Nuclear Fuel Lease Agree

Exhibit (10)-1
Commonwealth Edison Company
Form 10-K File No. 1-1839 ================================================================================


NUCLEAR FUEL LEASE AGREEMENT
BETWEEN
COMMED FUEL COMPANY, INC.
AND
COMMONWEALTH EDISON COMPANY


DATED AS OF NOVEMBER 23, 1993


THIS NUCLEAR FUEL LEASE AGREEMENT HAS BEEN MANUALLY EXECUTED IN MULTIPLE COUNTERPARTS, NUMBERED CONSECUTIVELY FROM 1 UPWARDS. THE RIGHTS OF THE LESSOR UNDER THIS FUEL LEASE AGREEMENT HAVE BEEN ASSIGNED TO, AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, AS INDENTURE TRUSTEE, FOR THE RATABLE BENEFIT OF THE SECURED PARTIES NAMED IN THE TRUST INDENTURE DATED AS OF NOVEMBER 23, 1993, BETWEEN THE LESSOR AND MORGAN GUARANTY TRUST COMPANY OF NEW YORK, AS INDENTURE TRUSTEE THEREUNDER. TO THE EXTENT, IF ANY, THAT SUCH FUEL LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST MAY BE CREATED IN, OR ASSIGNMENT EFFECTED OF, SUCH FUEL LEASE AGREEMENT THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OF SUCH FUEL LEASE AGREEMENT OTHER THAN THE ORIGINAL EXECUTED COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING COUNTERPART NO. 1 ON THE COVER, WHICH COUNTERPART NO. 1 CONTAINS A RECEIPT EXECUTED BY THE INDENTURE TRUSTEE ON THE SIGNATURE PAGE THEREOF.


Counterpart No.____ ================================================================================


TABLE OF CONTENTS


SECTION PAGE - ------- ---- 1. Defined Terms............................................ 1


2. Representations and Warranties of Lessee................. 2


3. Lease of Nuclear Fuel; Term.............................. 5


4. Title to Remain in the Lessor; Fuel Management;
Nuclear Fuel to be Personal Property and Used for
Generation; Location..................................... 5


5. Basic Rent and Additional Rent; Procedure for Payment.... 6


6. Payment of Costs by the Lessor........................... 9


7. Taxes.................................................... 11


8. Condition and Use of Nuclear Fuel; Quiet Enjoyment....... 11


9. Maintenance of the Nuclear Fuel.......................... 13


10. Removals, Purchase of Nuclear Fuel, Transfer to the
Lessee, Commingling, Substitution........................ 13


11. Indemnification by the Lessee............................ 17


12. Right to Inspect Nuclear Fuel............................ 19


13. Payment of Impositions; Further Assurances............... 19


14. Compliance with Legal and Insurance Requirements
and with Instruments..................................... 20


15. Liens.................................................... 20


16. Permitted Contests....................................... 21


17. Insurance................................................ 22


18. Damage................................................... 24


19. Condemnation or Eminent Domain........................... 26


20. Termination After Certain Events......................... 28


21. Conditions of Termination and Conveyance................. 34


22. Estoppel Certificates; Information....................... 35


23. Rights to Perform the Lessee's Covenants................. 35


24. Assignments.............................................. 36


25. Lease Events of Default and Remedies..................... 36


26. Surrender; Acceptance of Surrender....................... 42


27. No Merger................................................ 43


28. Notices.................................................. 43


29. Allocation of Amounts.................................... 44


30. Amendments............................................... 44


31. Severability............................................. 44


32. Taxes; Tax Benefits...................................... 45


33. Sale of Nuclear Fuel and Assignment of Rights under
Nuclear Fuel Contracts................................... 45


34. Miscellaneous............................................ 47


NUCLEAR FUEL LEASE AGREEMENT


THIS NUCLEAR FUEL LEASE AGREEMENT dated as of November 23, 1993 (as the same may be amended, modified or supplemented from time to time, this "FUEL LEASE"), between CommEd Fuel Company, Inc., a Delaware corporation ("LESSOR" or the "COMPANY"), and Commonwealth Edison Company, an Illinois corporation ("LESSEE").


W I T N E S S E T H:


WHEREAS, Lessee is party to a Nuclear Fuel Lease Agreement dated as of December 1, 1985, with CWE Fuel Company Inc. and a Nuclear Fuel Lease Agreement dated as of March 22, 1984, with Commonwealth Fuel Company II (together with CWE Fuel Company Inc., referred to herein as the "EXISTING FUEL COMPANIES", and individually as an "EXISTING FUEL COMPANY"), in each case relating to the lease by the respective lessor to Lessee of certain nuclear materials to be used in the production of heat for the generation of electricity (collectively, the "EXISTING LEASES"); and


WHEREAS, Lessee believes it is desirable to combine the Existing Leases into a single lease, to have the Lessor acquire the nuclear fuel currently leased by Lessee from the Existing Fuel Companies under the Existing Leases and to provide for the lease by Lessor to Lessee of the nuclear fuel so acquired as well as certain other nuclear fuel materials to be used from time to time in the production of heat for the generation of electricity; and


WHEREAS, Lessor proposes to so acquire such nuclear fuel and to enter into the Original Credit Agreement, the Original Note Purchase Agreements relating to the issuance and sale of IT Notes, and the Trust Indenture (as such terms are hereinafter defined);


NOW, THEREFORE, Lessor and Lessee hereby agree as follows:


SECTION 1. Defined Terms.


Except as otherwise specifically defined herein, the capitalized terms used in this Fuel Lease which are defined in Appendix A to this Fuel Lease shall have the respective meanings assigned in Appendix A.


SECTION 2. Representations and Warranties of Lessee.


The Lessee represents and warrants to the Lessor:


(a) Corporate Matters. The Lessee is a corporation duly organized, validly existing and in good standing under the laws of the State of Illinois, with full power and authority to own and operate its properties and conduct its business as presently being conducted; and the Lessee 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. The execution, delivery and performance by the Lessee of this Fuel Lease, the other Basic Documents to which it is a party and the certificates, instruments and documents executed, or to be executed, on behalf of the Lessee in connection with the transactions contemplated hereby and thereby, and the performance by the Lessee of its obligations hereunder and thereunder, are within the Lessee's corporate powers and have been duly authorized on behalf of the Lessee by all necessary corporate action. The execution, delivery and performance by each Existing Fuel Company of its Original Bill of Sale and the certificates, instruments and documents executed, or to be executed, on behalf of such Existing Fuel Company in connection with the transactions contemplated thereby, and the performance by such Existing Fuel Company of its obligations thereunder, are within such Existing Fuel Company's corporate powers and have been duly authorized on behalf of such Existing Fuel Company by all necessary corporate action.


(b) Validity, Enforceability. The Basic Documents to which Lessee is a party, the Original Bills of Sale executed by the Existing Fuel Companies and the certificates, instruments and documents executed, or to be executed, on behalf of the Lessee or an Existing Fuel Company in connection with the transactions contemplated by such Basic Documents or the Original Bills of Sale constitute, or when executed and delivered will constitute, legal, valid and binding obligations of the Lessee or such Existing Fuel Company (as the case may be), enforceable against the Lessee or such Existing Fuel Company (as the case may be) in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws of general applicability relating to or affecting the enforceability of creditors' rights generally or by general principles of equity and except as enforceability may be limited by the Atomic Energy Act and the regulations thereunder.


(c) Financial Statements. The Lessee has furnished or will furnish as soon as practicable to the Lessor copies of each of its Annual Reports on Form 10-K, each of its Quarterly Reports on Form 10-Q, and each of any other reports and documents filed by the Lessee with the Securities and Exchange Commission (other than registration statements on Forms S-3 and S-8 and registration statements on Form S-4 relating to registered exchange offers by the Lessee for its privately placed securities), all as so filed at


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any time on or after the date of the filing of its Quarterly Report on Form 10-Q for the quarter ended June 30, 1993. The financial statements contained in such documents fairly represent, and the financial statements to be delivered hereafter by the Lessee to the Lessor, any Assignee or any Secured Party will fairly represent, the financial position, results of operations, and changes in financial position of the Lessee as of the dates and for the periods indicated therein and have been prepared, and will have been prepared, in accordance with generally accepted accounting principles applied on a consistent basis (except as otherwise indicated therein).


(d) Changes, etc. Since June 30, 1993, there has been no change in the condition or business of the Lessee which in any way materially adversely affects the ability of the Lessee to perform its obligations under the Basic Documents to which it is a party except for the settlements described in Lessee's Current Report on Form 8-K dated September 24, 1993 (which settlements became final in November 1993).


(e) Litigation, etc. There is no action, suit, proceeding or investigation at law or in equity or by or before any governmental instrumentality or other agency now pending or, to the knowledge of the Lessee, threatened against or affecting the Lessee or any property or rights of the Lessee which questions the validity of the Basic Documents to which it is a party or which Lessee reasonably believes would materially adversely affect the ability of the Lessee to perform its obligations thereunder.


(f) Compliance with Other Instruments, etc. The execution, delivery and performance of the Basic Documents to which the Lessee is a party and the certificates, instruments and documents executed, or to be executed, on behalf of the Lessee in connection with the transactions contemplated thereby will not result in any violation of any term of the restated articles of incorporation or the by-laws of the Lessee or of any agreement, indenture or similar instrument, license, judgment, decree, order, law, statute, ordinance or governmental rule or regulation applicable to the Lessee or its property.


(g) Consent, etc. There are no consents, licenses, orders, authorizations or approvals of, or registrations with, any governmental or public body or authority which presently are required in connection with the valid execution, delivery and performance of the Basic Documents to which the Lessee is a party, the valid execution, delivery and performance of the Original Bills of Sale by the Existing Fuel Companies, and the certificates, instruments and documents executed, or to be executed, on behalf of the Lessee or either of the Existing Fuel Companies in connection with the transactions contemplated thereby, that have not been obtained and any such consents, licenses, orders, authorizations, approvals and registrations that have been obtained are in full


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force and effect. There are no material consents, licenses, permits, certificates, orders, authorizations or approvals of, or registrations with, any Person which presently are required in connection with the ownership by the Lessee of its property and assets and for the conduct of its business as now conducted, that have not been obtained or for which applications for renewal have not been timely filed and are pending, and consents, licenses, permits, certificates, orders, authorizations, approvals and registrations that have been obtained are in full force and effect.


(h) Defaults. The Lessee is not in default under (i) any contract to which it is a party with any manufacturer relating to the acquisition, processing, enrichment or fabrication of nuclear fuel materials, and, to the best of Lessee's knowledge, none of the other parties to such contracts are in material default of their obligations to Lessee thereunder, or (ii) any agreement, indenture or mortgage for borrowed money in excess of $20,000,000.


(i) ERISA. The provisions of each defined benefit plan, as defined in Section 3(35) of ERISA, maintained by the Lessee or by any consolidated subsidiary of the Lessee are in compliance in all material respects with applicable requirements of ERISA and of the Code, and with all applicable rulings and regulations issued under the provisions of ERISA and the Code setting forth those requirements.


(j) Title to Fuel; Liens. (1) Each Nuclear Fuel Contract assigned under this Fuel Lease on the date hereof is in full force and effect, and Lessee has delivered to Lessor a true and complete copy of such Nuclear Fuel Contract as presently in effect; (2) prior to its sale to Lessor, Lessee or an Existing Fuel Company, as the case may be, had good title to all of the Nuclear Fuel transferred by it, free and clear of all Liens (except for Liens permitted by Section 15(i), (ii), (iv) or (vi) of this Fuel Lease), and Lessee and the Existing Fuel Companies have not previously sold, assigned, transferred or created any Lien in, the Nuclear Fuel, any Nuclear Fuel Contract or any part thereof (except for Liens of or granted by the Existing Fuel Companies which are to be released contemporaneously with the purchase of such Nuclear Fuel from the Existing Fuel Companies); (3) Lessee shall warrant and defend forever Lessor's title to the Nuclear Fuel so transferred by Lessee or an Existing Fuel Company; (4) neither Lessee nor either Existing Fuel Company, as applicable, has waived performance by any other Person obligated under any assigned Nuclear Fuel Contract of any material obligation of such Person thereunder; (5) neither Lessee nor any other Person is in default in the payment, performance or observance of any material term, covenant or agreement on its part to be performed or observed under any assigned Nuclear Fuel Contract; and (6) no financing statement (other than any which may have been filed on behalf of any Assignee of Lessor) covering all or any part of the Nuclear Fuel or any Nuclear Fuel Contract is on file in any public office (except for


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financing statements of the Existing Fuel Companies, which are to be released contemporaneously with the purchase of Nuclear Fuel from such Existing Fuel Companies).


SECTION 3. Lease of Nuclear Fuel; Term.


(a) The Lessor hereby leases to the Lessee, and the Lessee hereby leases from the Lessor, the Nuclear Fuel for the term provided in this Fuel Lease and subject to the terms and provisions hereof.


(b) The term of this Fuel Lease shall begin at 12:01 A.M., Chicago time, on November 23, 1993, and, except as otherwise provided herein, shall terminate on September 30, 2013.


SECTION 4. Title to Remain in the Lessor; Fuel Management; Nuclear Fuel to be Personal Property and Used for Generation; Location.


(a) Title to and ownership of the Nuclear Fuel 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 Fuel Lease. This agreement is a lease only, and shall not give or grant to the Lessee any right, title or interest in or to the Nuclear Fuel, or any portion thereof, except the rights of a tenant in accordance with the provisions hereof.


(b) Except as otherwise expressly limited by the provisions of this Fuel Lease, the Lessee shall have full right and lawful authority to engage in Fuel Management. The Lessee is hereby designated the lawful representative of the Lessor in all dealings with the Manufacturers and any regulatory agency having jurisdiction over the ownership, possession or utilization of the Nuclear Fuel.


(c) The Nuclear Fuel is personal property and the Lessee shall, at its expense, take all such action as may be required to cause the Nuclear Fuel to retain its character as personal property. The Nuclear Fuel shall not become part of any real property on which it or any portion thereof may from time to time be situated, notwithstanding the means by which it is installed or attached thereto and notwithstanding any law or custom or the provisions of any lease, mortgage or other instrument applicable to any such real property. The Lessee agrees to indemnify the Lessor and each Assignee and each Secured Party against, and to hold the Lessor and each Assignee and each Secured Party harmless from, all losses, costs and expenses resulting from any of the Nuclear Fuel becoming real property.


(d) The Lessee represents and warrants to the Lessor that the Nuclear Fuel location will be limited to: (i) the Manufacturers' facilities, (ii) a Generating Facility, (iii) a


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Storage Facility, (iv) a Reprocessing facility, or (v) transit between any of such facilities, except as Lessee is otherwise instructed by Lessor pursuant to Section 25(b)(ii) hereof and except as provided in Section 10(a) hereof.


SECTION 5. Basic Rent and Additional Rent; Procedure for Payment.


(a) The Lessee irrevocably and unconditionally covenants to pay to the Lessor, or to such other person as the Lessor may direct, on each Basic Rent Payment Date, at not later than 10:00 A.M., Chicago time, the respective amounts of Basic Rent (net of any prepayments) shown on Annex I to the Rent Schedule delivered to the Lessor in accordance with clause (i) of Section 5(b) hereof in respect of such Basic Rent Payment Date. The Lessee may prepay Basic Rent at any time by delivering such amount and a Rent Schedule appropriately completed. The Lessee agrees to prepay Basic Rent if and to the extent required to enable Lessor to pay interest or other amounts due under a Credit Agreement, the Note Purchase Agreements, the IT Notes or any other Basic Documents.


(b) On or before each Basic Rent Payment Date, the Lessee shall:


(i) deliver to the Lessor a Rent Schedule and Annex
I duly completed with respect to the Basic Rent Period
ending on or immediately prior to such Basic Rent
Payment Date; and


(ii) pay to the Lessor, or to such other Person as
the Lessor may direct, the amount shown for Basic Rent
(net of any prepayments) in such Annex I.


Each such Rent Schedule shall be signed and delivered in triplicate.


(c) All sums payable by the Lessee to the Lessor shall be payable in funds which are immediately available at the place of payment on the date when due, and shall be paid to the Lessor at the Lessor's address for purposes of notices hereunder or to such other person or at such other address as the Lessor may from time to time designate.


(d) In addition to the Basic Rent, the Lessee will also pay, on demand, from time to time, as additional rent (herein called "ADDITIONAL RENT") to the Lessor or such other persons as the Lessor may direct from time to time, (i) all Lessor's legal, accounting, administrative and other management and operating expenses and taxes to the extent not paid as part of the Basic Rent, (ii) all expenses and payments under Sections 4(c), 5(g) and 11 hereof, (iii) interest at the rate incurred by the Lessor, as a result of any delay in payment by the Lessee, to meet obligations that would have been satisfied out of prompt payment by the Lessee,


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and (iv) any other amounts necessary to enable the Lessor to meet its obligations under the Basic Documents. In the event of any failure by the Lessee to pay Additional Rent, the Lessor shall have all the rights, powers and remedies as in the case of failure to pay Basic Rent.


(e) The Lessee shall have reasonable access to the books and accounting records, if any, relating to this Fuel Lease maintained by the Lessor for purposes of auditing the computation of any and all payments made or accrued under this Fuel Lease, and Lessor shall, upon reasonable notice and at Lessee's expense, make such books and accounting records available on Lessor's premises for such purpose or such other purposes as the Lessee deems appropriate.


(f) The Lessor shall have reasonable access to the books and accounting records of the Lessee relating to the Nuclear Fuel and Nuclear Fuel Contracts for purposes of auditing the computation of any and all payments made or accrued under this Fuel Lease.


(g) If any lien, encumbrance or charge of any kind or any judgment, decree or order of any court or other governmental authority (including, without limitation, any tax lien affecting the Lessor), whether or not valid, shall be asserted or entered which interferes with the due and timely payment of any sum payable hereunder or the due and timely receipt and application thereof by Lessor or any Secured Party of any sum payable by Lessor under or pursuant to a Credit Agreement, any Additional Financing, the Note Purchase Agreements or the IT Notes, Lessee shall, on receipt of notice to that effect from Lessor, promptly take such legally permissible action as may be necessary to prevent or terminate such interference. Lessee shall indemnify and hold harmless Lessor and each Secured Party from and against any and all losses and damages caused by any such interference.


(h) The obligation of Lessee to make all payments pursuant to this Fuel Lease (including, without limitation, the payments to be made pursuant to Section 20(b) hereof) shall be absolute and unconditional and shall not be affected by any circumstances of any character. The obligation of Lessee to make all payments due hereunder and to take any and all Nuclear Fuel during the term of this Fuel Lease is without any warranty or representation as to any matter whatsoever on the part of the Lessor or any Assignee or any Secured Party and, as between Lessee and Lessor, any Assignee or any Secured Party, Lessee assumes all risks and waives any and all defenses to such obligation to pay, including, without limitation, any defense relating to: (a) the safety, title, condition, intensity, quality, quantity, temperature, fitness for use, merchantability or any other quality or characteristic of the Nuclear Fuel, or whether or not any heat whatsoever is produced by the Nuclear Fuel or is taken or utilized by Lessee, (b) any setoff, counterclaim, recoupment, defense or


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other right which Lessee may have against the Lessor, any holder of outstanding Commercial Paper from time to time, any holder of outstanding IT Notes from time to time, any Assignee, any Secured Party or anyone else for any reason whatsoever, (c) any defect in title or ownership of the Nuclear Fuel or in the condition, design, operation, merchantability or fitness for a particular purpose of the Nuclear Fuel or any Generating Facility or any part of either thereof, (d) any loss, theft or destruction of, or damage to, the Nuclear Fuel, in whole or in part, or cessation of the use or possession of the Nuclear Fuel by Lessee for any reason whatsoever and of whatever duration, or any condemnation, confiscation, requisition, seizure, purchase, taking or forfeiture of the Nuclear Fuel, in whole or in part, unless upon any of the foregoing occurrences this Fuel Lease shall have terminated and the Nuclear Fuel shall have been purchased by Lessee pursuant to Section 20(b) hereof, (e) any inability or illegality with respect to the use or possession of the Nuclear Fuel by Lessee or the ownership thereof by the Lessor, (f) any failure to obtain, or expiration, suspension or other termination of, or interruption to, any required governmental licenses, permits, consents, authorizations or approvals, (g) the invalidity or unenforceability of this Fuel Lease or any other Basic Document or any other infirmity therein or any lack of power or authority of the Lessor or Lessee to enter into this Fuel Lease or any other Basic Document, (h) any insolvency, bankruptcy, reorganization or similar proceeding by or against Lessee, (i) whether, at any time in question, any contractor shall have performed any of its duties and obligations under any Nuclear Fuel Contract or any other agreement relating thereto, (j) any act, failure to act, omission or breach on the part of Lessor, any Bank, any IT Noteholder, or the Indenture Trustee under the Credit Agreement, the Note Purchase Agreements, the Indenture or any Basic Document or other documents or otherwise including, without limitation, the failure of any Bank, any IT Noteholder, the Indenture Trustee or the Lessor to take any action or exercise any right hereunder or under the Credit Agreement, the Note Purchase Agreements, the Indenture, any Basic Document or any other document referred to herein or therein or contemplated hereby or thereby, (k) any claim resulting from any other dealing between Lessor, any Bank, any IT Noteholder or the Indenture Trustee, and Lessee (it being understood that the foregoing shall not be deemed a waiver of any rights which Lessee may have against any such party as a result of any such act, failure to act, omission or breach), (l) any renewal, extension, modification, acceleration, compromise, amendment, supplement, termination, sale, exchange, waiver, surrender, release, indulgence or other act, or failure to act, or omission by any party in respect of the Credit Agreement, the Note Purchase Agreements, any Basic Document, any of the IT Notes, any Nuclear Fuel Contract or any security document or other document referred to in or contemplated by any thereof, or with respect to any indebtedness or obligation of Lessor, whether or not Lessee shall have assented thereto or have had any notice or knowledge of any of the foregoing, (m) the legality, validity, irregularity or


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enforceability of any Basic Document, the Credit Agreement, the Note Purchase Agreements, any of the IT Notes, any Nuclear Fuel Contract or any other agreement of Lessee, Lessor or any Bank, IT Noteholder or the Indenture Trustee relating to the Nuclear Fuel or any Generating Facility or the financing, construction, ownership, purchase or sale thereof, or (n) any other circumstances or happening whatsoever, whether or not similar ...