Document:

Ex-10.12 Head Lease Agreement

 

Exhibit 10.12

This Head Lease Agreement has been filed to provide investors with information regarding its terms.
It is not intended to provide any other factual information about the Tennessee Valley Authority.
The representations and warranties of the parties in this Head Lease Agreement were made to, and
solely for the benefit of, the other parties to this Head Lease Agreement. The assertions embodied
in the representations and warranties may be qualified by information included in schedules,
exhibits or other materials exchanged by the parties that may modify or create exceptions to the
representations and warranties. Accordingly, investors should not rely on the representations and
warranties as characterizations of the actual state of facts at the time they were made or
otherwise.

 

 

FINAL

 

Head Lease Agreement

(A1)

Dated as of September 26, 2003

between

Tennessee Valley Authority,

as Head Lessor 
and

NVG Network I Statutory Trust,

as Head Lessee

 

Lease OF Control, Monitoring and Data

ANALYSIS NETWORK

 

CERTAIN OF
THE RIGHT, TITLE AND INTEREST OF THE HEAD LESSEE IN AND TO THIS HEAD LEASE AND THE
RENT DUE AND TO BECOME DUE HEREUNDER HAVE BEEN ASSIGNED AS COLLATERAL SECURITY TO, AND ARE SUBJECT
TO A SECURITY INTEREST IN FAVOR OF, WILMINGTON TRUST COMPANY, NOT IN ITS INDIVIDUAL CAPACITY BUT
SOLELY AS LEASE INDENTURE TRUSTEE UNDER AN INDENTURE OF TRUST AND
SECURITY AGREEMENT (Al), DATED AS
OF SEPTEMBER 26, 2003, BETWEEN SAID LEASE INDENTURE TRUSTEE, AS SECURED PARTY, AND THE HEAD LESSEE,
AS DEBTOR. SEE SECTION 13 HEREOF FOR INFORMATION CONCERNING THE RIGHTS OF THE ORIGINAL HOLDER AND
THE HOLDERS OF THE VARIOUS COUNTERPARTS HEREOF.

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	SECTION 1.	 	DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	SECTION 2.	 	LEASE OF UNDIVIDED INTEREST; CONVEYANCE OF INTEREST IN SOFTWARE RIGHTS	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 2.1.	 	           Lease of Undivided Interest	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 2.2.	 	             Conveyance of Interest in Software Rights	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	SECTION 3.	 	TERM AND RENT	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 3.1.	 	          Head Lease Basic Term	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 3.2.	 	           Head Lease Renewal Term	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 3.3.	 	           Rent	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	SECTION 4.	 	RIGHT OF QUIET ENJOYMENT	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	SECTION 5.	 	TRANSFERS; CONVEYANCE OF TITLE	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.1	 	     
Transfer of Head Lessor’s Interest	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.2.	 	           Other Transfers	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	SECTION 6.	 	TERMINATION; SURRENDER AND RETURN; PARTIAL TERMINATION	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	4	 
	 
	 	Section 6.1.	 	          Automatic Termination of this Head Lease	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 6.2.	 	       Termination of Head Lease at Option of Head Lessee	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 6.3.	 	         Return by Head Lessee	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	SECTION 7.	 	LIENS	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 7.1.	 	          Head Lessor Covenant	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	SECTION 8.	 	NONTERMINABILITY	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	SECTION 9.	 	SEVERANCE	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	SECTION 10.	 	MODIFICATIONS; REPLACEMENT
COMPONENTS; SUBSTITUTED COMPONENTS, SUBSTITUTED NON-NETWORK EQUIPMENT; FUTURE SOFTWARE RIGHTS	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	SECTION 11.	 	NONMERGER	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	SECTION 12.	 	APPLICATION OF PAYMENTS FROM GOVERNMENTAL ENTITY	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	SECTION 13.	 	SECURITY FOR THE HEAD LESSEE’S OBLIGATION	 	 	6
6	 
	 
	 	 	 	 	 	 	 	 
	SECTION 14.	 	MISCELLANEOUS	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 14.1.	 	         Amendments and Waivers	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 14.2.	 	        Notices	 	 	7	 

-i-

 

 

TABLE
OF CONTENTS 
(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 
	 	Section 14.3.	 	     Survival	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 14.4.	 	     Successors and Assigns	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 14.5.	 	      Business Day	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 14.6.	 	     Governing Law	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 14.7.	 	     Severability	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 14.8.	 	      Counterparts	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 14.9.	 	     Headings and Table of Contents	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 14.10.	 	      Further Assurances	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 14.11.	 	     Effectiveness	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 14.12.	 	     Limitation of Liability	 	 	8	 

Attachments:

Attachment A            Description of the Network

Attachment B            Permitted Closing Date Liens

-ii-

 

 

Head
Lease Agreement (A1)

     This
HEAD LEASE AGREEMENT (A1), dated as of September 26, 2003
(this “Head Lease”), between
TENNESSEE VALLEY AUTHORITY, a wholly owned corporate agency and instrumentality of the United
States (the “Head Lessor”), and NVG NETWORK I STATUTORY TRUST, a Delaware statutory trust (together
with its successors and permitted assigns, the “Head
Lessee”).

     WHEREAS, the Head Lessor, the Head Lessee, the Owner Participant and the other parties thereto have
entered into the Participation Agreement setting forth the terms and conditions for entering into
the Transaction;

     WHEREAS, pursuant to this Head Lease, the Head Lessor will lease an undivided interest equal to the
Owner Lessor’s Percentage in the Network (other than the Software Rights) to the Head Lessee, and
the Head Lessee will lease the Undivided Interest from the Head Lessor, for a term equal to
approximately 125% of the estimated remaining useful life of the Network, subject to extension as
provided herein; and

     WHEREAS, pursuant to this Head Lease, the Head Lessor will assign its interest in the Software
Licenses or, alternatively, grant a non-exclusive license to use the Software Rights which are not
created by the Software Licenses, to the Head Lessee for the Head Lease Term, and the Head Lessee
will accept the assignment of, or grant of such license to use, such Software Rights from the Head
Lessor.

     NOW, THEREFORE, in consideration of the foregoing premises, the mutual agreements herein contained,
and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

SECTION 1. DEFINITIONS.

     Unless the context otherwise requires, capitalized terms used in this Head Lease, including those
used in the recitals, and not otherwise defined herein shall have the respective meanings set forth
in Appendix A to the Participation Agreement. The general provisions of such Appendix A shall apply
to terms used in this Head Lease and specifically defined herein.

			
	SECTION 2.	 	LEASE OF UNDIVIDED INTEREST; CONVEYANCE OF INTEREST IN SOFTWARE RIGHTS.

     Section 2.1. Lease of Undivided Interest. The Head Lessor hereby leases the Undivided Interest to
the Head Lessee, upon the terms and conditions set forth herein, for the term and renewal terms, if
any, described below, and the Head Lessee hereby leases the Undivided Interest, upon the terms and
conditions set forth herein, from the Head Lessor. The Head Lessor and the Head Lessee understand
and agree that legal title to the Undivided Interest remains vested in the Head Lessor throughout
the Head Lease Term. The Undivided Interest includes an undivided interest equal to the Owner
Lessor’s Percentage in (x) all Modifications

 

 

which are incorporated in the Network and which became part of the Network pursuant to Section 8.3
of the Network Lease and Section 10 hereof, (y) all Replacement Components which become part of the
Network pursuant to Section 7.2 of the Network Lease and
Section 10 hereof, and (z) any Substituted
Components or Substituted Non-Network Equipment which became part of the Network pursuant to
Section 14A of the Network Lease and Section 10 hereof.

     Section 2.2.
Conveyance of Interest in Software Rights. The Head Lessor hereby assigns on a
non-exclusive basis the Software Licenses and hereby grants a non-exclusive license to use such of
the Software Rights as are not created by the Software Licenses, and the Head Lessee hereby accepts
such assignment of or grant of a non-exclusive license in, such Software Rights, upon the terms and
conditions set forth herein, for the term and renewal terms, if any, described below. The Head
Lessor and the Head Lessee understand and agree that (a) certain of the Software Rights are owned
by the Head Lessor and others were conveyed to the Head Lessor by the Software Licenses and are
subject to the rights of the vendors under the Software Licenses and the terms of the Software
License Consents, and (b) the assignment of certain of the Software Rights and the non-exclusive
license to use certain of the Software Rights granted by the Head Lessor hereunder, are
non-exclusive, and the Head Lessor has assigned and granted similar rights in the Software Rights
to the Other Owner Lessors.

SECTION 3. TERM AND RENT.

     Section 3.1.
Head Lease Basic Term. The Head Lease Term shall commence on the Closing Date and
shall terminate at 11:59 p.m. (New York City time) on March 25, 2041 (the “Head Lease Basic
Term”), subject to earlier termination pursuant to the express terms hereof and extension for
any number of Head Lease Renewal Terms (as defined below). Notwithstanding anything to the contrary
set forth in this Section 3.1, in no event shall the Head Lease Basic Term terminate so long as the
Head Lessee’s interest under this Head Lease shall be subject to the Lien of the Lease Indenture.

     Section 3.2. Head Lease Renewal Term. At the expiration of the Head Lease Basic Term or any Head
Lease Renewal Term, the Head Lessee may extend this Head Lease with respect to the Owner Lessor’s
Interest for any number of additional terms of not less than one year each (each a “Head Lease
Renewal Term” and, together with the Head Lease Basic Term,
the “Head Lease Term”) by giving
the Head Lessor 180 days’ prior written notice.

     Section 3.3.
Rent. (a) The Head Lessee hereby agrees to pay the Head Lessor rent in the amount of
the Owner Lessor’s Cost on the Closing Date for the Head Lease Basic Term and all Head Lease
Renewal Terms (the “Head Lease Rent”). The Head Lessor acknowledges receipt of such amount
in full satisfaction of the Head Lessee’s obligation to pay rent during the Head Lease Basic Term
and each Head Lease Renewal Term for the Owner Lessor’s Interest. If the Head Lessee elects to
renew the term of the Head Lease of the Owner Lessor’s Interest for a Head Lease Renewal Term or
Head Lease Renewal Terms pursuant to Section 3.2 hereof, the Head Lessor agrees that no additional
rent shall be payable in respect of any such Head Lease Renewal Term. The parties agree that for
Federal, state and local income tax purposes, (i) this Head Lease constitutes a sale of the
Undivided Interest and Software Rights from the Head Lessor to the Head Lessee, and (ii) the Head
Lease Rent will be treated as proceeds realized from such sale and assignment.

2

 

          (b) Head Lease Rent paid pursuant to Section 3.3(a) shall be retained by the Head Lessor in any and
all events which are contemplated, prospective or possible under the provisions and conditions of
this Head Lease and the other Operative Documents and shall be absolute and irrevocable under any
circumstances whatsoever, including any rescission or termination of this Head Lease, in whole or
in part.

          (c) For all purposes of this Head Lease and the Operative Documents, the Head Lease Rent payment
and any other amount payable by the Head Lessee in respect of the Owner Lessor’s Interest shall be
separately stated as follows: (i) 67% for the use of the Owner Lessor’s Interest without regard to
the Software Rights separately stated, and (ii) 33% for the assignment of, or grant of a
non-exclusive license to use, the Software Rights with respect to the Owner Lessor’s Interest.

SECTION 4. RIGHT OF QUIET ENJOYMENT.

     The Head Lessor agrees that, during the Head Lease Term, neither the Head Lessor, any Affiliate nor
any other Person claiming title superior to, or by, through or under it shall interfere with or
interrupt the quiet enjoyment of the use, operation and possession by the Head Lessee of the
Network subject to the terms hereof; provided that the Head Lessor’s covenant does not relate to
actions of the Lease Indenture Trustee.

SECTION
5. TRANSFERS; CONVEYANCE OF TITLE.

     Section 5.1. Transfer of Head Lessor’s Interest. Upon (i) termination of the Network Lease pursuant
to Section 14 or 18 thereof (unless in the case of Section 18 thereof, the Lessee pays Termination
Value and all other amounts due to the Head Lessee pursuant to Section 18.l(g) of the Network
Lease), or (ii) the expiration of the Network Lease Term under circumstances where the Lessee is
required to return the Lessee’s Interest to the Owner Lessor (or its designee) in accordance with
Section 5 of the Network Lease, the Head Lessee shall have the option exercisable at any time
following such a termination or expiration of the Network Lease Term to purchase the Undivided
Interest then subject to this Head Lease for an aggregate purchase price of one dollar ($1.00). If
the Head Lessee shall exercise its option provided by this Section 5.1, the Head Lessor shall
transfer by a bill of sale in form and substance reasonably satisfactory to the Head Lessee and
prepared by and at the expense of the Head Lessor all of its right, title, interest and estate in,
to and under the Undivided Interest to the Head Lessee free and clear of Liens other than Permitted
Post Network Lease Term Liens.

     Section 5.2.
Other Transfers. The Head Lessee agrees that, prior to the expiration of, or earlier
termination of, the Network Lease Term, it shall not (i) assign, transfer or convey the Head
Lessee’s interest in the Undivided Interest, or (ii) assign or grant a license or sublicense to use
the Software Rights, in either case in whole or in part, except as part of the Head Lessee’s
transfer of all or part of the Owner Lessor’s Interest pursuant to, and as permitted by, the
Operative Documents. The Head Lessor and the Head Lessee acknowledge that (i) the Undivided
Interest will be leased, and the Software Rights will be assigned, to the Lessee pursuant to the
Network Lease, (ii) the Head Lessee shall have the right to transfer and convey all or part of the
Owner Lessor’s Interest under and in accordance with Sections 10.2, 13.3, 14.4,

3

 

14A.5, 15.2, 16 and 18.1 of the Network Lease, and (iii) the Lessee shall have the right to
sublease and assign the Undivided Interest in accordance with Section 20 of the Network Lease.

SECTION 6. TERMINATION; SURRENDER AND RETURN; PARTIAL TERMINATION.

     Section 6.1. Automatic Termination of this Head Lease. The Head Lease Term shall automatically
terminate with respect to the entire Undivided Interest and the Software Rights, without any action
of any Person whatsoever, upon (i) the purchase by the Head Lessor of the Owner Lessor’s Interest,
and payment therefor, pursuant to Section 10.2, 13.3, 15.2, 16 or 18.l(g) of the Network Lease, or
(ii) the purchase by the Head Lessee of the Owner Lessor’s Interest pursuant to Section 5.1 hereof.
The Head Lease Term shall automatically terminate, without any action of any Person whatsoever,
with respect to the Terminated Portion of the Network, upon satisfaction of the conditions set
forth in Section 14A.4 of the Network Lease, (including the condition that payment of the Partial
Termination Payment be made or, alternatively, subjection to this Head Lease of the Substituted
Components or Substituted Non-Network Equipment).

     Section 6.2. Termination of Head Lease at Option of Head Lessee. At any time within eighteen months
following the expiration or early termination of the Network Lease Term if (i) the Head Lease Term
shall not have been terminated pursuant to Section 6.1 of this Head Lease, and (ii) the Head Lessee
shall not have exercised its option to purchase the Owner Lessor’s Interest pursuant to Section 5.1
of this Head Lease, the Head Lessee may terminate this Head Lease. In connection with any
termination of this Head Lease pursuant to this Section 6.2, the Head Lessee shall return the Owner
Lessor’s Interest to the Head Lessor in accordance with Section 6.3.

     Section 6.3. Return by Head Lessee. Upon termination of the Head Lease Term pursuant to Section
6.1(i) or Section 6.2 of this Head Lease, the Head Lessee shall return the Owner Lessor’s Interest,
by giving up possession of the same to the Head Lessor wherever the Owner Lessor’s Interest is then
located and shall execute, acknowledge and deliver a release, surrender or conveyance of all its
rights, title, interests and estate in the Owner Lessor’s Interest to be prepared by and at the
expense of the Head Lessor in a form reasonably satisfactory to the Head Lessee, in each case on an
“as is,” “where is,” and “with all faults” basis; provided that, upon termination of the Head Lease
Term pursuant to Section 6.l(i), the Head Lessor shall pay all, costs of removal and restoration of
the various premises from which the Owner Lessor’s Interest was removed if so required.

SECTION 7. LIENS.

     Section 7.1. Head Lessor Covenant. The Head Lessor agrees that it shall (i) not, directly or
indirectly, create, incur, assume or suffer to exist any Lien on or with respect to the Owner
Lessor’s Interest other than, during the Network Lease Term, Permitted Liens and, after the
termination of Network Lease Term, Permitted Post Network Lease Term Liens, (ii) promptly notify
the Head Lessee and, so long as the Lien of the Lease Indenture has not been discharged, the Lease
Indenture Trustee, of the imposition of any such Lien (other than, during the Network Lease Term,
Permitted Liens and, after the Network Lease Term, Permitted Post Network Lease Term Liens) of
which the Head Lessor is aware, and (iii) promptly, at its own

4

 

expense, take such action as may be necessary to fully discharge or release any such Lien (other
than, during the Network Lease Term, Permitted Liens and, after the termination of Network Lease
Term, Permitted Post Network Lease Term Liens); provided, however, that the Head Lessor shall not
be in breach of this covenant so long as it shall be diligently contesting such Lien and such
contest shall not present any material risk of the sale, foreclosure
or loss of the Owner Lessor’s
Interest or any part thereof or the rights of the Head Lessee or, so long as the Lien of the Lease
Indenture has not been terminated or discharged, the Lease Indenture Trustee, under the Operative
Documents.

SECTION 8. NONTERMINABILITY.

     Neither the rights nor obligations of the Head Lessee or the Head Lessor under this Head Lease
shall be terminated, extinguished, diminished, lost or otherwise impaired by any circumstances of
any character, including, without limitation: (a) any loss or destruction of, or damage to, all or
any part of the Undivided Interest, the Software Rights, or the Network or any part of the
foregoing for any reason whatsoever and of whatever duration, (b) the condemnation, requisitioning
(by eminent domain or otherwise), expropriation, seizure or other taking of title to or use of the
Undivided Interest, the Software Rights, the Network or any other part of the foregoing, by any
Governmental Entity or TVA or otherwise, (c) any prohibition, limitation or restriction on the use
by any Person of all or any part of its property or the interference with such use by any Person,
or any eviction by paramount title or otherwise, (d) any inadequacy, incorrectness or failure of
the description of the Undivided Interest, the Software Rights or the Network or any part thereof
or any rights or property in which an interest is intended to be granted or conveyed by this Head
Lease, (e) the insolvency, bankruptcy, reorganization or similar proceedings by or against the Head
Lessor, the Head Lessee or any other Person, (f) the failure by the Head Lessee to comply with any
Operative Document or (g) any other reason whatsoever, whether similar or dissimilar to any of the
foregoing.

SECTION 9. SEVERANCE.

     It is the express intention of the parties hereto that the Network (exclusive of the Software
Rights) is tangible personal property under the laws of the State where any portion of the Network
is located, that title to the Network and every portion thereof is severed and subject to removal
from the real property on which any portion of the Network is located and shall be and remain
severed, from title to the real property on which arty portion of the Network is located.

			
	SECTION 10.	 	MODIFICATIONS; REPLACEMENT COMPONENTS; SUBSTITUTED
COMPONENTS, SUBSTITUTED NON-NETWORK EQUIPMENT; FUTURE SOFTWARE RIGHTS.

     Title to all Replacement Components, Substituted Components and Modifications incorporated in, or
made to the Network from time to time in accordance with the Network Lease and in all Substituted
Non-Network Equipment shall vest in the Head Lessor. An undivided interest equal to the Owner
Lessor’s Percentage in all Replacement Components, Substituted Components and Modifications
incorporated in, or made to the Network from time to time, in accordance with the Network Lease
and in all Substituted Non-Network Equipment

5

 

shall automatically become subject to this Head Lease without any action by any Person whatsoever
and shall be deemed to be a part of the Undivided Interest for all purposes of this Head Lease. The
Head Lessor (i) assigns to the Head Lessee on a non-exclusive basis its rights in any Software
Licenses obtained by the Head Lessor from time to time and (ii) grants to the Head Lessee a
non-exclusive license in any software developed by the Head Lessor or in which it has a proprietary
interest, in the case of either (i) or (ii), which are utilized in connection with the operation of
the Network and are necessary for the operation of the Network as an integrated system for the
Network Functions, in accordance with Sections 7 and 8 of the Network Lease. The Head Lessor and
the Head Lessee acknowledge that similar rights in software acquired by the Head Lessor in the
future shall be assigned or granted to the Other Owner Lessors.

SECTION 11. NONMERGER.

     The reversionary interests of the Head Lessor in the Undivided Interest shall not merge into any
interests in the Undivided Interest leased by, through or under, this Head Lease even if such
reversionary interests and such leased interests are at any time vested in or held directly or
indirectly by the same Person, but this Head Lease shall nonetheless remain in full force and
effect in accordance with its respective terms notwithstanding such vesting or holding.
Notwithstanding this Section 11, nothing shall preclude termination of this Head Lease pursuant to
Section 6.1.

SECTION 12. APPLICATION OF PAYMENTS FROM GOVERNMENTAL ENTITY.

     Any payments received during or with respect to the Network Lease Term by the Head Lessor or by the
Head Lessee from any Governmental Entity or TVA with respect to the seizure, expropriation,
condemnation or requisition of the use of, or title to the Undivided Interest or the Network shall
be applied in accordance with Section 10 of the Network Lease. Any payments received with respect
to the period after the expiration of the Network Lease Term by the Head Lessor or by the Head
Lessee from any Governmental Entity with respect to the seizure, expropriation, condemnation or
requisition of the use of, or title to the Undivided Interest or the Network shall be paid over to,
or retained by, the Head Lessee.

SECTION 13. SECURITY FOR THE HEAD LESSEE’S OBLIGATION.

     In order to secure the Lessor Notes, the Head Lessee will by the Lease Indenture assign and grant a
Lien to the Lease Indenture Trustee in and to all of the Head Lessee’s rights, title and interest
in, to and under this Head Lease and the Owner Lessor’s Interest including its leasehold interest
in the Undivided Interest and its interests in the Software Rights, other than Excepted Payments
and Excepted Rights. The Head Lessor hereby consents to such assignment and to the creation of such
Lien and acknowledges receipt of a copy of the Lease Indenture, it being understood that such
consent shall not affect any requirement or the absence of any requirement for any consent under
any other circumstances. TO THE EXTENT, IF ANY, THAT THIS HEAD 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 HEAD LEASE MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY
COUNTERPART HEREOF OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE
COUNTERPART

6

 

CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE LEASE INDENTURE TRUSTEE ON THE SIGNATURE PAGE
THEREOF.

SECTION
14. MISCELLANEOUS.

     Section 14.1. Amendments and Waivers. No term, covenant, agreement or condition of this Head Lease
may be terminated, amended or compliance therewith waived (either generally or in a particular
instance, retroactively or prospectively) except by an instrument or instruments in writing
executed by each party hereto.

     Section 14.2.
Notices. Any notices, requests or communications hereunder shall be given or made in
accordance with the provisions of Section 15.5 of the Participation Agreement.

     Section 14.3. Survival. The warranties and covenants made by each party hereto shall not survive
the expiration or termination of this Head Lease in accordance with the terms hereof.

     Section 14.4. Successors and Assigns.

          (a) This Head Lease shall be binding upon and shall inure to the benefit of, and shall be
enforceable by, the parties hereto and their respective successors and permitted assigns as
permitted by and in accordance with the terms hereof.

          (b) The Head Lessor hereby consents to the entry by the Head Lessee into, and the performance by
the Head Lessee of, the Operative Documents. Except as expressly provided herein or in any other
Operative Document, neither party may assign its interests or transfer its obligations herein
without the consent of the other party hereto.

     Section 14.5. Business Day. Notwithstanding anything herein to the contrary, if the date on which
any payment or performance is to be made pursuant to this Head Lease is not a Business Day, the
payment otherwise payable on such date shall be payable on the next succeeding Business Day with
the same force and effect as if made on such scheduled date and (provided such payment is made on
such succeeding Business Day) no interest shall accrue on the amount of such payment from and after
such scheduled date to the time of such payment on the next succeeding Business Day.

     Section 14.6. Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York including all matters of construction, validity and performance,
without regard to the conflicts-of-laws provisions thereof except New York General Obligations Law
Section 5-1401 except to the extent inconsistent with Federal law.

     Section 14.7. Severability. If any provision hereof shall be invalid, illegal or unenforceable
under the Applicable Law of any jurisdiction, the validity, legality and enforceability of such
provision in any other jurisdiction, and of the remaining provisions hereof in any jurisdiction,
shall not be affected or impaired thereby.

     Section 14.8. Counterparts. This Head Lease may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same instrument.

7

 

     Section 14.9. Headings and Table of Contents. The headings of the sections of this Head Lease and
the Table of Contents are inserted for purposes of convenience only and shall not be construed to
affect the meaning or construction of any of the provisions hereof.

     Section 14.10. Further Assurances. Each party hereto shall promptly and duly execute and deliver
such further documents to make such further assurances for and take such further action reasonably
requested by the other party hereto, all as may be reasonably necessary to cany out more
effectively the intent and purpose of this Head Lease.

     Section 14.11. Effectiveness. This Head Lease has been dated as of the date first above written for
convenience only. This Head Lease shall be effective as of the date set forth on the signature page
hereto.

     Section 14.12. Limitation of Liability. It is expressly understood and agreed by the parties hereto
that (a) this Head Lease is executed and delivered by the Trust Company, not individually or
personally but solely as trustee of the Head Lessee under the Trust Agreement, in the exercise of
the powers and authority conferred and vested in it pursuant thereto, (b) each of the
representations, undertakings and agreements herein made on the part of the Head Lessee is made and
intended not as personal representations, undertakings and agreements by the Trust Company, but is
made and intended for the purpose for binding only the Head Lessee, (c) nothing herein contained
shall be construed as creating any liability on the Trust Company, individually or personally, to
perform any covenant either expressed or implied contained herein, all such, liability, if any,
being expressly waived by the parties hereto or by any Person claiming by, through or under the
parties hereto and (d) under no circumstances shall the Trust Company, be personally liable for the
payment of any indebtedness or expenses of the Head Lessee or be liable for the breach or failure
of any obligation, representation, warranty or covenant made or undertaken by the Head Lessee under
this Head Lease.

(Signatures Follow On Next Page)

8

 

IN WITNESS WHEREOF, the Head Lessor and the Head Lessee have caused this Head Lease to be duly
executed and delivered by their respective officers thereunto duly authorized on the dates below
their respective signatures, but effective as of September 26, 2003.

	 	 	 	 	 	 	 
	 	 	TENNESSEE VALLEY AUTHORITY,	 	 
	 	 	as Head Lessor	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ John M. Hoskins	 	 
	 

	 	 	 	 

Name: John M. Hoskins
	 	 
	 

	 	 	 	Title: Sr. V.P. & Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	NVG NETWORK I STATUTORY TRUST,	 	 
	 	 	as Head Lessee	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Wells Fargo Delaware Trust Company

not in its individual capacity, but solely as

Owner Trustee under the Trust Agreement	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Ann Roberts Dukart	 	 
	 

	 	 	 	 

Name: Ann Roberts Dukart
	 	 
	 

	 	 	 	Title: Vice President	 	 

 

 

 

			
	*	 	Receipt of the original counterpart of the foregoing Head Lease is hereby acknowledged on this
26th day of September, 2003.

	 	 	 	 	 	 	 
	 	 	WILMINGTON TRUST COMPANY,	 	 
	 	 	not in its individual capacity, but solely	 	 
	 	 	as Lease Indenture Trustee	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Ann Roberts Dukart	 	 
	 

	 	 	 	 

Name: Ann Roberts Dukart
	 	 
	 

	 	 	 	Title: Vice President	 	 

 

			
	*	 	This acknowledgment executed in the original counterpart only.

 

 

CONTROL, MONITORING AND DATA ANALYSIS NETWORK

HEAD LEASE AGREEMENTS

The September 26, 2003, Head Lease Agreement (Al) between the Tennessee Valley Authority (“TVA”),
as head lessor and NVG Network I Statutory Trust, as head lessee has been filed. Each of the four
Head Lease Agreements is substantially similar, except as noted below:

Head Lease
Agreement (Al) covers an undivided 26.640926641 percent interest in the Control, Monitoring and
Data Analysis Network (“Network”). In consideration of NVG Network I Statutory Trust
agreeing to pay TVA $103.5 million as head lease rent, TV A agrees to
lease the undivided interest in the Network to NVG
Network I Statutory Trust for the head lease term.

Head Lease
Agreement (A2) covers an undivided 33.462033462 percent interest in the Network. In consideration
of NVG Network II Statutory Trust agreeing to pay TVA $130 million as head lease rent, TVA agrees
to lease the undivided interest in the
Network to NVG Network II Statutory Trust for the head lease term.

Head Lease
Agreement (A3) covers an undivided 21.879021879 percent interest in the Network. In consideration
of NVG Network III Statutory Trust agreeing to pay TVA $85 million as head lease rent, TVA agrees
to lease the undivided interest in the
Network to NVG Network III Statutory Trust for the head lease term.

Head Lease
Agreement (A4) covers an
undivided 18.018018018 percent interest in the Network. In consideration
of NVG Network IV Statutory Trust agreeing to pay TVA $70 million as head lease rent, TVA
agrees to lease the undivided interest in
the Network to NVG Network IV Statutory Trust for the head lease term.Ex-10.13 Leasehold Security Agreement

 

Exhibit 10.13

This Leasehold Security Agreement has been filed to provide investors with information regarding
its terms. It is not intended to provide any other factual information about the Tennessee Valley
Authority. The representations and warranties of the parties in this Leasehold Security Agreement
were made to, and solely for the benefit of, the other parties to this Leasehold Security
Agreement. The assertions embodied in the representations and warranties may be qualified by
information included in schedules, exhibits or other materials exchanged by the parties that may
modify or create exceptions to the representations and warranties. Accordingly, investors should
not rely on the representations and warranties as characterizations of the actual state of facts at
the time they were made or otherwise.

 

 

FINAL

Leasehold
Security Agreement (A1)

Dated as of September 26, 2003

made by

NVG Network I Statutory Trust,

as the Debtor

to

Tennessee Valley Authority,

as the Secured Party

 

Lease
of Control, Monitoring

and Data Analysis Network

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	ARTICLE I         INCORPORATION OF RECITALS; DEFINITIONS	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II        SECURITY AGREEMENT	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III       SECURITY AGREEMENT EVENTS OF DEFAULT	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV       REMEDIES	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 4.01	 	Rights of the Secured Party	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 4.02	 	The Debtor’s Rights	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 4.03	 	Delay or Omission Not a Waiver	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 4.04	 	Restoration of Rights and Remedies	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 4.05	 	Attorney-in-Fact	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 4.06	 	Filings	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 4.07	 	Early Termination	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 4.08	 	The Secured Party’s Duties	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V       MISCELLANEOUS	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.01	 	Amendments and Waivers	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.02	 	Notices	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.03	 	Survival	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.04	 	Successors and Assigns	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.05	 	Business Day	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.06	 	Governing Law	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.07	 	Severability	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.08	 	Counterparts	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.09	 	Headings and Table of Contents	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.10	 	Further Assurance	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.11	 	Effectiveness	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.12	 	Release	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.13	 	Subordination	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.14	 	Limitation of Liability	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	Attachments	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Attachment A      Description of the Network	 	 	 	 

-i-

 

LEASEHOLD SECURITY AGREEMENT (A1)

     This
LEASEHOLD SECURITY AGREEMENT (A1) (this “Security
Agreement”) dated as of September 26, 2003, made by NVG NETWORK I STATUTORY TRUST, a Delaware statutory trust (together with its
successors and permitted assigns, the “Debtor” or “Owner Lessor”), to TENNESSEE VALLEY
AUTHORITY, a wholly owned corporate agency and instrumentality of the United States (in such
capacity, the “Secured Party” or “TVA”).

     WHEREAS, TVA, the Debtor, Wachovia Mortgage Corporation, Wells Fargo Delaware Trust Company, in
the capacities set forth therein, and Wilmington Trust Company, as trustee under two indentures,
have entered into the Participation Agreement dated as of September 22, 2003 (the
“Participation Agreement”);

     WHEREAS, the Network consists of certain equipment utilized in connection with the operation of
the Secured Party’s transmission system, and software used in connection with such equipment,
including the Software Rights, located in the States of Tennessee, Kentucky, Georgia and
Mississippi;

     WHEREAS, TVA has leased an undivided interest equal to the Owner Lessor’s Percentage in the Network
(other than the Software Rights), to the Owner Lessor, and the Owner Lessor has leased the
Undivided Interest from TVA, pursuant to the Head Lease;

     WHEREAS, TVA has assigned, or granted a license to use, the Software Rights, to the Owner Lessor,
and the Owner Lessor has accepted such assignment, or grant of a license to use, the Software
Rights from TVA, pursuant to the Head Lease;

     WHEREAS, the Owner Lessor has subleased the Undivided Interest and assigned its interest in the
Software Rights to TVA pursuant to the Network Lease;

     WHEREAS, the Network is more particularly described in Attachment A, such Attachment being attached
to and made a part of this Security Agreement;

     WHEREAS, the Owner Lessor is granting and conveying to the Secured Party a security interest in the
collateral defined herein as security for certain obligations of the Owner Lessor pursuant to the
Network Lease, subject and subordinate to the Lease Indenture.

     NOW, THEREFORE, in consideration of the foregoing premises, the mutual agreements herein contained,
and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

GRANTING CLAUSE

     To secure (a) the performance and observance by the Debtor of its obligations pursuant to Section
10 of the Participation Agreement and Section 4.2 of the Network Lease not to interfere

 

 

with or interrupt the quiet enjoyment of the use, operation and possession of the Network, and (b)
the performance and observance by the Debtor of its obligations
pursuant to Sections 15.2 and 16.2
of the Network Lease to deliver the Owner Lessor’s Interest (including the Undivided Interest and
the Software Rights) to the Secured Party in connection with the payment of the Early Purchase
Price or the Purchase Option Price, as applicable, or other consideration due therefor (such
obligations are collectively referred to hereinafter as the “Secured Obligations”), the
Debtor hereby, subject and subordinate to the Lease Indenture, grants, bargains, sells and conveys
and warrants to the Secured Party and grants to the Secured Party a security interest in and lien
upon all right, title and interest of the Secured Party in, to and
under the following described
property (being hereinafter referred to collectively as the
“Collateral)”:

     (1) all right, title and interest of the Debtor in the Owner Lessor’s Interest, including the
Undivided Interest and the Software Rights; and

     (2) all direct or indirect proceeds of the foregoing of whatever kind or nature, in each case
whether now owned or existing or hereafter acquired and wherever located, including all claims
against third parties for destruction, loss or damage to any of the foregoing or otherwise.

     TO
HAVE AND TO HOLD the Collateral for the benefit of the Secured Party to secure the Secured
Obligations and all other obligations imposed upon the Debtor by this Security Agreement, subject
to the terms and conditions hereof.

     THE DEBTOR FURTHER COVENANTS AND AGREES as follows:

ARTICLE I

INCORPORATION OF RECITALS; DEFINITIONS

     The
recitals set forth above are incorporated in this Article I as if set forth in this Article I
in their entirety. Capitalized terms used in this Security Agreement, including the granting clause
and the recitals, and not otherwise defined herein shall have the respective meanings set forth in
Appendix A to the Participation Agreement. The general provisions of Appendix A shall apply to
terms used in this Security Agreement and specifically defined herein.

ARTICLE II

SECURITY AGREEMENT

     The Debtor hereby grants to the Secured Party a security interest in the Collateral, whether now
owned or hereafter acquired. This Security Agreement is a security agreement under, and in
accordance with, the Uniform Commercial Code of New York for the benefit of the Secured Party, and
(b) shall support any financing statement showing the Secured Party’s interest as the Secured Party
with respect to the Collateral.

2

 

ARTICLE III

SECURITY AGREEMENT EVENTS OF DEFAULT

     Each of the following events shall constitute a “Security Agreement Event of Default” so long as
the same shall be continuing:

     (a) the failure of the Debtor to perform its obligations set forth in Section 10 of the
Participation Agreement or Section 4.2 of the Network Lease not to interfere with or interrupt the
quiet enjoyment of the use, operation and possession of the Network, which failure shall have
resulted in the loss of possession of the Undivided Interest and the Software Rights by the
Secured Party; and

     (b) the failure of the Debtor to perform its obligations set forth in Sections 15.2 or 16.2
of the Network Lease to deliver to the Secured Party the Owner Lessor’s Interest (including the
Undivided Interest and the Software Rights) in connection with the Secured Party’s exercise of the
Early Purchase Option or Purchase Option after tender by the Secured Party of the payment of the
Early Purchase Price or the Purchase Option Price, as applicable, and all other amounts due in
connection therewith.

ARTICLE IV

REMEDIES

     Section 4.01 Rights of the Secured Party. If a Security Agreement Event of Default shall have
occurred and be continuing, the Secured Party may, subject to Section 4.02, exercise, at its option
and in addition to any other rights and remedies the Secured Party may have at law or in equity,
any one or more or all, and in any order, any of the following remedies, it being expressly
understood that no remedy herein conferred is intended to be exclusive of any other remedy or
remedies, but that each and every remedy is cumulative and is in addition to every other remedy
given herein or now or hereafter existing at law or in equity or by
statute:

          (i) the Secured Party may, upon written notice to the Debtor, take possession of all or any part of
the Collateral and may exclude therefrom the Debtor and all persons claiming under it, and may
exercise all remedies available to a secured party under the UCC of New York or any State in which
the Collateral is located or any other provision of Applicable Law. The Secured Party may proceed
to enforce the rights of the Secured Party by directing payment to it of all moneys payable under
any agreement or undertaking constituting a part of the Collateral, by proceedings in any court of
competent jurisdiction to recover damages for the breach hereof or for the appointment of a
receiver or for sale of all or any part of the Collateral or for foreclosure of the Owner Lessor’s
interest, the Undivided Interest and the Software Rights, and by any other action, suit, remedy or
proceeding authorized or permitted by this Security Agreement, at law or in equity, or whether for
the specific performance of any agreement contained herein, or for an injunction against the
violation of any of the terms hereof, or in aid of the exercise of any power granted hereby or by
law, and in addition, may foreclose upon, sell, assign, transfer and deliver, from time to time to
the extent permitted by Applicable Law, all or any part of the Collateral or any interest therein,
at any private sale or public auction with or

3

 

without demand, advertisement or notice (except as herein required or as may be required by law) of
the date, time and place of sale and any adjournment thereof, for cash or credit or other property,
for immediate or future delivery and for such price or prices and on
such terms as the Secured
Party, in its unfettered discretion, may determine, or as may be required by law, so long as the
Debtor is afforded a commercially reasonable opportunity to bid for all or such part of the
Collateral in connection therewith; provided that 20 days shall be deemed to be a commercially
reasonable opportunity to bid for purposes of this Section 4.01. The Secured Party may file such
proofs of claim and other papers or documents as may be necessary or advisable in order to have the
claims of the Secured Party asserted or upheld in any bankruptcy, receivership or other judicial
proceedings.

          (ii) the Secured Party may proceed to protect and enforce this Security Agreement and the Secured
Obligations by action, suit or proceedings at law, in equity or in bankruptcy, or for the specific
performance of the Debtor’s obligations under Section 10 of the Participation Agreement, Sections
4.2, 15.2 or 16.2 of the Network Lease, or in execution or aid of any power herein granted or for
foreclosure hereunder or thereunder, or for appointment of a receiver or receivers of the
Collateral or any part thereof, or for the recovery of judgment for the Secured Obligations or for
the enforcement of any other proper, legal or equitable remedy available under Applicable Law.

     Section 4.02 The Debtor’s Rights. Subject to Section 4.07 and notwithstanding Section 4.01, the
Debtor shall, to the extent set forth in Section 18 of the Network Lease, have the right to
exercise the remedies set forth in such Section 18, including to the extent permitted therein the
sale of the Undivided Interest and the Software Rights, all without regard to any rights granted to
the Secured Party hereunder (other than the Secured Party’s rights to the proceeds of any such sale
under Section 4.07) or under Applicable Law.

     Section 4.03 Delay or Omission Not a Waiver. No delay or omission by the Secured Party in the
exercise of any right or remedy hereunder accruing upon any Security Agreement Event of Default
shall impair any such right or remedy or constitute a waiver of any other Security Agreement Event
of Default or be deemed to be in acquiescence therein. Every right and remedy given by this Article
IV or by Applicable Law to the Secured Party may be exercised from time to time, and as often as
may be deemed expedient, by the Secured Party.

     Section 4.04 Restoration of Rights and Remedies. If the Secured Party has instituted any proceeding
to enforce any right, power or remedy under this Security Agreement and such proceeding has been
discontinued or abandoned or for any reason has been determined adverse to the Secured Party, then
the Debtor and the Secured Party shall, subject to any determination in such proceeding, be
restored to their former positions hereunder and all rights, remedies and powers of the Secured
Party shall continue as if no such proceeding has been instituted.

     Section 4.05 Attorney-in-Fact. The Debtor hereby appoints and constitutes the Secured Party as the
true and lawful attorney-in-fact of the Debtor for the purpose of taking any action permitted by
this Security Agreement in connection with the enforcement of the Lien of this Security Agreement,
with full power (in the name of the Debtor or otherwise), at any time following any Security
Agreement Event of Default and during the continuance thereof, to ask, require, demand and receive
any and all amounts and claims for amounts due and to become due

4

 

under or arising out of the Collateral or any portion thereof, to endorse any check or other
instrument or order in connection therewith and to file any claim or take any action or institute
any proceeding to collect any portion of the Collateral. Upon the written instructions of the
Secured Party, the Debtor shall execute any financing statement (and any continuation statement
with respect to any such financing statement), or any other document necessary for the Secured
Party to obtain the full benefits of the Lien of this Security Agreement and as may be specified in
such instructions.

     Section 4.06 Filings. The Debtor authorizes the Secured Party to file, and agrees that upon
request of the Secured Party if shall, at its own expense, execute and deliver, all financing
statements presented to it in final form necessary to perfect the Secured Party’s interest in the
Collateral or any other document presented to it in final form reasonably requested by the Secured
Party to perfect, protect, enforce, or otherwise give effect to the Secured Party’s rights and
remedies hereunder.

     Section 4.07 Early Termination. The Lien of this Security Agreement on the Collateral shall
terminate upon any sale of the Debtor’s interest in the Undivided Interest and Software Rights
pursuant to, or as permitted by, the Network Lease, including Section 18 thereof, but such Lien in
favor of Secured Party shall, subject to Section 5.12, continue in the proceeds of any sale
pursuant to Section 18 of the Network Lease.

     Section 4.08
The Secured Party’s Duties. The powers conferred on the Secured Party hereunder are
solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the accounting for monies actually received by it hereunder, the
Secured Party shall have no duty as to the Collateral or other matters relative to the Collateral,
whether or not the Secured Party has or is deemed to have knowledge of such matters, or as to the
taking of any necessary steps to preserve rights against any parties or any other rights pertaining
to the Collateral.

ARTICLE V

MISCELLANEOUS

     Section 5.01
Amendments and Waivers. No term, covenant, agreement or condition of this Security
Agreement may be terminated, amended or compliance therewith waived (either generally or in a
particular instance, retroactively or prospectively), except by an instrument or instruments in
writing executed by each party hereto.

     Section 5.02 Notices. Any notices, requests or communications hereunder shall be given or made in
accordance with the provisions of Section 15.5 of the Participation Agreement.

     Section 5.03 Survival. Except as expressly set forth herein, the warranties and covenants made by
each party hereto shall not survive the expiration or termination of this Security Agreement in
accordance with its terms.

5

 

     Section 5.04 Successors and Assigns.

          (i) This Security Agreement shall be binding upon and shall inure to the benefit of, and shall be
enforceable by, the parties hereto and their respective successors and permitted assigns as
permitted by and in accordance with the terms hereof.

          (ii) Except as expressly provided herein or in the other Operative Documents, no party hereto may
assign its interests herein without the consent of the other parties hereto.

     Section 5.05
Business Day. Notwithstanding anything herein to the contrary, if the date on which
any payment is to be made pursuant to this Security Agreement is not a Business Day, the payment
otherwise payable on such date shall be payable on the next succeeding Business Day with the same
force and effect as if made on such scheduled date and (provided such payment is made on such
succeeding Business Day) no interest shall accrue on the amount of such payment from and after such
scheduled date to the time of such payment on such next succeeding
Business Day.

     Section 5.06 Governing Law. This Security Agreement shall in all respects be governed by and
construed in accordance with the laws of the State of New York to the extent not inconsistent with
Federal law.

     Section 5.07 Severability. Any provision of this Security Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     Section 5.08 Counterparts. This Security Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall he an original, but all
such counterparts shall together constitute but one and the same instrument.

     Section 5.09 Headings and Table of Contents. The headings of the Articles and Sections of this
Security Agreement and the Table of Contents are inserted for purposes of convenience only and
shall not be construed to affect the meaning or construction of any of the provisions hereof.

     Section 5.10 Further Assurance. Each party hereto shall promptly and duly execute and deliver such
further documents and assurances for and take such further action reasonably requested by any party
to whom the Debtor is obligated, at the sole cost of the Debtor, all
as may be reasonably necessary
to carry out more effectively the intent and purpose of this Security Agreement.

     Section 5.11 Effectiveness. This Security Agreement has been dated as of the date first above
written for convenience only. This Security Agreement shall be effective as of the date set forth
on the signature page hereto.

     Section 5.12 Release. At such time as all amounts secured hereby have been paid in full and the
Debtor has fully performed all of the covenants, obligations and agreements of the

6

 

Debtor secured hereby, or such amounts are no longer payable and such obligations have terminated,
the Secured Party shall at the request of the Debtor, but at the expense of the Secured Party,
release the Lien hereof on the Collateral.

     Section 5.13 Subordination. The Secured Party hereby acknowledges that the Lien of this Security
Agreement is subject and subordinate to the Lien of the Lease Indenture.

     Section 5.14
Limitation of Liability.  It is expressly understood and agreed by the parties hereto
that (a) this Security Agreement is executed and delivered by the Trust Company, not individually
or personally but solely as trustee of the Debtor under the Trust Agreement, in the exercise of the
powers and authority conferred and vested in it pursuant thereto, (b) each of the representations,
undertakings and agreements herein made on the part of the Debtor is made and intended not as
personal representations, undertakings and agreements by the Trust Company, but is made and
intended for the purpose for binding only the Debtor, (c) nothing herein contained shall be
construed as creating any liability on the Trust Company, individually or personally, to perform
any covenant either expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties hereto or by any Person claiming by, through or under the parties
hereto and (d) under no circumstances shall the Trust Company, be personally liable for the payment
of any indebtedness or expenses of the Debtor or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken by the Debtor under this
Security Agreement.

7

 

     IN WITNESS WHEREOF, the Debtor and the Secured Party have caused this Leasehold Security
Agreement to be duly executed, sealed and delivered by their respective officers thereunto duly
authorized on the dates below their respective signatures but effective as of September 26, 2003.

	 	 	 	 	 	 	 	 	 
	 	 	NVG NETWORK I STATUTORY TRUST, as

Debtor	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Wells Fargo Delaware Trust Company,	 	 
	 	 	 	 	not in its individual capacity but solely as	 	 
	 	 	 	 	Owner Trustee under the Trust Agreement	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Ann Roberts Dukart	 	 
	 

	 	 	 	 	 	 

Name: Ann Roberts Dukart
	 	 
	 

	 	 	 	 	 	Title: Vice President	 	 
	 

	 	 	 	 	 	Date: SEP 24 2003	 	 

Leasehold Security Agreement (A1)

 

 

	 	 	 	 	 	 	 
	 	 	TENNESSEE VALLEY AUTHORITY, as	 	 
	 	 	Secured Party	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John M. Hoskins	 	 
	 

	 	 	 	 

Name: John M. Hoskins
	 	 
	 

	 	 	 	Title:Senior Vice President and Treasurer	 	 
	 

	 	 	 	Date:	 	 

Leasehold Security Agreement (A1)

 

 

CONTROL, MONITORING AND DATA ANALYSIS NETWORK

LEASEHOLD SECURITY AGREEMENTS

The September 26, 2003, Leasehold Security Agreement (Al) is made by NVG Network I Statutory Trust,
as the debtor and the Tennessee Valley Authority (“TVA”) as the secured party has been filed. Each
of the four Leasehold Security Agreements is substantially similar, except as noted below:

Leasehold Security Agreement (Al) is made by NVG Network I Statutory Trust, as the debtor and TVA
as the secured party. Leasehold Security Agreement (Al) covers an
undivided 26.640926641 percent interest in the Control, Monitoring and Data Analysis Network
(“Network”).

Leasehold Security Agreement (A2) is made by NVG Network II Statutory Trust, as the debtor and TVA
as the secured party. Leasehold Security Agreement (A2) covers an
undivided 33.462033462 percent interest in
the Network.

Leasehold Security Agreement (A3) is made by NVG Network III Statutory Trust, as the debtor and TVA
as the secured party. Leasehold Security Agreement (A3) covers an
undivided 21.879021879 percent interest in
the Network.

Leasehold Security Agreement (A4) is made by NVG Network IV Statutory Trust, as the debtor and TVA
as the secured party. Leasehold Security Agreement (A4) covers an
undivided 18.018018018 percent interest
in the Network.

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