent by written telecommunication, addressed to the
following specified addresses or to such other addresses or
parties as the Lessor or the Lessee may specify by written notice
to the other party:
If to the Lessor:
JMG Funding, Limited Partnership
c/o ML Leasing Equipment Corp.
Project and Lease Finance Group
North Tower-27th Floor
World Financial Center
250 Vesey Street
New York, New York 10281-1327
Attention: Jean M. Tomaselli
Telephone: (212) 449-7925
Telecopy: (212) 449-2854
With a copy of each such notice to be simultaneously given,
delivered or served to Martin J. McInerney at the following
address:
ML Leasing Equipment Corp.
Controller's Office
World Financial Center
South Tower-14th Floor
225 Liberty Street
New York, New York 10080-6114
If to the Lessee:
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Ohio Power Company
c/o American Electric Power Service Corporation
1 Riverside Plaza
Columbus, Ohio 43215-6631
Attention: Vice President - Finance
Telephone: (614) 223-2850
Telecopy: (614) 223-1687
with a copy of each such notice to any Assignee at such address
as such Assignee may specify by written notice to the Lessor and
the Lessee.
SECTION 24. Relationship of Parties.
The Lessor and the Lessee hereby declare that it is their
mutual intent that for accounting and regulatory purposes this
Lease be treated as an operating lease and not an instrument or
evidence of indebtedness, and that the relationship between the
Lessor and the Lessee under this Lease shall be that of lessor
and lessee only. Title to and ownership of the Project shall at
all times remain in the Lessor and at no time become vested in
the Lessee except in accordance with an express provision of this
Lease. The Lessee does not hereby acquire any right, equity,
title or interest in or to the Project except pursuant to the
terms hereof. The Lessor and the Lessee hereby agree that
nothing contained in this Lease shall be construed as a guaranty
by the Lessee of any of the Lessor's Financing Arrangements.
SECTION 25. Right to Perform for Lessee.
If an Event of Default shall occur and be continuing
hereunder, and if the Lessee fails to perform or comply with any
of its covenants or agreements contained in this Lease, the
Lessor may, upon at least seven (7) days' notice to the Lessee
but without waiving or releasing any obligations or default,
itself perform or comply with such covenant or agreement, and the
amount of the reasonable expenses of the Lessor incurred in
connection with such performance or compliance, shall be payable
by the Lessee, not later than ten (10) days after written notice
by the Lessor.
-51-<PAGE>
SECTION 26. Merger, Consolidation or Sale of Assets.
The Lessee may not, without the written consent of the
Lessor, 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, (i) the total principal amount of
all indebtedness of such successor corporation or entity (whether
or not the Lessee) for borrowed money (other than Short-Term
Debt) would exceed 65% of the Capitalization of such successor
corporation or entity, (ii) such successor corporation or entity
(if other than the Lessee) shall fail to assume the obligations
of the Lessee under this Lease, the Agreement for Lease, each
Consent and the Ground Lease, or (iii) as a result of the events
described above in this paragraph, an Event of Default or
Potential Default or Termination Event will occur; provided,
however, that the Lessee may merge into or consolidate with any
Affiliate, including Columbus Southern Power Company, without the
consent of the Lessor.
For purposes of this Section 26, the "Capitalization" of
such successor corporation or entity means, as of any particular
time, an amount equal to the sum of the total principal amount of
all indebtedness for borrowed money, secured or unsecured, of
such successor corporation or entity, then outstanding (whether
or not such indebtedness matures, pursuant to the instrument by
which such indebtedness shall be created or incurred, within
twelve months after such particular time) and the aggregate of
the par value of, or stated capital represented by, the
outstanding shares of all classes of stock and of the surplus of
such successor corporation or entity, paid in, earned and other,
if any.
For purposes of this Section 26, "Short-Term Debt" means the
principal amount of indebtedness for borrowed money represented
by a note or draft issued, renewed or guaranteed by such
successor corporation or entity which has a maturity at the time
of issuance, renewal or guarantee of not more than twelve months,
exclusive of days of grace.
SECTION 27. No Merger.
There shall be no merger of this Lease or of the leasehold
estate hereby created with the fee estate in the Project by
reason of the fact that the same person acquires or holds,
directly or indirectly, this Lease or the leasehold estate hereby
created or any interest herein or in such leasehold estate as
well as the fee estate in the Project or any interest in such fee
estate.
-52-<PAGE>
SECTION 28. Permitted Contests.
(a) The Lessee shall not be required, nor shall the Lessor
have the right, to pay, discharge or remove any tax, assessment,
levy, fee, rent, charge or Lien on the Project or on any Unit of
Equipment, or to comply or cause the Project or any Unit of
Equipment to comply with any Legal Requirements applicable to the
Project or any Unit of Equipment or the use or operation thereof,
so long as no Event of Default exists under this Lease, and, in
the opinion of the Lessee's counsel, the Lessee shall have
reasonable grounds to contest the existence, amount,
applicability or validity thereof by appropriate proceedings, so
long as such proceedings in the reasonable judgment of the Lessor
and any Assignee, (i) shall not involve any material danger that
the Project or any Basic Rent or any Additional Rent would be
subject to sale, forfeiture or loss, as a result of failure to
comply therewith, (ii) shall not affect the payment of any Basic
Rent or any Additional Rent or other sums due and payable
hereunder or result in such sums being payable to any Person
other than the Lessor or any Assignee, (iii) will not subject the
Lessor or any Assignee to any reasonable likelihood of civil
liability for which the Lessor or any Assignee is not adequately
indemnified (Lessee's obligations under Section 11 of this Lease
shall be deemed to be adequate indemnification if no Event of
Default or Potential Default exists and if such civil liability
is reasonably likely to be less than $2,500,000) or subject the
Lessor or any Indemnified Person to any criminal liability, (iv)
if involving taxes, shall suspend the collection of taxes, and
(v) shall be permitted under and be conducted in accordance with
the provisions of any other instrument to which the Lessee or the
Project or Unit of Equipment is subject and shall not constitute
a default thereunder (the "Permitted Contest"). The Lessee shall
conduct all Permitted Contests in good faith and with due
diligence and shall promptly after the final determination
(including appeals) of any Permitted Contest, pay and discharge
all amounts which shall be determined to be payable therein. The
Lessor shall cooperate in good faith with the Lessee with respect
to all Permitted Contests conducted by the Lessee pursuant to
this Section 28.
(b) In the event that the Lessee's senior secured debt is
rated below Baa3 by Moody's Investors Service, Inc. ("Moody's")
(or if Moody's shall cease to provide such ratings, as determined
by the comparable rating of Standard & Poor's Corporation
("S&P"), or, if S&P shall cease to provide such ratings, by the
comparable rating of a successor entity performing similar
functions) and the Lessor deems, in its sole discretion, that its
interests under this Lease or in the Project are not adequately
protected in connection with a Permitted Contest brought by the
Lessee under this Section 28, the Lessee shall give such
reasonable security, as may be demanded by the Lessor to insure
payment of such tax, assessment, levy, fee, rent, charge or Lien
-53-<PAGE>
and compliance with Legal Requirements and to prevent any sale or
forfeiture of the Project, any Basic Rent or any Additional Rent
by reason of such nonpayment or noncompliance. The Lessee hereby
agrees that the Lessor may assign such security provided by the
Lessee to any Assignee.
(c) At least ten (10) days prior to the commencement of any
Permitted Contest, the Lessee shall notify the Lessor in writing
thereof if the amount in contest exceeds $2,500,000, and shall
describe such proceeding in reasonable detail. In the event that
a taxing authority or subdivision thereof proposes an additional
assessment or levy of any tax for which the Lessee is obligated
to reimburse the Lessor under this Lease, or in the event that
the Lessor is notified of the commencement of an audit or similar
proceeding which could result in such an additional assessment,
then the Lessor shall in a timely manner notify the Lessee in
writing of such proposed levy or proceeding and shall cooperate
in good faith, at the Lessee's expense, with the Lessee in any
such proceeding.
SECTION 29. Leasehold Interests.
The following provisions relate to the Ground Lease under
which the Premises (as defined in the Agreement for Lease) is
subleased to the Lessee hereunder:
(a) The Lessee hereunder covenants and agrees to perform
and to observe all of the terms, covenants, provisions,
conditions and agreements of the Ground Lease on the Lessor's
part as lessee thereunder to be performed and observed
(including, without limitation, payment of all rent, additional
rent and other amounts payable by the Lessor as lessee under the
Ground Lease) to the end that all things shall be done which are
necessary to keep unimpaired the rights of the Lessor as lessee
under the Ground Lease. The Lessee further covenants that it
shall cause to be exercised any renewal option contained in the
Ground Lease which relates to renewal occurring in whole or in
part during the term of this Lease.
(b) The Lessee covenants and agrees pursuant to Section 11
hereof to indemnify and hold harmless the Lessor and any Assignee
from and against any and all liability, loss, damage, suits,
penalties, claims and demands of every kind and nature
(including, without limitation, reasonable attorneys' fees and
expenses) by reason of the Lessee's failure to comply with the
Ground Lease or the provisions of this Section 29.
(c) The Lessor and the Lessee agree that the Lessor shall
have no obligation or responsibility to provide services or
equipment required to be provided or repairs or restorations
required to be made in accordance with the provisions of the
Ground Lease by the lessor thereunder. The Lessor shall in no
-54-<PAGE>
event be liable to the Lessee nor shall the obligations of the
Lessee hereunder be impaired or the performance thereof excused
because of any failure or delay on the part of the lessor under
the Ground Lease in providing such services or equipment or
making such restorations or repairs and such failure or delay
shall not constitute a basis for any claim against the Lessor or
any offset against any amount payable to the Lessor under this
Lease.
(d) If the Lessor's interest under the Ground Lease shall
expire, terminate or otherwise be extinguished, the Lease of the
Project shall thereupon terminate as provided in this paragraph
(d). Upon such expiration, termination or extinguishment, the
Lessee shall be required to purchase the Lessor's interest in the
Project at its Adjusted Acquisition Cost. If the Lessee shall be
required to purchase the Lessor's interest in the Project, then
(i) on the Basic Rent Payment Date next succeeding such event,
the Lessee shall pay to the Lessor an amount equal to the
Adjusted Acquisition Cost of the Project along with all Basic
Rent payable, the Variable Component of Fixed Rent accrued with
respect to the Project and any Additional Rent and other amounts
owing hereunder, (ii) the Lease Term or Renewal Term of the
Project shall continue until the date on which the Lessor
receives payment from the Lessee pursuant to the foregoing clause
(i) and shall then terminate upon the payment of such amounts and
(iii) the Lessor shall on such date transfer title to the
Lessor's interest in the Project to the Lessee.
SECTION 30. Miscellaneous.
(a) All agreements, indemnities, representations and
warranties, and the obligation to pay all amounts payable
hereunder in accordance with the terms of Section 5 of this
Lease, including, without limitation, Additional Rent, contained
in this Lease shall survive the expiration or other termination
hereof.
(b) This Lease, and the instruments, documents or
agreements referred to herein (including, without limitation, the
Agreement for Lease and any Consent) constitute the entire
agreement between the parties and no representations, warranties,
promises, guarantees or agreements, oral or written, express or
implied, have been made by any party hereto with respect to this
Lease or the Project or Equipment, except as provided herein or
therein.
(c) This Lease may not be amended, modified or terminated,
nor may any obligation hereunder be waived orally, and no such
amendment, modification, termination or waiver shall be effective
for any purpose unless it is in writing, signed by the party
against whom enforcement hereof is sought. A waiver on one
-55-<PAGE>
occasion shall not be construed to be a waiver with respect to
any other occasion.
(d) 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. Any provision of
this Lease which is prohibited by law 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 the parties
hereto shall negotiate in good faith appropriate modifications to
reflect such changes as may be required by law, and, as nearly as
possible, to produce the same economic, financial and tax effects
as the provision which is prohibited or unenforceable; and any
such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law,
the Lessee and the Lessor hereby waive any provision of law which
renders any provision hereof prohibited or unenforceable in any
respect. THIS LEASE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
EXCEPT THAT TO THE EXTENT THAT ENFORCEMENT OF RIGHTS AND REMEDIES
UNDER THIS LEASE PURSUANT TO THE LAWS OF THE STATE WHERE THE
PROJECT IS LOCATED REQUIRES THE APPLICATION OF SUCH STATE'S LAW,
THEN, TO SUCH EXTENT, SUCH ENFORCEMENT SHALL BE GOVERNED BY THE
LAW OF SUCH STATE. The Lessee hereby irrevocably submits to the
jurisdiction of the United States District Court for the Southern
District of New York and any court in the State of New York
located in the City and County of New York in any action, suit or
proceeding brought against it and related to or in connection
with this Lease or the transactions contemplated hereby, and to
the extent permitted by applicable law, the Lessee hereby waives
and agrees not to assert by way of motion, as a defense or
otherwise in any such suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of such courts,
that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is
improper, or that this Lease or any document or any instrument
referred to herein or the subject matter hereof may not be
litigated in or by such courts. To the extent permitted by
applicable law, the Lessee agrees not to seek and hereby waives
the right to any review of the judgment of any such court by any
court of any other nation or jurisdiction which may be called
upon to grant an enforcement of such judgment.
(e) In connection with any sale of the Project pursuant to
Section 12, 13, 14, 15, 19, 20 or 29 of this Lease, when the
Lessor transfers title, such transfer shall be on an as-is,
non-installment sale basis, without warranty by, or recourse to,
the Lessor, but free of the Lien created pursuant to a Financing
-56-<PAGE>
Agreement and any Liens resulting from the willful act or knowing
omission of the Lessor.
(f) In connection with the sale or purchase of the Project
pursuant to Section 12, 13, 14, 15, 19, 20 or 29, the Lessee
shall pay or shall cause the purchaser of the Project to pay in
addition to the purchase price, all transfer taxes, transfer
gains taxes, mortgage recording tax, if any, recording and filing
fees and all other similar taxes, fees, expenses and closing
costs (including reasonable attorneys' fees) in connection with
the conveyance of the Project to the Lessee or any purchaser.
(g) When used in Section 12, 13, 14, 15, 20 or 29 of this
Lease, the phrase "the Variable Component of Fixed Rent accrued"
means the Variable Component of Fixed Rent accrued through the
date of termination of this Lease pursuant to such Section which
has not been included in Basic Rent then payable or previously
paid.
(h) In each instance where the Adjusted Acquisition Cost of
a Unit of Equipment is to be calculated separately from the
Adjusted Acquisition Cost of the Project, such Unit's Adjusted
Acquisition Cost shall be an amount agreed to by the Lessor and
the Lessee, or if they do not agree, an amount equal to such
Unit's fair market value as determined pursuant to the Appraisal
Procedure.
(i) The Lessor covenants and agrees that, as of the end of
each calendar quarter, its capitalization shall consist of at
least three percent (3%) equity.
(j) The Lessor and the Lessee hereby agree that (i) the
Lessee shall have the sole and exclusive benefit of any and all
license(s), authorization(s), credit, allowance or other rights
under any applicable federal, state or local law to which the
Project or the Facility, or any owner or operator thereof, may be
entitled by reason of the Facility's utilization of a particular
type of fuel or the level of the Facility's emission of air
pollutants, including, without limitation, any license(s),
authorization(s), credit, allowance or other rights relating to
the Facility's emission of air pollutants in a quantity, a volume
and/or at a rate which is less than the applicable emission
limitations established pursuant to such federal, state or local
law and any and all allowances, credits, "banking" rights and/or
offsets arising therefrom and the right to trade or sell the same
(the "Air Benefits") and (ii) the Lessor waives and releases all
claims or entitlement which it might assert on its behalf for the
benefit of a third party with respect to such license(s),
authorization(s), credit, allowance or other such rights.
Nothing herein shall be deemed to require an appraiser either to
exclude or include any Air Benefits in calculating the fair
-57-<PAGE>
market value of the Project if the Lessee exercised its right to
purchase the Project.
SECTION 31. No Recourse.
The Lessor's obligations hereunder are intended to be the
obligations of the limited partnership and of the corporation
which is the general partner thereof only and no recourse for the
payment of any amount due under this Lease or for any claim based
thereon or otherwise in respect thereof, shall be had against any
limited partner of the Lessor or any incorporator, shareholder,
officer, director or Affiliate, as such, past, present or future
of such corporate general partner or of any corporate limited
partner or of any successor corporation to such corporate general
partner or any corporate limited partner of the Lessor, or
against any direct or indirect parent corporation of such
corporate general partner or of any limited partner of the Lessor
or any other subsidiary or Affiliate of any such direct or
indirect parent corporation or any incorporator, shareholder,
officer or director, as such, past, present or future, of any
such parent or other subsidiary or Affiliate, it being understood
that the Lessor is a limited partnership formed for the purpose
of the transactions involved in and relating to this Lease on the
express understanding aforesaid. Nothing contained in this
Section 31 shall be construed to limit the exercise or
enforcement, in accordance with the terms of this Lease and any
other documents referred to herein, of rights and remedies
against the limited partnership or the corporate general partner
of the Lessor or the assets of the limited partnership or the
corporate general partner of the Lessor.
-58-<PAGE>
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.
JMG Funding, Limited Partnership by
JMG Capital, Inc., its General Partner
By:___/s/ Thomas W. Widener________
Name: Thomas W. Widener
Title: Vice President, Secretary
and Treasurer
Ohio Power Company
By:_____/s/ G. P. Maloney__________
Name: G. P. Maloney
Title: Vice President
/PAGE
<PAGE>
<PAGE>
EXHIBIT A
Description of Project
The flue gas desulfurization (FGD) system to be constructed at
the General James M. Gavin Generating Plant, which is located
between Gallipolis and Pomeroy, Ohio, on Ohio State Route 7
adjacent to the Ohio River, which is more particularly described
below:
A. Description. The flue gas desulfurization system,
consisting of all structures, systems, facilities, improvements,
fixtures, equipment and other tangible property relating to the
FGD system located on, under or above the Premises, including,
but not limited to:
1. six (6) steel absorbers and six (6) induced draft fans
for unit 1, and six (6) steel absorbers and six (6)
induced draft fans for unit 2, and all associated
equipment, including the unit 1 and the unit 2 absorber
enclosures, the unit 1 and the unit 2 absorber area
switch gear buildings, the unit 1 and the unit 2
absorber electrical buildings, one unit 1 and one unit
2 absorber transfer tank absorption system and
associated equipment, and all precipitator outlet and
scrubber inlet ductwork relating thereto commencing at
the outlet face of each precipitator box.
2. one (1) 830' tall stack for unit 1, and one (1) 830'
tall stack for unit 2, each consisting of a concrete
shell and free-standing liner, stack elevator, and two
annular pressurization fans.
3. unit 1 and unit 2 absorber area electrical substations
and the dedicated associated 138 KV feeds running
between the take-off structure lying within the 138/69
KV switching station yard fence and said absorber area
electrical substations.
4. lime storage and handling system, including twelve (12)
river cells, two (2) lime barge unloaders including
associated machinery enclosures, a lime handling
electrical building (river), an approximately 1150 foot
long lime conveyor, a lime conveyor deluge valve house,
a lime conveyor take-up tower, lime blower building,
unit 1 and unit 2 lime preparation electrical
buildings, lime slurry feed pump house, unit 1, unit 2
and common lime preparation feed systems and associated
equipment, unit 1 and unit 2 lime slurry storage tank
-60-<PAGE>
distribution box enclosures, unit 1 lime silo
(including stair tower), common lime silo, unit 2 lime
silo (including elevator), lime silo transfer station
at top of lime silos, unit 1 lime slurry storage tank,
common lime slurry storage tank, unit 2 lime slurry
storage tank, unit 1 lime crusher station, common lime
crusher station, unit 2 lime crusher station, six (6)
lime day silos, dust collection and fire protection
system.
5. unit 1 and unit 2 fly ash transfer buildings, fly ash
removal system, unit 1 fly ash silo, unit 2 fly ash
silo, common fly ash silo, and dry fly ash pipes, fly
ash removal and fly ash handling systems and associated
equipment, and dust collection system.
6. FGD waste handling system, including unit 1 and unit 2
FGD waste handling building, unit 1 and unit 2 FGD
waste handling electrical building, FGD building oil
heater storage tank fly ash fluidizing air blower
building, dewatering area electrical substation and the
dedicated associated 138 KV feeds running between the
take-off structure lying within the 138/69 KV switching
station yard fence and said dewatering area electrical
substation, dewatering area switchgear building,
clarified recycled water pump house, unit 1 and unit 2
thickener electrical buildings, unit 1 and unit 2
thickener distribution box enclosures, one (1) - unit 1
and one (1) - unit 2 - 500,000 gallon capacity
clarified recycle water tank, two (2) - unit 1 and two
(2) - unit 2 and one (1) common 200 foot diameter
thickener tanks, unit 1 thickener tunnels, unit 2
thickener tunnels, and common thickener tunnel, two (2)
- unit 1 thickener underflow surge tanks, two (2) -
unit 2 thickener underflow surge tanks, unit 1 and unit
2 thickener underflow surge tank enclosure, unit 1 and
unit 2 thickener underflow surge tanks distribution box
enclosures, unit 1, unit 2 and common primary
dewatering, secondary dewatering and stabilization
system and associated equipment, and dust collection
system.
7. An overflow pond, including overflow pond pump
structure.
8. An overland belt conveyor system from the FGD waste
handling building to the FGD landfill disposal site,
including a dual FGD waste transfer conveyor, a 5130
foot long dual overland conveyor, transfer stations,
two (2) FGD one dual waste radial stackers, FGD waste
stock pile electrical building, FGD waste stock pile
-61-<PAGE>
pads, FGD waste stock pile substation, dust collection
and fire protection systems.
9. FGD waste disposal buildings and equipment located at
the FGD waste landfill disposal site, including
chemical treatment building(s), settling basin pump
structure(s), CO2 tank and vaporizer.
10. All fences, electrical power supply circuits, all
pipelines, pipeline trenches water lines, compressed
air lines, controls including FGDS control system,
auxiliary systems, service building annex, turbine
parts storage building, pedestrian bridge, storage
building including permanent fire protection and HVAC
equipment related to equipment within and for FGD
structures, and other equipment related to the above.
</PAGE>
-62-<PAGE>
<PAGE>
EXHIBIT B
CALCULATION OF FIXED RENT AND RELATED DEFINITIONS
Calculation
"Fixed Rent" for each Quarterly Rent Period during the Lease Term
shall be calculated as the sum of the products of (A) and (B)
below:
(A) (x) The Adjustment Acquisition Cost of the Project
before the Basic Rent Payment for such Quarterly Rent
Period shall be multiplied by:
(i) The Debt Portion multiplied by Lessor's Cost
of Debt for the Computation Period relating
to such Quarterly Rent Period; plus
(ii) [PORTION OMITTED AND FILED SEPARATELY
PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]; plus
(iii) The Administration Charge for such
Quarterly Rent Period.
(y) the product of (x) shall be multiplied by a
fraction having a numerator equal to the number of days
in such Quarterly Rent Period and a denominator of 365.
(B) The Quarterly Rent Amortization Component of such
Quarterly Rent Period. The Quarterly Rent Amortization
Component shall be calculated by multiplying the
Quarterly Rent Amortization Factor set forth for such
Quarterly Rent Period in Exhibit C by the Acquisition
Cost of the Project.
Fixed Rent for each Quarterly Rent Period during the Renewal
Term, if any, shall be $250,000.
Definitions
Administration Charge: As set forth in Exhibit
C.
Debt Portion: During the Initial Term,
as set forth in Exhibit C
to this Lease; during the
Extended Term, [PORTION
OMITTED AND FILED
SEPARATELY PURSUANT TO A
REQUEST FOR CONFIDENTIAL
TREATMENT]<PAGE>
Equity Portion: During the Initial Term,
as set forth in Exhibit C
to this Lease; during the
Extended Term, [PORTION
OMITTED AND FILED
SEPARATELY PURSUANT TO A
REQUEST FOR CONFIDENTIAL
TREATMENT]
[PORTION OMITTED AND FILED SEPARATELY PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Lessor's Cost of Commercial
Paper: For any Computation
Period, the weighted
average bond yield
equivalent percentage
cost per annum, including
as a part of such cost
any fees under a
Financing Arrangement or
Financing Arrangements,
any dealer discount or
placement agency
commission payable by the
Lessor in respect of its
Commercial Paper, on all
Commercial Paper of the
Lessor outstanding at any
time during such
Computation Period;
provided, that if no
Commercial Paper of the
Lessor is outstanding
during such Computation
Period, the Lessor's Cost
of Commercial Paper will
be deemed to be equal to
the sum of (i) the "1-
month" commercial paper
rate set forth in
"Federal Reserve
Statistical Release H.15
(519), Selected Interest
Rates" published by the
Board of Governors of the
Federal Reserve System
under the heading
"Commercial Paper", or in
any successor publication
of the Board of Governors
of the Federal Reserve
System with respect to
the calendar month<PAGE>
immediately preceding the
calendar month in which
such Computation Period
ends and (ii) the most
recent costs (stated on a
percentage basis) paid by
the Lessor for Financing
Arrangement fees and
dealer discount or
placement agency
commission with respect
to its Commercial Paper.
Lessor's Cost of Debt: For any Computation
Period (A) the Lessor's
Cost of Commercial Paper
if only Commercial Paper
of the Lessor is
outstanding during such
Computation Period or (B)
if no Commercial Paper of
the Lessor is outstanding
during such Computation
Period, the Lessor's
weighted average cost per
annum (stated on a
percentage basis) of
other borrowings
outstanding at any time
during such Computation
Period plus any fees
under a Financing
Arrangement or (c) if
both Commercial Paper of
the Lessor and other
borrowings are
outstanding at any time
during such Computation
Period, a weighted
average blended rate per
annum (stated on a
percentage basis) based
on clauses (A) and (B)
above.
Quarterly Rent Amortization
Factor: As set forth in Exhibit
C.
</PAGE>
-3-<PAGE>
<PAGE>
EXHIBIT D
[ PORTION OMITTED AND FILED SEPARATELY
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ]
/PAGE
<PAGE>
<PAGE>
EXHIBIT E
FORM OF CERTIFICATION OF
[PORTION OMITTED AND FILED SEPARATELY
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
OHIO POWER COMPANY
Officer's Certificate
The undersigned _______________ of Ohio Power Company hereby
certifies that:
(i) the [PORTION OMITTED AND FILED SEPARATELY PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT] necessary to compute [PORTION
OMITTED AND FILED SEPARATELY PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] for the Quarterly Rent Period immediately preceding
[March/June/ September/December] are __________
and
(ii) no Event of Default, Termination Event or Force Majeure
Event has occurred and is continuing during such Quarterly Rent
Period.
All capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to such terms in the Lease
Agreement to be entered into by JMG Funding, Limited Partnership
and Ohio Power Company.
IN WITNESS WHEREOF, the undersigned has hereunto signed
his/her name this _____ day of _______________, _____.
Name:
Title:
-5-<PAGE>
</PAGE>
-6-<PAGE>
<PAGE>
<TABLE>
Exhibit C
Fixed Rent Schedule
<CAPTION>
Quarterly Adjusted
Rent Acquisition
End of Debt Equity Administration Amortization Cost
Quarter Portion Portion Charge Factor Factor
<S> <C> <C>
0 PORTION OMITTED AND FILED 0.0000% 100.00000%
1 SEPARATELY PURSUANT TO A 0.3938% 99.60619%
2 REQUEST FOR CONFIDENTIAL 0.4015% 99.20472%
3 TREATMENT 0.4093% 98.79546%
4 0.4172% 98.37824%
5 0.4253% 97.95291%
6 0.4336% 97.51932%
7 0.4420% 97.07730%
8 0.4506% 96.62669%
9 0.4594% 96.16731%
10 0.4683% 95.69900%
11 0.4774% 95.22158%
12 0.4867% 94.73487%
13 0.4962% 94.23869%
14 0.5058% 93.73286%
15 0.5157% 93.21719%
16 0.5257% 92.69148%
17 0.5359% 92.15553%
18 0.5464% 91.60915%
19 0.5570% 91.05213%
20 0.5679% 90.48427%
21 0.5789% 89.90534%
22 0.5902% 89.31514%
23 0.6017% 88.71344%
24 0.6134% 88.10002%
25 0.6254% 87.47464%
26 0.6376% 86.83707%
27 0.6500% 86.18708%
28 0.6627% 85.52442%
29 0.6756% 84.84883%
30 0.6888% 84.16008%
31 0.7022% 83.45789%
32 0.7159% 82.74200%
33 0.7299% 82.01215%
34 0.7441% 81.26806%
35 0.7586% 80.50945%
36 0.7734% 79.73603%
37 0.7885% 78.94752%
38 0.8039% 78.14362%
39 0.8196% 77.32403%
40 0.8356% 76.48843%
41 0.8519% 75.63651%
42 0.8686% 74.76796%
43 0.8855% 73.88244%
44 PORTION OMITTED AND FILED 0.9028% 72.97962%
45 SEPARATELY PURSUANT TO A 0.9205% 72.05916%
46 REQUEST FOR CONFIDENTIAL 0.9384% 71.12071%
47 TREATMENT 0.9568% 70.16393%
48 0.9755% 69.18844%
49 0.9946% 68.19389%
50 1.0140% 67.17989%
51 1.0338% 66.14606%
52 1.0540% 65.09202%
53 1.0747% 64.01736%
54 1.0957% 62.92168%
55 1.1171% 61.80457%
56 1.1390% 60.66560%
57 1.1613% 59.50434%
58 1.1840% 58.32035%
59 1.2072% 57.11319%
60 1.2308% 55.88240%
61 0.7353% 55.14711%
62 0.7353% 54.41181%
63 0.7353% 53.67652%
64 0.7353% 52.94122%
65 0.7353% 52.20593%
66 0.7353% 51.47063%
67 0.7353% 50.73534%
68 0.7353% 50.00004%
69 0.7353% 49.26475%
70 0.7353% 48.52945%
71 0.7353% 47.79416%
72 0.7353% 47.05886%
73 0.7353% 46.32357%
74 0.7353% 45.58827%
75 0.7353% 44.85298%
76 0.7353% 44.11768%
77 0.7353% 43.38239%
78 0.7353% 42.64709%
79 0.7353% 41.91180%
80 0.7353% 41.17651%
81 0.7353% 40.44121%
82 0.7353% 39.70592%
83 0.7353% 38.97062%
84 0.7353% 38.23533%
85 0.7353% 37.50003%
86 0.7353% 36.76474%
87 0.7353% 36.02944%
88 0.7353% 35.29415%
89 0.7353% 34.55885%
90 0.7353% 33.82356%
91 0.7353% 33.08826%
92 PORTION OMITTED AND FILED 0.7353% 32.35297%
93 SEPARATELY PURSUANT TO A 0.7353% 31.61767%
94 REQUEST FOR CONFIDENTIAL 0.7353% 30.88238%
95 TREATMENT 0.7353% 30.14708%
96 0.7353% 29.41179%
97 0.7353% 28.67649%
98 0.7353% 27.94120%
99 0.7353% 27.20591%
100 0.7353% 26.47061%
101 0.7353% 25.73532%
102 0.7353% 25.00002%
103 0.7353% 24.26473%
104 0.7353% 23.52943%
105 0.7353% 22.79414%
106 0.7353% 22.05884%
107 0.7353% 21.32355%
108 0.7353% 20.58825%
109 0.7353% 19.85296%
110 0.7353% 19.11766%
111 0.7353% 18.38237%
112 0.7353% 17.64707%
113 0.7353% 16.91178%
114 0.7353% 16.17648%
115 0.7353% 15.44119%
116 0.7353% 14.70589%
117 0.7353% 13.97060%
118 0.7353% 13.23531%
119 0.7353% 12.50001%
120 0.7353% 11.76472%
121 0.7353% 11.02942%
122 0.7353% 10.29413%
123 0.7353% 9.55883%
124 0.7353% 8.82354%
125 0.7353% 8.08824%
126 0.7353% 7.35295%
127 0.7353% 6.61765%
128 0.7353% 5.88236%
129 0.7353% 5.14706%
130 0.7353% 4.41177%
131 0.7353% 3.67647%
132 0.7353% 2.94118%
133 0.7353% 2.20588%
134 0.7353% 1.47059%
135 0.7353% 0.73529%
136 0.7353% 0.00000%
*Quarter 0 is the partial calendar quarter in which the Effective Date occurs.
</TABLE>
<PAGE>
AMENDMENT NO. 1
Dated as of March 7, 1995
to
LEASE AGREEMENT
Dated as of January 20, 1995
between
JMG Funding, Limited Partnership
as Lessor
and
Ohio Power Company
as Lessee
This Amendment has been manually executed in
6 counterparts, numbered consecutively from 1
through 6, of which this is No. ___. To the
extent, if any, that this Amendment
constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in
effect in any jurisdiction), no security
interest in this Amendment may be created or
perfected through the transfer or possession
of any counterpart other than the original
executed counterpart which shall be the
counterpart identified as counterpart No. 1.<PAGE>
Amendment No. 1 dated as of March 7, 1995 ("Amendment
No. 1") to Lease Agreement, dated as of January 20, 1995, between
JMG Funding, Limited Partnership, a Delaware limited partnership
("Lessor"), and Ohio Power Company, an Ohio corporation
("Lessee"), amending the Lease Agreement referred to below.
WHEREAS, Lessor and Lessee have heretofore entered into
a Lease Agreement, dated as of January 20, 1995 (the "Lease
Agreement"); and
WHEREAS, Lessor and Lessee wish to amend the Lease
Agreement as hereinafter provided;
NOW, THEREFORE, Lessor and Lessee hereby agree that the
Lease Agreement is amended as follows:
1. The definition of "Computation Period" in Section
1 of the Lease Agreement is amended to read in its entirety as
follows:
"Computation Period" means with respect to (i) the
first Quarterly Rent Period hereunder, the period beginning on
January 1, 1995 and ending on March 22, 1995, and (ii) any
subsequent Quarterly Rent Period, the period beginning on the
23rd day of the last calendar month of the immediately preceding
Quarterly Rent Period and ending on the 22nd day of the last
calendar month of the Quarterly Rent Period for which Basic Rent
is being computed."
2. The definition of "Quarterly Rent Period" in
Section 1 of the Lease Agreement is amended to read in its
entirety as follows:
"Quarterly Rent Period" means each quarterly period of
each year of the Lease Term beginning January 1 and ending March
31, beginning April 1 and ending June 30, beginning July 1 and
ending September 30, and beginning October 1 and ending December
31, as the case may be; provided, however, that (i) the first
such period shall be deemed to have commenced on January 1, 1995
and shall end on March 31, 1995, and (ii) the last such period
shall end on the last day of the Lease Term or Renewal Term, if
any, as the case may be.
3. Exhibit C to the Lease Agreement is hereby amended
to read in its entirety as set forth on Schedule A attached
hereto.
4. This Amendment No. 1 may be executed in several
counterparts, each of which when executed and delivered shall be
deemed an original and all of which counterparts, taken together,
shall constitute but one and the same Amendment No. 1.
2<PAGE>
5. This Amendment No. 1 shall in all respects be
governed by, and construed in accordance with, the laws of the
State of New York, including all matters of construction,
validity and performance.
6. Except as provided herein, all provisions, terms
and conditions of the Lease Agreement shall remain in full force
and effect. As amended hereby, the Lease Agreement is ratified
and confirmed in all respects.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to be duly executed as of the date first above
written.
JMG Funding, Limited Partnership
By JMG Capital, Inc., its
general partner
By:___/s/ Thomas W. Widener_____
Name: Thomas W. Widener
Title: Vice President, Secretary
and Treasurer
Ohio Power Company
By:___/s/ G. P. Maloney____
Name: G. P. Maloney
Title: Vice President
4<PAGE>
<TABLE>
SCHEDULE A
Exhibit C
Fixed Rent Schedule
<CAPTION>
Quarterly Adjusted
Rent Acquisition
End of Debt Equity Administration Amortization Cost
Quarter Portion Portion Charge Factor Factor
<S> <C> <C> <C> <C> <C>
0* PORTION OMITTED AND FILED SEPARATELY 0.3938% 99.60619%
1 PURSUANT TO A REQUEST FOR CONFIDENTIAL 0.4015% 99.20472%
2 TREATMENT 0.4093% 98.79546%
3 0.4172% 98.37824%
4 0.4253% 97.95291%
5 0.4336% 97.51932%
6 0.4420% 97.07730%
7 0.4506% 96.62669%
8 0.4594% 96.16731%
9 0.4683% 95.69900%
10 0.4774% 95.22158%
11 0.4867% 94.73487%
12 0.4962% 94.23869%
13 0.5058% 93.73286%
14 0.5157% 93.21719%
15 0.5257% 92.69148%
16 0.5359% 92.15553%
17 0.5464% 91.60915%
18 0.5570% 91.05213%
19 0.5679% 90.48427%
20 0.5789% 89.90534%
21 0.5902% 89.31514%
22 0.6017% 88.71344%
23 0.6134% 88.10002%
24 0.6254% 87.47464%
25 0.6376% 86.83707%
26 0.6500% 86.18708%
27 0.6627% 85.52442%
28 0.6756% 84.84883%
29 0.6888% 84.16008%
30 0.7022% 83.45789%
31 0.7159% 82.74200%
32 0.7299% 82.01215%
33 0.7441% 81.26806%
34 0.7586% 80.50945%
35 0.7734% 79.73603%
36 0.7885% 78.94752%
37 0.8039% 78.14362%
38 0.8196% 77.32403%
39 0.8356% 76.48843%
40 0.8519% 75.63651%
41 0.8686% 74.76796%
42 0.8855% 73.88244%
43 0.9028% 72.97962%<PAGE>
44 PORTION OMITTED AND FILED SEPARATELY 0.9205% 72.05915%
45 PURSUANT TO A REQUEST FOR CONFIDENTIAL 0.9384% 71.12071%
46 TREATMENT 0.9568% 70.16393%
47 0.9755% 69.18844%
48 0.9946% 68.19389%
49 1.0140% 67.17989%
50 1.0338% 66.14606%
51 1.0540% 65.09202%
52 1.0747% 64.01736%
53 1.0957% 62.92168%
54 1.1171% 61.80457%
55 1.1390% 60.66560%
56 1.1613% 59.50434%
57 1.1840% 58.32035%
58 1.2072% 57.11319%
59 1.2308% 55.88240%
60 0.7353% 55.14711%
61 0.7353% 54.41181%
62 0.7353% 53.67652%
63 0.7353% 52.94122%
64 0.7353% 52.20593%
65 0.7353% 51.47063%
66 0.7353% 50.73534%
67 0.7353% 50.00004%
68 0.7353% 49.26475%
69 0.7353% 48.52945%
70 0.7353% 47.79416%
71 0.7353% 47.05886%
72 0.7353% 46.32357%
73 0.7353% 45.58827%
74 0.7353% 44.85298%
75 0.7353% 44.11768%
76 0.7353% 43.38239%
77 0.7353% 42.64709%
78 0.7353% 41.91180%
79 0.7353% 41.17651%
80 0.7353% 40.44121%
81 0.7353% 39.70592%
82 0.7353% 38.97062%
83 0.7353% 38.23533%
84 0.7353% 37.50003%
85 0.7353% 36.76474%
86 0.7353% 36.02944%
87 0.7353% 35.29415%
88 0.7353% 34.55885%
89 0.7353% 33.82356%
90 0.7353% 33.08826%
91 0.7353% 32.35297%
92 0.7353% 31.61767%<PAGE>
93 PORTION OMITTED AND FILED SEPARATELY 0.7353% 30.88238%
94 PURSUANT TO A REQUEST FOR CONFIDENTIAL 0.7353% 30.14708%
95 TREATMENT 0.7353% 29.41179%
96 0.7353% 28.67649%
97 0.7353% 27.94120%
98 0.7353% 27.20591%
99 0.7353% 26.47061%
100 0.7353% 25.73532%
101 0.7353% 25.00002%
102 0.7353% 24.26473%
103 0.7353% 23.52943%
104 0.7353% 22.79414%
105 0.7353% 22.05884%
106 0.7353% 21.32355%
107 0.7353% 20.58825%
108 0.7353% 19.85296%
109 0.7353% 19.11766%
110 0.7353% 18.38237%
111 0.7353% 17.64707%
112 0.7353% 16.91178%
113 0.7353% 16.17648%
114 0.7353% 15.44119%
115 0.7353% 14.70589%
116 0.7353% 13.97060%
117 0.7353% 13.23531%
118 0.7353% 12.50001%
119 0.7353% 11.76472%
120 0.7353% 11.02942%
121 0.7353% 10.29413%
122 0.7353% 9.55883%
123 0.7353% 8.82354%
124 0.7353% 8.08824%
125 0.7353% 7.35295%
126 0.7353% 6.61765%
127 0.7353% 5.88236%
128 0.7353% 5.14706%
129 0.7353% 4.41177%
130 0.7353% 3.67647%
131 0.7353% 2.94118%
132 0.7353% 2.20588%
133 0.7353% 1.47059%
134 0.7353% 0.73529%
135 0.3676% 0.36765%
136 0.3676% 0.00000%
*Quarter 0 is the partial calendar quarter in which the Effective Date occurs.
/PAGE
<PAGE>
</TABLE>
