ML20069D923
| ML20069D923 | |
| Person / Time | |
|---|---|
| Site: | Vermont Yankee File:NorthStar Vermont Yankee icon.png |
| Issue date: | 06/01/1994 |
| From: | Ritsher J ROPES & GRAY |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| NUDOCS 9406060272 | |
| Download: ML20069D923 (178) | |
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ROPES & GRAY ONE INTERNATIONAL PLACE BOSTON, MASSACH USETTS O2110-2624 100t PENNSYLVAN: A AVI.NUE, N W 30 ME NNEDY PL AZA SUIT E 1200 SOtll H PROVf DE NCE, R.1. C2903 T E L ECOPI E R: (617)951 7050 W ASH'NGTON. D C. 20004 90,)
3 4,00 T E L ECOP:ER (40<) 455 440, (204 m - 3000 Writer's Direct Dial Numtier s (617) 951-7322 June 1, 1994 United States Nuclear Regulatory Commission One White Flint North 11555 Rockville Pike Rockville, Maryland 20852 Attn:
Document Control Desk Re:
License No. DPR-28 (Docket No. 50-271)
Application for Consent to an Eauipment Lease
Dear Sir:
Enclosed herewith for filing in the above docket is an original and two copies of an Application for Commission Consent to an Equipment Lease relating to the leasing of two replacement low-pressure turbines to be installed in the Vermont Yankee Station during its next refueling outage.
Would you please acknowledge receipt of this filing on the enclosed copy of this letter and return it to me in the enclosed self-addressed stamped envelope.
Very truly yours, f
John' A. Ritsher JAR /jmf: JARUSNRC.VY Enclosures cc:
USNRC-Regional Administrator-Region 1 USNRC-Resident Inspector-VYNPS USNRC-Project Manager-VYNPS 00
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A 9406060272 940601 PDR ADOCK 0500 1
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BEFORE THE UNITED STATES NUCLEAR REGULATORY COMMISSION I
LICENSE NO. DPR-28 I
i DOCKET NO. 50-271 IN THE MATTER OF VERMONT YANKEE NUCLEAR POWER CORPORATION (Vermont Yankee Nuclear Power Station)
APPLICATION FOR j
l COMMISSION CONSENT TO AN EQUIPMENT LEASE i
1 JARNRCAP.VY
BEFORE THE UNITED STATES NUCLEAR REGULATORY COMMISSION LICENSE NO. DPR-28 DOCKET NO. 50-271 IN THE MATTER OF VERMONT YANKEE NUCLEAR POWER CORPORATION (Vermont Yankee Nuclear Power Station) l APPLICATION FOR COMMISSION CONSENT TO AN EQUIPMENT LEASE i
uomco.vr l
i
UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION
)
In the Matter of
)
Vermont Yankee Nuclear Power
)
Corporation
)
Docket No. 50-271
)
(Vermont Yankee Nuclear Power )
Station)
)
)
APPLICATION FOR CONSENT TO AN EQUIPMENT LEASE Vermont Yankee Nuclear Power Corporation
(" Vermont Yankee"),
on behalf of itself and TIFD VIII-H Inc., as the prospective owner-Lessor named below, hereby requests that the Commission by an appropriate order consent to the financing transaction described herein, find that the Owner-Lessor by entering into such transaction need not be named as a Commission licensee, and, impose the conditions described in 10 CFR 550.81.
BACKGROUND Vermont Yankee is the owner and operator of Vermont Yankee Nuclear Power Station (the " Station") and the sole licensee under Operating License No. DPR-28 (the " Operating License") which authorizes it to possess, use and operate the Station in accordance with the terms and conditions of the Operating License.
TIFD VIII-H Inc. is a wholly-owned subsidiary of Global Project & Structured Finance Corporation which is, in turn, a JAM a GP.VY
wholly-owned subsidiary of GE Capital Corporation ("GE Capital").
GE Capital is a wholly-cwned subsidiary of General Electric Capital Services, Inc., which is, in turn, a wholly-owned subsidiary of General Electric Company.
In 1992 Vermont Yankee determined that, because of the steam erosion damage to the internals and casings of the present low-pressure turbines in the Station, they would have to be replaced within the succeeding three refueling cycles.
Vermont Yankee sought proposals for replacing those turbines and subsequently j
ordered the replacement turbines from General Electric Company
(" Contractor").
The replacement turbines (the " Equipment") are
)
anticipated to be delivered to the Station site in time for installation during the 1995 refueling outage.
Vermont Yankee also investigated the alternatives available for financing its acquisition of the Equipment and concluded that an operating lease would be the most economical method.
Vermont Yankee accepted a financing proposal from GE Capital which contemplates that TIFD VIII-H Inc. (the " Owner-Lessor") would acquire legal title to the turbines from Contractor and lease them to Vermont Yankee.
Verment Yankee and the Owner-Lessor have entered into a Participation Agreement dated as of March 31, 1994, which sets forth tne terms and conditions on which a long-term Equipment Lease (the " Lease") will be entered into when the Equipment is ready for shipment.
Attached hereto as Exhibit A is a copy of the Lease, together with a copy of the Participation Agreement which, inter alia, sets out the conditions precedent to entering j amcu.vy
l l
into the Lease and the tax indemnity with respect to the lease financing.
PROPOSED TRANSACTION Description.
Under the proposed transaction Vermont Yankee, as lessee, and the Owner-Lessor will enter into the Lease, Vermont Yankee will assign to the Owner-Lessor its rights under the fabrication contract to acquire the Equipment from the Contractor when the fabrication is completed, and the Owner-Lessor will thereupon lease the Equipment to Vermont Yankea pursuant to the Lease.
The Equipment would then be delivered to the Station site and installed as an integral part of the l
Station.
The Lease provides for an initial ten year term with an option for Vermont Yankee to renew the term for an additional seven years (Lease, 54.1) and an option to purchase the Equipment for fair market value at the end of the initial lease term or the renewal term (Lease, 55.1).
The end of the renewal term would i
coincide with the present expiration date of the Operating License.
The Lease also provides that bare legal title to the Equipment will reside in the Owner-Lessor but that Vermont Yankee, as lessee, so long as it complies with the terms of the Lease, shall have uninterrupted possession, use and control of the Equipment (Lease, 2.3) and is authorized to enforce all warranty claims against the manufacturer of the Equipment (Lease,s2.2).
The Lease will be a "not lease" whereby Vermont Yankee, as lessee, is responsible for the operation and maintenance of the Equipment and all costs in connection JARNRCAP.VY therewith, including insurance, taxes, assessments, repairs or improvements and other charges and liabilities relating thereto, such as decontamination and decommissioning (Lease, 53.4).
In the event of a default under the Lease by Vermont Yankee, the Lease provides that the owner-Lessor's exercise of its remedies is subject to compliance with all applicable rules and regulations of the Commission. (Lease, 514.1).
As a condition precedent to entering into the Lease, GE Capital and the Owner-Lessor have required that Vermont Yankee obtain confirmation from the Commission that neither the Owner-Lessor, by entering into the Lease, nor its indirect parent, GE Capital, needs to be named as a Commission licensee (Participation Agreement, 54.2(p)).
The Participation also requires that the Lease be executed when the Equipment is ready for shipment from Contractor's manufacturing facility in New York, which is presently anticipated to occur in mid-October, 1994.
Without the requested Commission action by that date, the transaction will not go forward.
Discussion.
The transaction presented by this petition is comparable to two types of transactions which the Commission has dealt with before.
First, Section 184 of the Atomic Energy Act of 1954, as amended (the "Act")' empowers the Commission to consent to a " mortgage, pledge or other lien upon any facility".2 1
42 U.S.C.
5 2011 et sea.
2 42 U.S.C.
5 2234. unsace.vr
I In promulgating its Rules and Regulations, the Commission has 3
granted a general consent to such financing arrangements on the conditicas that any such creditor's rights must be exercised in compliance with the requirements and restrictions applicable under the Act and the Commission's Rules and Regulations thereunder and that no creditor may take possession of its collateral prior to obtaining appropriate license authority from the Commission.
While the language of 550.81 does not explicitly cover an operating lease financing arrangement, such as is presented here, the substance of the operating lease transaction does not differ materially from a mortgage or pledge transaction for prysent purposes.
Both financing approaches provide for possession, use, control and maintenance and operational responsibility for the asset being financed to remain with the
" debtor" or " lessee", while the role of the creditor is essentially passive unless it becomes necessary for it to assert its creditor's rights against the asset (i.e., the collateral) in the event of a default.
The Lease in this instance expressly provides that any assertion of such claims by the Owner-Lessor is at all times subject to compliance with the Commission's Rules and Regulations.'
The consent granted by 10 CFR 550.81 makes no 3 10 CFR 550.81.
Vermont Yankee relied upon this general consent when it entered into its First Mortgage Indenture, dated October 1, 1970, which mortgaged the entire Station as security for Vermont Yankee's First Mortgage Bonds and when it entered into the Indenture of Second Mortgage, dated as of February 22, 1990, securing its Revolving Credit.
' See Lease, 514.1. a waca.vy
)
l reference to " title" because the situs of legal or equitable title to a facility is not generally material in financing arrangements under the Uniform Commercial Code.
Thus, the Lease is this instance should be treated no differently than a mortgage or pledge.
Second, the Commission and its Staff have consistently approved sale arid leaseback transactions of undivided interests in a nuclear generating facility while expressly exempting the
" lessor" from any licensing requirement.
This issue first arose with respect to Palo Verde Nuclear Generating Station, Unit 1 (Docket No. STN 50-528).
That was a case of first impression for the Commission:
the Staff issued its articulation of the rationale supporting the licensing action there requested in NRC Policy Paper SECY-85-367 (Nov. 20, 1985) and the Commission consented to the transaction by Order dated December 12, 1985.5 In that transaction the applicants were seeking authorization for one licensee to transfer part or all of its undivided interest in the generating facility to a third party owner-trustee in a sale-leaseback transaction.
While the Staff acknowledged that the application in that case of first impression presented a question of whether licensing action was required under Section 101 of the Act,' the Staff reasoned that, since the third party owner-trustee, representing passive investors, had no authority over the facility and could not influence any operational decisions, S CLI-85-17, 22 NRC 875 (1985).
6 42 U.S.C.
52131.
l no purpose would be served by licensing such "transferees" under the license.
The Palo Verde precedent has since been followed in numerous other proceedings:
e.a., Palo Verde Unit 2 (Docket No.
STN 50-529), Perry Nuclear Power Plant (Docket No. 50-412), Grand Gulf Nuclear Station, Unit 1 (Docket No. 50-416), Waterford Steam Electric Station, Unit 3 (Docket No. 50-382), and Seabrook Station, Unit 1 (Docket No. 50-443).
The facts of the transaction presented here fall well within the statutory interpretation and regulatory position in the Palo Verde line of cases.
In each of those transactions the licensee was transferring legal title to an undivided interest in an entire utilization facility which was already licensed by the Commission and was concurrently leasing it back, thus retaining full control and responsibility.
Those cases recognized that the
" transfer" was within the scope of Section 101 of the Act and, while it was therefore necessary to approve an operating license amendment to acknowledge the transfer, it was determined that the new legal owner of that interest need not be named as a licensee because the entity with the real control and responsibility for the transferred interest remained the licensee named in the license.7 In the present situation Vermont Yankee will make no transfer of an interest in the Station.
Rather, in this case 7 Each of these precedents, which concluded that the financing party need not be licensed, involved transfers of an undivided interest in a complete " utilization facility".
This financing transaction presents an even more remote factual situation because it involves a single piece of equipment rather than an undivided share of a " facility".
m aca.vy -
1 Vermont Yankee will assign certain contract rights to acquire title to the Equipment, which contract rights are not part of the licensed Station.
It will receive in exchange rights, as lessee under the Lease, to possess, control, use and operate the Equipment which it will incorporate as a physical part of the Station.
Thus, in this case the financing mechanism - an operating lease - does not involve a " transfer" of any interest subject to the operating License, but is merely a method for acquiring the use in the Station of a piece of replacement equipment to be owned by the Owner-Lessor but controlled and operated solely by Vermont Yankee.
Legal title to the Equipment will pass directly to the Owner-Lessor from the Contractor prior to its installation in the Station and becoming a component in the licensed facility.
Therefore, while Vermont Yankee will not itself hold legal title to the Equipment, it will at all times have possession and control of the Equipment pursuant to the Lease.
The underlying issue presented by this petition is comparable to the Palo Verde precedent: does a lessor, the holder of bare legal title to a piece of equipment used in a utilization facility, need to become a licensee of the Commission where the lessee of that eyaipment, which has possession and full responsibility for the use and maintenance of the equipment, is duly licensed by the Commission?
Vermont Yankee submits that, i
because under the terms of the Lease the owner-Lessor will be a passive investor and will have no authority over the Equipment or.annce.vy
how it is operated, the same rationale which supported Palo Verde and its successors should control here:
"where the investor owner only serves in a passive role with no authority or control over the nuclear facility,
...no regulatory purpose... would be served by an interpretation of Section 101 of the Atomic Energy Act, which requires the licensing of such financial investors.... Moreover, where the lease expressly provides that [the licensee) will: (i) continue to be licensed to possess the facility;...and (iii) continue its responsibility for payment of its... share of all taxes, insurance premiums, operating and maintenance cost...,
the Staff does not view the approval of the proposed transaction as presenting any public health and safety concerns."a In recognition of the close parallels noted above between the mortgage / pledge financing arrangement and the operating lease financing transaction contemplated herein, Vermont Yankee would anticipate that the conditions set forth in 10 CFR 50.81 should ba expressly incorporated by reference in the Commission order requested herein.
Relief Reauested.
Vermont Yankee seeks an order from the Commission which (i) confirms that neither the owner-Lessor nor l
GE Capital, as the indirect parent of the Owner-Lessor, both being passive investors, need be named as a Commission licensee, (ii) provides that any rights of the Owner-Lessor pursuant to the Lease may be exercised only in compliance with and subject to the requirements and restrictions of the Act and the Commission's regulations thereunder, and (iii) requires Vermont Yankee to notify the Commission in writing of any changes in the terms and conditions of the Lease and of any actions by the owner-Lessor 8 SECY-85-367 (Nov. 20, 1985), at pp.
7-8.
naxace vy 1 i
1
that may have an effect on the safe operation of the Station.
Vermont Yankee submits that the aforesaid conditions are consistent with the action taken by the Commission in Palo Verde and the other cited precedents.
SUPPORTING INFORMATION General Information on Owner-Lessor.
TIFD VIII-H Inc. is a Delaware corporation and a wholly-owned, indirect subsidiary of GE Capital, organized for the sole purpose of acting as Owner-Lessor in the proposed transaction.
Decommissionina Costs.
In compliance with 10 CFR g 50. 3 3 (k) (2 ) and 550.75, Vermont Yankee has heretofore filed with the Commission the estimated costs of decommissioning the Station and assurance that appropriate funds will be available under cover of letter dated July 19,1990.'
The proposed transaction does not alter Vermont Yankee's continuing obligation to provide such funds.
Antitrust Considerations.
The proposed transaction only relates to the leasing of the Equipment from the Owner-Lessor and does not assign to the Owner-Lessor any interest in the energy i
and capacity of the Station.
This transaction does not affect the marketing of the electric energy from the Station as originally reviewed by the Commission.
Therefore, there is no need for a further review under 5105 of the Act.
See BVY 90-079, Decommissioning Funding Assurance Report and Certification, dated July 17, 1990, in the above Docket.
" 42 U.S.C.
52135. m a ce.vy
Restricted Data.
The proposed transaction does not involve any Restricted Data or other defense information.
Nevertheless, Vermont Yankee reconfirms its existing undertaking to appropriately safeguard such information and not to permit any individual to have access to Restricted Data until the Office of Personnel Management shall have made the requisite investigation and report to the Commission and the Commission shall have authorized sech access.
Public Health, Safety and Welfare Considerations.
The proposed transaction does not affect the operation, management or maintenance of the Station, all of which responsibilities remain in Vermont Yankee.
As a result, the proposed transaction will have no impact on the public health, safety and welfare.
The actual installation of the Equipment in the Station will be duly justified in an appropriate analysis to be filed pursuant to 10 CFR 550.59.
Environmental Considerations.
The proposed Lease, being a l
financing transaction, does not itself, as distinguished from the
)
Equipment, involve any physical change in the Station, any change f
in transmission or other facilities associated with the Station, any change in the types or amounts of effluents from the Station, or any change in the potential for accidental releases from the Station.
The effect of installing the Equipment is described below under " Change in the Facility".
Accordingly, the grant of j
the relief requested herein only involves financial arrangements for the Station and related reporting requirements, and does not
~11" MMmCAP.VY l
present an unreviewen environmental impact.
Therefore, as in c
Palo Verde, it meets the eligibility criteria for categorical exclusion set forth in 10 CFR 551.22 (c) (10).
Therefore, no environmental assessment or environmental impact statement need be prepared in connection with this application.
CHANGE IN THE FACILITY Before the new low-pressure turbines which Vermont Yankee will be leasing under the Lease are installed in the facility during the 1995 refueling outage, Vermont Yankee will have performed all analyses and safety evaluations required to comply with 10 CFR 550.59 and thereafter will submit a brief description thereof in its next report filed pursuant thereto.
CONCLUSION Based upon the foregoing, Vermont Yankee hereby respectfully request that the Commission issue an order consenting to the Lease and imposing the conditions described above under Relief Requested.
Respectfully submitted, Dated: June 1, 1994 VERMONT YANKEE NUCLEAR POWER CORPORATION By its attorney, By f
[
J ohn' A. Ritsher Rop'es & Gray Oge International Place Boston, Massachusetts 02110 anwaca.vy
i Exhibit A to the Participation Agreement i
LEASE AGREEMENT between VERMONT YANKEE NUCLEAR POWER CORPORATION,
- Lessee, and TIFD VIII-H INC.,
Lessor Dated as of
,199_
Two Low-Pressure Steam Turbines Vermont Yankee Nuclear Power Station Vemon, Vermont i
No security interest in this Lease or in any right, title or interest in, to or under this Iease shall be created or perfected by possession of any counterpart of this Lease other than the counterpan with the legend " ORIGINAL COUNTERPART" countersigned by Lessor on the signature page.
NYFs08... : i6047660'.0766il:36M G R 87793.S9N i
1 l
TABLE OF CONTENTS Page 1.
INTERPRETATION I
1.1.
Definitions I
1.2.
Conventions....
1 2.
LEASE OF EQUIPMENT 1
2.1.
I. ease.......
1 2.2.
Agency I
2.3.
Quiet Enjoyment.
2 3.
RENT 2
3.1.
Basic Rent 2
3.2.
Supplemental Rent.
2 3.3.
late Payment.
2 3.4.
Net Lease; No Setoff...
2 4.
RENEWAL OPTION 4
4.1.
Right to Renew 4
4.2.
Renewal Not'.ce 4
4.3.
Conditions to Renewal 4
4.4.
Provisions Applicable During the Renewal Term 4
5.
PURCHASE OPTION 5
5.1.
Right to Purchase 5
5.2.
Purchase Notice 5
5.3.
Purchase Price 5
5.4.
Conditions to Purchase..
5 5.5.
Transfer of Equipment after Purchase..
6 6.
DISCLAIMER OF WARRANTIES 6
7.
OPERATION AND MAINTENANCE; ALTERATIONS, MODIFICATIONS AND ADDITIONS 7
7.1.
Condition 7
7.2.
Standards 7
i a
B.TFS38.. 360 47660#'66t! 36AGRS2793.S9N
Pace 7.3.
Replacement of Pans....
7 7.4.
Alterations Required by law 7
7.5.
Other Alterations..........................
7 7.6.
Title to Pans and Alterations 8
7.7.
Repons of Alterations
.9 7.8.
Removal of Pans or Alterations
.9 7.9.
Lessor's Right To Purchase Certain Pans...
10 7.10. Parts Free and Cles.t of Liens 10 7.11. Permitted Contes's............
10 7.12. Operating Logs.
10 8.
IDENTIFICATION I1 9.
RETURN AND DISPOStrION OF EQUIPMENT.....
I1 9.1.
General Conditions and Obligations Governing Retum..
11 9.2.
Special Return Conditions 13 9.3.
Other Return Conditions 15 10.
CASUALTY AND AWARDS 15 10.1. Casualty........
15 10.2. Awards 15 10.3. Application of Casualty Awards 16 10.4. Application of Non-Casualty Awards 16 10.5. Payments During Default 16 11.
INTEREST CONVEYED TO LESSEE 16 12.
ASSIGNMENT AND SUBLEASE; LOCATION 17 12.1. Assignment and Sublease 17 12.2. Location.....
17 13.
EVENTS OF DEFAULT 17 14 ENFORCEMENT 19 14.1. Remedies..
19 14.2. Survival of Lessee's Obligations......
22 14.3. Remedies Cumulative.......
22 ii NYF508.. n604760010"661:36.AGR82793,59N
22 3 15.
RJOHT TO PERFORM FOR LESSEE 23 16.
No LIENS ON LESSOR'S INTEREST 23 Appendix A Def'mitions and Usage Schedule 1 Basic Reat Schedule 2 Stipulated Loss Percentages i
iii NYFS08. a63'47660s0'M 1:36AGR82793.59N l
i l
l LEASE AGREEMENT, dated as of
,199_, between i
VERMONT YANKEE NUCLEAR POWER CORPORATION, a Vermont l
corporation (" Lessee"), and TIFD VIII-II INC., a Delaware l
corporation (" Lessor").
l l
l Iessor and Lessee are parties to the Panicipation Agreement providing for Lessor's lease of the Equipment to Lessee. The parties hereby agree as follows:
1.
INTERPRETATION l
1.1.
Definitions. Unless the context otherwise requires, the definitions and rules of interpretation in Appendix A apply to this agreement.
1.2.
Conventions. The Conventions in Appendix A apply to this agreement.
J 2.
LEASE OF EQUIPMENT 2.1.
Lease. On the Lease Commencement Date, subject to the conditions to Lessor's obligations set forth in the Participation Agreement, Lessor hereby leases the Equipment to Lessee, and Lessee hereby leases the Equipment fmm Lessor, for the lease Term, which shall consist of the Interim Term and the Basic Term, and at lessee's option one Renewal Term following the Basic Term in accordance with Anicle 4 hereof.
2.2.
Agency. (a) Lessor hereby appoints Lessee as Lessor's agent and attorney-in-fact to exercise and enforce Lessor's rights under the Warranties, such appointment being coupled with an interest and irrevocable. Lessee may exercise the agency created by this Section in its own or in Lessor's name. The agency created by this Section shall be suspended, upon notice from Lessor to lessee, during any Default, and shall expire at the end of the Lease Term. Lessee shall exercise the agency created by this Section not in violation of the lease Documents and at lessee's expense.
(b)
Lessor shall execute and deliver any instruments lessee may reasonably request to evidence the agency created by this Section 2.2.
NYFS08.. f 6047660 0'661236 AGR8 793.59N
(c)
Lessee shall inform Lessor with respect to the enforcement of rights under the Warranties. lessee shall use its best efforts to maximize any recovery under the Warranties.
(d)
Any proceeds of any claim under the Warranties are an Award.
2.3.
Quiet Enjoyment. Until the Lease Termination Date, so long as Lessee shall comply with its obligations under this Irase and no Default shall have occurred and be continuing, and except as otherwise expressly provided herein, lessor shall exercise no control over the Equipment, and Lessee's use and possession of the Equipment and its peaceful and quiet enjoyment of its rights under this lease shall not be interrupted or disturbed by Lessor.
3.
Rect 3.1.
Basic Rent. On each Rent Payment Date during the Basic Term, Lessee shall pay to lessor an installment of Basic Rent calculated in accordance with Schedule 1. Basic Rent shall be subject to adjustment pursuant to the Participation Agreement.
3.2.
Supplemental Rent. Lessee shall pay Supplemental Rent to Lessor, or to the Person entitled to it, as and when due.
3.3.
Late Payment. If Lessee shall fail to pay any Rent (including, to the extent permitted by law, Rent representing interest) when due, Iessee shall pay, as Suprimental Rent, interest on such Rent at the Default Rate. Lessee shall pay such
%pplemental Rent to the Person entitled to the Rent on which such interest shall accrue with such Rent or on demand of the Person entitled to such Rent.
3.4.
Net Lease; No Setoff. (a) This Lease is a net lease.
(b)
Notwithstanding any other provision of this Lease or any other Operative Document or any Rule, lessee shall pay all Rent without notice, demand, counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Lessee agrees that it will not setoff or seek to reduce any payment due lessor hereunder because Lessee asserts that Lessor or any of its Affiliates owes any amount to Lessee and any attempted setoff by Lessee shall be void and of no effect.
(c)
Lessee's obligations and liabilities shall not be released, discharged or otherwise affected for any reason (other than full performance as and when due), including (1) any defect in the condition, quality or fitness for use of the Facility, the Equipment or any pan thereof; (2) any damage to, removal, 2
NYF S08.. :16047660'076611236AGRS2793.S9N
abandonment, salvage, loss, scrapping or destmetion of or any requisition or taking of the Facility, the Equipment or any pan thereof; (3) any restriction, prevention or curtailment of or interference with any use of the Facility, the Equipment or any pan thereof; (4) any change, waiver, extension, indulgence or other action or omission in respect of any obligation or liability of Lessee, Lessor or any other Person; (5) any bankmptcy, insolvency, reorgamzation, composition, adjustment, dissolution, liquidation or other like proceeding relating to Lessor or any other Person, or any action taken with respect to this Lease by any tmstee or receiver of Lessor or any other Person or by any coun; (6) any claim that Lessee has or might have against any Person, including Lessor; (7) any failure on the part of Lessor to perform or comply with any of the terms hereof or of any other agreement; (8) any failure on the pan of any pany to any Operative Document to perform or comply with any terms of any Operative Document; (9) any invalidity or unenforceability or disaffirmance of this Lease or any provision hereof or any Operative Document or any provision of any thereof, in each case whether against or by Lessee or otherwise; (10) any loss, revocation or lack of any Permit; (11) any regulatory orders (including orders disallowing pass-through of payments); or (12) any other occurrence whatsoever, whether similar or dissimilar to the foregoing, whether or not Lessee shall have notice.
or knowledge of any of the foregoing.
(d)
Lessee has no rights to cancel this Lease. Iessee waives all rights now or hereafter conferred by Rule or othenvise to quit, terminate or surrender this Lease or to any diminution or reduction of Rent payable by Lessee hereunder.
(e)
All payments by Lessee shall be final. Lessee shall not seek to recover any such payment or any pan thereof for any reason whatsoever other than payments made by clerical mistake or through manifest error.
(f)
If for any reason whatsoever this lease shall be terminated in whole or in pan except as expressly provided herein, Lessee shall nonetheless pay to Lessor an amount equal to each Rent payment at the time and in the manner that such payment would have become due under this Lease if it had not been terminated in whole or in pan.
(g)
Nothing in this Anicle 3 or elsewhere in this lease shall be constmed as a guarantee by Lessee of any obligations of Lessor or any residual value of the Equipment.
(h) lessee shall perform all its obligations at its own cost, expense and risk, whether or not so stated, unless explicitly stated to the contrary.
(i) lessee shall pay all present or future stamp or documentary taxes or any other sales, transfer, excise or propeny taxes that arise from this Lease or any payment made hereunder, or from the execution, sale, transfer, delivery or 3
NYFS08 3604766010'66C36AGRC793.59N
registration of, or otherwise with respect to this Lease or any other documents contemplated hereby.
4.
RENEWAL OPTION 4.1.
Right to Renew. Lessee may extend this lease for one Renewal Term at the end of the Basic Term.
4.2.
Renewal Notice. To exercise its right to extend this Lease, Lessee must deliver an irrevocable Renewal Notice to Lessor at least six months (but not more than 12 months) before the end of the Basic Term.
4.3.
Conditions to Renewal. Lessee's right to extend this Lease for the Renewal Term is subject to the following conditions:
(a)
No Event of Default shall have occurred and be continuing on the date Lessee gives Lessor the Renewal Notice.
(b)
No Default shall have occurred and be continuing at the beginning of the Renewal Term.
(c)
Such renewal shall conform to then-prevailing IRS guidelines.
(d)
All the representations and warranties in Article 5 of the Panicipation Agreement shall be true at the beginning of the Renewal Term, as though lessee made such representations and warranties at the beginning of the Renewal Term.
l (e)
Lessee shall not have given a notice of return pursuant to Section 9.2 or a Purchase Notice.
(f)
Lessor shall have received evidence satisfactory to it that lessee has obtained all Permits, in form and substance satisfactory to lessor in its sole discretion, that are (or will as a result of such extension become) necessary or appropriate in connection with the Transactions. At the begmnmg of the Renewal Term, all such Permits shall be in full force and effect and shall not be subject to any appeals or further Proceedmgs or to any unsatisfied condition that may allow material modification or revocation.
j 4.4.
Provisions Applicable During the Renewal Term. (a) The monthly Basic Rent for the Renewal Term shall be 75 % of the average monthly Basic Rent payable during the Basic Term.
4 NYFSC8.. ;404766076611236.ACR8 ?93.S9N
(b)
Except as provided in paragraph (a), all the provisions of this Lease and the Participation Agreement shall be applicable during the Renewal Term.
5.
PURCHASE OrnON 5.1.
Right to Purchase. Unless lessor shall have previously sold or otherwise disposed of the Equipment in accordance with this lease or the other Operative Documents, Lessee may purchase the Equipment either on the last day of the Basic Term or on the last day of the Renewal Term.
5.2.
Purchase Notice. To exercise its right to purchase the Equipment, Iessee must deliver a Purchase Notice to lessor at least six months (but not more than 12 months) before the end of the Basic Term or the Renewal Term, as applicable; 5.3.
Purchase Price. If Lessee shall duly exercise its option to purchase the Equipment under this Article, Lessee shall purchase the Equipment for cash on the last day of the Basic Term or the Renewal Term, as applicable. The purchase price for the Equipment at the end of the Basic Term under this Article shall be the Fair Market Sale Value of the Equipment determined by mutual agreement of Lessor and Lessee within 30 days after receipt by Lessor of the Purchase Notice. The purchase price for the Equipment at the end of the Renewal Term under this Article shall be the Fair Market Sale Value Upon Renewal of the Equipment determined by mutual agreement of Lessor and lessee within 30 days after receipt by Lessor of the Purchase Notice. In either case, if lessor and Lessee fail to agree within such 30-day period, the Fair Market Sale Value or Fair Market Sale Value Upon Renewal, as appropriate, shall be determined by an appmiser selected by Lessor and reasonably acceptable to lessee, and the cost of such appraisal shall be borne by Lessee.
5.4.
Conditions to Purchase. Lessee's right to exercise the option to purchase the Equipment is subject to the following conditions:
(a)
No Event of Default shall have occurred and be continuing at the date Lessee gives Lessor the Purchase Notice.
(b)
No Default shall have occurred and be continuing at the date of the purchase.
(c)
Lessee shall not have delivered a notice of retum pursuant to Section 9.2 and, if the Purchase Notice is delivered during the Basic Term, Iessee shall not have delivered a Renewal Notice.
5 STF508 n60 47660E661L6AGR8:793 $9N
5.5.
Transfer of Equipment after Purchase. Upon payment by Lessee to Lessor of the purchase price for the Equipment as provided in this Anicle and upon payment by Lessee of all Rent due or accmed to and including such payment date, Lessor shall transfer (without recourse, representation or warranty, other than that such title is free of any Lessor Liens) to Lessee all its right, title, and interest in and to the Equipment and under the Construction Contracts. Lessor shall deliver to Lessee appropriate instmments prepared by Lessee transferring such right, title, and interest. Any such instmment shall contain a warmnty that Lessor is transferring such title without recourse, representation or warranty, other than that such title is free of Lessor Liens.
6.
DISCLABIER OF WARRANTIES LESSEE REPRESENTS, WARRANTS, ACKNOWLEDGES AND AGREES THAT (A) THE EQUIPMENT IS OF THE SIZE, DESIGN, CAPACITY AND MANUFACTURE SELECTED BY LESSEE, (B) LESSEE IS SATISFIED THAT THE EQUIPMENT IS SUITABLE FOR ITS PURPOSES, (C) LESSOR IS NEITHER A MANUFACTURER NOR A DEALER IN PROPERTY OF SUCH KIND AND (D) THE EQUIPMENT IS LEASED HEREUNDER, AND, IF SOLD OR TRANSFERRED TO LESSEE THE EQUIPMENT SHALL BE SOLD OR TRANSFERRED, SUBJECT TO ALL RULES AND GOVERNMENTAL REGULATIONS NOW IN EFFECT OR HEREAFTER ADOPTED AND IN THE STATE AND CONDITION OF EVERY PART THEREOF WHEN THE SAME FIRST BECAME OR BECOMES SUBJECT TO THIS LEASE, WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND BY LESSOR, EXPRESS OR IMPLIED, AS TO THE TITLE, MERCHANTABILITY, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, OPERATION, FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT, ABSENCE OF LATENT DEFECTS OR FITNESS FOR USE OF THE EQUIPMENT (OR ANY PART j
THEREOF) OR FITNESS FOR A PARTICULAR PURPOSE, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED; AND THE EQUIPMENT IS LEASED AND SHALL BE SOLD OR TRANSFERRED HEREUNDER "AS IS", BUT FREE AND CLEAR OF LESSOR LIENS AS PROVIDED IN SECTION 5.5. Except as expressly provided herein or in any other Operative Document all risks incident to the matters discussed in the preceding sentence as between Lessor, on the one hand, and Lessee, on the other, are to be borne by lessee. The provisions of this paragraph have been negotiated and, except to the extent otherwise expressly stated, the foregoing provisions are intended to be a complete exclusion and negation of any representations or warranties by Lessor, express or implied, with respect to the Equipment that may arise pursuant to any Rule now or hereafter in effect or otherwise.
6 NITS 38...n60476605661:36 AGRE 793.S9N
7.
OPERATION AND MAINTENANCE; ALTERATIONS, MODIFICATIONS AND ADDmONS 7.1.
Condition. Lessee shall maintain the Equipment in at least the operating condition it was in when first delivered, ordinary wear and tear excepted.
7.2.
Standards. Iessee shall operate and maintain the Equipment in good condition and repair, and in any event (a) in a prudent manner consistent with utility industry practice, (b) so that it will continue to have the capacity to continuously perfonn, in nonnal commercial operation, at its design output, (c) in accordance with all Rules, required insurance and the Contractor's specifications and recommendations, (d) to the pmdent standards it applies to any similar equipment it may own, operate or lease, (e) so that all Warranties and all required insurance shall be in effect, without any exclusion, for their stated tenns, and (f) use and possess the Equipment in compliance with all Energy Rules.
7.3.
Replacement of Parts. If any Damage shall occur to the Equipment or any Pan, or if the Equipment or any Part shall wear out, Lessee, at its own expense, shall promptly replace, repair and restore the Equipment and shall replace each such Pan with the same type of Part or a similar Pan that perfonns the same function.
Lessee may remove any Pans in the ordinary course of maintenance, service, repair or testing, but Lessee shall promptly replace such Pans. I2ssee shall keep all replacement Pans free and clear of all Liens except Permitted Liens. All replacement Pans shall be in at least as good operating condition as, and shall have a value, utility and useful life at least equal to, the Pans replaced, assuming such replaced Pans were in the condition and repair required to be maintained by the terms hereof.
7.4.
Alterations Required by Law. Lessee, at its own expense, shall make such Alterations to the Equipment as may be required from time to time to meet the requirements of all applicable Rules and the requirements of any Authority.
7.5.
Other Alterations. Lessee may from time to time make such Alterations to the Equipment as Lessee may deem desirable in the proper conduct of its business, so long as 7
FOTS08.. :M04766007661236AGR82793. SON
1 l
(a) no Default has occurred and is continuing (or would be caused thereby),
(b) such Alterations shall not, in Lessor's good faith judgment, result in a " lessee investment" within the meaning of Revenue Procedure 75-21,1975-1 C.B. 715, as amended by Revenue Procedure 79-48, 1979-2 C.B. 529, or result in the Equipment becoming " limited use propeny" within the meanmg of Revenue Procedure 76-30,1976-2 C.B. 647, (c) such Alterations shall not diminish the operating capacity, cost efficiency, reliability, useful life, value, fair market value at the expiration of this Lease or utility of the Equipment in any material respect, (d) such Alterations are performed or approved in writing by Contractor, such approval not to be unreasonably withheld, (e) if this Lease provides that title to any Part to be incorporated in the Equipment, as a result of such Alterations, is to vest in Lessor, Lessee shall have transferred such title to Lessor by instnaments satisfactory to Lessor, and (f)
Lessee shall have provided written notice of such Alterations to lessor at least 30 days before such Alterations are made.
7.6.
Title to Parts and Alterations. (a) Title to each Pan or Alteration incorporated in the Equipment pursuant to this Anicle 7 shall without funher act vest in lessor and shall be deemed to constitute a pan of the Equipment and be subject to this Lease in the following cases:
(1) such Put or Alteration shall be in replacement of or in substitution for, and not in addition to, any Pan originally incorporated in the Equipment during the construction thereof or pursuant to the Construction Contract or any Pan or Alteration title to which shall have vested in lessor pursuant to this Anicle 7; (2) such Pan or Alteration shall have been incorporated in the Equipment pursuant to the terms of this Anicle 7; (3) such Pan or Alteration cannot be readily removed from the Equipment without diminishing the operating capacity, cost efficiency, reliability, useful life, value, fair market value at the expiration of this Lease or utility of the Equipment in any material respect; or 8
NYFS38...:\\60147660i0766il:36 AGR82793.59N
(4) bssor shall have paid for such Part or Alteration.
(b)
Title to any Part or Alteration which has been replaced hereunder and is no longer incorporated in or pan of the Equipment shall vest in Lessee or in the Person Lessee shall designate.
(c)
If any Pans or Alterations to which Lessor shall have title shall be removed from the Equipment, they shall remain the propeny of Lessor, no matter where located, until such time as such Parts or Alterations shall be replaced by Pans or Alterations that have been incorporated in the Equipment, that meet the requirements for replacement Pans or Alterations specified in this Article and title to
)
which shall have vested in Lessor. Except in the case of equipment from vendors or other Persons that is temporarily borrowed to replace Pans or Altentions from the Equipment while such Pans or Alterations are being repaired or replaced, immediately upon any replacement Pans or Alterations becoming incorpomted in the Equipment as provided in this Anicle without funher act (1) title to the removed Pans or Alterations and any spare Pans related to such removed Pans or Alterations shall thereupon vest in such Person as shall be designated by Lessee, free and clear of all rights of lessor, (2) title to such replacement Pans or Alterations shall thereupon vest in Iessor and (3) such replacement Pans or Alterations shall become subject to this Lease and be pan of the Equipment for all purposes hereof as if originally incorporated in the Equipment.
7.7.
Reports of Alterations. On each anniversary of the Delivery Date and on the Lease Termination Date, Lessee shall provide Lessor with a repon stating the total cost of all Alterations made during the period from (i) the Lease Commencement Date or the end of the period covered by the next previous report made pursuant to this Section, to (ii) the last day of the month immediately before such repon, and describing in reasonable detail all Alterations (or related group of Alterations) that shall have been made during such period.
7.8.
Removal of Parts or Alterations. Any Pan or Alteration to which Lessee (or any other Person other than Lessor) shall have title pursuant to the provisions of this Anicle 7 may be removed from the Equipment by Lessee (or such other Person) prior to the delivery of the Equipment to Lessor in accordance with any of the provisions of this Lease and title to such Pans or Alterations shall at all times remain in Lessee (or such other Person) only if (a) such removal shall not result in the violation of any Rule, (b) no Default shall have occurred and be continuing, i
i 9
h*YFS08. 660t47660 O'6611:36%GR82793.S9N
(c) such removal shall not diminish or impair the value, utility or condition that the Equipment would have had at such time had such Pan or Alteration not been so incorpomted, (d)
Lessee shall have provided to Lessor a cenificate of an engineer (who shall be Contractor or an independent engineer if the aggregate value of such Part or Alteration, and all related Pans and Alterations, exceeds $10,000) that such Pan or Alteration is not within any of the categories set fonh in clauses (1), (2) and (3) of Section 7.6(a), and (e)
Lessee shall have pmvided Ixssor the written agreement of any Person (other than Lessee) in which title to such Part or Alteration shall vest to be bound by the provisions of this Anicle.
7.9.
Ixssor's Right To Purchase Certain Parts.12ssor may elect to purchase for cash any Parts removed in accordance with Section 7.8 which are owned by Lessee (or such other Person) at the time of removal. To exercise such right, Lessor shall provide Lessee (or such other Person) written notice of its election to purchase such Pans within 90 days after delivery of such notice. The purchase price of any such Pans shall be the fair market value thereof as of the date of purchase by Lessor, as agreed to by Lessee and Lessor within 20 days after receipt by Izssee of a notice fmm Lessor setting fonh Ixssor's opinion of what such fair market value is or, if they shall fail to agree within such 2.0-day period, by an appmiser selected by Lessor and reasonably acceptable to Lessee.
7.10.
Parts Free and Clear of Liens. Lessee shall keep any Part title to which shall vest in Izssor pursuant to Section 7.6 free and clear of all Liens, except Permitted Liens.
7.11.
Permitted Contests. Lessee need not perform an Alteration required by Rule if, to the extent and for so long as (a) Ixssee shall be contesting the Rule by a Pemlitted Contest or (b) lessee shall have in effect a Permit that excuses noncompliance by Lessee and Ixssor for the useful life of the Equipment; provided, however, that nothing in this Section shall affect or limit Lessee's obligation to deliver the Equipment in accordance with Anicle 9.
7.12.
Operating IAgs. lessee shall keep operation, maintenance and repair repons in sufficient detail to indicate the nature and date of all material work done on the Equipment. Such logs and repons shall be kept on file at the Facility and shall be made available to Lessor upon reasonable request.
)
10
> YFS08. J.6047%07661236ACR82793,50N l
8.
IDENTIFICATION Lessee shall maintain in prominent places on and about the Equipment plates or other appropriate markings bearmg the inscription " PROPERTY OF TIFD VIII-H INC., LESSOR" in letters not less than two inches in height. Lessee shall not allow the name of any Person other than that of Lessee or Lessor to be placed on any part of the Equipment in a manner that might reasonably be interpreted as a claim of ownership or right to possession or use thereof.
9.
RETURN AND DISPOSITION OF EQLTPMENT 9.1.
General Conditions and Obligations Governing Return. Unless otherwise specifically provided in this Article 9, Lessee shall under all circumstances that obligate lessee to return or permit Lessor to obtain the return of the Equipment under the Lease, return the Equipment in accordance with the following conditions and fulfill the following obligations:
(a)
Except as specifically provided to the contrary, it shall be the responsibility of lessee to return the Equipment, in accordance with these provisions, at its own expense and risk in compliance with all Energy Rules, Permits, restrictions, conditions, covenants, reservations and other matters arising under the lease to which the Equipment is subject.
(b)
Lessee shall, subject to and in compliance with all Permits and Rules, remove the Equipment from the Facility's protected area and deliver it to the nearest railhead or to a shipper designated by Lessor.
(c) lessee shall return the Equipment to lessor or its designee free and clear of all Liens other than Lessor Liens.
(d) lessee shall furnish or cause to be furnished to lessor such insumnce, bonds, indemnities and other assurances as lessor may reasonably require to ensure lessee's fulfillment of its obligations under tids Article 9.
(e)
Lessee shall ensure that all Alterations have be.m performed or approved in writing by Contractor, such approval not to have been unreasonably withheld.
(f)
Lessee shall ensure that the Equipment shall be in at least the operating condition it was in when first delivered, ordinary wear and tear excepted, and that it shall have been operated and maintained in good condition and repair in a pmdent manner consistent with utility industry 11 NYFS08...n604660666C36 AGR82793 $9N e
practice and to the pmdent standards it applies to any similar equipment that it may own, operate or lease.
(g)
Lessee shall provide a written assessment by an independent engineer acceptable to Lessor (which engineer shall state that he has reviewed all operation, maintenance and repair repons and performed a physical inspection of the Equipment) that the Equipment is free of damage resulting fmm water induction incidents, poor steam quality, overspeed or impmper maintenance or operation. This assessment is to be provided no later than the Lease Termination Date or, if applicable, the date specified in Section 9.3(a).
(h)
Lessee shall make available to Lessor upon demand, subject to all Energy Rules and Permits, its records necessary for the review of the operation, maintenance and mpair of the Equipment.
(i)
All of the obligations of Lessee contained in this Section 9.1 require Lessee to obtain all necessary Permits and to comply with all Rules necessary to meet the return conditions specified by this Section within the time specified and at its own expense and risk. The inability of Lessee timely to obtain any Permit necessary to comply with the above conditions shall not excuse performance.
(j)
Lessee shall assist on a good faith basis and using best effons at its own cost in the remarketing of the Equipment, by providing infonnation and data with respect to the Equipment which is in its possession and by granting reasonable access to the Equipment, as requested by lessor.
(k)
Lessee shall at its own expense and in accordance with all applicable Rules and Permits, prepare the Equipment for safe shipment by i
packing same in acconiance with commercial standards applicable to equipment of the same type and transported in the same manner as the Equipment is to be transponed from point of origin to point of destination and
{
so as to comply with all Rules including those governing the transit of such equipment.
(1)
The obligations of Lessee under this Anicle 9 shall survive termination of this Lease.
(m)
Lessee is obligated at all times to maintain possession and control of the Equipment, whether before or after the Lease Termination Date, under, and in accordance with, its NRC license until such time as the Equipment is decontaminated pursuant to this Article 9 or Lessee transfers or disposes of the Equipment in compliance with the provisions of Article 9 and with all applicable Energy Rules and Permits. Nothing in this provision is 12 NTFS08...n6N76604'664236 AGR82793.59N
intended to relieve Lessee of any liability for failure to have retumed the Equipment at an earlier time or under the conditions specified by this Lease.
9.2.
Special Return Conditions. The special retum conditions below shall apply only when Lessee strictly satisfies each of the requirements of Section 9.1 and each of the requirements of this Section 9.2. Lessee acknowledges that strict compliance is essential to the applicability of these special conditions and that failure to strictly comply will necessitate compliance with the requirements of Section 9.3 instead of this Section 9.2.
(a)
Lessee shall have furnished to Lessor notice of an intention to retum the Equipment after the Lease Term. Such notice shall be provided no later than the earlier of (i) two years before the end of the lease Term and (ii) ten days after the date on which a contract for alternative equipment to replace the Equipment is executed. To be effective, such notice shall be unqualified and irrevocable when given. In the event lessee solicits firm and final quotes for alternative equipment to replace the Equipment, Lessee shall provide to lessor, within ten days, notice of such solicitation.
(b)
All provisions of Section 9.1 shall apply to return under this Section 9.2, as well as the following:
(1)
Lessor shall notify Lessee, no later than six months before the lease Termination Date, of its instructions to lessee to prepare the Equipment for retum or disposal in accordance with one of the following three standards:
(A)
If the Equipment is designated by Lessor for shipment for use by another nuclear facility licensed by the NRC, Lessee shall, in accordance with all Permits and Energy Rules, decontaminate the Equipment to the level required for Conditional Release for its intended purpose and shall, at its own expense, take all actions necessary for the Equipment to the shipped in accordance with all applicable Permits and Rules to a licensee of the NRC to be designated by Lessor.
(B) lessor may instruct Lessee to prepare, in accordance with this Section, the Equipment for shipment, in accordance with all applicable Permits and Rules, to a facility which does not have a radioactive materials license. In that case, Lessee shall, at its own expense, take all actions necessary for the Equipment to be shipped to the designated facility and shall decontaminate all components of the Equipment, except the inner casings, to the level required for Unconditional Release 13 NYF508..:W47660766 C36 AGR8P93.S9N
and shall decontaminate the inner casings to the level required for Conditional Release for their intended purpose. Lessor or its designee shall be responsible to seek and obtain a byproduct materials license for the facility to which the Equipment is intended to be shipped, and Lessee shall give its full support and cooperation in pursuing such application. As pan of its cooperation, Lessee shall, at its own expense, perfonn radiological surveys of the Equipment and assist Lessor or its designee in obtammg such license. If the option of using 10 C.F.R. f 20.2002 is exercised to " dispose" of the radioactivity by leaving it in place on the Equipment, Lessee shall provide all mdiological information required by all applicable Rules.
(C)
If Lessor notifies Lessee that the Equipment will not be remarketed or that Lessor or its designee is unable to obtain the regulatory authorization described in paragaph (B) above necessary to ship the Equipment in accordance with paragraph (B) above, Lessee shall, at its sole expense and risk, decontaminate the Equipment to the level required for Unconditional Release or at its option, shall decontaminate all components of the Equipment except the inner casings to the level required for Unconditional Release, provided that in such case it shall purchase the inner casings for the greater of (i) the excess of fair market value over dismantlement cost and (ii) $1, and shall own and retain the casings and dispose of them at its own expense in accordance with all applicable Permits and Rules.
(2)
Except as provided below, if Lessee previously has given notice pursuant to Section 9.2(a), Iessee shall deliver the Equipment to lessor or its designee in the manner and according to the standards specified above no later than the Lease Termination Date. Timely performance is of the essence and shall not be excused by failure for any reason including regulatory delays or frustration by any Energy Rules or any event of force majeure. IfI2ssor previously notified Lessee to prepare the Equipment for return pursuant to pangmph (A) or (B) above and subsequently notifies Lessee above that it has been unsuccessful in effectuating a transfer under either paragraph (A) or (B), as applicable, Lessor may so notify lessee and lessee shall be subject to the conditions of return specified by paragraph (C) except that the last date for retum specified above shall be the later of (i) the Lease Termination Date and (ii) a date 90 days after Lessor has fumished such notice to Lessee.
14 NYFSOE.. :%04600'661236ACR8"93.$9N
9.3.
Other Return Conditions. Unless the special return conditions of Section 9.2 are applicable, lessee shall satisfy all of the equirements of Section 9.1 and the following:
(a)
Whenever the Lease requires Lessee to return or permits I2ssor to demand retum of the Equipment, the date for return of the Equipment shall be 90 days from the date of such obligation or notice from Lessor. Timely performance is of the essence and shall not be excused by failum for any reason, including regulatory delays or frustration of performance by any Energy Rules. However, upon any event of force majeure following the date of such obligation or notice from Lessor, lessee shall have an additional 30 days within which to return the Equipment to lessor.
(b)
Lessee shall decontaminate the Equipment in its entirety to the condition required for its Unconditional Release and shall return the Equipment as an integrated functioning unit.
10.
CASUALD' AND AWARDS 10.1. Casualty. (a) If a Casualty shall occur, Lessee shall < ve Lessor d
prompt written notice thereof and shall pay to Lessor on the first Rent Payment Date after such Casualty, as compensation for such Casualty, the higher of Fair Market Sale Value and the Stipulated Loss Value detennined as of such Rent Payment Date.
~
(b)
From the date of any Casualty to and including the date of payment pursuant to paragraph (a), all Rent shall continue to accme and be paid when due.
(c)
Upon payment in full of the amount specified in Section 10.l(a),
together with such accmed Rent specified in Section 10.l(b) and all other Rent due and owing through and including the date of such payment, the Lease Tenn shall end and the obligations of Lessee hereunder (other than any such obligations expressed herein as surviving termination of this Lease) shall terminate as of the date of such payment and Lessor shall transfer to Lessee, without recourse or warranty but free and clear of Iessor Liens, all right, title and interest of Lessor in and to the Equipment.
l 10.2.
Awards. Immediately after receiving any Award, lessee shall, except as may otherwise be required under any Energy Rule relating to insurance proceeds for damage to the Equipment, pay it over to Lessor for application in accordance with the following Sections.
15 fGFSC8. :.60.47660;0766'1:36 ACP82793.S9N
10.3.
Application of Casualty Awards. If a Casualty shall have occurred, any Award that shall then be held or that shall thereafter received shall be applied first, to Lessor to pay any Stipulated Loss Value or other Rent due or accmed; second, unless a Default shall have occurred and be continuing, to reimburse Lessee for any Stipulated Imss Value it shall already have paid to Lessor; and thini, any balance to Lessor.
10.4. Application of Non-Casualty Awards. Unless a Casualty shall have occurred, Lessor shall hold any Award for so long as repair and restoration of any related Damage to the Equipment shall be progressing in accordance with this Lease and shall apply such Awards, first, to pay directly the costs of such repair and restoration if not already paid by lessee; and second, unless a Default shall have occurred and be continuing, to reimburse Lessee for any such costs Lessee has actually paid, upon presentation of (i) an invoice for such cost, (ii) a cenificate of a responsible officer of lessee stating that repair and restoration are progressing in accordance with this lease and that such invoice is for a valid cost thereof and (iii) if the total amount of such repair and restoration (and all related repair and restoration) is greater than
$100,000, a certificate of an independent engineer reasonably acceptable to Lessor confirming the statements made in such certificate.
After such repair and restoration is completed (or suspended or abandoned) Lessor shall retain any balance of any such Award for its own account.
10.5. Payments During Default. If a Default shall have occurred and be continuing, any amount that would otherwise be payable to lessee pursuant to this Article shall be paid to and held by Lessor as security for the obligations of Lessee hereunder, and Lessor may apply such amount to any obligation of Lessee under the lease Documents. At such time thereafter as no Default shall be continuing, Lessor shall pay any amount remaining to lessee in accordance with this Anicle 10.
11.
INTEREST COMUED To LESSEE This Lease is an agreement of lease. It does not convey to Lessee any right, title or interest in or to the Equipment except as a lessee and as an agent to enforce any Warranties.
16 NYFS08.m60 47660Co6436 AGRIF93.50N
12.
ASSIGNMENT AND SUBLEASE; LOCATION 12.1. Assignment and Sublease. Lessee shall not assign or otherwise transfer or encumber (other than by Permitted Liens) any of its rights or interests hereunder or any interest in the Equipment without the prior written consent of Lessor in its sole discretion. Lessee shall not sublease the Equipment or any part thereof nor permit any other Person to operate the Equipment or any part thereof without the prior written consent of Lessor in its sole discretion. No consent to any sublease, assignment or pennission to operate shall release lessee from any of its obligations or liabilities of any nature whatsoever arising under any of the Operative Documents.
The rights and obligations of lessor and lessee hereunder shall inure to the benefit of, and be binding upon, the permitted successors and assigns of Lessor and Lessee.
12.2. Location. Lessee shall not remove, or permit any other Person to remove, the Equipment or any part thereof from the Facility, except that Lessee may remove Parts and Alterations to the extent permitted by Article 7.
13.
EVENTS OF DEFAULT Each of the following is an " Event of Default":
(a)
Lessee shall fail to pay any Basic Rent when due, and such failure shall continue for two Business Days.
(b)
Lessee shall fail to pay any Stipulated Loss Value when due.
(c)
Lessee shall fail to pay any amount (other than Basic Rent or Stipulated less Value) when due under any Lease Document, and such failure shall continue for five Business Days.
(d)
Lessee shall fail to return the Equipment in accordance with Article 9.
(e)
Lessee shall fail to perform when due any of its obligations under Sections 8.6 (Liens), 8.7 (Awards), 8.8 (Location of Equipment), 8.9 (Name and Place of Business), 8.12 (Contracts), 8.16 (Regulation), 8.19 (Organization), 8.20 (Merger), 8.22 (Permits), 8.24 (Environmental Matters) or 8.25 (Employee Plans) or Article 9 (Insurance) of the Participation Agreement or under Article 9 (Return and Disposition of Equipment) hereof.
(f) lessee shall fail to perform when due any obligation in any Operative Document (other than as provided elsewhere in this Article), and (if 17 NYFSOL n60 47660L"661236AGRC793.59N
such failure shall be cumble and Lessee shall be diligently pursuing a cure) such failure shall continue for 30 days after notice from Lessor.
(g)
Any representation or wananty by Lessee in any Operative Document or in any written statement, report, financial statement or certificate given to Lessor shall have been false in any material respect at the time it was made.
(h)
Lessee shall fail to pay when due (after any applicable grace period) any obligation for borrowed money or any obligation as lessee under any lease, if, in either case, lessee's aggregate obligation thereunder (with any related obligations) shall exceed $100,000.
(i)
Any event shall occur or condition shall exist that, with or without notice or time, would permit any Person to declare any obligation for bormwed money or any obligation as lessee under any lease to be due before its scheduled date for payment, or that would otherwise result in such an obligation becoming due before its scheduled date for payment, if, in any such case, Lessee's aggregate obligation thereunder (with any related obligations) shall exceed $100,000.
(j)
Any Contract shall fail to be in full force and effect against all parties to such Contract or shall fail to be a legal, valid and binding obligation of each such party, enforceable against each such pany in accordance with the terms of such Contract provided to Iessor.
(k)
Any default by any pany shall occur and be continuing under any Contract or any party to any Contract shall fail to perform any material obligation under such Contract as and when due.
(1)
Any asset of lessee shall be attached, seized, levied upon or subjected to a writ or distress warrant, or come within the possession of any receiver, trustee, custodian or assignees for the benefit of creditors of lessee and shall remain unstayed or undismissed for 60 consecutive days; or any Person shall apply for the appointment of a receiver, trustee or custodian for any of the assets of Lessee and such application shall remain unstayed or undismissed for 60 consecutive days; or Lessee shall have concealed, removed or permitted to be concealed or removed, any part of its property, with intent to hinder, delay or defraud its creditors or any of them or made or suffered a transfer of any of its property or the incurring of an obligation which may be fraudulent under any bankruptcy, fraudulent conveyance or other similar law.
(m)
A case or proceeding shall have been commenced against Lessee in a court having compctent jurisdiction seeking a decree or order in respect of I8 NYFS38... '6047660s0766'1:36\\AGR 82703.59N
i such Lessee (1) under Title 11 of the United States Code, as now consiimted or hereafter amended, or any other applicable Federal, state or foreign bankmpicy or other similar law, (2) appointing a custodian, receiver, liquidator, assignee, tmstee or sequestrator (or similar official) of Lessee or of any substantial pany of its propenies, or (3) ordering the winding-up or liquidation of the affairs of Lessee and such case or pmceeding shall remain undismissed or unstayed for 60 consecutive days or such coun shall enter a decree or order granting the relief sought in such case or proceeding.
(n)
Lessee shall (1) file a petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable Federal, state or foreign bankruptcy or other similar law, (2) consent to the institution or proceedmgs thereunder or to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of Lessee such other Person or of any substantial part of its propenies, (3) fail generally to pay its debts as such debts become due, or (4) take any corporate action in funherance of any such action.
(o)
Finaljudgment orjudgments for the payment of money in excess of $500,000 in the aggregate or for injunctive or similar relief shall be rendered against lessee, unless such judgment shall be (i) fully covered by insurance in accordance with Anicle 9 of the Participation Agreement, (ii) fully recovered within 30 days pursuant to the Power Contracts or the Additional Power Contracts, or (iii) vacated, stayed, bonded, paid or discharged within 30 days.
(p)
(1) With respect to any Plan, a prohibited transaction within the meaning of Section 4975 of the Code or Section 406 of ERISA occurs that could result in direct or indirect liability to Lessee, (2) with respect to any Title IV Plan, the filing of a notice to voluntarily terminate any such plan in a distress termination, (3) with respect to any Multiemployer Plan, Lessee or any ERISA Affiliate shall incur any Withdrawal Liability, or (4) with respect to any Qualified Plan, lessee or any ERISA Affiliate shall incur an accumulated funding deficiency or request a funding waiver from the IRS, pursuant to which, in each of the above cases, Vermont Yankee is reasonably likely to incur liability in excess of $500,000.
14.
ENFORCEMENT 14.1.
Remedies. If an Event of Default shall have occurred and be continuing, then Lessor may, at its option to the extent not prohibited by any Rule, at 19 NY F508. 66047660iO?664236 AGR 82793.S9N
any time and from time to time thereafter do any one or more of the following as Lessor in its sole discretion shall determine:
(a) by notice to Lessee, rescind or terminate this Lease; (b)
(1) demand that lessee return the Equipment promptly to Lessor, and Lessee shall upon the written demand of Iessor return the Equipment promptly to lessor at the location specified in Article 9, in the manner and condition required by, and otherwise in accordance with, all the provisions of this lease, and Lessor shall not be liable for the reimbursement of any amounts to lessee for any costs and expenses incurred by Lessee in connection therewith or (2) subject to all applicable Energy Rules, enter upon the premises where the Equipment shall be located and take immediate possession (to the exclusion of Lessee) of the Equipment by summary proceedings or otherwise, all without liability to Lessee for or by reason of such entry or taking of possession, whether for the restoration of damage to property caused by such taking or otherwise; (c) sell, upon ten days prior written notice (which Lessee agrees is reasonable notice for purposes of any notice requirements contained in any Rule), all or any part of the Equipment, at public or private sale performed in accordance with any Rule, as Lessor may determine, free and clear of any rights of Lessee and without any duty to account to lessee with respect to such action or inaction or any proceeds with respect thereto (except to the extent mquired by paragraph (e) or (f) below if Lessor shall elect to exercise its rights thereunder), in which event lessee's obligation to pay Rent hereunder for periods commencing after the date of such sale shall be terminated or propenionately reduced, as the case may be (except to the extent that Rent is to be included in computations under pangmph (e) or (f) below if lessor shall elect to exercise its rights thereunder);
(d) hold, keep idle or lease to others all or any part of the Equipment, as Lessor in its sole and absolute discretion may determine, free and clear of any rights of Lessee and without any duty to account to Lessee with respect to such action or inaction or for any proceeds with respect to such action or inaction, except that Lessee's obligation to pay Rent for periods commencing after Lessee shall have been deprived of use of the Equipment pursuant to this paragmph (d) shall be reduced by the net proceeds, if any, received by Lessor from leasing the Equipment to any Person other than Lessee for the same periods or any portion thereof; (e) whether or not Lessor shall have exercised or shall thereafter at any time exercise any of its rights under pam;raph (a), (b), (c) or (d) above with respect to the Equipment, demand, by written notice to Lessee specifying 20 NYFS08..:;604%60f66;1:36 AGR87793. SON
a payment date which shall be a Rent Payment Date with respect to this Lease not earlier than ten days after the date of such notice, that Lessee pay to Lessor, and Lessee shall pay to lessor, on the payment date specified in such notice, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Pent due after the payment date specified in sm notice), any unpaid Rent due !hrough the payment date specified in sue otice plus whichever of the foiMwing amounts Lessor, in its sole and absolute discretion, shall specify in such nodce (together with interest on such amount at the Default Rate from the payment date specified in such notice to the date of actual payment):
(1) an amount equal to the excess, if any, of the Stipulated Loss Value, computed as of the payment date specified in such notice, over the aggregate Fair hiarket Rental Value of the Equipment through the Lease Termination Date after discounting such Fair hiarket Rental Value quarterly to present value as of the payment date specified in such notice at the Default Rate; (2) an amount equal to the excess, if any, of such Stipulated Loss Value over the Fair hiarket Sale Value of the Equipment as of the payment date specified in such notice; or (3) an amount equal to the highest of (A) such Stipulated Loss Value, (B) such aggregate Fair hiarket Rental Value and (C) such Fair hiarket Sale Value and, in this event, upon full payment by Lessee of all sums due hereunder, Lessor shall, subject to Lessee's compliance with all applicable Rules and the requirements of Article 9 and receipt of applicable regulatory approvals, at Lessee's option, either (y) exercise its best effons promptly to sell, without recourse to or warranty from Lessor but free and clear of Lessor Liens, the Equipment and pay over to Lessee the net proceeds of such sale (after deducting from such proceeds all costs and expenses whatsoever incurred by Lessor or any of its Affiliates in connection therewith) up to the amount set fonh in (A), (B) or (C) above actually paid by Lessee, or (z) transfer to lessee, without recourse or warranty, all lessor's right, title and interest, if any, in and to the Equipment and the Operative Documents, whereupon this Iease shall terminate; (f) demand, if Lessor shall have sold the Equipment pursuant to paragmph (c) above and, in lieu of exercising its rights under pangraph (e) above with respect to the Equipment, Lessor shall have so elected, in its sole and absolute discretion, by written notice that Lessee pay to lessor on the next Rent Payment Date to occur at least ten days after the date of such notice and Lessee shall pay to Lessor on such Rent Payment Date, as liquidated damages 21 NYFS08.. n6047660566.1236 AGR82793.59N
for loss of a bargain and not as a penalty (in lieu of Basic Rent due for periods commencing after such Rent Payment Date), any unpaid Rent due through the date of such sale (calculated on a pro rata basis with respect to a period which is less than a full rent payment period), plus the amount of any deficiency between the net proceeds of such sale and the Stipulated Loss Value, computed as of such Rent Payment Date, together with interest at the Default Rate on the amount of such Rent and such deficiency from the date of such sale until the date of actual payment; or (g) exercise any other right or remedy that may be available to it under any Rule or proceed by appropriate court action to enforce the terms hereof or to recover damages for the breach hereof.
14.2. Survival of Lessee's Obligations. No termination of this Lease, in whole or in part, or repossession of all or any part of the Equipment or exercise of any remedy under Section 14.1 shall, except as specifically provided therein, relieve Lessee of any of its liabilities and obligations hereunder or under the other Lease Documents. In addition, Lessee shall be liable, except as otherwise provided above, for any and all unpaid Rent due hereunder before, after or during the exercise of any of the foregoing remedies, and all reasonable legal fees (including pamlegal fees and costs relating to administative proceedmgs, legal proceedmgs and appeals therefrom) and other costs and expenses incurred by Lessor-by reason of the occurrence of any Event of Default hereunder or the exercise of Lessor's remedies with respect thereto and including all costs and expenses incurred in connection with the return of the Equip, ment in the manner and condition required by, and otherwise in accordance with the provisions of this Lease. At any sale of the Equipment or any part thereof pursuant to Section 14.1, Lessor, Lessee or any of their Affiliates may bid for and purchase such property.
14.3. Remedies Cumulative. To the extent permitted by, and subject to the mandatory requirements of, any Rule, each and every right, power and remedy herein specifically given to Lessor or otherwise in this Lease or the other Operative Dc,cuments shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whe.ther specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by Lessor, in its sole and absolute discretion, and the exercise or the begmmng of the exercise of any power or remedy shall not be constmed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by Lessor in the exercise of any right, power or remedy shall be construed to be a waiver of any default on the pan of Lessee or to be an acquiescence therein. No express or implied waiver by Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of any future or subsequent Event of Default. To the extent permitted by applicable law, 22 NYFS08.. a6047600K66il:36.AGR82793.59N
1 l
i i
Iessee hereby waives any rights now or hereafter conferred by statute or otherwise that may require Lessor to sell, lease or otherwise use the Equipment or any pan thereof in mitigation of Lessor's damages upon the occurrence of an Event of Default or that may otherwise limit or modify any of Lessor's rights or remedies under this Article 14.
15.
RIGHT TO PERFORM FOR LESSEE If Lessee shall fail to make any payment of Rent when due or shall fail to perform or comply with any of its other agreements contained herein, lessor may (but shall not be obligated to) make such payment or perform or comply with such agreement and lessee shall pay to Lessor on demand the amount of such payment and the amount of the expenses of Lessor incurnd in connection with such agreement, as the case may be, together with interest thereon at the Default Rate from the date Lessor made such payment or incurred such expense to the date of payment by lessee.
16.
NO LIENS ON LESSOR'S INTEREST Neither the Equipment nor any interest of Lessor in the Equipment shall be subject to any Liens for improvements made by Lessee or for any other labor, materials or work commissioned by Lessee, and Lessee shall notify in writing (with a j
copy to lessor) any contractor or other third pany making such improvements or supplying or performing such labor, materials or work of the terms of this Section.
Notwithstanding any other provision of this Lease, Iessee and Lessor agree and confum that (i)Iessor has not consented and will not consent to the furnishing of any labor or materials to the Equipment that would or may result in any Liens attaching to the Equipment, (ii) Lessee is not the agent of lessor for the purposes of any such Alterations or replacement of Pans, (iii) except as expressly provided for herein, Lessor has retained no control over the manner in which such Alterations or replacement of Pans are accomplished, and (iv) Lessor has made no agreement to make or be responsible for any payment to or for the benefit of any Person furnishing labor and/or materials in connection therewith. No such Person shall be entitled to claim any Lien against the Equipment and any such Person shall look solely to lessee for satisfaction of any such claim.
i 23 1
NTFS08 m 66047660#66il236 AGR82793.S9N
IN WTrNESS WHEREOF, the undersigned panies have each caused this agreement to be fully executed as of the date first written above.
VERMONT YANKEE NUCLEAR POWER CORPORATION, as Lessee By:
Name:
Title:
TIFD VHI-H INC., as IAssor By:
Name:
Title:
I 24 NYF$38.. :i60s47660\\0"66 d136 AGR 8M9).59N
Schedule 1 to the Lease Agreement BASIC RENT Each monthly payment of Basic Rent during the Basic Term is 1.18132 % of the fmal Equipment Cost.
1 l
l l
I l
)
hTFS08...:247660 cms 1236%GR82793 $9N
r1:R 25 '94 10:21AM GE CffITFL. T & IFC 223 357 6828 P.2 Schedule 2 to the Lease Agreement Stipulated Loss Value Stipulated Loss Value as a Percentage Date ofLessofs coat 12/31/94 41.363 %
01/15/95 52.130 %
02/15/95 62.985 %
03/15/95 66.969 %
04/15/95 67.485 %
05/15/95 73.774 %
06/15/95 104.841 %
07/15/95 104.474 %
08/15/95 104.102 %
09/15/95 103.727 %
10/15/95 103.347 %
11/15/95 102.962 %
12/15/95 102.573 %
01/15/96 102.180 %
02/15/96 101.782 %
03/15/96 101.378 %
04/15/96 100.970 %
05/15/96 100.558 %
06/15/96 100.142 84 07/15/96 99.722 %
08/15/96 99.296 %
09/15/96 98.866 %
10/15/96 98.432 %
11/15/96 97.992 %
12/15/96 97.549 %
01/15/97 97.100 %
02/15/97 96.647 %
03/15/97 96.187 %
04/15/97 95.723 %
05/15/97 95.256 %
06/15/97 94.784 %
07/15/97 94.309 %
08/15/97 93.828 %
09/15/97 93.342 %
10/15/97 92.853 %
11/15/97 92.358 %
j 12/15/97 91.859 %
01/15/98 91.356 %
02/15/98 90.846 %
T1r42 25 '94 10:2141 CE CAPITAL T & IFC 203 357 6828 P.3 Schedule 2 to the Lease Agreemen:
Stipuisted Loss Value Stipulated Loss Value as a Percentage Date oft uah cne 03/15/98 90,331 %
04/15/98 89.812 %
05/15/98 89.289 %
06/15/98 88.762 %
07/15/98 88.231 %
08/15/98 87.694 %
09/15/98 87.153 %
10/15/98 86.609 %
11/15/98 86.058 %
12/15/98 85.503 %
01/15/99 84.944 %
02/15/99 84.379 %
03/15/99 83.808 %
04/15/99 83.232 %
05/15/99 82.653 %
06/15/99 82.071 %
07/15/99 81.484 %
08/15/99 80.891 %
09/15/99 80.294 %
10/15/99 79.693 %
11/15/99 79.086 %
12/15/99 78A74 %
01/15/2000 77.859 %
02/15/2000 77.237 %
03/15/2000 76.609 %
04/15/2000 75.977 %
05/15/2000 75.341 %
06/15/2000 74.701 %
07/15/2000 74.057 %
08/15/2000 73A06 %
09/15/2000 72.752 %
10/15/2000 72.094 %
{
11/15/2000 71.429 %
12/15/2000 70.760 %
01/15/2001 70.086 %
02/15/2001 69.406 %
03/15/2001 63.720 %
04/15/2001 68.029 %
05/15/2001 67.334 %
M'E 25 '94 10:22Gt1 E CFPITR., T & IFC 203 357 6829 P.4 Schedale 2 to the Lease Agreement Stipulated Loss Value l
l Stipulated Loss Value as a Percentage Date oft =Ws cost 06/15/2001 66.635 %
07/15/2001 65.932 %
1 08/15/2001 65.233 %
l 09/15/2001 64.530 %
{
10/15/2001 63.822 %
j 11/15/2001 63.108 %
{
12/15/2001 62.389 %
01/15/2002 61.664 %
02/15/2002 60.933 %
03/15/2002 60.197 %
04/15/2002 59.455 %
05/15/2002 58.708 %
06/15/2002 57.954 %
1 07/15/2002 57.195 %
08/15/2002 56.429 %
09/15/2002 55.658 %
10/15/2002 54.881 %
11/15/2002 54.098 %
12/15/2002 53.308 %
01/15/2003 52.513 %
02/15/2003 51.711 %
03/15/2003 50.904 %
04/15/2003 50.089 %
05/15/2003 49.269 %
06/15/2003 48.442 %
07/15/2003 47.609 %
08/15/2003 46.769 %
09/15/2003 45.923 %
10/15/2003 45.070 %
11/15/2003 44.211 %
12/15/2003 43.345 %
01/15/2004 42.472 %
02/15/2004 41.592 %
03/15/2004 40.706 %
04/15/2004 39.812 %
05/15/2004 38.912 %
06/15/2004 38.005 %
07/15/2004 37.090 %
08/15/2004 36.169 %
1 11AR 25 '94 10:22AM GE CAPITA T & IFC 203 357 E828 P.5 Schedule 2 to the Lease Agreement Stipulated Loss Value Stipulated Loss Value as aPercentage Date oft===ar's Cost 09/15/2004 35.240 %
10/15/2004 34.305 %
11/15/2004 33.362 %
12/15/2004 32.411 %
01/15/2005 31.453 %
02/15/2005 30.488 %
03/15/2005 29.516 %
04/15/2005 28.430 %
PARTICIPATION AGREEMENT between VERMONT YANKEE NUCLEAR POWER CORPORATION and TIFD VIII-H INC.
Dated as of March 31,1994 Two low-Pressure Steam Turbines Vermont Yankee Nuclear Power Station Vernon, Vermont NYFS08.. 060'47660'0766'1117\\ACR82493.X5N
TABLE OF CONTENTS i
l Page i
1 INTERPRETATION 1
1.1.
Definitions 1
1.2.
Conventions....
1 2.
LEASE CLOSING,.....
1.
2.1.
Notice of Dates 1
2.2.
Lease Closing 2
2.3.
Time and Place.............
2 3.
CoNDmONS TO PARTICIPATION AGREEMENT CLOSING 2
3.1.
Documents 2
4.
CONDmONS TO LEASE CLOSING..
3 4.1.
Documents 3
4.2.
Other Conditions.....
6 5.
CONDmONS TO INSTALLMENT PAYMENTS.
9 6.
CONDmONS TO COMMENCEMENT OF BASIC TERM
..................12 6.1.
Documents
.........................12 6.2.
Other Conditions...........................
13 7.
REPRESENTATIONS AND WARRANTIES
......................15 1
7.1.
Vermont Yankee Representations.......
...............15 l
7.2.
Transaction Representations............................
21 7.3.
Lease Representations................................
22 7.4.
Sponsor Contract Representations
........................24 7.5.
Construction Representations 25 7.6.
Performance Testing Representation.......................
26 8.
COVENANTS..........................................26 8.1.
Reports
........................................27 8.2.
Books and Records
.................................28 8.3.
No Other Business........
.........................28 8.4.
Taxes
. 28.
8.5.
Rules...............
..........................29 8.6.
Liens.........
.........................29 8.7.
Awards
........................................29
.I NY FS08..M47660\\0766\\ l l 17\\AG R82493.X5 N
.. _..., _.,..~
l l-I l
Page 8.8.
Location of Equipment.............
.................29 8.9.
Name and Place of Business....
...................29 8.10. Affiliate Transactions................................
29 8.11. Maintenance of Rights
......................30 8.12. Contracts
........................30 8.13. Construction
........................30 8.14. Perfonnance of 0bligations.
.......................31 8.15. In spection.......................................
31 8.16. Regulation.......................................
3 2 8.17. Regulatory Reports 32 8.18. Further Assurances 33 8.19. Organization
...........................33 8.20. Merger...
..........................34 8.21. Operation of Facility.......
........................34 8.22. Permits
...................34 8.23. Cooperation in Default...............................
34
[
8.24. Environmental Matters...............................
34 8.25. Employee Plans........................
...........35 i
i 9.
INSURANCE.........
.........................37 9.1.
Mandatory Insurance................................
37 l
9.2.
Requirements for Coverage
.....38 9.3.
Contractor Insurance
...............................39 9.4.
Adjustment of Losses...
.................39 l
9.5.
Certification
.....................................39 9.6.
Reports
.....................................39 l
10.
RENT ADJUSTMENTS.....................................40 10.1. Adjustments for Changes in Assumptions...................
40 l
10.2. Adjustments for Certain Tax Law Changes................
40.
l 10.3. Adjustments for Payments.............................
40 10.4. Preservation of Net Economic Return; Confirmation of Adjustments... 40 I1.
FEES AND EXPENS ES..................................... 41 11.1. Administrative Fee 41 11.2. Expenses
............................41 i
11.3. Other Expenses
...................................41 12.
INDEMNITIES.
......................................42 i
12.1. General Indemnity..................................
42 i
i i
U NYFs08...:16047660io766illl7\\AGR82491X5N I
Page 12.2. Nuclear Indemnity...
44 12.3. Special Tax Indemnity 44 12.4. General Tax Indemnity 56 12.5. Survival 61 13.
ASSIGNMENT...
........ 61 13.1. Assignment by Vermont Yankee.
61 13.2. Assignment by Lessor
..................61 Appendix A Defmitions and Usage Appendix B Assumptions Exhibit A Form of Lease Exhibit B Form of Contractor Consent Exhibit C Form of Bill of Sale Exhibit D Form of Secretary's Certificate Exhibit E Form of Officer's Cenificate Exhibit F Form of Permit Certificate Exhibit G Form of Engineer's Certificate Exhibit H Substance of Appraisal Exhibit I-l Form of Ropes & Gray Opinion Exhibit I-2 Form of Ryan Smith & Carbine, Ltd. Opinion Exhibit J Form of Sponsor Counsel Opinion Exhibit K Form of Indenture Tnistee Confirmation Exhibit L Form of Second Mortgage Confirmation Exhibit M Form of Constniction Contracts Assignment Exhibit N Form of Notice of Funding Schedule 1 Addresses and Accounts Schedule 2 Permits Schedule 3 Filings Schedule 4 Milestones Schedule 5 Proceedings Schedule 6 ERISA Schedule 7 Environmental i
kk NYFS08.. :i6047660'076611117AGR82493.X5N
PARTICIPATION AGREEMENT, dated as of March 31,1994, between VERMONT YANKEE NUCLEAR POWER CORPORATION, a Vermont corpomtion, and TIFD VIII-II INc., a Delaware corporation.
Vermont Yankee owns and operates a nuclear power plant in Vernon, Vermont. Contractor is constmeting the Equipment for installation at the Facility pursuant to the Construction Contracts.
On initial shipment of the Equipment and the satisfaction of certain conditions herein, simultaneously Vermont Yankee will assign its rights under the Constmetion i
Contracts to Lessor, Lessor will purchase the Equipment, Lessor will accept title to the Equipment (other than the Forging) from Contractor, Vermont Yankee will i
transfer title to the Forging to Lessor and Vermont Yankee will lease the Equipment from Lessor pursuant to the Lease, and thereafter from time to time, subject to satisfaction of certain conditions, Lessor will make Installment Payments under the Construction Contracts to Contractor.
The panies agree as follows:
1.
INTERPRETATION.
1.1.
Definitions. Unless the context otherwise requires, the definitions and rules of interpretation in Appendix A apply to this agreement.
1.2.
Conventions. The Conventions in Appendix A apply to this agreement.
2.
LEASE CLOSING.
2.1.
Notice of Dates. At least 45 days before the anticipated Delivery Date of the Equipment, Vermont Yankee shall notify 12ssor of the anticipated Delivery Date and of a proposed Lease Commencement Date. At least ten Business Days before the Delivery Date, Vermont Yankee shall notify Lessor of the actual Delivery Date and the Lease Commencement Date. At least ten Business Days before each Installment Payment Date on which Vermont Yankee requests an Installment Payment to be made, Vermont Yankee shall notify Lessor thereof. At least ten Business Days before the Basic Term Commencement Date, Vermont Yankee shall notify Lessor thereof.
NYFS08 660147660'0766;l117%CR80493.X5N i
2.2.
Lease Closing. On the lease Commencement Date, Vermont Yankee shall assign to Lessor all of Vermont Yankee's rights under the Construction Contracts pursuant to the Constmetion Contracts Assignment, shall convey title to the Forging to Lessor by delivering the duly executed Bill of Sale, and Contmetor shall convey title to the Equipment to Lessor. Lessor shall lease the Equipment to Vermont Yankee, and Vermont Yankee shall lease the Equipment from Lessor, by entering into the Lease. The total purchase price of the Equipment shall be its fair market value as determined by the appraisal delivered pursuant to Section 6.l(f). The amount of this total purchase price paid on the Lease Commencement Date shall not exceed the payments theretofore made by Vermont Yankee under the Construction Contracts plus approximately $2,045,000 with respect to the Forging. Thereafter, the amount of each Installment Payment shall not exceed the amount then due to Contractor under the Constmetion Contracts plus on the Basic Term Commencement Date any unpaid total purchase price of the Equipment as described above.
2.3.
Time and Place. The lease closings shall take place at 10:00 a.m.,
New York City time, on the Lease Commencement Date and the Basic Term Commencement Date, at the offices of Weil, Gotshal & Manges, 767 Fifth Avenue, New York, New York 10153.
3.
CONDmONS TO PARUCIPARON AGREEMENT CLOSING.
3.1.
Documents. Lessor's obligation to execute this agreement is subject to Lessor's receipt (or waiver) of the following documents on the date of execution of this agreement. Each document listed below shall be in form and substance satisfactory to Lessor.in its sole discretion and, unless otherwise indicated, shall be j
dated the date of this agreement.
(a)
Secretary's Certificate. A certificate in substantially the form of Exhibit D, duly completed and signed by the Secretary or an Assistant
{
Secretary of Vermont Yankee.
(b)
Chaner. A copy of Vennont Yankee's current certificate of incorporation, certified at a recent date by an official of the State of Vermont.
(c)
Good Standing Cenificate. A certificate, certified at a recent date of an official of the State of Vermont, certifying that Vermont Yankee is duly organized, validly existing and in good standing.
(d)
Ooinions. An opinion of (1)
Ropes & Gray, counsel to Vermont Yankee, with respect to the due authorization, execution and delivery of this agreement, and 2
NYF508.. 360547660\\(T766ttilTAGR8:493.X5N
(2)
Ryan Smith & Carbine, Ltd., Vermont counsel to Vermont Yankee, with respect to the due authorization, execution and delivery of this agreement.
4.
CONDmoNs TO LEASE CLOSING.
4.1.
Documents. Lessor's obligations to consummate the Tansactions to occur on the lease Commencement Date are subject to Lessor's receipt (or waiver) of the following documents on the Lease Commencement Date. Each document listed below shall be in form and substance satisfactory to Lessor in its sole discretion and, unless otherwise indicated, shall be dated the lease Commencement Date.
(a)
Aereements. A copy of each of the following, duly executed by each party thereto:
(1) the Lease, (2) the Bill of Sale, (3) the Contmetor Consent, (4) the Constmction Contracts Assigmnent, (5) a Sponsor Counsel Opinion from each Sponsor, (6) the Indenture Tmstee Confinnation, j
(7) the Second Mongage Confirmation, and (8) this Panicipation Agreement.
(b)
Secretary's Certificate. A certificate in substantially the form of Exhibit D, duly completed and signed by the Secretary or an Assistant Secretary of Vermont Yankee.
(c)
Chaner. A copy of Vermont Yankee's current certificate of incorporation, certified at a recent date by an official of the State of Vermont.
(d)
Good Standine Cenificate. A certificate, certified at a recent date, of an official of the State of Vermont, cenifying that Vermont Yankee is duly orgamzed, validly existing and in good standing.
3 NYF508.. n6047660io766illl7\\AGR82493.X5N
(e)
Officer's Cenificate. A certificate in substantially the fonu of Exhibit E, duly completed and signed by the chief financial officer of Vennont Y ankee.
(f)
Pennit Certificalc. A certificate in substantially the fonn of Exhibit F, duly completed and signed by the Secretary or an Assistant Secretary of Vennont Yankee.
(g)
Appraisal. A preliminary report of an independent appraiser including the findings and estimates described in Exhibit H and addressing any other matters Ixssor may request.
(h)
Lien Release. An original, signed release of all mechanics',
workers', contractors', subcontractors' and other construction Liens on the Equipment.
(i)
Oninions. An opinion of (1)
Ropes & Gray, counsel to Vennont Yankee, in substantially the fann of Exhibit I-1, (2)
Ryan Snuth & Carbine, Ltd., Vermont counsel to Vennont Yankee, in substantially the fonn of Exhibit I-2, (3)
Downs Rachlin & Martin, Vennont counsel to Lessor, (4)
Weil, Gotshal & Manges, counsel to Lessor, (5)
Swidler & Berlin, special regulatory counsel to Lessor, l
which, among other things, will confinn that Lessor and GE Capital will not be subject to any fomi of regulation as a public utility, a public utility company, an electric utility, an electric utility company, an electric company, an electric utility holding company or a public utility holding company under any Rule or be subject to any regulation relating to nuclear facility, equipment or fuel as a result of the Transactions, and (6)
Weil. Gotshal & Manges, special tax counsel to Lessor, on the federal income tax treatment of the Transactions.
(j)
Insurance Policies. A copy of each insurance policy required by any Operative Document of Vennont Yankee, certified by the insurer as being in effect.
4 NYFS08.. n60\\47660N076611Il7\\AGR82491X5N
(k)
Insurance Certi6cate. A cenincate of Vennont Yankee's insurance broker as referred to in Section 9.6.
(1)
Evidence of Liens. Certificates of ofGeials of Vennont and New York as to UCC financing statement 61ings and tax lien filings with respect to the Equipment.
(m)
Audited Financial Statements. A balance sheet of Vermont Yankee at the end of its then most recent fiscal year, with statements of income, retained earnings and cash flow for the year then ended, with an unqualified opinion of an independent firm of certified public accountants reasonably acceptable to Ixssor, that those statements were prepared in accordance with GAAP and fairly present the condition and results of Vermont Yankee.
(n)
Unaudited Financial Statemml.s. A balance sheet of Vermont Yankee as of the end of the most recent month preceding by at least 30 days the Lease Commencement Date, with statements of income, retained earnings and cash flow for the period from the end of its last fiscal year to that date, with a certi6cate of the chief financial officer of Vermont Yankee that the Gnancial statements were prepared in accordance with GAAP and fairly present the condition and results of Vermont Yankee.
(o)
SEC Filings. Copies of Vennont Yankee's most recent Annual Repon on Form 10-K, proxy statement and annual repon filed or provided under the Securities Exchange Act of 1934, and each other document that Vermont Yankee has filed with or provided to the SEC since the filing of such Fonn 10-K, if any.
(p)
Financial Statements. Copies of the Sponson' most recent balance sheets and staicments of income, retained earnings and cash Dow.
(q)
Notigg. The notice et actual Lease Commencement Date required pursuant to Section 7.1, u substantially the form of Exhibit N hereto and dated at least ten Business Days before such date, stating the amount to be paid by Lessor and including reasonable detail of invoices and other payment notices from Contractor relating thereto.
(r)
Other Evidence. Lessor shall have received any cenificates, opinions or other evidence from Persons other than Vermont Yankee that it may have requested to demonstrate the satisfaction of any conditions that it has not waived, the truth of any representation or the compliance with any agreement.
5 NYFS08. 360\\476680766ilit7\\AGRs:493 X5N
4.2.
Other Conditions. Lessor's obligations to consummate the Transactions to occur on the Lease Commencement Date are subject to the satisfaction (or waiver) of the following conditions on the Lease Commencement Date, each such condition to be satisfied in fonn and substance satisfactory to Lessor in its sole discretion.
(a)
Performance. Each party (other than Lessor) to any Operative Document shall have performed all obligations that the Operative Documents require it to perform on or before the Lease Commencement Date.
(b)
Ooerative Documents. Each Operative Document shall have been duly authorized, executed and delivered by all panies and shall be in full force and effect. No event shall have occurred or condition exist, nor would any result from the Transactions to occur on the Lease Commencement Date, that would give any Person the right to terminate, delay or not perform any of its obligations under any Operative Document.
(c)
No Default. No Default, and no default under any material agreement, shall have occurred and be continuing. No Default, and no default under any material agreement, would occur after giving effect to the Tansactions to occur on the Lease Commencement Date.
(d)
Reoresentations. Each representation and warranty made in an Operative Document by a pany other than Lessor shall be true and correct as though made on and as of the Lease Commencement Date. Each such representation and warranty shall be true and correct after giving effect to the Transaction; to occur on the Lease Commencement Date.
(e)
Permits. Each Permit listed on Schedule 2 (which Schedule 2 shall specify all permits and licenses necessary for the ongoing operation of the Facility, including, without limitation, the NRC license for the Facility, the scheduled expiration date for each such permit and license, if renewal thereof is reasonably anticipated by Vennont Yankee and the methodology therefor),
and each other Permit that may be (or, after giving effect to the Transactions to occur on the Lease Commencement Date, will become) necessary or appropriate in connection with the Transactions shall have been obtained, shall be in full force and effect and shall not be subject to any appeals or funher proceedings or to any unsatisfied condition that may allow material modification or revocation. Lessor shall have received a copy of each such Permit cenified by the Secretary or an Assistant Secretary of Vermont Yankee as being a tnie and correct copy.
(f)
Legality. No Rule, shall prohibit any Transaction, subject any Transaction to material penalty or liability, adversely affect the status of any 6
NYF SC8.. :'6047660@66il117'AGR82493.X3N
Permit or make it materially more burdensome to Lessor to maintain any Permit. No change in any Rule shall have taken effect which shall have had, or could have, a Material Adverse Effect.
(g)
Proceedings. No Proceeding shall have been instituted nor shall any Authority have threatened to institute any Proceeding or have issued or proposed any Rule that would prohibit any Transaction, subject any Transaction to any material penalty or liability, adversely affect the status of any Permit or make it materially more burdensome to Lessor to maintain any Permit. No Proceeding shall have been commenced that, if adversely decided to Vermont Yankee or Lessor, could have a Material Adverse Effect or would prohibit any Tansaction.
(h)
Forcine Liens Released. The Liens on the Forging created by the Indenture and the Second Mortgage shall have been released and Lessor shall have received copies of such releases.
(i)
Lessor's Title. Immediately after the Transactions to occur on the I2ase Commencement Date, Lessor shall have good and marketable title to the Equipment (including t.'1e Forging), free and clear of all Liens except Vermont Yankee's rights uader the Lease and any mechanics', workers',
contractors', subcontractors' or other constmetion Liens on that part of the Equipment not yet shipped to Vermont Yankee created pursuant to the Constmetion Contracts.
(j)
Filings and Recordings. Vermont Yankee shall have made all filings and recordings that Schedule 3 indicates should be made on or before the Lease Commencement Date.
(k)
Taxes. Vermont Yankee shall have paid all Taxes due or j
accmed in connection with the Transactions to occur on or before the Lease Commencement Date, or in connection with the execution, delivery, recordation and filing of the documents and instruments described in this agreement.
(1)
No Material Adverse Effect. No event shall have occurred, and no condition shall exist that shall have had, or could have, a Material Adverse Effect.
(m)
D_ ate. The Lease Commencement Date shall not be later than December 31,1994.
(n)
Casualty. No Casualty shall have occurred.
7 NYF 508...a6047660ic766t t l 17%GR82493,X5 N
)
(o)
Equipment Cost. As of the Lease Commencement Date, the total anticipated Equipment Cost plus Lease Transaction Costs shall not be more than $33,368,519.
(p)
Refrulatioll.
(1)
Vermont Yankee shall have submitted all necessary Transaction Documents to the NRC for review and shall have obtained NRC acknowledgement that the financial transaction contemplated by the Lease is consistent with the Atomic Energy Act and that Lessor need not become an NRC licensee, in form and substance satisfactory to Lessor in its sole discretion or any other form of written assurance in form and substance satisfactory to Lessor in its sole discretion.
(2)
Lessor shall have obtained an order from FERC designating Lessor as an " exempt wholesale generator" and a declaration from FERC in form and substance satisfactory to Lessor in its sole discretion that the Transactions will not be regulated as a sale of electric energy at wholesale pursuant to Sections 205 and 206 of the Federal Power Act.
(q)
Assumotions. Each of the assumptions in Appendix B shall be tme or the adjustments contemplated by Section 10.1 shall have been made satisfactorily to Lessor.
(r)
Chanee in Tax Law. There shall have been no changes or proposed changes in the Code or any Rule concerning Taxes that migh'.
adversely affect Lessor's Net Economic Return.
(s)
Facility Operability.
(1)
The Facility is not shut down pursuant to any order of or agreement with the NRC. There shall not be any order or agreement in effect not to start up the Facility without NRC authorization.
(2)
The Facility shall not have been voluntarily shut down or kept shut down for a period in excess of 30 days due to the inoperability of any structure, system or component, the violation of the Facility's license, technical specifications, or the inoperability of or inability to operate any stmeture, system or component required for the generation of electricity from the Facility.
(t)
No Soonsor Default. No pany to any Sponsor Contract is subject to any bankruptcy, insolvency or other similar proceeding. No material adverse change has occurred in the business, assets, liabilities, 8
NY FS08...:160'47660@6611117.AGR8:493.X5N
operations, condition or prospects of any Sponsor. No Sponsor has defaulted on, or threatened or asserted a right to cancel or otherwise terminate, any Sponsor Contract.
5.
CONDmoNs To LNSTAU3fEST PADtEN"fS.
I2ssor's obligation to make each Installment Payment is subject to the satisfaction (or waiver) of the following conditions on the date such Installment Payment is to be made, each such condition to be satisfied in form and substance satisfactory to Lessor in its sole disemtion.
(a)
Performance. Each pany (other than Lessor) to any Operative Document shall have performed all obligations that such Operative Document requires it to perform on or before the date the Instalhnent Payment is to be made.
(b)
Operative Documents. Each Operative Document shall have been duly authorized, executed and delivered and shall be in full force and effect. No event shall have occurred and no condition shall exist, nor would any result from the Transactions to occur on the date such Installment Payment is to be made, that would give any Person the right to tenninate, delay or not perfonn any of its obligations under any Operative Document.
(c)
No Defaull. No Default shall have occurred and be continuing.
No Default would occur after giving effect to the Transactions to occur on the date the Installment Payment is to be made.
(d)
Reoresentations. Each mpresentation and warranty made in a Transaction Document (other than those made by Lessor) shall be tnie and correct as though made on and as of the date the Installment Payment is to be made. Each such representation and warranty shall be tnie and correct after giving effect to the Transactions to occur on the date the Installment Payment is to be made.
(e)
Permits. Each Pennit listed on Schedule 2, and each other Permit that may be (or, after giving effect to the Transactions to occur on the date such Installment Payment is to be made, will become) necessary or appropriate in connection with the Transactions shall have been obtained, shall be in full force and effect and shall not be subject to any appeals or further Proceedings or to any unsatisfied condition that may allow material modification or revocation. Lessor shall have received a copy of each such Permit certified by the Secretary or an Assistant Secretary of Vermont Yankee as being a tnie and correct copy.
9 NY F S08.. mo047660\\0766il l 17\\AG R 82493.X5N
(f) 12eality. No Rule shall prohibit any Transaction, subject any i
Transaction to material penalty or liability, adversely affect the status of any Permit or make it materir.lly more burdensome to Lessor to maintain any Permit. No change in any Rule shall have taken effect which shall have had,
{
or could have, a Material Adverse Effect.
(g)
Proceedings. No Proceedmg shall have been instituted nor shall any Authority have threatened to institute any Proceedmg or have issued or proposed any Rule that would prohibit any Transaction, subject any Transaction to any material penalty or liability, adversely affect the status of any Permit or make it materially more burdensome to Lessor to maintain any Permit. No Proceeding shall have been commenced that, if adversely decided to Vermont Yankee or Lessor, could have a Material Adverse Effect or would prohibit any Transaction.
(h)
Taxes. Vermont Yankee shall have paid all Taxes due or accrued in connection with the Transactions to occur on or before the date such Installment Payment is to be made, or in connection with the execution, delivery, recordation and filing of the documents and instmments described in this agreement.
(i)
No Material Adverse Effect. No event shall have occurred, and no condition shall exist that shall have had, or could have, a Material Adverse Effect. No material adverse change shall have occurred in the business,
, operations, financial condition or prospects of Vermont Yankee from that set fonh in the most recent financial statements provided to Lessor before the execution of this agreement.
(j)
Casualty. No Casualty shall have occurred.
(k)
Date. The date such Installment Payment is to be made shall be on or before June 30,1995.
(1)
Commitment. The purchase price previously paid for the Equipment on the Lease Commencement Date and each prior Installment Payment Date, plus the amount of such Installment Payment to be made, plus Lessor's good faith estimate of the Equipment Cost remaining after such Installment Payment is made plus Lease Transaction Costs, shall not be more than 533,368,519.
(m)
Milestone. The event related to such Installment Payment, as described on Schedule 4, shall have occurred. The amount of such Installment Payment plus the aggregate amount of payments made by lessor to Vermont Yankee or Contractor on the Lease Commencement Date and each prior 10 NYFS08.. :;6047660T766ill17%CR82493.X5N
l Installment Payment Date shall not exceed the amount specified for such Installment Payment Date on Schedule 4.
(n) lessor's Title. Lessor shall have good and marketable title to that part of the Equipment delivered since the last Installment Payment Date.
(o)
Lien Release. An original, signed release of all mechanics',
workers', contractors', subcontractors' and other constmetion Liens on that pan of the Equipment delivered since the last Installment Payment Date.
(p)
Assumptions. Each of the assumptions in Appendix B shall be true or the adjustments contemplated by Section 10.1 shall have been made satisfactorily to Lessor.
(q)
Chance in Tax Law. There shall have been no changes or proposed changes in the Code or any Rule concerning Taxes that might adversely affect Ixssor's Net Economic Return.
(r)
No Sponsor Default. No party to any Sponsor Contract is subject to any bankruptcy, insolvency or other similar proceeding. No material adverse change has occurred in the business, assets, liabilities, operations, condition or prospects of any Sponsor. No Sponsor has defaulted on, or threatened or assened a right to cancel or otherwise terminate, any Sponsor Contract.
(s)
Officer's Cenificate. A certificate in substantially the form of Exhibit E, duly completed and signed by the chief financial officer of Vermont Yankee.
(t)
Notice. The notice of Installment Payment Date required pursuant to Section 2.1, in substantially the form of Exhibit N and dated at least ten Business Days before such date, stating the amount to be paid by Lessor and including reasonable detail of invoices and other payment notices from Contractor relating thereto.
(u)
Other Evidence. Lessor shall have received any certificates, opinions or other evidence from Persons other than Vermont Yankee that it may have requested to demonstrate the satisfaction of any conditions that it has not waived, the truth of any representation or the compliance with any agreement.
I1 NYFS08.. :'60;47660@66'.111MGR82493.X5N
i 6.
CONDmONS TO CO313 FENCE 31ENT OF BASIC TER31.
6.1.
Documents. The commencement of the Basic Term on the Basic Term Commencement Date is subject to Lessor's receipt (or waiver) of the following documents on the Basic Term Commencement Date. Each document listed below shall be in form and substance satisfactory to Lessor in its sole discretion and, unless otherwise indicated, shall be dated the Basic Term Commencement Date.
(a)
Secretary's Certificate. A certificate in substantially the form of Exhibit D, duly completed and signed by the Secretary or an Assistant Secretary of Vermont Yankee.
(b)
Officer's Cenificate. A cenificate in substantially the form of Exhibit E, duly completed and signed by the chief financial officer of Vermont Yankee.
(c)
Permit Cenificate. A cenificate in substantially the form of Exhibit F, duly completed and signed by the Secretary or an Assistant Secretary of Vermont Yankee.
(d)
Equipment Cost Certificate. A cenificate setting forth the amount and components of Equipment Cost as of the Basic Term Commencement Date and signed by the chief financial officer of Vermont Yankee, in detail satisfactory to Lessor in its sole discretion.
(e)
Eneineer's Cenificate. A cenificate in substantially the form of Exhibit G, from an independent engineer selected by Lessor.
(f)
Appraisal. A report of an independent appmiser including the findings and estimates described in Exhibit H and addressing any other matters Lessor may request.
(g)
Chaner. A copy of Vermont Yankee's current certificate of incorpontion, cenified at a recent date by an official of the State of Vermont.
(h)
Good Standine Certificate. A cenificate, cenified at a recent date, of an official of the State of Vermont, certifying that Vermont Yankee is duly organized, validly existing and in good standing.
(i)
Lien Release. An original, signed release of all mechanics',
workers', contractors', subcontractors' and other constmetion Liens on the Equipment.
12 NYFS08.. :4047660\\07W1117AGR82493.X5N
(j)
Opinions. An opinion of Weil, Gotshal & Manges, special tax counsel to Lessor, on the federal income tax treatment of the Transactions.
(k)
Other Evidence. Lessor shall have received any certificates, opinions or other evidence from Persons other than Vermont Yankee that it may have requested to demonstrate the satisfaction of any conditions that it has not waived, the truth of any representation or the compliance with any agreement.
6.2.
Other Conditions. Lessor's obligations to consummate the Transactions to occur on the Basic Term Commencement Date are subject to the satisfaction (or waiver) of the following conditions on the Basic Term Commencement Date, each such condition to be sadsfied in form and substance satisfactory to Lessor in its sole discretion.
(a)
Performance. Each party (other than Lessor) to any Operative Document shall have performed all obligations that the Operative Documents require it to perform on or before the Basic Term Commencement Date. No event shall have occurred or condition exist, nor would any result from the Transactions to occur on the Basic Term Commencement Date, that would give any Person the right to terminate, delay or not perfonn any of its obligations under any Operative Document.
(b)
No Default. No Default, and no default under any material agreement, shall have occurred and be continuing. No Default, and no default under any material agreement, would occur after giving effect to the Transactions to occur on the Basic Term Commencement Date.
(c)
Representatio.nj. Each representation and warranty made in an Operative Document shall be true and correct as though made on and as of the Basic Term Commencement Date. Each such representation and warranty shall be true and correct after giving effect to the Transactions to occur on the Basic Term Commencement Date.
(d)
Permits. Each Permit listed on Schedule 2, and each other Permit that may be (or, after giving effect to the Transactions to occur on the Basic Term Commencement Date, will become) necessary or appropriate in connection with the Transactions shall have been obtained, shall be in full force and effect and shall not be subject to any appeals or further proceedings or to any unsatisfied condition that may allow material modification or revocation. Lessor shall have received a copy of each such Permit certified by the Secretary or an Assistant Secretary of Vermont Yankee as being a true and correct copy.
13 NY rS08... : \\60w7660ic76611117M C R 82493.X5 N
(e)
Leeality. No Rule shall prohibit any Transaction, subject any Transaction to material penalty or liability, adversely affect the status of any Permit or make it materially more burdensome to Lessor to maintain any Permit. No change in any Rule shall have taken effect which shall have had, or could have, a Material Adverse Effect.
(f)
Proceedings. No Proceeding shall have been instituted nor shall any Authority have threatened to institute any Proceeding or have issued or i
proposed any Rule that would prohibit any Transaction, subject any Transaction to any material penalty or liability, adversely affect the status of any Permit or make it materially more burdensome to Lessor to maintain any Permit. No Proceeding shall have been commenced that, if adversely decided to Vermont Yankee or Lessor, could have a Material Adverse Effect or would prohibit any Transaction.
(g)
Taxes Vermont Yankee shall have paid all Taxes due or accrued in connection with the Transactions to occur on or before the Basic Term Commencement Date, or in connection with the execution, delivery, l
recordation and filing of the documents and instruments described in this agreement.
(h)
No Material Adverse Effect. No event shall have occurred, and no condition shall exist that shall have had, or could have, a Material Adverse Effect. No material adverse change shall have occurred in the business, operations, financial condition or prospects of Vermont Yankee from that set forth in the most recent financial statements provided to lessor before the execution of this agreement.
(i)
In Service. The In-Service Date shall have occurred and all Performance Testing of the Equipment shall have been successfully completed.
t (j)
Date. The Basic Term Commencement Date shall not be later than June 30,1995.
(k)
Casualty. No Casualty shall have occurred.
(1)
Eauipment Cost. The final Equipment Cost plus Lease Transaction Costs as of the Basic Term Commencement Date shall not be more than $33,368,519.
(m)
Expenses. Lease Transaction Costs do not exceed $750,000.
i
?
14 l
NYFS08.. 360\\47660\\0766illlTAGR82493.X5N
(n)
Assumptions. Each of the assumptions in Appendix B shall be tme or the adjustments contemplated by Section 10.1 shall have been made satisfactorily to Lessor.
(o)
Change in Tax Law. There shall have been no changes or proposed changes in the Code or any Rule concerning Taxes that might adversely affect Lessor's Net Economic Return.
(p)
No Sponsor Default. No pany to any Sponsor Contract is subject to any bankruptcy, insolvency or other similar proceeding. No material adverse change has occurred in the business, assets, liabilities, operations, condition or prospects of any Sponsor. No Sponsor has defaulted on, or threatened or asserted a right to cancel or otherwise terminate, any Sponsor Contract.
(q)
Facility Operability.
(1)
The Facility is not shut down pursuant to any order of or agreement with the NRC. There shall not be any order or agreement in effect not to stan up the Facility without NRC authorization.
(2)
The Facility shall not have been voluntarily shut down or kept shut down for a period in excess of 30 days due to the inoperability of any structure, system or component, the violation of the Facility's license technical specifications, or the inoperability of or inability to operate any structure, system or component required for the generation of electricity from the Facility.
7.
REPRESENTATIONS AND WARRANTIES.
7.1.
Vermont Yankee Representations. Vennont Yankee represents and warrants as follows:
(a)
Oreanization. Vennont Yankee is a corporation duly organized, validly existing and in good standing under the laws of the State of Vermont.
Vermont Yankee has not merged, consolidated, dissolved, sold or leased any substantial pan of its assets out of the ordinary course of its business, nor has it authorized or taken any steps toward any merger, consolidation, dissolution or sale of any substantial part of its assets out of the ordinary course of its business.
15 NYFS08. 6604766010766il!!7%GR82493.X5N
(b)
Good Standing. Vermont Yankee is duly qualified to do business and is in good standing in each jurisdiction where its assets or the conduct of its business requires qualification.
(c)
Comorate Power. Vermont Yankee has the power and authority to own, lease, and operate the propeny it owns, leases or proposes to own or lease. Vermont Yankee has the power and authority to consummate the Transactions and enter into and perform the Operative Documents.
(d)
Authorization. Vermont Yankee has duly authorized the execution, delivery and perfonnance of each Operative Document to which it is or is to be a pany.
(e)
Permits. Vermont Yankee has all Permits necessary to operate the Facility and conduct its business as presently conducted and as contemplated to be conducted, each of which expires or terminates after, or is reasonably expected to be renewed through, March 21,2012. Vermont Yankee's NRC opemting license for the Facility expires after March 21,2012.
(f)
Pmceedings. There are no Proceedings pending or threatened by any Anthority or any Sponsor (other than those listed on Schedule 5) that if l
adversely determined could have a Material Adverse Effect.
l l
(g)
Taxes. Vermont Yankee has duly and timely completed and filed all required fedeml, state, local and foreign Tax returns. Vermont Yankee has paid all Taxes in respect of the periods covered by such returns.
Vermont Yankee has established adequate reserves for the payment of any accrued Taxes. No deficiency or assessment for any Taxes has been proposed, assened, assessed or, to the knowledge of Vermont Yankee, threatened.
(h)
Place of Business. Vermont Yankee's place of business if it has one, or its chief executive office if it has more than one place of business, is its address for notices on Schedule 1. The office where Vermont Yankee keeps its records concerning its accounts and the Operative Documents, is also I
its address for notices on Schedule 1.
(i)
Investment Company Act. Vermont Yankee is not an investment company or an affiliated person of, or promoter or principal underwriter for, an investment company, within the meaning of the Investment Company Act of 1940.
(j)
No Misstatements. The information that Vermont Yankee or any of its officers have furnished to Lessor or any of its Affiliates or any appraiser, engineer, surveyor, counsel, accountant or other expen in 16 NYFS08.. n60476@0766st117%GRI:493.X5N
connection with the Equipment or the Operative Documents, when taken as a whole, does not contain any material misstatement of fact.
(k)
Statements to Insurers. All representations and warranties by Vermont Yankee or any of its agents or representatives to any insurer issuing an insurance policy required by any Opentive Document were true when made.
(1)
No Default. Vermont Yankee is not in default under any material obligation.
(m)
Financial Statements. All Vermont Yankee's balance sheets and statements of income, retained earnings and cash flow which it provided to Lessor at or before the time this representation is made have been prepared in accordance with GAAP and fairly present the financial posidon of Vermont Yankee at the date and for the periods indicated (subject to normal year-end audit adjustments for interim statements).
(n)
No Material Adverse Effect. No event has occurred and no condition exists that has had, or could have, a Material Adverse Effect.
(o)
Name. Vermont Yankee does not do business under any name other than its corporate name.
(p)
Moneage Liens. The first mongage Lien created pursuant to
, the Indenture and the second mongage Lien created pursuant to the Second Mongage are not attached to any of the Equipment except that prior to the Lease Commencement Date, the Forging is subject to the Lien of the Indenture.
l (q)
Regulation.
(1)
Vermont Yankee is a "public utility" and a " subsidiary" of two registered holding companies, each as defined by Section 2(a)(5) of the Public Utility Holding Company Act of 1935.
(2)
The entire output of the Facility is and will be sold exclusively at " wholesale," as defined by Section 201(d) of the Federal Power
.Act.
(r)
Facility Ooerability. To the best of its knowledge after due inquiry Vermont Yankee has no notice or knowledge of any of the following:
17 NYFS08...:\\ 60\\4766010'766il 117iA C R 82493.X5N
)
1
i l
(1)
Any existing condition that would require the Facility to be shut down under any Energy Rule or Permit.
(2)
Any existing condition that could reasonably be expected to result in the Facility being shut down (other than shut downs for periodic maintenance in the ordinary course of business) due to the inopembility of or inability to opente any structure, system or component at the Facility.
(3)
Any existing condition at or concerning the Facility, including any activity covemd by the Facility's NRC operating license, that could reasonably be expected to result in (i) an increase in Vermont Yankee's capital or operating costs which would have a Material Adverse Effect on Vermont Yankee, (ii) an outage of more than 270 days, (iii) operation of the Facility for more than 365 days at less than 50% of full power, (iv) any reduction in the useful life of the Facility, or (v) an inability, consistent with all Energy Rules, Permits and prudent utility practices, to restart the Facility.
(s)
Environmental Matters. Except as disclosed on Schedule 7, (1) all real property owned, opemted or leased by Vermont Yankee is free from contamination by any Hazardous Substance other than Hazardous Radioactive Substances which is masonably likely to result in liabilities to Vermont Yankee in excess of $500,000; (2)
Vermont Yankee has no liabilities with respect to Hazardous Substances other than Hazardous Radioactive Substances that are reasonably likely to be in excess of $500,000, and to the best knowledge of Vermont Yankee no facts or circumstances exist which could give rise to liabilities with respect to such substances which are reasonably likely to be in excess of $500,000; (3)
Vermont Yankee has no liabilities for Hazardous Radioactive Substances exceeding $2,000,000 other than:
(i) the cost to decontaminate and decommission the Facility which is assessable against a decommissioning tmst fund maintained by Vermont Yankee and regulated by the NRC, or which is assessable to the Sponsors under Section 9 of the Power Contracts and Section 10 of the Additional Power Contracts; 18 NYF508.. :160i47660W766ill17\\AGR82493.X5N
i l
(ii) costs resulting from future operations after the date of this representation; (iii) costs associated with handling, storage or disposal of spent fuel genemted by the Facility; and (iv) costs associated with decontaminating plant and equipment at the Facility in the future, which has been or will be irradiated in compliance with the requirements of the Atomic Energy Act, upon their retirement and replacement in the nonnal course of business.
(4)
(i) the operations of Vermont Yankee comply in all material respects with all applicable Environmental Laws, (ii) Vermont Yankee has obtained and currently maintains all Environmental Permits necessary for its operations and is in compliance with such Environmental Permits, (iii) there are no Proceedmgs pending nor, to the best knowledge of Vermont Yankee, threatened against Vermont Yankee alleging the violation of any Environmental law or to revoke any Environmental Permit, and (iv) Vermont Yankee has not received any written notice from any source to the effect that there is lacking any Environmental Permit required in connection with the current use or operation of any property owned, operated or leased by Vermont Yankee; (5) neither Vermont Yankee, nor any predecessor of Vermont Yankee, nor any of its past or current facilities and operations, nor, to the best knowledge of Vermont Yankee, any owner of propeny leased or operated by Vermont Yankee, are subject to any outstanding written Environmental Order or agreement, including Environmental Liens, with any Authority or other Person, or subject to any federal, state, local, foreign or territorial investigation respecting (i) Environmental Laws, (ii) Remedial Action, (iii) an Environmental Claim or (iv) the Release or threatened Release of any Hazardous Substance; (6) neither Vermont Yankee nor, to Vermont Yankee's best knowledge, any predecessor of Vermont Yankee, any owner of premises leased or operated by Vermont Yankee or any owner or opemtor of premises adjacent to Vermont Yankee's facilities with respect to those adjacent premises, have filed any notice under federal, state or local law indicating past or present treatment, storage, or disposal of or reporting a Release of Hazardous Substances into the enbronment; l
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l
i 1
(7) none of the opemtions of Vermont Yankee or, to Vermont Yankee's best knowledge, of any predecessor of Vermont Yankee or of any owner of premises leased or operated by Vermont Yankee involve or previously involved the generation, transponation, treatment, storage or disposal of hazardous waste, as defined under 40 C.F.R. Pans 260-270 (in effect as of the date of this agreement) or any state or local equivalent except in mateM ccmpliance with all applicable Environmental Laws; and (8) them is not now, nor to the best knowledge of Vermont Yankee has there been in the past, on, in or under any real propeny owned, operated or leased by Vermont Yankee or any of its predecessors (i) any underground storage tanks or surface tanks, dikes or impoundments; (ii) any friable asbestos-containing materials; or (iii) any polychlorinated biphenyls.
(t)
ERISA.
(1)
Schedule 6 lists (i) all Plans and Multiemployer Plans, and sepamtely identifies the Title IV Plans and Multiemployer Plans, and (ii) all ERISA Affiliates.
(2)
Each Plan and, to the knowledge of Vermont Yankee, each Multiemployer Plan is in compliance in all material respects with the applicable provisions of ERISA and the Code.
(3)
Each Plan intended to qualify under Section 401 of the Code has been determined by the IRS to so qualify, and any trust created thereunder has been determined to be exempt from tax under Section 501 of I
the Code. To the best knowledge of Vermont Yankee, nothing has occurred which would cause the loss of such qualification or tax-exempt status.
(4)
Except as set forth in Schedule 6, no event has occurred which, with the giving of notice under Section 4219 of ERISA, could result in liability under Section 4201 of ERISA as a result of a complete or panial withdrawal from a Multiemployer Plan.
(5)
Except as set fonh in Schedule 6, within the last five years neither Vennont Yankee nor any EILSA Affiliate has engaged in a transaction which resulted in a Title IV Plan with Unfunded Pension Liabilities being transferred outside of the " controlled group" (within the meaning of Section 4001(a)(14) of ERISA) of any such entity.
20 NYFS08.. 960A7%0\\07%41ITACRt2493.X5N
i 1
1 (6)
There are no pending, or to the knowledge of Vermont Yankee, threatened claims, actions or lawsuits (other than claims for benefits in the normal course), assened or instituted against (i) any Plan or its assets or (ii) Vermont Yankee or any ERISA Affiliate with respect to any Plan or Multiemployer Plan.
(7)
With respect to each Plan or Multiemployer Plan, neither Vermont Yankee nor any ERISA Affiliate has failed to make any contribution or pay any amount due, as required by the tenns of any such plan or collective bargaining agreement, or by Section 412 of the Code or Section 4201 of ERISA, if applicable.
(8)
Except as set fonh on Schedule 6, (i) no Title IV Plan has any Unfunded Pension Liability, and (ii) then: has not been, nor is there reasonably expected to be, any ERISA Event.
7.2.
Transaction Representaticas. Vermont Yankee represents and warrants as follows:
(a)
No Conflict. Neither the Transactions nor the execution, delivery and performance of the Operative Documents do or will (1) require any approval of Vermont Yankee's stockholders, (2) contravene any Rule, or (3) contmvene or result in a breach of or constitute a default under, or result in or require the creation of a Lien under Vermont Yankee's orgamzational documents or any obligation that may bind Vennont Yankee or any of its assets, including, without limitation, the Indenture or the Second Mongage.
(b)
No Default. No Default has occurred and is continuing. No Default will result from the Transactions to occur on the date this representation is made.
(c)
Cost of Eauioment. To the best of Vermont Yankee's knowledge, the final Equipment Cost plus Lease Transaction Costs will not be more than $33,368,519.
(d)
Milestones. To the best of Vermont Yankee's knowledge, each event described on Schedule 4 will occur on or within 45 days of the date set fonh for that event on Schedule 4.
21 NYF508.. no0',47660\\0766dll7tACR82493.X5N
(e)
Time for Decontamination. Decontamination and removal of the Equipment for return to Lessor as provided under Anicle 9 of the Lease will not require, in Vermont Yankee's best estimate, more than 90 days nor cost more than $600,000.
(f)
Operatine Exoenses. Under all Rules, and all proposed Rules (including proposed amendments or supplements to Rules), payments of Rent under the Lease qualify as operating expenses in accordance with the Uniform System of Accounts prescribed by FERC.
(g)
Foreine. The Forging was acquired by Vermont Yankee after October 18,1986.
(h)
Accountine Treatment. Vermont Yankee has received an opinion from its accountants confuming the accounting treatment of the Transactions desired by Vermont Yankee and Vermont Yankee is willing to proceed with the Tmnsactions.
(i)
Reeulation.
(1)
None of Vermont Yankee, Lessor or GE Capital is subject to regulation by the State of Vermont or any Authority or political subdivision thereof with respect to or on account of the Lease, (2)
Neither Vermont Yankee nor Lessor is obligated to give notice of or file with the State of Vermont or any Authority or political subdivision thereof a copy of the Lease, and (3)
The Equipment is strictly replacement equipment to be installed in the ordinary course of business and its purchase and installation does not trigger any obligation to obtain a certificate or require any state regulatory review.
(j)
No_ Casualty Event. No event described in paragraphs (a), (b),
(c), (e) or (f) of the definition of Casualty has occurred.
7.3.
Lease Representations. At and as of the Lease Commencement Date and the Basic Term Commencement Date, Vermont Yankee shall represent and warrant that the following statements are true:
(a)
Enforceability. Vermont Yankee has duly executed and delivered the Transaction Documents to which it is a party. Each such Transaction Document and each Opentive Document to which Vermont Yankee is or will be a party, when executed and delivered by Vermont
)
22 NY FS08... SoJ 47660t0'66\\ l 117\\A G R82493.X5N
Yankee, is or will be Vermont Yankee's legal, valid and binding obligation, enforceable against Vermont Yankee in accordance with its respective terms, in all cases subject to applicable bankmptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' and secured parties' rights I
and remedies generally, and subject, as to enforceability, to general principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).
(b)
Operative Documents. AD the Operative Documents are in full force and effect.
(c)
Title. Lessor has good and marketable title to the Equipment, free and clear of all Liens, except Vermont Yankee's rights under the Lease.
(d) location of Eauipment. No Equipment is located any place other than at the Facility or prior to delivery with the Contractor or in transit to the Facility.
(e)
No Security Interests. No financing statement or other similar document has been signed or filed against Lessor's right, title or interest in or to any Equipment except financing statements and security agreements with respect to the Forging which have been released on or before the Lease Commencement Date.
(f)
No Conflict. Neither the Transactions nor the execution, l
delivery and performance of the Transaction Documents require or will require any Permit, except those listed in Schedule 2.
(g)
Permits. Except as noted on Schedule 2, each action listed on Schedule 2 and each Permit necessary or advisable in connection with the Transactions, (1) has been duly obtained or taken, (2) is in full force and effect, (3) is not subject to any contest or funher Proceedings or appeals, and (4) is in Lessor's name or permits Lessor to own and remove the Equipment l
on enforcement of remedies or on the return of the Equipment as provided in l
Anicle 9 of the Lease.
(h)
Eilin_gs. Schedule 3 lists all filings, recordings and other actions necessary to establish, protect and perfect Lessor's rights, titles and interests purponed to be created by the Transaction Documents. All such filings, recordings and other actions have been duly made.
(i)
Reculation. To the best of Vermont Yankee's knowledge after due inquiry and, as to subparagraph (4) below, in reliance on the declaration referred to in Section 4.2(p)-
I l
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NYFS08. 360;476 TOC 766\\1117\\AGR82493.X$N
(1)
Lessor is not, and will not be under any existing Rule, subject, as a result of the Lease or any other Operative Document, to any state or federal utility regulation or to becoming an NRC licensee or to regulation with respect to the storage, disposal, transportation or receipt of nuclear waste or spent fuel; (2)
Iessor is not, and will not be under any existing Rule, required, as a result of entering into the Lease or any other Operative Document, to become an NRC licensee; (3)
Vermont Yankee has no knowledge of any facts that would pre'ent Lessor from obtammg or retaming status as an " exempt wholesalc generator" pursuant to Section 32 of the Public Utility Holding Company Act of 1935; (4)
None of the Operative Documents give rise to FERC jurisdiction (i) over Lessor or any of its Affiliates as a "public utility,"
as defm' ed by Section 201(e) of the Federal Power Act or (ii) over the Lease as a sale of electric energy at wholesale pursuant to Sections 205 and 206 of the Federal Power Act; and (5)
None of the Operative Documents give rise to the jurisdiction of the State of Vermont or any Authority or political subdivision thereof or any other Authority charged with regulating public utilities in any state (i) over Lessor or any of its Affiliates or (ii) over the Lease.
7.4.
Sponsor Contract Representations. Vermont Yankee represents and warrants as follows:
(a)
C.gpjes. The copies of the Sponsor Contracts provided to lessor pursuant to this agreement are true and complete. There are no amendments, modifications, change orders, agreements, discussions with Vermont Yankee or understandings (other than those set forth in such copies provided to Lessor) that affect or contemplate affecting any party's obligation under any Sponsor Contract.
(b)
Termination. The obligations of the Sponsors under the Power Contracts expire on December 31,2002. The Additional Power Contracts and the Capital Funds Agreements are in effect and the obligations of the Sponsors thereunder do not expire or terminate before March 21, 2012.
(c)
No Default or Excuse. No default has occurred and is i
continuing under any Sponsor Contract. No default would occur under any 24 i
mTsos.. s604766cm66 itiracas:493.x3x
Sponsor Contract after giving effect to the Transactions to occur on the date this representation is made. No event has occurred and no condition exists, nor would any result from the Transactions to occur on the date this representation is made, that would give any Person the right to terminate, delay, or not perform any of its obligations under any Sponsor Contract.
(d)
No Cancellation for Economic Reasons. Neither the Power Contracts, pursuant to Section 9 thereof, nor the Additional Power Contracts, pursuant to Section 10 thereof, can by their respective terms be cancelled due to a situation that could be rectified and no such situation which would permit such cancellation exists.
(e)
Cost of Service Tariff. Under the Cost of Service Tariff, all of Vermont Yankee's operating costs, as they may change from time to time, are automaticall passed through to its customers without the necessity of Vermont
/
Yankee mak'ng a rate filing with FERC pursuant to Section 205 of the Federal Power Act to reflect such changes in costs, except for costs associated with a change in the level of return or with the rate of accmal of decommissioning and depreciation charges.
7.5.
Construction Representations. Vermont Yankee represents and warrants as follows:
(a)
Authorization. The Construction Contracts have been duly authorized, executed and delivered by Vermont Yankee.
(b)
Effectiveness. The Constmetion Contracts are in full force and effect against all parties to them and are legal, valid and binding obligations of each party to them, enforceable against each pany to them in accordance with i
their tenns, subject to (i) applicat bankmptcy, Usolvency, reorgamzation, moratorium and other laws affecting the rights rf creditors genemlly, and (ii) the exercise of judicial discretion in accordancc with general principles of equity.
(c)
No Excuse. No event has oc;urred and no condition exists, nor would any result from the Tmnsactions to occur on the date this representation j
is made, that would give any Person the right to terminate, delay or not i
perform any of its obligations under the Construction Contracts.
(d)
Copiel. The copies of the Construction Contracts provided to Lessor pursuant to this agreement are complete. There are no amendments, modifications, change orders, agreements, assignments or understandings (other than those set forth in such copies provided to Lessor) that affect any party's obligation under the Construction Contracts.
25 NYFS08.. n6047660MTTE1117MGR82493.X3N
(e)
Force Maieug. No event or condition of force majeure has occurred and is continuing under the Constmetion Contracts. No such event, condition or excuse would result from the Transactions to occur on the date this representation is made.
(f)
No Default. No default has occurred and is continuing under the Constmction Contracts. No default would occur under the Construction Contracts after giving effect to the Transactions to occur on the date this representation is made. No pany to the Construction Contracts is subject to any bankmptcy, insolvency or other similar proceeding.
(g)
No Change Orders. Vermont Yankee has not amended the original Construction Contracts (except as set forth in the purchase order amendments delivered to Lessor prior to the date hereof), issued any new purchase orders or issued any change orders to any purchase order with respect to the Equipment.
7.6.
Performance Testing Representation. At and as of the Basic Term Commencement Date, Vermont Yankee will represent and warrant that the results of Performance Testing of the Equipment have indicated that the Equipment is expected to be capable of generating, in commercial operation on a continuing basis and in accordance with all Energy Rules, at least 540 megawatts of electricity, subject only to reduction for normal degradation, not to exceed 5 megawatts by the tenth year of operation.
8.
COVENA. TS.
V l
On and after the date hereof and so long as Lessor is obligated hereunder or i
any amount is payable to Lessor or any of its Affiliates by Vermont Yankee under this agreement or the Lease, unless waived by Lessor in writing:
8.1.
Reports. Vermont Yankee shall furnish to Lessor l
(a) within 90 days after the close of each of its fiscal quarters, (1) an unaudited balance sheet at the end of the quaner and statements of earnings and of changes in financial position for the quaner and for the period from the beginning of the fiscal year to the end of the quarter, all prepared in accordance with GAAP (subject to normal year-end adjustments),
(2) a cenificate of its chief financial officer that such financial statements were so prepared and either stating that no Default 26 TOT 508.. :i60\\47660t0766\\11ITAGR82493.X5N
has occurred or is continuing or describing the Default and the action it has taken, is taking or proposes to take, and (3) to the extent filed, a copy of its quanerly report on Form 10-Q filed with the SEC, including all exhibits thereto and all documents incorporated by reference therein-i i
(b) within 120 days after the close of each of its fiscal years, (1) a balance sheet at the close of the fiscal year and statements of income and retained earnings and of c6mgm in financial position for the fiscal year, all prepared in accordance with GAAP, l
(2) a cenificate of a firm of independent certified public accountants reasonably acceptable to Lessor that such financial
)
statements were so prepared, (3) a cenificate of its chief financial officer that such financial statements were so prepared and either stating that no Default has occurred or is continuing or describing the Default and the action it has taken, is taking or proposes to take, and (4) an opinion of counsel reasonably acceptable to Lessor stating that in the opinion of such counsel cenain action should be taken during the forthcoming fiscal year with respect to the recording, filing,
)
mgistering, rerecording, refiling and reregistering of the Operative j
Documents and financing statements and other instruments relating to the Operative Documents in order to establish, preserve and protect the rights, titles and intemsts of 12ssor intended to be created by the i
Operative Documents and reciting the details of such action or stating that in the opinion of such counsel no such action is necessary or desirable therefor.
(5) to the extent filed, a copy of its annual repon on Form 10-K filed with the SEC, including all exhibits thereto and all 1
documents incorporated by reference therein; (c) promptly after Vermont Yankee becomes aware of any of the following, a statement of Vermont Yankee's chief executive officer or chief financial officer setting forth details and the action taken, being taken or 1
proposed to be taken:
(1) a Default or any event or condition that if left uncorrected has a reasonable likelihood of resulting in a Default, j
27 NYFS08...:\\6@J7660V166\\l117\\ACR82493.X5N l
n (2) a Material Adverse Effect, (3) an ERISA Event, (4) the institution or threat (which threat has a reasonable possibility of resulting in the institution) of a Proceeding that could adversely affect the Equipment or result in a Material Adverse Effect, (5) any assertion that Vermont Yankee or the Equipment does not comply with a Rule or Permit in any material respect which has a reasonable possibility of resulting in regulatory action, (6) any Lien (including a Permitted Lien) on any right, title or interest in the Equipment, (7) any default under a Contract, or (8) any assertion that a Contract is not (or at any time that any obligation outstanding under a Transaction Document will not be) in full force and effect; (d) promptly after becoming aware that the representation in Section 7.3(g) would be inaccurate, a revised Schedule 2 that would make that representation true; (e) promptly but in any case within two Business Days after filing any document with the SEC, a copy of such filing; and (f) any other information, including financial statements and projections, that Lessor may reasonably request.
8.2.
Books and Records. Vermont Yankee shall keep adequate records and books of account (with respect to all its operations including the Equipment) in accordance with GAAP and sound business and accounting practice.
8.3.
No Other Business. Vermont Yankee shall engage in no business activities other than those necessary for or related to the operation of the Facility or those permitted by the cenificate of incorporation of Vermont Yankee as in effect on the date hereof.
8.4.
Taxes. (a) Vermont Yankee shall duly and timely complete and file all federal, state, local and foreign Tax returns.
28 NYFS08...:160;4766&O766tlll7\\AGR82493.X5N
(b)
Vermont Yankee shall duly pay all Taxes due for the periods covered by such returns or on any assessment it may receive, except those being contested by it in good faith if (1) it shall have either paid such Tax under claim for refund or established a bond or reserve at least equal to the Tax and any interest and penalties thereon, and (2) the nonpayment of the Tax does not have a Material l
Adverse Effect or result in a material risk of any Lien on the j
Equipment or other assets of Vennont Yankee.
(c)
Vermont Yankee shall establish adequate reserves for the payment of any and all accrued Taxes.
j 8.5.
Rules. Vermont Yankee shall comply with all Rules and all Permits, except those being contested by it in good faith.
j 8.6.
Liens. Vermont Yankee shall not permit any Lien (other than i
Permitted Liens) on any interest in the Equipment, its interest under the Constmetion i
Contracts, its leasehold interest, or any of 12ssor's interests.
8.7.
Awards. Except as may otherwise be required under any Energy Rule relating to insurance proceeds for damage to the Equipment, while any obligation shall be outstanding under the Transaction Documents, Vennont Yankee shall (or as long as the Indenture is in effect, instmet the Indenture Trustee to) pmmptly, and in any event within 10 days after receipt thereof, deposit with Lessor any Award it may receive.
8.8.
Location of Equipment. Vermont Yankee shall not permit any Equipment to be located at any place other than the Facility or its principal place of business, except that the Equipment may be in the possession of Contractor before delivery.
8.9.
Name and Place of Business. Vermont Yankee shall not change its name or adopt a trade name, nor shall it move its principal place of business from Vernon, Vermont or its chief executive office from Brattleboro, Vermont without providing at least 30 days prior written notice of such move to Lessor. Vermont Yankee shall not move its principal place of business or its chief executive office from Vermont.
8.10. Affiliate Transactions. Except in accordance with any Energy Rule, Vermont Yankee shall not engage in any transaction with any Affdiate except on 29 NYFS08... n60w?660!O'166il l l7%CR 82493.X5N i
terms at least as favorable to Vermont Yankee as could be obtained through arm's-length dealing.
8.11. Maintenance of Rights. Vermont Yankee shall maintain and defend the Sponsor Contracts and the Cost of Service Tariff and shall take no action to cause or permit (except as may be mandated by FERC) any of them to be modified, changed, amended, waived or terminated, in whole or in part, and shall enter into no separate agreements, including any agreement affecting Vermont Yankee's rates, that restricts Vermont Yankee's recovery of its costs, without the prior written consent of Lessor.
8.12. Contracts. Without the prior written consent of Lessor, Vennont Yankee shall not amend, modify, terminate or assign (except as may be mandated by FERC) any Contact (other than an assignment of the Sponsor Contracts pursuant to the Indenture) or waive compliance with, consent to variance from, or forebear from i
assening any right it may have or any obligation it may be owed under any Contract.
8.13. Construction. (a) Vermont Yankee shall diligently perform its obligations under the Constmetion Contracts and complete, install and test the Equipment in a good and workmanlike manner substantially in accordance with the plans and the standards set forth in the Construction Contracts, and in accordance with all Rules and Permits. Vermont Yankee's obligation under this paragraph (a) shall be discharged so long as the Constmetion Contracts shall be in full force and effect, neither pany thereunder shall be in default and Contractor shall be performing faithfully thereunder.
(b)
. Vermont Yankee shall use its best effons to cause each event described on Schedule 4 to occur on or before the date set forth for that event on Schedule 4.
(c)
Subject to all Energy Rules and Permits, Lessor at its expense may keep at the Facility an engineer who may review all plans, subcontracts, materials, invoices and work on the Equipment and any changes to any thereof, and who may monitor, witness and inspect the constmetion and installation of the Equipment and review and audit any records relating to the construction of the Equipment. Notwithstanding anything to the contrary herein or in any other i
Operative Document, no act or omission of such engineer shall in any way affect the obligations of Vermont Yankee, Contractor or any other Person, be deemed to be the acceptance of any defective work performed by Vermont Yankee, Contactor or any other Person, or be deemed to be a waiver of any rights against Vermont Yankee, Contractor or any other Person.
30 NYFS08..160\\47660 0766sI11hAGR82493.X5N
(d)
If Lessor shall request, Vermont Yankee shall, subject to all applicable Energy Rules and Permits, permit Lessor to attend any or all Performance Testing of the Equipment.
(e)
Vermont Yankee shall not amend the Construction Contracts, issue any new purchase orders or issue any change orders to any purchase order with respect to the Equipment after the date hereof without prior written notification to Lessor and receipt of written appmval from Lessor within five Business Days of such notification, such approval not to be unreasonably withheld by Lessor. Vermont Yankee shall not pay before it is due to be paid any amount under the Construction Contracts to Contractor.
(f)
Vermont Yankee shall maintain the Equipment in an uncontaminated condition at all times prior to its installation.
(g)
Vermont Yankee shall regularly provide to Lessor a repon on the progress of construction of the Equipment under the Constmetion Contracts.
8.14. Performance of Obligations. Vermont Yankee shall perform all its obligations under the Contracts and its other material obligations as they become due, subject to its reasonable rights to contest such obligations. Vermont Yankee shall diligently enforce all obligations owed to it under the Contracts and all of its other material obligations.
8.15. Inspection. (a) At any reasonable time after reasonable notice, and at any time during a Default, representatives of Lessor may, subject to all applicable Energy Rules and Permits (1) examine and make copies and abstracts of Vermont Yankee's records and books of account and any communications from any Authority, (2) visit and inspect the Equipment and the Facility, and (3) discuss Vermont Yankee's affairs, finances and accounts and the operation and maintenance of the Equipment with Vermont Yankee's officers, independent accountants and attorneys.
(b)
By this provision, Vennont Yankee directs its officers, independent accountants and attorneys to meet with lessor's representatives during any inspection pursuant to Section 8.15(a) and accurately discuss Vermont Yankee's affairs, regulatory matters, finances and accounts and the operation and maintenance of the Facility with Lessor's representatives.
31 NYrS08...:\\60',47660'.0766;11 thGR82443.X3N
8.16. Regulation. (a) Vermont Yankee shall take all actions as may be necessary so that neither Lessor nor any of its Affiliates shall, as a result of the Transactions, be subject to becoming an NRC licensee or to regulation as a public utility, a public utility company, an electric utility, an electric utility company, an electric company, an electric utility holding company or a public utility holding company, promptly upon its knowledge of the desirability of any such action and in any case promptly after receipt of notice thereof from Lessor.
l (b)
Vermont Yankee shall at all times maintain its status as a "public utility," as dermed by Section 2(a)(5) of the Public Utility Holding Company j
Act of 1935.
(c)
The entire output of the Facility shall at all times be sold exclusively at " wholesale," as defined by Section 201(d) of the Federal Power Act.
8.17. Regulatory Reports. (a) Vermont Yankee shall duly prepare and timely file any and all repons and other documents required to be filed with any Authority.
(b)
Whenever Vermont Yankee shall submit or receive any of the following NRC regulatory notices, reports or evaluations, it shall promptly provide a copy to Lessor:
)
(1) any notice of violation or response, (2) any notice of civil penalty or response, (3) any confirmatory action letter, (4) any licensee event report, on a quanerly basis,
)
(5) any SALP repon or response, (6) any enforcement order or enforcement conference notice, (7) any notice or record of Management Meetings and any monthly NRC statistical reports, (8) any evaluations by American Nuclear Insurers, (9) any notice ofimmediately reportable events, or (10) any report of a special or team NRC inspection, including, but not limited to, Operational Safety Team Inspections.
32 j
NYFS08-. :,60u?660s0766,t117\\AGR82493.X5N i
(c)
Upon the written request of Lessor, Vermont Yankee shall promptly provide all of the following information to Lessor:
i (1) quality assurance reports and quality assumnce trend
- reports, (2) management-level safety review and audit group or committee repons, (3) reports or findings of external quality assurance reviews, including combined utility assessment team reports, and (4) all pleadings and briefs by Vermont Yankee or any other party filed with FERC or any state regulatory commission in a proceeding that could affect Vermont Yankee or the classification of the Basic Rent under the Uniform System of Accounts.
(d)
Vermont Yankee shall promptly provide to lessor any notices filed with FERC or any state regulatory commission in a proceeding that could affect Vermont Yankee or the classification of the Basic Rent under the Uniform System of Accounts.
8.18. Further Assurances. At its own expense, Vermont Yankee shall take all action, shall execute and deliver all documents and assurances and shall record and file and rerecord and refile all notices, statements and other documents necessary or desirable, or reasonably requested by Lessor, to establish, maintain, protect and perfect (a)
Lessor's title to the Equipment, (b)
Lessor's interest in the Construction Contracts, and (c) the other rights, titles and interests that the Operative Documents intend to create against all parties to the Operative Documents and against all third parties, free of all Liens other than Permitted Liens. Vermont Yankee irrevocably appoints Lessor as Vermont Yankee's agent and attomey-in-fact to execute, deliver, record, file, rerecord or refile any and all documents necessary or desirable to establish, maintain, protect and perfect the foregoing.
8.19. Organization. Vermont Yankee shall maintain its existence as a valid corpomtion in good standing under the law of Vermont.
33 i
NY F 508... : \\oct47660i c766i 1117,AG R8:493.X5N I
I
_______________________________-_---_--_--_-_-----_-----------------------J
8.20. Merger. Vermont Yankee shall not merge, consolidate, dissolve, sell or lease all or substantially all its assets to any Person, unless, in each case, the successor corporation shall (a) assume, to 12ssor's satisfaction, Vermont Yankee's obligations under the Operative Documents, (b) have a stockholders' equity, after giving effect to such transaction, of not less than the stockholders' equity of Vermont Yankee immediately before such tmnsaction and (c) have long tenn debt rated not less than Baa by Moody's Investors Service or BBB by Standard & Poor's Corporation.
8.21. Operation of Facility. Vermont Yankee shall maintain all rights, power and authority necessary to own, lease, subject to Lien and operate the Facility and the other propeny it owns, leases or proposes to own or lease. Vermont Yankee shall operate the Facility in a prudent manner consistent with normal utility industry practice.
8.22. Permits. Vermont Yankee shall maintain in full force and effect the Permits listed on Schedule 2 and each other Permit that may be or become necessary or appropriate in connection with the Transactions or the operation of the Facility, W
and shall renew prior to its expiration each such Permit except where the failure to timely renew such Permit would not have a Material Adverse Effect.
8.23. Cooperation in Default. Upon any Event of Default, Vermont Yankee (a) shall, in addition to and not in lieu of taking any actions required under Article 9 of the Lease and the other Transaction Documents, cooperate in the preparation of, and suppon, insofar as is consistent with I
Vermont Yankee's obligations under the Facility's operating license and any Energy Rule, any application, request or petition by Lessor, whether before the NRC or any court of law, relating to Lessor's exercise of possession and control over the Equipment, and (b) shall refrain from taking any action, except as otherwise
{
required by any Rule, which is inconsistent with the exercise of Iessor's right l
under the Lease to obtain the use and possession of the Equipment, as I
permitted by any Energy Rule.
8.24. Environmental Matters. (a) Vermont Yankee shall cause the Equipment to be maintained and operated and the propeny on which it is located and the operations conducted thereon to be in compliance in all material respects with all applicable Environmental Laws and Environmental Permits.
(b)
Vennont Yankee shall not, and shall not cause any other Person to, manage, handle, store, genemte, recycle, reclaim, transpon or label any Hazardous Substances other than those used or generated at the Facility or any other 1
facilities owned, leased or operated by Vermont Yankee. Vermont Yankee shall 34 NYF508.. :<6047660566ullhAGR8:40LX5N
i manage, handle, store, generate, recycle, reclaim, transport, dispose and label any Hazardous Substances in accordance in all material respects with all applicable Environmental Laws and other Rules, and shall cause any Person who does any of the foregoing for any Hazardous Substance used or generated at the Facility to do so in accordance with all applicable Environmental laws and other Rules.
l (c)
Vermont Yankee shall retain only those third-pany independent j
contractors who are properly licensed by an Authority to provide the services they are retained to perform.
(d)
Vermont Yankee shall notify Lessor promptly, and in any event within ten days, of learning of any: (i) Release or threatened Release of any Hazardous Substance other than Hazardous Radioactive Substances on or fmm any J
propeny owned, operated or leased by Vermont Yankee that is reasonably likely to result in liabilities to Vennont Yankee in excess of $500,000 and any written order, notice, permit, application, or other communication or repon received by Vermont Yankee in connection with or relating to any such Release or threatened Release; (ii) written notice or claim to the effect that Vermont Yankee is or may be liable to any Person as a result of the Release or threatened Release of any Hazardous Substance l
other than Hazardous Radioactive Substances into the environment; (iii) receipt by I
Vermont Yankee of notification that any property of Vermont Yankee is subject to an Environmental Lien; (iv) any Remedial Action requiring the expenditure of more than
$500,000 taken by Vermont Yankee or any other Person in response to any Hazardous Substance other than Hazardous Radioactive Substances on, under or about any real pmperty owned, opented or leased by Vermont Yankee or involving any proposed capital expenditure of Vermont Yankee intended or designed to implement any existing or additional Remedial Action; (v) receipt by Vermont Yankee of any notice of violation of, or knowledge by Vermont Yankee that there exists a condition which may result in a violation by Vermont Yankee of, any Environmental law which is reasonably likely to result in liabilities to Vermont Yankee in excess of
$500,000; or (vi) any proposed acquisition of stock, assets or real pmpeny, or any proposed leasing of pmpeny by Vermont Yankee, unless such action is not reasonably likely to result in environmental liability in excess of $500,000.
8.25. Employee Plans. (a) With respect to other than a Multiemployer Plan, for each retirement plan hereafter adopted or maintained by Vermont Yankee or any ERISA Affiliate and intended to qualify under Section 401 of the Code, Vermont Yankee shall (i) seek, or cause its ERISA Affiliates to seek, and receive detennination letters from the IRS to the effect that such plan is qualified within the meaning of Section 401(a) of the Code; and (ii) from and after the adoption of any such plan, cause such plan to be qualified within the meanmg of Section 401(a) of the Code and to be administered in all material respects in accordance with the requiremeats of ERISA and Section 401(a) of the Code.
35 NYF508.. n6047660'0766\\l117AGR82493.X5N
~m.
(b)
With respect to each welfare benefit plan (as defined in Section 3(1) of ERISA) hereafter adopted or maintained by Vermont Yankee or any ERISA Affiliate, Vemiont Yankee shall comply, or cause its ERISA Affiliates to comply, with the notice and continuation coverage requirements of Section 4980B of the Code and the regulations thereunder.
(c)
Promptly and in any event within 60 days after Vennont Yankee or any ERISA Affiliate knows or has reason to know that a request for a minimum funding waiver under Section 412 of the Code has been filed with respect to any Plan, Vermont Yankee shall furnish to Lessor a written statement of the chief fmancial officer or other appropriate officer of Vennont Yankee describing such ERISA Event or waiver request and the action, if any, which Vermont Yankee or any ERISA Affiliate proposes to take with respect thereto and a copy of any notice filed with the PBGC or the IRS pertaining thereto.
(d)
Promptly and in any event within 60 days after the filing thereof by Vermont Yankee or any ERISA Affiliate, Vennont Yankee shall furnish to Lessor a copy of each annual report (Form 5500 Series, including Series B thereto) with respect to each Title IV Plan, and upon request by Lessor, with respect to any other Plan.
i (e)
Promptly and in any event within 30 days after receipt thereof, Vermont Yankee shall furnish to Lessor a copy of any adverse notice, detennination letter, ruling or opinion Vermont Yankee or any ERISA Affiliate received fmm the PBGC, the IRS or the U.S. Department of L. abor with respect to any Plan intended to qualify under Section 401 of the Code.
(f)
Promptly and in any event within 30 Business Days after receipt thereof, Vennont Yankee shall fumish to Lessor a copy of any correspondence Vermont Yankee or any ERISA Affiliate receives from the plan sponsor (as defined by Section 4001(a)(10) of ERISA) of any Multiemployer Plan concerning potential Withdrawal Liability of Vermont Yankee or any ERISA Affiliate, or notice of any reorganization, with respect to any Multiemployer Plan, together with a written statement of the chief financial officer or other appropriate officer of Vermont Yankee of the action which Vermont Yankee or any ERISA Affiliate proposes to take with respect theneto.
(g)
Promptly and in any event within 60 Business Days after the adoption thereof, Vermont Yankee shall furnish to lessor notice of any amendment to a Title IV Plan which results in an increase in benefits or the adoption of a new, welfare benefit plar; (as defined in Section 3(1) of ERISA) which Vermont Yankee or any of its ERISA Affliates maintains, contributes or has an obligation to contribute to, and which results 10 an increase in benefits for retirees or new benefits for retirem 36 NYFS08.. 960i47660W66\\lll7\\AGR82493.X5N
(h)
Promptly and in any event within 60 Business Days after receipt of written notice of commencement thereof, Vermont Yankee shall furnish to 12ssor notice of any action, suit or proceeding before any Authority affecting Vermont Yankee or any ERISA Affiliate with respect to any Plan, except those which, in the aggregate, if adversely determined could not have a Material Adverse Effect.
(i)
Promptly and in any event within 60 days after notice or knowledge thereof, Vermont Yankee shall furnish to lessor notice if Vermont Yankee or any of its ERISA Affiliates becomes subject to the tax on prohibited transactions imposed by Section 4975 of the Code, together with a copy of Form 5330.
(j)
With respect to each Title IV Plan, Vermont Yankee shall not, and shall not permit any ERISA Affiliate to, directly or indirectly permit the present value of all benefit liabilities (as defined in Title IV of ERISA and using reasonable actuadal assumptions used for funding purposes in Vermont Yankee's most recent actuarial valuation) to exceed the market value of assets allocable to such benefits by more than $10,000, all determined as of the most recent valuation date for each such Title IV Plan, or increase benefits to the extent that security must be provided to any Title IV Plan under Section 401(a)(29) of the Code.
9.
INSURANCE.
9.1.
Mandatory Insurance. Without limiting any of the obligations of Vermont Yankee under the Lease, Vermont Yankee shall maintain the following minimum insurance until the expiration or termination of the Lease, and thereafter, as provided specifically.herein. All such insurance shall be provided by insurers, in such forms and amounts and with such deductibles, as are acceptable to Lessor in its discretion.
(a)
All risk property insurance, including fire and extended coverage, collapse, flood, earthquake and sudden and accidental radioactive contamination. Such policy shall not exclude loss arising from mechanical breakdown, centrifugal force or explosion. Such policy shall not exclude loss dudng testing and shall not contain an exclusion for latent defect. Such policy stall be written on a repair or replace ' oasis with an agreed amount clause waiving any co-insurance penalty. Such policy shall be in an amount not less than the highest of (i) Stipulated Loss Value, (ii) the replacement cost of the Equipment and (iii) the Fair Market Sale Value of the Equipment; (b)
Comprehensive general liability insurance written in an amount not less than $15,000,000. Such coverage shall include but not be limited to premises and operations; explosion, collapse and underground hazard; broad 37 NYFS08. 247660ic766\\lil7 AGR82493 X5N
i 1
1 form contractual; independent contractor's; products and completed operations; broad form property; and personal injury; (c)
Nuclear liability insurance covering bodily injury and property damage arising from nuclear hazard written in the maximum amount available from private insurers and to the extent available the Secondary Financial Protection Program, until such time as Vermont Yankee is notified by Lessor that Lessor has no further real or potential liability in connection with the Lease; and (d)
Workers' compensation insurance writt'en with statutory limits and employer's liability insurance written in an amount not less than S15,000,000. Such policy shall not contain an exclusion for occupational disease.
9.2.
Requirements for Coverage. Insurance carried in accordance with Section 9.1 shall be endorsed to provide that:
(a)
With the exception of workers' compensation insurance, Lessor shall be an additional named insured with respect to the insurance provided in accordance with paragraph (a) of Section 9.1 and as an additional insured with respect to the insurance pmvided in accordance with paragraph (b) of Section 9.1 and included under the omnibus insured provision with regard to insurance provided in accordance with paragraph (c) of Section 9.1, with the
, understanding that Lessor shall not be responsible for any of the obligations of Vennont Yankee, including payment of premiums; (b)
With respect to insurance provided with respect to paragraph (a) of Section 9.1, Lessor shall be a loss payee and (on and after the Lease Commencement Date for the insurance referred to in Section 9.l(a) above) witn respect to the Equipment with lessor as sole loss payee; (c)
With respect to the insurance provided pursuant to paragraphs (b) and (c) of Section 9.1, such insurance shall be endorsed to provide that, inasmuch as such policy is written to cover more than one insured, all terms, conditions, insuring agreements and endorsements, with the exception of limits of liability, shall operate in the same manner as if there were a separate policy covering each insured; I
(d)
With respect to insurance provided with respect to paragraph (a) of Section 9.1, the interests of Lessor shall not be invalidated by any action or inaction of Vermont Yankee or any other Person and shall insure Lessor regardless of any breach or violation by Vermont Yankee or any other Person of any warranties, declarations or conditions of such policies; 38 NYFS08. 6600660i076611Il7%CR8:493.X5N i
(e)
All insurers shall waive all rights of subrogation against Lessor, any right of setoff and counterclaim and any right to deduction by attachment j
or otherwise; j
i (f)
All insurance shall be primary insurance without right of contribution of any other insurance carried by Lessor; (g)
If any insurance is cancelled for any reason whatsoever, including nonpayment of premium, or any substantial change is made which could have a Material Adverse Effect, such cancellation or change shall not be cffective as to Lessor until 30 days after receipt by Lessor of written notice sent by registered mail; and
)
(h)
No insurance provided pursuant to Section 9.1 shall lapse or be cancelled due to any bankmptcy, insolvency or other similar proceeding filed or initiated by or against Vermont Yankee.
9.3.
Contractor Insurance. Vermont Yankee shall cause Contractor to provide all risk property insurance and transit insumnce until the Equipment has been delivered to the Facility as provided by the Constmetion Contacts as in effect on the date hereof.
9.4.
Adjustment of Losses. Losses, if any, under any insurance required to be carried by paragraph (a) of Section 9.1 shall be adjusted with each insurer or othenvise collected, including the filing of that portion of the claim related to the Equipment by Vermont Yankee subject to the approval of lessor.
9.5.
Certification. At the Lease Commencement Date and at each policy renewal, but not less than annually, Vemiont Yankee shall provide to Lessor approved cenification from each insurer or by an authorized representative of each insurer where it is not practical for such insurer to execute the cenificate itself. Such certification shall identify the undenvriters, the type of insurance, the insurance limits, any deductibles and the policy term, and shall specifically list the special provisions enumerated for such insurance requimd by Section 9.2. Upon request, Vermont Yankee shall furnish lessor with copies of all insurance policies, binders and covemotes or other evidence of such insurance.
9.6.
Reports. Concurrently with the furnishing of the cenification referred to in Section 9.5, Vermont Yankee shall provide to Lessor the report of an independent insurance broker stating that all premiums then due have been paid.
Funhermore, Vermont Yankee shall advise Lessor promptly in writing of any default in the payment of any premiums or any other act or omission on the pan of any Person which might invalidate or render unenforceable, in whole or in pan, any insurance provided by Vermont Yankee hereunder. Iessor at its sole option may 39 NYFS08...:\\6047660\\0766\\ll17iAGR82493 X5N
obtain such insurance if not provided by Vermont Yankee and, in such event, Vermont Yankee shall reimburse Lessor upon demand for the cost thereof.
10.
RnT ADJUSTMENTS.
10.1. Adjustments for Changes in Assumptions. If any of the assumptions set forth in Appendix B changes, the amounts of Basi Rent and Stipulated Loss Value shall be adjusted in accordance with Section 10.4 to preserve Iessor's Net Economic Return; provided that, in the case of lease Transaction Costs, only 50% of any change thereof shall be taken into account for such adjustment.
10.2. Adjustments for Certain Tax Law Changes. (a) If any change in the Code or the regulations promulgated thereunder is enacted, promulgated or effective at any time from January 11,1994 to the Basic Term Commencement Date, and such change would affect lessor's Net Economic Return, then the amounts of Basic Rent and Stipulated Loss Value shall be adjusted in accordance with Section 10.4 to preserve Lessor's Net Economic Return.
l (b)
If at any time from January 11,1994 to the last day of the Basic Term there is a change in the maximum federal corporate regular income tax rate, either an increase or a decrease, that would affect Lessor's Net Economic Return, then Vermont Yankee's remaining Basic Rent and Stipulated Loss Value shall be adjusted in accordance with Section 10.4 to preserve Lessor's Net Economic Return.
10.3. Adjustments for Payments. If Vermont Yankee shall have indemnified Lessor pursuant to Section 12.3 for a Loss or Income Inclusion, or if lessor shall pay any of Lessor's Cost on or after the Lease Commencement Date, or iflessor shall receive any distribution of any Award on account of any Warranty on or after the Basic Term Commencement Date, then Basic Rent and Stipulated Loss Value shall be adjusted in accordance with Section 10.4 to preserve Lessor's Net Economic Return.
10.4. Preservation of Net Economic Return; Confirmation of 1
Adjustments. (a) Any adjustments to Basic Rent or Stipulated Loss Value shall be made so as to preserve lessor's Net Economic Return.
(b)
The amount of any adjustment pursuant to this Anicle 10 shall be determined by lessor, and Iessor shall provide a certificate to Vermont Yankee setting forth the amount of any such increase or decrease and confirming that the assumptions and methods of calculation employed in determining such adjustment were the same as those employed in the original calculation of Basic Rent and Stipulated less Value, except with respect to any changes in assumptions expressly permitted to be taken into account in making adjustments pursuant to this Anicle 10, 40 hTFS08. 660T47660i076611!!TAGRS2493.X5N
which changes in assumptions will be identified to Vermont Yankee. Such determination by Lessor shall be conclusive and binding absent manifest error.
11.
FEES AND EXPENSES.
11.1. Administrative Fee. Vermont Yankee has paid the administrative fee of $293,685. Tids administrative fee has been fully eamed by Lessor and is non-refundable.
11.2. Expenses. Vermont Yankee shall pay all its own out-of-pocket expenses incurred in connection with the preparation, negotiation, execution and delivery of the Transaction Documents and the consummation of the transactions contemplated thereby. Except as set forth herein, Lessor shall pay all Iease Transaction Costs. If a Casualty shall occur before the Basic Term Commencement Date, then Vermont Yankee shall pay or reimburse Lessor for 100% of Lease Transaction Costs in excess of $293,685.
11.3. Other Expenses. If, at any time, regardless of the existence of an Event of Default (except with respect to paragraphs (c) and (d) below, which shall be subject to an Event of Default having occurred and be continuing), lessor shall employ counsel or other advisors for advice or other representation or shall incur reasonable legal or other costs and expenses in connection with (a) any amendment, modification or waiver, or consent with respect to, any of the Operative Documents or advice in connection with the administration of the lease made pursuant hereto or its rights hereunder or thereunder; (b) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Lessor, Vennont Yankee, any subsidiary of Vermont Yankee or any other Person) in any way relating to the Equipment, any of the Operative Documents or any other agreements to be executed or delivered in connection therewith; (c) any attempt to enforce any rights of Lessor against Vermont Yankee, any subsidiary of Vennont Yankee or any other Person, that may be obligated to Lessor by vinue of any of the Operative Documents; (d) any attempt to verify, protect, collect, sell, liquidate or otherwise dispose of the Equipment; and (e) any attempt to obtain or enforce any Permit; 41 NY FS08... :\\ 60' 47660\\0766\\ l 117\\AG R 82493.X5N
then, in any such event,100% of the attorneys' and other advisors' fees arising from such services, including those of any appellate proceedings, and all expenses, costs, charges and other fees incurred by such counsel and other advisors in any way or respect arising in connection with or relating to any of the events or actions described in this Section shall be payable, on demand, by Vermont Yankee to Lessor. Vermont Yankee shall have the right to review, but not approve, any and all expenses incurred by Lessor which are to be paid for by Vermont Yankee under this Anicle 11.
12.
INDEMNTTIES.
12.1. General Indemnity. (a) Subject to Section 12.1(b), whether or not any of the transactions contemplated by the Operative Documents shall be consummated, the Indemnitor shall pay, and indemnifies and shall hold harmless, protect, defend and save each Indemnitee, on an After-Tax Basis, from and against any and all Expenses imposed on, incurred by or assened against the Equipment or any Indemnitee (whether because of an action or omission by such Indemnitee or otherwise), in any way relating to or arising out of (1) the Equipment or any pan thereof; (2) any Operative Document, or any Default or other default thereunder, or the administration or enforcement thereof, or any Transaction; (3) the construction, or negotiations or bidding in respect thereof, ownership, financing or refinancing, leasing, maintenance or operation of the Equipment or the sale of products or services there from or the entering into any Operative Document or any transaction contemplated hereby or any transaction contemplated hereby or thereby; (4) the regulation of the construction, ownership, leasing, maintenance or operation of the Equipment or the sale of products or services therefrom or the entering into any Operative Document or any Transaction; (5) any Environmental Claim, Environmental Lien or any Remedial Action arising out of or based upon anything relating to the Equipment or the real propeny owned, leased or operated by Vermont Yankee or its facilities located or operations conducted thereon; (6) any inaccuracy or breach of any representation or warranty made by or on behalf of Vermont Yankee that are set forth in the Operative Documents or in any report, cenificate, financial 42 NYF508.. ao0\\47660ic76611117AGR8:493.X5N
statement or instmment at any time delivered in connection therewith, or the failure of Vermont Yankee to perform any of its obligations under the Operative Documents; and (7) the Tmnsactions or the manufacture, financmg, construction, purchase, acceptance, rejection, ownership, acquisition, delivery, nondelivery, lease, sublease, preparation, installation, storage, maintenance, repair, transportation, transfer of title, abandonment, possession, rental, use, operation, condition, sale, return or other application or disposition of all or any part of any interest in the Equipment; including (A) claims or penalties arising from the violation of any Rule or liability in tort (strict or otherwise) or from the active or passive negligence of any Indemnitee, (B) loss of or damage to any property or the environment or death or injury to any Person, (C) latent or other defects, whether or not discoverable, and (D) any claim for patent, trademark or copyright infringement. Without limiting the foregoing, whether or not any of the transactions contemplated by the Operative Documents shall be consummated, Vermont Yankee shall pay (1) the ongoing fees, expenses and disbursements of any escrow agent, trustee or fiduciary and (2) all thini-pany costs and expenses incurred by any Indemnitee in connection with (x) any Default or Event of Default, (y) the entering into or giving or withholding of any amendment, supplement, waiver or consent with respect to any Operative Document or (z) any Casualty or any transfer of all or any part of the right, title and interest of any Indemnitee in the Facility or in, to and under any of the Operative Documents and (3) any and all Expenses incurred by any Indemnitee arising out of, in any way connected with, or as a result of, the execution, delivery or performance of any Operative Document or any investigation, negotiation or discussion of any claims or alleged claims reasonably believed to exist thereunder.
(b)
The indemnities contained in Section 12.l(a) with regard to any particular Indemnitee shall not extend to any Expense (i) to the extent resulting from the willful misconduct or gross negligence of such Indemnitee (other than willful misconduct or gross negligence imputed to such Indemnitee solely by reason of its interest in the Facility), (ii) to the extent resulting from the breach by such Indemnitee of any of its representations, warranties or covenants in any of the Operative Documents, (iii) to the extent such Expense shall relate to acts not attributable to the Indemnitor that occur after the date on which all obligations of Vermont Yankee shall have terminated hereunder and under the Transaction Documents so long as no Default shall have occurred and be continuing, (iv) arising out of the sale of the Equipment to any Person other than Vermont Yankee so long as no Default shall have occurred and be continuing, or (v) constituting Taxes.
43 NYF508. 660\\47660 076611117\\AGR82493.X5N
(c)
If an Indemnitee entitled to indemnity under this Section 12.1 shall have received written notice of any liability for which it is entitled to be indemnified against under this Section, it shall give prompt notice thereof to Vermont Yankee. Each Indemnitee shall notify Vermont Yankee of any negotiations relating to the settlement of any such liability. The failure to give notice under this paragraph (c) shall not affect any obligation under this Section unless and only to the extent Vermont Yankee is adversely affected by such failure.
(d)
If Vermont Yankee shall obtain knowledge of any Expense for which any Indemnitee may reasonably be expected to be indemnified hereunder, it shall promptly notify each Indemnitee entitled to be indemnified.
(e)
Vermont Yankee indemnifies each Indemnitee against and holds each Indemnitee harmless from all liabilities, Liens, claims and demands on account of any Alterations or replacement of Parts.
12.2. Nuclear Indemnity. (a) Neither Lessor nor any of its Affiliates shall have any liability to Vermont Yankee or its insurers pursuant to the Transaction Documents for any damage or contamination to any property located at the Facility due to nuclear energy hazard, and Vermont Yankee shall indemnify lessor and its Affiliates against any and all Expenses arising therefrom. As used in this Section
" damage due to nuclear energy hazard" means any loss, damage, or loss of use, 1
which in whole or in pan is caused by, arises out of, results from, or is in any way j
related, directly or indirectly, to the hazardous propenies of source, special nuclear or by-product material, as those materials are defined in the Atomic Energy Act of 1954 and any applicable regulations thereunder. Vermont Yankee shall purchase at fair market value any of Lessor's property other than the Equipment that becomes radioactive while at the Facility and that Vermont Yankee is unable to decontaminate l
for Unconditional Release.
(b)
Any nuclear decontamination necessary for Vermont Yankee's performance (including remedial warranty effons) shall be performed by Vermont Yankee at its sole expense and without cost to Lesscr.
12.3. Special Tax Indemnity. (a) Tax Assumotions. Iessor has entered into this transaction and the Basic Rent, Stipulated Loss Value and the Net Economic Return of Lessor with respect to the Equipment have been calculated on the basis of certain income tax assumptions set forth in this Section 12.3(a) (the " Tax Assumptions") including the following (it being understood that the Tax Assumptions may be revised in accordance with the facts in existence on the Lease Commencement Date and the Basic Term Commencement Date, and if the Tax Assumptions are so adjusted, the amounts of Basic Rent and Stipulated Loss Value will be adjusted in accordance with such revised Tax Assumptions pursuant to Section 10.1);
44 NYFS08.. :'60x47660\\0766\\1117%GR8:493.X5N
(1)
The Lease will be treated as a "true lease," Lessor will be treated as the owner and lessor of the Equipment, and Vermont Yankee will be treated as the lessee of the Equipment, for federal, state and local income tax purposes; (2)
For purposes of computing federal income tax cost recovery deductions with respect to the Equipment, lessor will use the Modified Accelerated Cost Recovery System ("MACRS") pursuant to Section 168 of the Code. For purposes of computing cost recovery deductions under MACRS with respect to the Equipment, Lessor's basis, within the meanmg of Sections 167(c),1011 and 1012 of the Code, in the Equipment is equal to the Equipment Cost (the " Basis");
(3)
Lessor will be entitled to federal income tax cost recovery deductions with respect to 100% of the Basis computed on the basis that Lessor will be entitled to use a 15-year recovery period, the 150 percent declining balance method (switching to the straight lin6 method) and the half-year convention, resulting in deductions equal to 5.00% of the Basis in its taxable year that includes the Basic Term Commencement Date, and amounts equal to 9.50%,8.55%,7.70%,
6.93 %, 6.23 %, 5.90 %, 5.90 %, 5.91 %, 5.90 %, 5.91 %, 5.90 %,
5.91 %,5.90%,5.91% and 2.95% of the Basis in its second through sixteenth taxable years, respectively, after the taxable year that includes the Basic Tenn Commencement Date, (the cost recovery deductions
~
described in this Section 12.3(a)(3) will be referred to as the " Federal Depreciation Deductions"); and I2ssor will be entitled to take the Federal Depreciation Deductions into account in computing its federal income tax liability pursuant to the Code and the regulations promulgated thereunder; (4)
Lessor will be entitled to cost recovery or depreciation deductions with respect to the Equipment for state and local income tax purposes at the times and amounts specified in Section 12.3(a)(3) (the
" State Depreciation Deductions"); and Lessor will be entitled to take the State Depreciation Deductions into account in computing its state and local income tax liability pursuant to the provisions of all relevant state and local income ta laws (the Federal Depreciation Deductions and the State Depreciation Deductions will be referred to collectively as the " Depreciation Deductions");
(5)
Current deductions will be allowed for amonization of an amount equal to Lease Transaction Costs paid by Lessor in respect of the Equipment pursuant to Section 11.2, computed on a straight line basis over the Basic Term of the Lease (the "Amonization 45 PO FS08...:\\60\\47660'0766\\11thAGR82493.X3N
Deductions"); and Lessor will be entitled to take the Amortization Deductions into account in computing its federal, state and local income tax liability pursuant to the Code and the regulations promulgated thereunder and the corresponding provisions of state and local income tax laws; (6)
The federal rate of tax on the taxable income of Lessor will be 35 % and the effective combined rate of tax imposed by all state and local taxing authorities on the taxable income of Lessor will be 2%
for a combined fedemi, state and local effective mte of 37%;
(7)
I2ssor shall not, for federal income tax purposes, be required to include in its gross income any amount with mspect to the transactions contemplated by the Operative Documents other than (i)
Basic Rent, in each case in the amounts specified in Secdon 3.1 of the Lease accmed ratably over the three-month period preceding each Rent Payment Date as such payments may be adjusted pursuant to Anicle 10, and Supplemental Rent; (ii) the amount of any payment of Stipulated Imss Value on the date such amount is paid under the Lease (but not earlier than the date on which such amount is required to be paid under the Lease) offset, as appropriate, by any associated tax basis; (iii) any amount paid to Iessor and specifically identified as interest on the date such amount is paid under the Operative Documents; (iv) any amount paid to Lessor under the Operative Documents on an After-Tax Basis; (v) any amount to the extent offset in the same taxable year of Lessor in which such amount is included in income by a related deduction of the same tax character, which deduction is not otherwise taken into account pursuant to this Section; and (vi) any income or gain from the rental, sale or other disposition of the Equipment, or any interest therein, after the expiration of the Lease Term (except an inclusion in income resulting in whole or in pan from a Default or Event of Default);
(8)
Lessor will be required to take into account all items of income, gain, loss and deduction in accordance with the accmal method of accounting and Lessor's taxable year that includes the Basic Term Commencement Date will be a full taxable year consisting of 12 months and each taxable year of Lessor thereafter will be the calendar year ending December 31; (9)
The Lease will not constitute a "section 467 rental agreement" within the meanmg of Section 467 of the Code; 46 NYFSC8.. 360 47660\\0766ill17\\AGR82493.X5N l
1
(10)
The Equipment is not " tax-exempt use property" as defined in Section 168(h) of the Code as of the Lease Commencement Date; Vermont Yankee is not, and will not become during the Lease l
Term, a " tax-exempt entity" as defined in Section 168(h)(2) of the Code; Vermont Yankee will not cause the Equipment to become tax-exempt use property during the Lease Term; the Equipment is not, and will not become during the Lease Term, " tax-exempt bond financed property" as defined in Section 168(g)(5) of the Code; (11)
The Equipment is not, and will not become during the Lease Term, property described in Section 168(f)(2) of the Code; and (12)
Each item of income, gain, loss, deduction and credit with respect to this transaction will be treated as derived from, or allocable to, sources within the United States, within the meamng of Section 861 of the Code and the regulations promulgated thereunder.
(b)
Intent. Lessor and Vermont Yankee intend that for federal, state and local income tax purposes, Lessor will be the owner of the Equipment and Vermont Yankee will be the lessee of the Equipment. Nothing herein shall be construed as creating, and the parties do not intend to create, a partnership or a joint venture between Lessor and Vermont Yankee.
)
(c)
Reoresentations. Warranties and Covenants of Vermont Yankee.
Vermont Yankee represents and warrants to, and covenants with, Lessor (the " Tax Representations") that for fedeal, state and local income tax purposes:
)
(1)
The fair market value of the Equipment will be an amount equal to the Equipment Cost; (2)
Assuming that Lessor is the owner of the Equipment for federal income tax purposes, Lessor will be entitled to Depreciation Deductions in accordance with Section 12.3(a), and on the Basic Term Commencement Date,100% of Lessor's Basis in the Equipment will consist of "15-year property," as such term is defined in Section 168(e) of the Code; (3)
Vermont Yankee will not at any time during the term of the Lease use or fail to use (including any use or failure to use by a 3
sublessee or assignee of Vermont Yankee) the Equipment in such a l
manner as to disqualify any part of the Equipment as 15-year property; (4)
The Equipment is not, and will not become during the Lease Term, property described in Section 168(f)(2) of the Code; J
j 47
)
NYFS08.. 360'47660\\0766\\lll7\\AGR82493.X5N I
(5)
The Equipment is not, and Vermont Yankee will not cause the Equipment to become during the Lease Term, " tax-exempt bond financed propeny" as defined in Section 168(g)(5) of the Code; the Equipment is not " tax-exempt use property" as defined in Section 168(h) of the Code as of the lease Commencement Date, Vermont Yankee is not, and will not become during the Lease Term, a " tax-exempt entity" as defined in Section 168(h)(2) of the Code, and Vermont Yankee will not cause the Equipment to become tax-exempt use property during the Lease Term. As of the Lease Commencement Date, Iessor will not be required to use the " alternative depreciation system" described in Section 168(g) of the Code and during the I2ase Term Vermont Yankee will not take any action or omit to take any action (including any action or omission by any sublessee or assignee of Vermont Yankee) that would cause Lessor to be required to use the alternative depreciation system; (6)
On the Basic Term Commencement Date, the Equipment will require no improvements, modifications or additions in order to be rendered complete for its intended use by Vermont Yankee and during the Ixase Term, Vermont Yankee will not make any Nonseverable Improvements; (7)
All information supplied by Vermont Yankee (or its Affiliates or any agent thereof) to Lessor and its appraiser with respect to the transactions contemplated by the Operative Documents was complete and accurate at the time given and as of the Lease Commencement Date and the Basic Term Commencement Date; (8)
The Equipment as designed and constmeted is a fully integrated and self-contained unit and each component of the Equipment is interrelated to the other components in terms of useful life, functions, stmeture and design; (9)
The Equipment will be placed in service for federal, state and local income tax purposes on or before the Basic Term Commencement Date; j
(10)
Neither Vermont Yankee nor any member of the Lessee Group shall have furnished or will furnish any pan of the cost of the Equipment in violation of the provisions of Revenue Procedure 75-21 or Revenue Procedure 75-28; (11)
Neither Vennont Yankee, any sub-lessee, nor any l
Affiliate, successor or assign of either of the foregoing will at any time 48 NYFSC8.. :s60\\47660566Till7\\AGR82493.X5N
take any action or take a position on any Tax retum, amended Tax return or claim for Tax refund or in connection with the examination of any Tax return, that is inconsistent with Section 12.3(b) hereof or a position taken by Lessor on its income tax returns in accordance with the Tax Assumptions, as they may be amended, and Vermont Yankee, any sub-lessee, and any Affiliates, successor and assigns of either of the foregoing will take such actions and execute such documents as Lessor may request, as may be reasonably necessary to facilitate the accomplishment of Lessor's entitlement to the benefits contemplated by the Tax Assumptions, as they may be amended, and Section 12.3(b) hereof; (12)
During the Lease Term, all amounts includable in the gross inconie of Lessor with respect to the transactions contemplated by the Operative Documents and all deductions and losses allowable to I2ssor with respect thereto shall be treated as derived from or allocable to, sources within the United States within the meaning of Section 861 of the Code; (13)
On the Basic Term Commencement Date, the Equipment will not constitute " limited use property" within the meaning of Revenue Procedure 76-30 and Vermont Yankee will not cause the Equipment to become limited use property during the Lease Term; (14)
No loss, damage, condemnation, confiscation, requisition, seizure or temporary or pennanent removal from service to or of the Equipment which does not constitute a Casualty will result in a Loss or Income Inclusion:
(15)
Vennont Yankee has not made, and wiu not make, any election pursuant to Section 168(b)(5) or Section 168(g)(7) of the Code with respect to the Equipment; and (16)
The Lease will not constitute a "section 467 rental agreement" within the meaning of Section 467 of the Code.
(d)
Indemnity for Loss of Deoreciation Deductions and Amonization Deductions. (1) If for federal income tax purposes, Lessor shall lose the benefit of, shall not have, shall lose the right to claim, shall not claim (as the result of a good faith determination by Lessor that such claim is not properly allowable), shall be delayed in claiming, shall suffer a disallowance or deferral of, or shall be required to recapture all or any ponion of, the Depreciation Deductions or Amonization Deductions, in each case as a result of (x) any act or failure to act of Vermont Yankee or any Affiliate of Vermont Yankee, (y) the breach or inaccuracy of 49 NYFs08.. es47660@66ill17MGR82493.X$N
any of the Tax Representations, or (z) the failure of Vermont Yankee to abide by its obligations under the Operative Documents, (any such event hereinafter referred to as a " Loss"), then, upon notice to Vermont Yankee, Vermont Yankee shall pay to Lessor, as an indemnity additional Rent on the next succeeding Rent Payment Date (as provided for in the Lease) that occurs at least 30 days after written notice to Vermont Yankee by Lessor of such Loss, an amount sufficient, on an After-Tax Basis, and after taking into account (i) the consequences of such Loss, (ii) present or future federal, state and local income tax benefits reasonably anticipated to be realized by Lessor as a result of such Loss or the circumstances resulting in such Loss, and (iii) all interest, penalties and additions to tax actually payable for federal, state and local income tax purposes as a result of such Loss, which in the opinion of Lessor, will preserve Lessor's Net Economic Return (as determined pursuant to Section 10.3) as if such Loss had not occurred. The amount of any Loss shall be determined by Lessor in its sole discretion and Lessor shall provide a certificate to Vermont Yankee setting forth the amount of such Loss and confirming that such Loss was calculated in accordance with this Participation Agreement. Any s'ibsequent reduction, deferral, loss recapture, offset or other disallowance of a deduction, credit or other tax benefit taken into account in computing any payment of additional Rent pursuant to this Section 12.3(d)(1) shall be treated as a Loss subject to indemnification by Vemiant Yankee pursuant to this agreement, without regard to subsections (1), (3), (4), (5), (6) and (7) of Section 12.3(g); provided, however, that any such Loss may entitle Vermont Yankee to receive payments in accordance with Section 12.3(d)(2) where the requirements of such Section are satisfied, in the same manner as any Loss hereunder.
In calculating the amount necessary to preserve Lessor's Net Economic Return under Section 12.3(d)(1) with respect to any Loss, it shall be conclusively presumed that (i) Lessor suffers a corresponding Loss for state and local income tax purposes at the same time and to the same extent it has suffered a Loss for federal income tax purposes, (ii) Lessor has sufficient income and tax liability to be able to utilize the Federal Depreciation Deductions, Amortization Deductions and State Depreciation Deductions on a current basis for federal, state and local income tax purposes, and (iii) Lessor is subject to federal, state and local income tax at the Assumed Tax Rate, except for purposes of computing the amount necessary to make an indemnity payment on an After-Tax Basis.
(2)
If Lessor, as the result of a IAss or an event giving rise to a Loss for which Vermont Yankee has indemnified lessor pursuant to Section 12.3(d)(1), shall realize, with respect to any year, federal, state and local income tax savings that would not have been realized but for such Loss, and such savings were not taken into account in determining the amount payable to Lessor under Section 12.3(d)(1) and provided no Default or Event of Default shall have occurred and be continuing, Lessor shall pay to Vermont Yankee an amount equal to the sum of such income tax savings (" Tax Savings") reahzed by Lessor plus the amount of any federal, state and local income tax savings actually realized (" Tax Savings Gross-Up")
50 NYFS08. C604766G07661111EAGR82493.X5N
as the result of any payment made pursuant to this sentence (such Tax Sav'ngs Gross-Up to be computed assuming Lessor is subject to fedeml, state and local income tax at the highest marginal statutory rates in effect for the relevant taxable year). If any amount payable by Lessor to Vermont Yankee pursuant to the preceding sentence is not paid when due because of the occurrence and continuation of any Default or Event of Default, such amount shall be payable by Lessor to Vermont Yankee, without interest, at such time as such Default or Event of Default is no longer continuing.
Notwithstanding any other provision of this Section 12.3, the sum of all offsetting tax reductions with respect to Losses described in this Section 12.3(d)(2) shall not exceed the sum of the indemnity payments theretofore received by Lessor from Vermont Yankee. Additionally, lessor shall not be obligated to make any payment due hereunder before such time as Vermont Yankee shall have made all payments and indemnities theretofore due to Lessor under the Operative Documents or any other agreements related to the transactions contemplated by the Opentive Documents.
For purposes of determining the amount of any Tax Savings (but not Tax Savings Gross-Up), it shall be conclusively presumed that (A) in such year (i)
Lessor has sufficient income tax liability for federal, state and local income tax purposes to benefit on a current basis from any increase in allowable deductions, losses, or credits which result fmm any event or condition which results in a Loss for which an amount has been paid pursuant to this agreement, and (ii) Lessor is subject to federal, state and local income tax at the Assumed Tax Rate, (B) state and local income taxes are fully deductible for federal income tax purposes, and (C) Lessor recognizes any state and local income tax benefit corresponding to the additional allowable federal income tax deductions or reductions in gross income that is generally allowable for state and local income tax purposes.
Any amount payable by Lessor pursuant to this Section 12.3(d)(2) with respect to any taxable year of Lessor shall be paid on or prior to the later of (A) 30 days after the end of the taxable year in which Lessor has obtained, or is deemed to have obtained, the Tax Savings described in this Section, and (B) 30 days after receipt by Lessor of the indemnity payment then due under this Section 12.3 with respect to the related Loss. Any subsequent reduction, deferml, loss, recapture, offset or other disallowance of any Tax Savings realized by Lessor for which Lessor has paid Vermont Yankee pursuant to this Section 12.3(d)(2) shall be treated as a Loss subject to indemnification by Vermont Yankee pursuant to this agreement, without regard to subsections (1), (3), (4), (5), (6) and (7) of Section 12.3(g); provided, however, that any such Loss may entitle Vermont Yankee to receive payments in accordance with this Section 12.3(d)(2) where the requirements of this Section 12.3(d)(2) are satisfied, in the same manner as any Loss hereunder.
(e)
Income Inclusions. (1) If, for federal income tax purposes, at any time Lessor is required to include in gross income any amount with mspect to the transactions contemplated by the Operative Documents other than the amounts 51 NYFS08.. 66047660ic766dl17\\AGR8:493.X5N
l specined in clauses (i) through (vi) of Section 12.3(a)(7) (hereinafter referred to as an
" Income Inclusion"), upon notice to Vermont Yankee, Vermont Yankee shall pay to Lessor as an indemnity, on the next succeeding Rent Payment Date, an amount equal, on an After-Tax Basis, to the product of (a) the amount required to be so included in Lessor's income, and (b) the highest marginal federal, state and local income tax rates in effect for the period in which Lessor suffers the Income Inclusion.
(2)
In the case of any Income Inclusion for which Vermont Yankee has paid an indemnity to Lessor pursuant to Section 12.3(e)(1) and subject to the immediately following sentence, if the aggregate income taxes paid by Lessor for any taxable year shall be less than the amount of such taxes which would have been j
payable by Lessor had no such Income Inclusion occurred, then within 30 days after the payment of any finalincome tax payment which reflects such reduction in taxes, Lessor shall pay to Vermont Yankee an amount equal to the sum of (x) the amount of such reduction of taxes (computed assuming that Lessor is subject to federal, state and local income tax at the highest marginal statutory rates (taking into account the extent to which state and local taxes are deductible for federal income tax purposes) in effect for the relevant taxable year) plus (y) the amount of any income taxes saved by Iessor as a result of its payment to Vermont Yankee of the amounts referred to in clause (x) of this Section 12.3(e)(2) and its payment to Vermont Yankee of amounts pursuant to this clause (y) (computed assuming that Lessor is subject to federal, state and local income tax at the highest marginal statutory rates in effect for the relevant taxable year); provided, however, that Lessor shall not be required to make any payment to Vennont Yankee pursuant to this Section 12.3(e)(2) while a Default or Event of Default shall have occurred and be continuing or to the extent that the deduction, credit or other tax benefit which would otherwise give rise to such a payment was applied against the amount included in income as the result of such Income inclusion pursuant to Section 12.3(e)(1) in order to determine the net amount of the indemnity payable by Vermont Yankee to Lessor in the taxable year in which the Income Inclusion occurred. Iessor shall not be obligated to make any payment pursuant to the preceding sentence to the extent that the amount of such payment would exceed the amount of all prior payments by Vermont Yankee to Lessor pursuant to Section 12.3(e)(1). Any subsequent reduction, deferral, loss, recapture, offset or other disallowance of a deduction, credit or other tax benefit realized by Lessor attributable to an Income Inclusion for which Lessor has paid Vermont Yankee pursuant to the preceding sentence shall be treated as a Imss subject to indemnification by Vermont Yankee pursuant to this agreement, without regard to subsections (1), (3), (4), (5), (6) and (7) of Section 12.3(g); provided, however, that
)
any such Loss may entitle Vennont Yankee to receive payments in accordance with Section 12.3(d)(2) where the requirements of such Section are satisfied, in the same manner as any Loss hereunder.
(f)
Contest Provisions. (1) If the IRS shall propose an adjustment in the federal income taxes of Lessor for which Vermont Yankee would be requeed 52 NYFS08. 660i47660'0766illl7\\AGR82493.X5N
to indemnify Lessor pursuant to this Section 12.3, Lessor shall notify Vermont Yankee thereof If the amount of such proposed adjustment would exceed $250,000 in the aggregate over the Lease Term, then, if requested by Vennont Yankee in a written request received by Lessor within 30 days after Lessor has notified Vermont Yankee of such proposed adjustna:nt, lessor shall request an opinion of independent tax counsel selected by Lessor ud reasonably acceptable to Vermont Yankee (" Tax Counsel"), the cost of which shall be borne by Vermont Yankee, as to vhether it is more likely than not that the position to be put fonh by Lessor in a contest of such proposed adjustment would prevail. If tt'e opinion is to the effect that it is more likely than not that Lessor s position wil' prevail and if Vermont Yankee promptly requests Lessor to do so within 30 days after receipt of such opinion, Lessor shall contest the proposed adjustment; provided, however, that Lessor shall determine in its sole discretion the nature of all action to be taken to contest such proposed adjustment including (i) whether any action to contest such proposed adjustment shall initially be by way of judicial or administrative proceedings, or both, (ii) whether any such proposed adjustment shall be contested by resisting payment thereof or by paying the same and seeking a refund thereof, and (iii) if Lessor shall undenake judicial action with respect to such proposed adjustment, the coun or other judicial body before which such action shall be commenced. Iessor agrees to consult in good faith with Vermont Yankee's counsel regarding the contest of such proposed adjustment, including choice of forum. Notwithstanding the preceding sentence, Lessor shall have full control over any contest pursuant to this Section 12.3(0 and shall not be obligated to pursue an appeal from any determination by any coun or administrative tribunal unless Vermont Yankee supplies Lessor, at Vermont Yankee's expense, with the opinion of Tax Counsel that it is more likely than not that such decision will be reversed on appeal; provided, however, that Lessor shall in no event be required to appeal an adverse decision to the United States Supreme Coun. At any time, whether before or after commencing to take the action set fonh in this Section 12.3(0, Lessor may decline to take any such action required by this Section 12.3(0 with respect to all or any ponion of a proposed adjustment by notifying Vermont Yankee in writing that Vermont Yankee is relieved of its obligation to indemnify Lesmr with respect to the proposed adjustment or such ponion, as the case may be. U on receipt of a I
reasonable request by Vermont Yankee, Lessor shallin good faith infonn Vermont Yankee as to matters relating to the proposed adjustment specithd in such request and shall, upon the reasonable request of Vermont Yankee, pmvide Vermont Yankee with copies of all written submissions (or the relevant portions thereoO tiled in connection with, and to the extent related to, the proposed adjustment; provided, _however, that lessor shall have full control over all matters pertaining to such proceedings and all such written submissions; provided further that any failure by Lessor to so inform Vermont Yankee (or to consult in good faith with Vermont Yankee's counsel regarding the contest) shall not subject Lessor to any liability or give rise to any legal or equitable rights in Vermont Yankee, and shall not reduce any obligation of 1
Vermont Yankee under this Article 12 or under the Operative Documents.
53 NYFSos... n60' 47660ur166\\ l l l 7MG R 82493.X5N
(2)
Notwithstanding any other provision of this Section 12.3(f), lessor shall not be required to take any action pursuant to this Section 12.3(f) unless and until: (I) Vermont Yankee shall have agreed to indemnify Lessor in a manner reasonably satisfactory to Lessor for any liability or loss which Lessor may incur as a result of contesting the validity of any proposed adjustment and shall have agreed to pay to Lessor on demand, on an After-Tax Basis, all costs and expenses that Lessor incurs in contesting such proposed adjustment (including legal and accounting fees, disbursements, penalties, interest and additions to tax) and shall have provided security acceptable to Lessor for the payment of such costs and expenses; (II) Vermont Yankee shall have acknowledged, admitted and agreed, in writing, to its indemnity obligations with respect to such proposed claim pursuant to this Section 12.3 and the inapplicability of any exclusion set forth in subsections (1), (3), (4), (5),
(6) and (7) of Section 12.3(g); (III) Vermont Yankee has made all payments of Basic and Supplemental Rent then due, including all payments then due under this Article 12; and (IV) the action to be taken will not result in any risk of the sale, forfeiture or loss of, or the creation of any Lien on the Equipment or any part thereof or any interest therein. Lessor also shall not be required to contest any proposed adjustment if the legal issue which is the subject of such proposed adjustment shall be of a continuing nature and shall have previously been decided adversely to Lessor in a Final Determination (as defined below) pursuant to the contest provisions of this Section 12.3(f), unless there shall have been a change in the facts or the tax law and Lessor shall have received a written opinion in form and substance reasonably satisfactory to Lessor of Tax Counsel to the effect that as a result of such change in facts or tax law the prior authorities aIe no longer determinative as to the outcome of a future contest. A " Final Determination" shall mean (A) a decision, judgment, decree or other order by any court of competent jurisdiction, which decision, judgement, or decree or other order has become final (iA, when all appeals allowable by law have been exhausted by the opposing party to the action), (B) a closing agreement entered into under Section 7121 of the Code, or any other settlement agreement entered into in connection with an administrative orjudicial proceeding, for any taxable year for which a judicial contest is unavailable to Lessor, or the highest level of administrative proceedings shall have been completed or (C) the expiration of the time for instituting a claim for refund, or if such a claim was filed, the expiration of the time for instituting suit with respect thereto.
(3)
If Lessor determines to contest any adjustment by paying the additional tax and suing for a refund, Vermont Yankee shall pay to Lessor an amount equal, on an After-Tax Basis, to the sum of any tax, interest, penalties and additions to tax which are required to be paid. Upon receipt by Lessor of a refund of i
any amounts paid by it based on the adjutment in respect of which amounts it shall have previously been paid funds by Vendent Yankee, Lessor shall pay to Vermont Yankee the amount of such refund (or such portion thereof as is properly allocable to the adjustment) together with any interest received by it with respect to such refund (or such portion).
l 54 NYFSos.. 660\\476604766\\ll17\\AGR12493.X$N
(g)
Exclusions from Indemnity. Notwithstanding anything to the contrary in this Section 12.3, Vermont Yankee will have no obligation to indemnify Lessor for any Loss or Income Inclusion if such Loss or Income Inclusion directly results from one or more of the following:
(1)
The failure of lessor to have adequate taxable income against which to claim the Depreciation Deductions or the Amortization Deductions; (2)
The failure of Lessor in its federal income tax returns for the appropriate years to elect or otherwise claim in a timely and proper manner the Depreciation Deductions or Amortization Deductions unless such failure (i) is due to Vermont Yankee's failure timely to provide Lessor with the information necessary to make such claim or election, (ii) is pursuant to the advice of Tax Counsel, or (iii) would be inconsistent with a Final Determination with respect to which Vermont Yankee is or was required to indemnify Lessor pursuant to this Section 12.3:
(3)
A voluntary transfer, assignment or other disposition by Lessor (acting as lessor or in some other capacity) of some, or all, of its interest in the Equipment, unless such disposition skil be pursuant to or in connection with the exercise of any remedy, right, requirement or obligation of such Lessor under the Operative Documents; (4)
A disposition by Lessor of its interest in the Equipment in a tansaction in which Stipulated Loss Value is payable and shall actually be paid except to the extent that the date as of which Lessor was affected for federal income tax purposes is earlier than the date assumed in calculating the amount of Stipulated Loss Value; (5)
Lessor being or becoming subject to Sections 465 or 469 of the Code, or to the alternative minimum tax; (6)
Any change in the Code (including any change in temporary, proposed or final regulations which is attributable to a change in the Code), which is enacted, promulgated or effective after i
the Basic Term Commencement Date, it being understood that any change in the maximum federal corporate regular income tax rate is govemed by Section 10.2(b);
(7)
The application of the "mid-quarter" convention within j
the meaning of Section 168(d)(4)(C) of the Code unless the date the 55 msos...e4mmiiivacas:4,3.xts
Equipment is placed in service occurs after September 30 and on or before December 31 of any year; Notwithstanding anything to the contrary in this Section 12.3, Vermont Yankee will have no obligation to indemnify a tansferee lessor for any Ioss or Income Inclusion to the extent of the excess of such Ioss or Income Inclusion over the amount of Loss or Income Inclusion that would have occurred had there not been a voluntary sale or other voluntary disposition by Lessor of the Equipment or any interest therein or part thereof.
(h)
Defm' ition of Lessor. For purposes of this Anicle 12, " Lessor" shall include any affiliated group of which Lessor, or its assignee or transferee (or a panner in such assignee or transferee if such assignee or transferee is a partnership) if an assignee or transferee (or a partner in such assignee or transferee if such assignee or transferee is a pannership) becomes lessor, is, or may become, a member if consolidated, joint or combined returns are filed for such affiliated group for federal, state or local income tax purposes.
(i)
Records and Statements. Vermont Yankee agrees to maintain sufficient records to verify the amount of income, deductions and credits in respect of the Equipment so as to provide lessor with such data as may be required to confmn amounts covered by this Section 12.3.
(j)
Interest. Except where otherwise provided herein, interest at the Default Rate shall be payable on any amount not paid when due hereunder until such amount shall be paid.
(k)
No Setoff. Except in accordance with the express terms hereof (a) no payment required to be made by Vermont Yankee pursuant to this agreement shall be subject to any right of setoff, counterclaim, defense, abatement, suspension, deferment or reduction, and (b) Vermont Yankee shall have no right to terminate this agreement, or to be released, relieved or discharged from any obligation or liability under this agreement for any reason whatsoever.
12.4. General Tax Indemnity. (a) Vermont Yankee agrees to pay and assume liability for and to indemnify, protect, defend, save and hold harmless each Indemnitee, on an After-Tax Basis, from and against any and all Taxes imposed against any Indemnitee, Vermont Yankee, the Equipment or any portion thereof or interest therein, upon or with respect to (i) the Equipment, or any portion thereof or interest therein, (ii) the replacement, storage, manufacture, financing, constmetion, purchase, ownership, acquisition, acceptance, rejection, delivery, nondelivery, possession, installation, transportation, lease, sublease, condidon, return, abandonment or other application or sale or disposition of the Equipment, or any portion thereof, (iii) the rental, use, operation, maintenance or repair of the 56 NYFS08.. 66047660'0766(1117AGR82493.X5N
Equipment or any portion thereof, (iv) the rental payments, receipts or earnings arising from the Equipment or any ponion thereof or payable pursuant to the lease, or (v) other than with respect to federal, state or local income taxes, the Operative Documents or otherwise with respect to or in connection with the execution or performance of the transactions contemplated hereby or the Equipment.
(b)
Without prejudice to the provisions of Section 12.3, the provisions of this Section 12.4 shall not apply to:
(1)
Taxes on, or measured by, net income (including related capital gains and withholding taxes (other than any withholding tax imposed under Section 1445 of the Code) and corporate franchise taxes) of an Indemnitee, imposed by the United States of America or any state, local or foreign taxing authority, except, in each case, sales, use, excise, propeny, ad valorem, intangibles, value-added or rental Taxes; (2)
Taxes on doing business (including those based on gross receipts) and Taxes on capital or net wonh, except, in each case, sales, use, excise, propeny, ad valorem, intangibles, value-added or rental Taxes; (3)
Taxes imposed on an Indemnitee solely as a result of the willful misconduct or gross negligence of such Indemnitee (other than willful misconduct or gross negligence imputed to such Indemnitee solely by reason of its interest in the Equipment);
(4)
Taxes imposed on an Indemnitee for any period, or with respect to any act or omission of such Indemnitee, occurring after the expiration or earlier tennination of the Lease, at a time when remedies are not being exercised under the Iease as a result of a Default or Event of Default that has occurred and is continuing, other than interest and penalties relating back to an event occurring prior to such expiration or earlier termination of the Lease; (5)
Taxes imposed on an Indemnitee resulting from the disposition of the Equipment or any ponion thereof or interest of such Indemnitee therein, other than as a result of a Default or Event of Default or otherwise pursuant to the terms of the Operative Documents; (6)
Taxes included in Lessor's Cost; (7)
Taxes imposed outside the United States or any political subdivision thereof on any transferee of an Indemnitee (A) if such Tax would not have been imposed on the original Indemnitee or (B) to the 57 NYFS08.. :404660\\0766\\1117\\ACR8:493.X5N
extent such Tax exceeds the Tax which would have been imposed on the original Indemnitee, unless such transfer shall have occurred during the continuance of a Default or Event of Default; and (8)
Taxes imposed in any jurisdiction solely as a result of an Indemnitee doing business in such jurisdiction.
(c)
Payment. The amount which Vermont Yankee shall be required to pay to or for the account of any Indemnitee with respect to any Taxes which are subject to indemnification under this Section 12.4 shall be an amount sufficient, on an After-Tax Basis, to restore the Indemnitee to the same position the Indemnitee would have been in had such taxes not been incurred or imposed. If the payment by Vermont Yankee under this Section 12.4 of an amount equal to such Taxes is less than the amoi.nt which would be required to make such Indemnitee whole as a result of (i) the inclusion of any payment to be made by Vermont Yankee under this Section 12.4 in the taxable income of any Indemnitee in one year and the deduction of the Taxes with respect to which such payment is made from the taxable income of such Indemnitee in a different year or (ii) the nondeductibility of such Taxes from the taxable income of such Indemnitee in the year in which such Taxes are paid by Vermont Yankee, the amount of the indemnity to be paid by Vermont Yankee shall be adjusted to an amount which (after taking into account all tax effects on such Indemnitee, any loss of use of money resulting from differences in timing between inclusion of such indemnity payment in the taxable income of such Indemnitee and the anticipated realization by such Indemnitee of tax benefits resulting from the transaction to which such indemnity payment is related and the present value of any anticipated future tax benefits to be reahzed by such Indemnitee as a result of deducting such Taxes) will be sufficient to place the Indemnitee in the same position such Indemnitee would have been in had such Taxes not been imposed. Computations involving the loss of use of money or calculations of present value shall be based on the 30-day commercial paper rate applicable to companies of the highest credit rating as published in The Wall Street Joumal at the time of such compilation or calculation as adjusted for applicable income tax effects and compounded on the Rent Payment Dates if on or after the Lease Commencement Date.
(d)
Returns: Time for Payment. (1) If any report, retum or statement is required to be filed with respect to any Tax that is subject to indemnification under this Section 12.4, then Vermont Yankee shall timely fde the same, either in Vermont Yankee's own name or as agent of an Indemnitee (which agency is hereby created solely for such purpose), provided, however, Vermont Yankee shall not file such, report, return or statement which (i) an Indemnitee has notified Vermont Yankee that such Indemnitee intends to file (in which event Vermont Yankee shall provide such Indemnitee with information sufficient to permit such report, return or statement to be made with respect to the transactions contemplated by the Operative Documents), (ii) is required to reflect matters not subject to 58 NYF 508... :\\60i47660\\0766\\l 117AC R 82493.X5N
I indemnification by Vermont Yankee pursuant to this Section 12.4, or (iii) is required to be reported on a return in the name of such Indemnitee reporting transactions unrelated to the transactions contemplated by the Operative Documents. Each Indemnitee shall furnish Vermont Yankee with such information, not within the control of Vermont Yankee, as is in such Indemnitee's control and is necessary to file such returns. Vermont Yankee either shall file any such report, return or statement as to show ownership of the Equipment in Lessor, as the case may be, and send a copy of such report, return or statement to Indemnitee and Lessor (ifIndemnitee is not Lessor), or, where not so permitted, shall notify Indemnitee and Lessor of such requirement and prepare and deliver such report, return or statement to such Indemnitee and Lessor in a manner satisfactory to such Indemnitee and Lessor within a reasonable time prior to the time such report, return or statement is to be filed.
Vermont Yankee shall, to the extent permitted by law, use its best efforts to cause all communications with respect to such Taxes to be made directly to Vermont Yankee, either in its own name or as agent of the Indemnitee. Vermont Yankee shall furnish copies of all repons or notices to any Indemnitee involved in the filing. When filing or preparing these reports, Vermont Yankee shall not take any position inconsistent with the characterization of Lessor as the owner of the Equipment for federal income tax purposes or inconsistent with the Basis of the Equipment being equal to the fair market value of the Equipment. Vermont Yankee shall furnish such information as any Indemnitee may reasonably require to comply with the requirements of any taxing jurisdiction. Any Indemnitee, if requested by Vermont Yankee (or Vermont Yankee, if requested by an Indemnitee), shall take reasonable steps to provide information (within such Indemnitee's or Vermont Yardiee's control, as the case may be) to consult with and to cooperate with Vennont i
Yankee (or the Indemnitee, as the case may be) regarding the manner in which any repon, return or statement should be filed.
(2)
Vermont Yankee shall pay all Taxes subject to indemnification under this Section 12.4 for which it files a return under Section 12.4(d)(1) directly to the appropriate taxing authority only and in a timely manner so as to avoid the imposition of penalties or interest. In the case of a Tax subject to indemnification under this Section 12.4 for which Vermont Yankee does not file a return under Section 12.4(d)(1), Vermont Yankee shall pay such Tax in immediately available funds to the appropriate Indemnitee within ten days after a demand that specifies in reasonable detail the payment and the facts upon which the right to payment is based.
Vermont Yankee shall provide to the appropriate Indemnitee the original or certified copy of a receipt for Vermont Yankee's payment of such Tax or such other proof of payment of such Tax as is reasonably acceptable to the Indemnitee.
59 NY F S08...:160W7660\\0766\\l117\\AGR82493.X5N
(e)
Contests. If a claim is made against any Indemnitee for any Taxes as to which Vermont Yankee shall have an indemnity obligation under this Section 12.4, whether on audit or otherwise, such Indemnitee shall promptly notify Vennont Yankee. If requested by Vermont Yankee in writing and upon reasonable notice, such Indemnitee shall in good faith, at Vermont Yankee's expense, contest in the name of such Indemnitee or if permitted by law and requested by Vermont Yankee, permit in its reasonable discretion Vermont Yankee to contest in the name of Vermont Yankee the validity, applicability and amount of such Taxes, in any such case, by (i) resisting payment thereof, if such Indemnitee in its reasonable discretion shall determine such course of action to be appropriate, (ii) not paying the same except under protest, if protest is necessary and proper, or (iii) if payment shall be made, using reasonable effons to obtain a refund thereof in appropriate administrative and judicial proceedings, provided that (A) prior to taking such action Vermont Yankee shall have agreed to indemnify such Indemnitee, on an After-Tax Basis, in a satisfactory manner, on demand, for all liabilities, costs and expenses which such Indemnitee incurs as a result of pursuing such contest, including (I) all legal, accounting and investigatory fees and disbursements and (II) the amount of any interest, penalties or additions to tax payable as a result of contesting such claim, (B)
Vermont Yankee shall have provided to Indemnitee an opinion of independent tax counsel selected by the Indemnitee and reasonably acceptable to Vermont Yankee, furnished at Vermont Yankee's sole expense, to the effect that a reasonable basis exists for contesting such claim (within the meaning of American Bar Association Fonnal Opinion 85-352 (or any successor thereto)) or, if an adverse determination with respect to such claim is to be appealed, that a reasonable basis exists for such appeal (within the meaning of American Bar Association Formal Opinion 85-352 (or any successor thereto)), (C) if such contest is to be initiated by the payment of, and the claiming of a refund for such Taxes, Vermont Yankee shall have loaned to such Indemnitee (on an interest-free basis) sufficient funds to make such payment, (D) such proceedings do not involve any risk or danger of the sale, forfeiture or loss of the Equipment (or any part thereof or interest therein), (E) Vermont Yankee shall have acknowledged and agreed in writing to its obligation to indemnify Indemnitee with respect to such claim pursuant to this Section 12.4 and the inapplicability of any exception set forth in Section 12.4(b) hereof, (F) the amount of such claim shall be in excess of $25,000 and (G) Indemnitee shall not be required to contest the imposition of such Taxes so long as Vermont Yankee has not made any payment of Basic or Supplemental Rent which is then due and payable or any indemnity payment pursuant to this Article 12 which is then due and payable. Notwithstanding anything in this paragraph to the contrary, in the case of propeny taxes imposed by the State of Vermont or any political subdivision thereof, Vermont Yankee may initiate a contest of such propeny taxes only if (x) such contest is initiated by the payment of, and the claiming of a refund for, such propeny taxes, (y) Vermont Yankee shall have loaned to the Indemnitee (on an interest-free basis) sufficient funds to make such payment, and (7) the requirements of subclauses (A) through (G) of this Section 12.4(e) are satisfied.
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1 Indemnitee shall supply Vermont Yr.be with such information requested by Vermont Yankee as is reasonably necessary for Vermont Yankee to conduct or panicipate in any proceeding to the extent permitted by this Section 12.4.
Vermont Yankee shall supply Indemnitee with such information reasonably requested by Indemnitee as may be reasonably necessary or advisable to enable Indemnitee to i
conduct or panicipate in any claim and shall keep Indemnitee informed of the progress of any case where Vermont Yankee shall be contesting such claim in its own name pursuant to this Section 12.4. Neinar the Indemnitee nor Vermont Yankee l
shall enter into a settlement or other compromise with respect to any Taxes, or forego or terminate any proceeding, without the prior written consent of the other pany, which consent shall not be unreasonably withheld.
i (f)
Refunds. If any Indemnitee shall obtain a refund of all or any l
pan of any Taxes payment of, or indemnity for which, shall have been made by Vennont Yankee pursuant to this Section 12.4, such Indemnitee shall, unless a Default or Event of Default shall have occurred and be continuing, promptly pay to l
Vermont Yankee (i) the amount of such refund (including interest thereon received from the relevant taxing authority and attributable to the Taxes for which Vermont Yankee shall have made payment pursuant to this Section 12.4) plus (ii) an amount equal to all the net tax benefits realized by such Indemnitee as the result of the payment of the amounts referred to in clause (i) above and this clause (ii).
12.5. Survival. No termination or expiration of this Participation Agreement or the Lease shall relieve Vermont Yankee of its obligations under this Anicle 12.
13.
ASSIGNMENT.
13.1. Assignment by Vermont Yankee. Vermont Yankee shall have no right to assign or transfer any or all its rights or obligations under any of the Operative Documents without the prior written consent of Lessor, which consent may be withheld in Lessor's sole and absolute discretion.
13.2. Assignment by Lessor. (a) Lessor shall have no right to sell, assign or transfer any or all its rights or obligations under any of the Operative Documents, except to an Affiliate, without the prior written consent of Vermont Yankee, which consent shall not be unreasonably withheld or delayed. Lessor may, without the consent of Vermont Yankee, create a Lien on, all or any part of its rights, titles, interests and obligations under any Transaction Document. If Lessor sells, assigns or transfers all its rights and interests hereunder (in one or more transactions), Lessor shall without further act be released from its obligations under the Operative Documents and all other obligations to the panies thereto.
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(b)
Venncnt Yankee agrees, in each case at Lessor's expense, (i) to cooperate with lessor and its Affiliates to effectuate any transaction permitted pursuant to this Section 13.2 and (ii) to take all actions, necessary or desirable, as may be reasonably requested by lessor or any of its Affiliates in connection with any such transaction. Such actions may include cooperation in the preparation of an l
offering circular or memorandum or similar document and other materials to be used in connection with any such transactions with each pany agreeing to provide a standard indemnity to the other against any liabilities that may arise or be asserted by any Person relating to information therein that relates to such party or is supplied by it for inclusion therein. The foregoing indemnity by each pany shall be limited to those documents or materials that such party shall have approved before distribution (which approval shall not be unreasonably withheld or delayed) and cooperation in the preparation and execution of any transfer or other agreements to be used in connection with such transaction (including any required consents relating thereto).
(c)
No party shall have any obligation to register, or to register any securities, under any federal securities laws in connection with any such offering.
62 NYFS08,. '6047660T60'1117MGRt:493.X5N
IN WITNESS WHEREOF, the undersigned parties have each caused this agreement to be fully executed as of the date first written above.
VERMONT YANKEE NUCLEAR POWER CORPORATION By:
6/t3^vec it' WQcf f Nan 5e:
Title:
h< l'mde b - fasanc, rre m a te
TIFD VIII-H INC.
'01sm Co f $ ka bffr By: 1 t
Nime:
Title:
Y;c < [/e,[lt P f
63 NY FS08...:\\60i47o60C766ti l l7\\A C R 82493. X5N
Appendix A to the Panicipation Agreement and the Lease DEFINTTIONs AND USAGE Definitions
" Additional Power Contracts" means the Additional Power Contracts, each dated as of February 1,1984, between Vermont Yankee and each of the Sponsors.
" Affiliate" of any Person means any other Person directly or indirectly controlling, directly or indirectly controlled by or under direct or indirect common control with such Person.
" After-Tax Basis" means, with respect to any payment received or deemed to have been received or accrued by any Person, the amount of such payment supplemented by a funher payment to that Person so that the sum of the two payments shall, after deduction of all applicable Taxes and other charges (taldng into account any current credits or current deductions arising therefrom and computed at the highest marginal statutory tax rates) resulting from the receipt (actual or constnictive) or accrual of such two payments imposed under any Rule or by any Authority, be equal to such payment received or deemed to have been received or accrued.
" Alteration" means any improvement, alteration, modification or addition to the Equipment, other than replacement of Parts.
" Amonization Deductions" is defined in Section 12.3(a)(5) of the Panicipation Agreement.
" Assumed Tax Rate" for any taxable year means the maximum federal corporate regular income tax rate in effect for such taxable year plus a state and local tax rate of 2%.
" Authority" means any federal, state, local or foreign govemmental entity, authority, agency, board, court, tribunal, regulatory commission or other body, whether legislative, judicial or executive (or a combination or pennutation thereof) having jurisdiction of the relevant subject matter, and any Person with authority to decide a Proceeding.
NYFS08.. n6047660@66i1117APD82493.X1N
i
[
" Award" means (a) any proceeds of any insurance (other than liability insurance) required by a Transaction Document to the extent applicable to the Equipment; (b) any proceeds of any insurance (other than liability insurance) carried by Vermont Yankee covering Damage to the Equipment; (c) any recovery under ar.y Warranty; (d) any money or other property (including condemnation awards) received in respect of any Damage to the Equipment (other than Lessee's payment of Stipulated less Value).
l
" Basic Rent" means, for the Interim Term and the Basic Term, the rent payable pursuant to Section 3.1 of the Lease and, for the Renewal Term, the rent payable pursuant to Section 4.4 of the Lease.
" Basic Term" means the period beginning on the Basic Term Commencement Date and ending on the tenth anniversary of the Basic Term i
Commencement Date, or such shorter period as may result from earlier terminadon of the I2ase as provided therein.
" Basic Term Commencement Date" means the date on or before June 30,1995 by which all of the conditions in Article 6 of the Panicipation Agreement shall have been satisfied or waived by lessor and the Basic Term of the Lease commences.
" Basis" is defined in Section 12.3(a)(2) of the Participation Agreement.
" Bill of Sale" means a bill of sale for the Forging in the form of Exhibit C to the Panicipation Agreement, dated the Lease Commencement Date, from Vermont Yankee to Lessor.
i
" Business Day" means any day on which banks are required or
'i authorized to be open in New York City.
" Capital Funds Acreements" means the Capital Funds Agreements, each dated as of Febmary 1,1968, as amended, between Vermont Yankee and each Sponsor.
"C_asualty" means any of the following events:
l l
i 7
NYFS08. 6604766050766ullTAPD12493.X1N
(a)
Damage to the Equipment or the Facility so that either shall be beyond repair, or shall be uneconomical to repair, or shall be a total loss, or cannot practically be used for its intended purposes, or shall be unfit for normal use for longer than 270 days; (b)
Damage to the Equipment or the Facility that results in an insurance settlement on the basis of a total or constructive total loss; (c)
Damage to the Equipment or the Facility or to any pan of the Equipment or the Facility resulting in a loss of normal use of the Equipment or the Facility for longer than 270 days;
]
(d)
Lessor or any of its Affiliates being deemed by any Authority or by the operation of any Rule to be, or to be subjected to regulation as, a public utility, a public utility company, an electric utility, an electric utility company, an electric company, an electric utility holding company or a public utility holding company under any Rule or being subject to any regulation relating to nuclear facility, equipment or fuel if in the opinion of such pany m its sole discretion such regulation shall be deemed burdensome with respect to its normal business operations; (e)
Any of the events described in clauses (i), (ii) or (iii) of Section 9 of the Power Contracts or clauses (i), (ii) or (iii) of Section 10 of the Additional Power Contracts; (f)
The Facility shall not be capable of producing to capacity for any period of nine consecutive months; (g)
Any change in any Energy Rule or Permit or any action by any l
Authority the effect of which is or has a reasonable possibility to be to (1) make any of the Transactions unauthorized, illegal or otherwise contrary to any Energy Rule, (2) impede, to any extent exceedmg that arising under all applicable Rules on the date of the Panicipation Agreement, the exercise of any right or remedy of Lessor under the I2ase, or (3) constitute an assenion that the exercise of any right or remedy under the Lease or any other Operative Document is impennissible control over the Equipment within the meaning of the Atomic Energy Act, (h)
Lessor's status as an " exempt wholesale generator" granted by
)
FERC pursuant to Section 32 of the Public Utility Holding Company Act of 1935 is revoked; i
(i)
FERC asserts jurisdiction by vinue of the Lease over Lessor or any of its Affiliates as a "public utility," as defined by Section 201(e) of the 3
NYF S08...:io04766010766\\ l l 17\\A PD 8N93.X 1N I
Federal Power Act or over this Lease as a sale of electric energy at wholesale pursuant to Sections 205 and 206 of the Federal Power Act; (j)
The State of Vermont or any Authority or political subdivision thereof or any other Authority charged with regulating public utilities in any state asserts jurisdiction by vinue of the Lease over Lessor or any of its Affiliates or over the Lease; (k)
The NRC, prior to the lease Termination Date, asserts jurisdiction by vinue of the lease or any other Operative Document over Lessor or any of its Affiliates or any change in any Rule or Permit results in Lessor or any of its Affiliates being or potentially being required to become a licensee under the Atomic Energy Act or subject to any obligation or liability thereunder; (1)
Any amendment, supplement or modification of a Sponsor Contract mandated by FERC that has a Material Adverse Effect; (m)
Lessee is unable to return the Equipment when due under the Lease in accordance with Section 11.1 or 11.2; (n) The Basic Term Commencement Date has not occurred on or before June 30,1995; or (o) Prior to the Basic Term Commencement Date, the actual Equipment Cost plus the remaining amounts required to be paid under the Construction Contracts plus Lease Transaction Costs exceed $33,368,519.
" Code" means the Internal Revenue Code of 1986.
" Conditional Release" means, at the time of release, the stricter of (i) the then strictest standard collectively required by all federal Rules or Pennits, and all state Rules or Pennits of states through which Lessor designates that the Equipment will be tmnsported and in which it will be used, applicable to the transportation of the Equipment by common carrier and the release of the Equipment from the Facility, for use in a facility designated by Lessor which is licensed by the NRC for use of radioactive material and (ii) the level of loose radioactivity on all accessible areas of an item by dry smear test is not more than 1,000 disintegrations per minute per 100 square centimeters and fixed contamination on all accessible areas is not more than 1 mr/hr using an open window survey at I centimeter.
" Construction Contmets" means the contract between Vermont Yankee and Contractor for Irw Pressure Turbine Retrofit Project, numbered 4
NYFS08.. :'60;47660@66il117%PD8:493.X1N
VY-0293-02, and the contract between Vermont Yankee and Contractor for Nuclear Power Plant Parts and Services, each effective March 5,1993, as they relate to Vermont Yankee purchase order no. 93-55202-00.
". Construction Contracts Assienment" means an assignment by Vennont Yankee to Lessor of all of Vermont Yankee's rights under the Construction Contacts, in substantially the form of Exhibit M to the Participation Agreement.
I
" Contractor" means the General Electric Company, a New York corporation, acting through its Power Generation Division.
" Contractor Consent" means the Contractor Consent, dated the Lease Commencement Date, executed by Contractor, in the form of Exhibit B to the Participation Agreement.
l
" Contracts" means the Construction Contracts and the Sponsor Contracts.
I
" Cost of Service Tariff" means the Sponsor Contracts, filed as Rate Schedule No. F.P.C. I with the FERC on August 21,1972 and effective September 20, 1972, as amended from time to time.
"Damace" means any loss, damage, destruction, theft or disappearance; any loss of or interference with use (including as a result of any Rule or any other l
actior3 y any Authority); or any condemnation, confiscation, requisition or seizure of b
any nght, title, interest or use.
1 l
" Default" means an Event of Default or an event or condition that with notice or time would become an Event of Default.
" Default Rate" on any day means 2.00% plus the Prime Rate for such day.
" Delivery Date" means the date title transfers from Contractor to Lessor pursuant to the Construction Contracts.
l
" Depreciation Deductionj" is defined in Section 12.3(a)(4) of the Participation Agreement.
"Enerev Rule" means the Atomic Energy Act of 1954, the Public Utility Holding Company Act of 1935, the Federal Power Act, all rules, regulations and orders promulgated under or issued pursuant to any of the above, and any other Rule that is or may be applicable to any of the Operative Documents, the Facility or the Equipment.
5 j
NYFSOS. 060147660C66tt117aPD12493.X1N i
l
" Environmental Claim" means any written allegation, notice of violation, action, claim, Environmental Lien, demand, abatement or Environmental Order or direction (conditional or othenvise) by any Authority or any other Person for personal injury (including sickness, disease or death), tangible or intangible propeny damage, damage to the environment, nuisance, pollution, contamination or other adverse effects on the environment, or for fines, penalties or restrictions resulting from or based upon (i) the existence of a Release (including, without limitation, sudden or non-sudden accidental or non-accidental Releases) of, or exposure to, any Hazardous Substance or other chemical, material, pollutant, odor, audible noise, or other Release in, into or onto the environment (including, without limitation, the air, soil, surface water or groundwater) at, in, by, from or related to the Equipment or any propeny owned, operated or leased by Vermont Yankee and any activities or operations thereof; (ii) the environmental aspects of the transponation, storage, treatment or disposal of Hazardous Substances in connection with any propeny owned, opented or leased by Vermont Yankee or its operations or facilities; or (iii) the violation, or alleged violation, of any Environmental Laws, Environmental Orders or Environmental Permits of or from any Authority relating to environmental matters connected with the Equipment or any propeny owned, leased or operated by Vermont Yankee.
" Environmental Laws" means any federal, state or local Rule now or in effect relating to the environment, to natural resources, to public health or 1 -
sancty or to occupational safety and health, or to handling, storage, emissions, discharges, Releases or threatened Releases of Hazardous Substances into the environment, including ambient air, surface water, ground water or land, or othenvise relating to the manufacture, processing, distribution, use, treatment or disposal of Hazardous Substances (including, without limitation, the Clean Air Act, the Clean Water Act, the Safe Drmkmg Water Act, the Resources Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Toxic Substances Control Act, the Hazardous Materials Transportation Act, the Federal Insecticide, Fungicide and Rodenticide Act, the Oil Pollution Act of 1990, the Atomic Energy Act, the Nuclear Waste Policy Act, the Occupational Safety and Health Act, all regulations promulgated pursuant thereto, and all analogous state or local statutes).
" Environmental Lien" means any Lien in favor of any Authority for Environmental Claims and/or Remedial Actions.
" Environmental Order" means any order, injunction, judgment, decree, mling, assessment or arbitration award issued under or pursuant to any Environmental Law.
I 6
I NY T508.. n6047660' 0760\\ l ! ! 7%PD82493.X 1 N i
i
1 l
" Environmental Permit" means any Permit required under any applicable Environmental 12w or Environmental Order and all supporting documents associated therewith.
"Eauioment" means the two low-pressure steam turbines to be constnicted by Contractor and installed at the Facility under the terms of the Construction Contracts, including all Pans thereto and the Forging.
"Eauioment Cost" means all costs and expenses (other than those paid with proceeds of insurance) paid or incurred or to be paid or incurred by Vermont Yankee or Lessor under the Constniction Contracts or for the development, design, engineering, acquisition, construction, erection, assembly, inspection, testing and completion of the Equipment (including the purchase price of the Forging) that are properly included in the basis of the Equipment under the Code.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means any Person or any trade or business (whether or not incorporated) that is a member of a group of which Vermont Yankee is a member and which is treated as a single employer under Section 414 of the Code or Title IV of ERISA.
"ERISA Event" means (a) with respect to any Title IV Plan, a reportable event (as described in Section 4043(b)(9) of ERISA or 29 C.F.R. 66 2615.11,2615.16, 2615.17, 2615.21, 2615.22 and 2615.23) or an event described in Section 4068 of ERISA, (b) in the case of any Title IV Plan described in Section 4063(a) or 4064(a) of ERISA, the incurrence of liability under Section 4063 or Section 4064 by Vennont Yankee or any ERISA Affiliate, (c) with respect to any Multiemployer Plan, any event which could permit the assessment of Withdrawal Liability on Vermont Yankee or any ERISA Affiliate or receipt of notice of reorgamzation or notice of intent to terminate any Title IV Plan pursuant to Section 4041(c) of ERISA or the treatment of any amendment to any such plan as a tennination thereof pursuant to Section 4041 of ERISA, or (d) any other event or condition which could reasonably constitute grounds under Section 4042 of ERISA for the termination of any Title IV Plan.
7 NYFS08... :\\6047MO O766\\ t 117\\APD82493.X I N
" Event of Default" is defined in Article 13 of the Lease.
" Expense" means any liability (including any liability arising out of the doctrine of strict liability), obligation, loss, damage, penalty, claim, action, suit, judgment, cost, expense or disbursement, including reasonable legal fees (including attorneys' fees and paralegals' fees) and disbursements and expenses and costs of investigation, incurred in any litigation or any bankruptcy or any administrative proceeding and in each case any appeals therefrom, whether or not any of the foregoing be founded or unfounded, of whatsoever kind and nature (other than Taxes).
" Facility" means the Vermont Yankee Nuclear Power Station located in Vernon, Vermont.
" Fair Market Rental Value" means the fair market monthly rental value that would be obtained in an arm's-length transaction between an informed and willing lessee and an informed and willing lessor, in either case under no compulsion to lease, for the lease of the Equipment and shall be detennined on the basis that Lessee has and will have complied with the requirements of the Izase and each other Operative Document to which it is a party.
" Fair Market Sale Value" means, with respect to the Equipment, or any portion thereof, the fair market value as presently installed of the Equipment or such portion, that would be obtained in an arm's-length transaction between an informed and willing buyer and an informed and willing seller, under no compulsion, respectively, to buy or sell, and such value shall be determined without reduction for any cost that might be incurred to dismantle and decontaminate the Equipment as required by Section 9.3(b) of the Lease.
" Fair Market Sale Value Upon Renewal" means, with respect to the Equipment, or any portion thereof, the fair market value of the Equipment or such portion, that would be obtained in an arm's-length transaction between an informed and willing buyer and an informed and willing seller, under no compulsion, respectively, to buy or sell, and such value shall be detennined without reduction for any cost that might be incurred to dismantle and decontaminate the Equipment as required by Section 9.3(b) of the Lease.
"Fedeml Deoreciation Deductions" is defined in Section 12.3(a)(3) of the Participation Agreement.
"FERC" means the U.S. Federal Energy Regulatory Commission or, if the context requires, its pmdecessor, the U.S. Federal Power Commission.
8 NYFS08.. d60i47660766\\lllTAPD82493.XIN
i
" Final Determination" is defined in Section 12.3(f)(2) of the Participation Agreement.
"Foreing" means the low-pressure turbine monoblock rotor forging sold, or to be sold, to Lessor by Vermont Yankee pursuant to the Bill of Sale.
"GAAP" means generally accepted accounting principles in effect from time to time in the United States, consistently applied by the accounting enticy to which they refer.
"GE Capital" means General Electric Capital Corporation, a New York corporation.
" Hazardous Radioactive Substance" means any substance, material or waste, including, without limitation, real property and equipment (collectively,
" substance"), to the extent that substance is contaminated by radioactivity, is located on the Facility, and is subject to regulation and a plan of disposal, decontamination and decommissioning under the Atomic Energy Act, as amended.
" Hazardous Substance" means any substance, material or waste which is regulated by any Authority in the jurisdictions in which Vermont Yankee conducts business or the United States, including, without limitation, any material or substance which is defined as a " hazardous waste", " hazardous material", " hazardous substance", " extremely hazardous waste", " restricted hazardous waste",
" contaminant", " toxic waste" or " toxic substance" or regulated under any provision of any Environmental Law, including but not limited to, petroleum, petroleum products, asbestos, urea formaldehyde, radioactive materials and polychlorinated biphenyls.
i i
" Income Inclusion" is defined in Section 12.3(e)(1) of the Participation
" Indemnitee" means lessor and its Affiliates, successors, assigns, I
servants, directors, officers, employees, representatives, shareholders and agents.
" Indemnitor" means Vermont Yankee.
i
" Indenture" means the First Mongage Indenture, dated as of October 1, 1970, between Vermont Yankee and the Indenture Tmstee, as amended from time to time.
" Indenture Trustee" means Chemical Bank, as trustee under the Indenture.
l i
9 NITS 08. 660i4766017766illl7\\APD82493.X1N
" Indenture Trustee Confirmation" means a letter from Vermont Yankee and Lessor to and confirmed by the Indenture Trustee, substantially in the form of Exhibit K to the Panicipation Agreement.
"In-Service Date" means the date the Equipment is placed in service for federal income tax purposes, as determined by Lessor in its sole discretion.
" Installment Payment" means each payment made by Lessor to Contractor pursuant to the Constniction Contracts after the Lease Commencement Date.
" Installment Payment Date" means each date after the Lease Commencement Date on which Lessor has been requested pursuant to Section 2.1 of the Panicipation Agreement to make an Installment Payment.
" Interim Term" means the period beginning on the Lease Commencement Date and ending on the day immediately prior to the Basic Term Commencement Date.
" IRS" means the U.S. Internal Revenue Service.
"Lasg" or " Lease Aereement" means the lease agreement substantially in the form of Exhibit D to the Participation Agreement, to be dated as of the Lease Commencement Date, between Lessor and Lessee.
" Lease Commencement Date" means the date on which the tmnsactions contemplated by Article 2 of the Participation Agreement shall be consammated and j
by which all of the conditions in Anicle 4 of the Panicipation Agreement shall have been satisfied or waived.
" Lease Term" means the full term of the Lease, including the Interim Term, the Basic Term and the Renewal Term, if any.
" Lease Termination Date" means the last day of the Lease Term.
" Lease Transaction Costs" means all fees and out-of-pocket expenses incurred by Lessor in connection with the preparation, negotiation, execution and delivery of the Tansaction Documents and the consummation of the transactions contemplated thereby as of or on the Lease Commencement Date and the Basic Term Commencement Date, including (i) the fees, expenses and disbursements of any accounting, appraisal, environmental or engineering firms retained by lessor, (ii) the fees, expenses and disbursements of any counsel retained by Lessor and (iii) all other out-of-pocket expenses including advisory fees, the initial (but not ongoing) fees of Lessor, printing and other document reproduction and distribution expenses, and all 10 NY F 308... no047660;0'66 t i l l7\\APD82493.X IN
fees, taxes and other charges payable in connection with the Transaction Documents or any amendments thereto or the filing of instruments and financing statements described in the Operative Documents in connection therewith. Lease Tansaction Costs shall not include the fees, expenses and disbursements of any counsel retained by Lessee.
" Lessee" means Vermont Yankee, as the initial Lessee under the Lease, and any Person who becomes Lessee as provided in the Izase.
" Lessee Group" means Lessee, a shareholder of Lessee and any pany "related to" the Lessee within the meamng of Section 318 of the Code, as defined in Section 4(1)(A) of Revenue Procedure 75-21.
" Lessor" means TIFD VIII-H Inc., a Delaware corporation and an indirect wholly-owned subsidiary of GE Capital, as the initial Lessor under the 12ase, and any Person who becomes Lessor as provided in the Lease.
"Iessor Liens" means any Lien against the Equipment that results from claims against Lessor that are unrelated to ownership of the Equipment, the Operative Documents or the transactions contemplated by the Operative Documents.
" Lessor's Cost" means the Equipment Cost plus the lease Transaction Costs paid by lessor.
" Lien" means any lien, mongage, encumbrance, pledge, charge, lease, easement, servitude, right of others or security interest of any kind, including any thereof arising under conditional sales or other title retention agreements.
" Loss" is def'med in Section 12.3(d)(1) of the Participation Agreement.
"MACRS" is defined in Section 12.3(a)(2) of the Participation Agreement.
"Manaeement Meeting" means any meeting between the management of Vermont Yankee, as operator of the Facility, and the NRC which, from time to time, may be requested by the NRC in order to discuss with Vermont Yankee's management issues or problems in connection with its operation or oversight of the Facility.
" Material Adverse Effect" means 11 NYF508.. n6047660S166ill17%PD82493.XIN
~.
(a) a material adverse impairment on the Fair Market Rental Value, the Fair Market Sale Value, or the value, efficiency, utility, performance, reliability, durability or useful life of the Equipment, (b) a material adverse impairment on, or a significant negative effect on, the ability of any Person (other than Lessor) to perform any of its material obligations under any Operative Document, (c) any impainnent of the validity or enforceability of the rights, remedies or benefits of Lessor or GE Capital under any of the Operative Documents, or (d) any material adverse change in the business, assets, liabilities, operations, financial condition or prospects of Vermont Yankee since the date of the most recent financial statements provided to Lessor before the execution of the Participation Agreement.
"Multiemplover PlaD" means a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) to which Vermont Yankee or any ERISA Affiliate (other than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Code), is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions.
" Net Economic Return" means Lessor's (a) anticipated nominal after-tax economic yield (calculated using the multiple investment sinking fund method) and (b) after-tax cash as a percentage of Lessor's Cost, with the Lessor's anticipated nominal after-tax economic yield measure adjusted with respect to the change in the Treasury Index and the after-tax cash measure adjusted as required to accommodate the above referenced yield adjustment. These adjustments to be computed with respect to the assumptions set forth in Appendix B to the Participation Agreement and Schedule 1 to the Lease.
"Nonseverable Improvement" means any nonseverable improvement which would constitute a prohibited " lessee investment" pursuant to Section 4(4).03 of Revenue Procedure 75-21,1975-1 C.B. 715, as amended by Revenue Procedure 79-48,1979-2 C.B. 529.
"NRC" means the U.S. Nuclear Regulatory Commission.
" Operative DocumentJ" means the Transaction Documents and the Contracts, so long as each is in effect.
12 NYFS08-.:16&47660'0'66illl7\\APD82493.XtN
" Participation Agreement" means the Panicipation Agreement, dated as of March 31,1994, between Vermont Yankee and I.essor.
" Pan" means any part, instmment, appurtenance, accessory or other property (a) included in the Equipment or delivered under the Constmetion Contracts, (b) attached to, incorpomted in or installed on the Equipment under the Construction Contracts or otherwise as part of the constmetion, installation and testing of the Equipment, or (c) replacing or substituting for any Part.
"PBGC" means the U.S. Pension Benefit Guaranty Corporation.
"P_erfcunance Testing" means all performance testing of the Equipment e
required to be done pursuant to the Constmetion Contracts.
"Pennit" means, any authorization, consent, approval, waiver, exception, exemption, order, variance, franchise, permission, pennit, license or other action, instmment or approval of any Person or Authority.
" Permitted Contest" is a contest in good faith and by appropriate Proceedings so long as (a) there is no material danger of the sale, forfeiture, loss or impairment of any right, title or interest in or to any pan of the Equipment or of any Permit, (b) there is no material danger of any penalty being imposed on Vermont Yankee or any liability being imposed on Lessor or GE Capital, (c) there is no material danger of any interference with the use or disposition of the Equipment or with any payment due under the Operative Documents, and (d) the effect of the contest is not to delay the imposition of the contested matter past the end of the Lease Term.
" Permitted Liens" means (a) Liens for Taxes either not yet due or being contested by a Permitted Contest, (b) materialmen's, mechanics', workers',
repairmen's, employees' or other similar Liens arising in the ordinary course of 13 NYFS08...:T60\\47660\\0766)!IITAPD8:493.X1N
business for amounts either not yet due or being contested by a Permitted Contest, (c) Liens arising out of judgments or awards with respect to which at the time an appeal or proceeding for review is being prosecuted by a Permitted Contest for the payment of which adequate cash reserves shall have been provided, (d) Liens arising from workmen's compensation, unemployment insurance or other social security or old age pension obligations either not yet due or being contested in good faith with adequate cash reserves being held for payment thereof and (e) Liens created under the Transaction Documents.
" Person" means any individual, corporation, pannership, joint venture, association, joint-stock company, trust, unincorporated orgamzation or Authority.
" Plan" means any retirement plan intended to qualify under Section 401 of the Code to which Vermont Yankee or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions, other than any Multiemployer Plan.
" Power Contracts" means the Power Contracts, each dated as of Febn2ary 1,1968, as amended from time to time, between Vermont Yankee and each of the Sponsors.
" Prime Rate" for any day means the prime ate reponed for that day in The Wall Street Journal (Final Eastern Edition). If there is no such rate reponed for that day then the Prime Rate for that day means the highest of the pdme or base rate of interest publicly announced for such day by Citibank, N. A., Chemical Bank, Morgan Guamnty Trust Company of New York and The Chase Manhattan Bank, N.A., whether or not such rate is actually charged by such bank.
" Proceeding" means any lawsuit, proceeding, arbitration or other means of resolving a dispute that is binding on the panies to the dispute, or any investigation, hearing, audit, appeal or other proceeding (administrative, judicial or other) by or before any Authority.
" Purchase Notice" means a notice, delivered by Lessee to Lessor, indicating Lessee's irrevocable election to purchase the Equipment pursuant to Section 5.2 of the Lease.
" Release" means any release, spill, emission, leaking, pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching, or migntion on, into or out of any propeny owned, opented or leased by Vermont Yankee, including the movement of any Hazardous Substances or other material through or in the air, soil, surface water, groundwater, or propeny.
14 NYFS08. 06a47660@66il117APD82493.XIN
1
" Remedial Action" means all actions, including, without limitation, any capital expenditures, required or voluntarily undenaken to (i) clean up, remove, treat, or in any other way address any Hazardous Substance or other material in the indoor or outdoor environ. ment; (ii) prevent the Release or threat of Release, or minimize the funher Release of any Hazardous Substance or other material so it does not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (iii) perform pre-remedial studies and investigations or post-remedial monitoring and care; or (iv) bring the Equipment or facilities on any real property owned, operated or leased by Vermont Yankee into compliance with all Environmental laws, Environmental Orders and Environmental Permits.
" Renewal Notice" means a notice, delivered by Lessee to Lessor, indicating lessee's irrevocable election to extend the Lease Term pursuant to Section 4.2 of the Lease.
" Renewal Term" means the seven-year period of extension of the Lease Term in accordance with Anicle 4 of the Lease or such shoner period as may result from the tennination of the Lease as provided in the Lease.
" Rent" means Basic Rent plus Supplemental Rent.
"Rept Payment Date" means the last day of each calendar month during the Basic Term, and tiac Lease Termination Date.
" Rule" means any statute, law, treaty, rule, code, ordinance, regulation, permit, interpretation, certificate or order of any Authority, including all Environmental laws, or any judgment, decision, decree, injunction, writ, order or like action of any Authority.
"SEC" means the U.S. Securities and Exchange Commission.
"Second Morteace" means the Second Mortgage, Fixture Filing and Security Agreement, dated as of February 22,1990, as amended or supplemented from time to time, by Vermont Yankee in favor of Societe Generale.
"Second Morteace Confirmation" means a letter from Vermont Yankee to and confirmed by Societe Generale, as mongagee under the Second Mortgage, in substantially the fann of Exhibit L to the Panicipation Agreement.
"Soonsor" means each of Central Vermont Public Service Corporation, Green Mountain Power Corporation, New England Power Company, The Connecticut Light and Power Company, Central Maine Power Company, Public Service Company of New Hampshire, Western Massachusetts Electric Company, Montaup Electric Company and Cambridge Electric Light Company.
15 NY F508. :100i47660107661111TAPD82493.X1N
"Soonsor Contracts" means the Power Contracts, the Additional Power Contracts and the Capital Funds Agreements.
" Sponsor Counsel Ooinion" of any Sponsor means a letter from such Sponsor's counsel in substantially the form of Exhibit J to the Participation Agreement.
" State Depreciation Deductions" is def' ed in Section 12.3(a)(4) of the m
Panicipation Agreement.
" Stipulated Loss Value" at any date during the Lease Tenn means the product of Lessor's Cost times the Stipulated less Percentage set forth in Schedule 2 to the Lease, detennined pursuant to Section 10.1 of the Lease. Stipulated Loss Value at any date during the Renewal Term means 20% of final Equipment Cost.
" Supplemental Rent" means any and all amounts, liabilities and obligations (other than Basic Rent) that Lessee assumes or agrees to pay to Lessor or j
any Indemnitee under the Lease or the Panicipation Agreement, including payments of indemnities, Stipulated Loss Value, interest, Fair Market Rental Value and Fair Market Sales Value.
l
" Tax Assumptions" is defined in Section 12.3(a) of the Panicipation Agreement.
" Tax Counsel" is defined in Section 12.3(f) of the Panicipation Agreement.
" Tax Representations" is defined in Section 12.3(c) of tiac Participation Agreement.
" Tax Savings" is defined in Section 12.3(d)(2) of the Participation Agreement.
" Tax Savines Gross-Uo" is defined in Section 12.3(d)(2) of the Panicipation Agreement.
" Taxes" means any and all federal, state, county, city, municipal, local, foreign or other governmental or quasi-governmental fees (including license, filing, recording, registation and Permit fees), taxes (including gross or net income, gross receipts, franchise, ad valorem, capital, value added, rental, excise, occupational, sales, use, propeny (real or personal), tangible or intangible taxes),
interest equalization (including those under Section 4975 of the Code) and stamp taxes, assessments, levies, imposts, Liens, duties, claims, charges or withholdings of 16 NYFS08.. f 6047660'.07t$1117APD82493.XIN i
l 1
1 l
any kind or nature whatsoever, together with any and all penalties, additions to tax, l
fines or interests thereon.
1
" Title IV Plan" means any Plan subject to Title IV of ERISA or Section 302 of the Code.
" Transactions" means the execution, delivery and performance of any_
l Transaction Document; any transaction contemplated by any Transaction Document or Construction Contract; any transaction described in Anicle 2 of the Panicipation Agreement; the payment or' Rent; the creation and perfection of the rights, titles, interests and Liens intended to be created by the Transaction Documents; the enforcement of any rights, remedies and Liens under the Transaction Documents or l
Warranties; and the ownership, saie, lease, operation, maintenance and financing of the Equipment as contemplated by the Transaction Documents.
" Transaction Documents" means the Participation Agreement, the Lease, the Contractor Consent, the Bill of Sale, the Sponsor Counsel Opinions, the Indenture Tmstee Confirmation, the Second Mortgage Confirmation, the Construction Contracts Assignment, and all other documents, consents, opinions and assignments delivered or required to be delivered to Lessor in connection with the foregoing documents.
l
" Treasury Index" means the 6.5 year U.S. Treasury rate (interpolated straight line between 5 and 7 year benchmark U.S. Treasury rates) as published in the Fedemi Reserve Statistical Release H.15 released two days before the Basic Term Coramencement Date and listed under the column "this week average".
"UCC" means the Uniform Commercial Code of the jurisdiction with respect to which such term is used.
l
" Unconditional Release" means the decontamination of the item l
specified (and all of its constituent parts) to the strictest collective standards applicable l
at the time of release pursuant to all federal and state Rules or Permits applicable to the transportation of the Equipment by common carrier and its use by any facility or facilities that do not have a license to use radioactive material.
"Unfunded Pension Liabilitv" means, with respect to any Title IV Plan, the amount, if any, by which the benefit liabilities (as defined by Section 4001 of ERISA and determined by using the actuarial assumptions utilized in the most recent actuarial valuation of such plan) exceed the fair market value of the assets of such plan.
" Vermont Yankee" means Vermont Yankee Nuclear Power l
Corporation, a Vermont corporation.
17 NYF508. :WM7660.0766\\ll17\\APD82493.XIN l
l
l
" Warranty" means any warranty, guaranty, indemnity, damage (liquidated or otherwise), accounting or other right to payment or performance from any manufacturer, contractor, vendor, subcontractor, materialman or other insnller or supplier under any Construction Contract.
" Withdrawal Liability" means any liability of Vermont Yankee or any ERISA Affiliate pursuant to Section 4201 of ERISA.
l 18 NYF508.. :16047660'0766\\lllTAPD82493.X1N
Conventions If a document states that these Conventions aprly to it, then the following shall apply to the document except to the extent cuerwise expressly provided in the document. In these Conventions, "this dxument" means such document.
Payments.
(a)
All payments, advances or other transfers of money under this document (" payments") shall be made by wire transfer of immediately available, freely transferable legal tender of the United States of America.
(b)
Each party's initial account for payments under this document is set fonh on Schedule 1 to the Participation Agreement. A party may change its account for any payments by notice to the Nrson required to make the payment.
(c)
If a payment shall be received in the payee's account for payments ender this document before 1:00 p.m. (local time at the place where the account is located) on a regular banking day at the bank holding the account, the payment shall be effective on the date received. Any other payment shall be effective on the first regular bankmg day after the date it is received in the payee's account for payments.
Notices.
(a)
All notices, consents, directions, approvals, instructions, requests and other communications pursuant to this document (" notices") must be in writing to be effective.
(b)
Each party's initial address for notices under this document is set fonh on Schedule 1 to the Participation Agreement. A pany may change its address for notices by notice to the other party.
(c)
If a notice shall be received during regular business hours on a regular Business Day at the addressee's address for notices under this document, it shall be effective on the date received. Any other notice shall be effective on the first regular Business Day after the date it is received at the addressee's address for notices.
Business Day. If any payment shall be due on a day that is not a Business Day, the Person owing the payment shall instead make the payment on the next following Business Day. The deferral to the next Business Day shall not suspend any obligation to accrue or pay interest on the payment.
19
)
NYFS08.. :s60\\47660\\0766\\1117\\APD82493.X1N
Time Periods. Amounts accruing from a date to another date shall accrue from but excluding the first date to and including the second date.
Survival. The panies' obligations under their representations, warranties and agreements in this document shall survive the execution and delivery of this document, the Transactions and the expiration or other termination of any other Operative Document. A pany's extension of any statute of limitations shall not affect the survival of any obligations under this document.
Severability. If any provision of this document shall be invalid, illegal or unenforceable in any jurisdiction, that provision shall continue to be valid and enforceable in any otherjurisdiction and the remaining provisions of the Operative Documents shall continue to be valid and enforceable in alljurisdictions. To the extent permitted by law, each pany waives any law that may render any provision of this document invalid, illegal or unenforceable.
Waiver and Amendment. No pany shall be bound by any purported waiver, termination, amendment, supplement or modification of this document unless that pany shall have consented to it in writing. A pany may waive or agree to terminate, amend, supplement or modify any right or obligation under any Operative Document at any time without prejudicing its right to any other right or obligation, including the right to performance of a waived right under any circumstaxes not expressly covered by the waiver. A pany may exercise, fail to exercise, delay in exercising or abandon or suspend the exercise of any right or remedy under any Operative Document at any time without prejudicing its right to the exercise the right or remedy at any other time.
Benefit. The parties to this document, any express indemnitees or other express beneficiaries and their permitted successors and assigns are the only persons entitled to the benefit of this document.
Obligations. The parties to this document are the only Persons bound by this document. No pany has any obligation with respect to the Transactions, except as expressly set fonh in the Operative Documents to which it is a pany or as it may agree in writing. This document and the other Operative Documents set forth the entire agreement of the panies with respect to the Transactions. This document and the other Operative Documents supersede all prior written or oral agreements among the parties with respect to the Transactions.
Counterparts. The panies may sign this document in any number of counterparts and on separate countegarts.
Governing Law. This document, the Transactions and the rights and obligations of the parties with respect to this document and the Transactions 20 NYF508.. n60\\47660'076611!!7MPD8 493.X1N
l i
shall be governed by and construed in accordance with the internal law of the State of New York.
Jurisdiction. Each party to this document irrevocably submits to the jurisdiction of the state and federal courts in the Borough of Manhattan, State of New York, United States of America, in any suit, action or proceeding arising out of this document or the Transactions. Each pany waives and agrees not to assen any claim of lack of jurisdiction, improper venue, of inconvenient forum or that this document or the rights or obligations of the parties may not be detennined by any such court. A judgment of any such court in any such suit, action or proceeding shall be conclusive and may be enforced in any other jurisdiction by a suit on the judgment. A copy of any such judgment, certified by the filing officer of the court in which entered, shall be conclusive evidence of such judgment.
I Remedies Cumulative; Full Recourse. Lessor's rights and remedies under the Operative Documents shall be cumulative and nonexclusive of any other rights and remedies Lessor may have under any other agreement, by operation of law or otherwise. Recourse to the Equipment shall not be required. Without limiting any of the foregoing, Lessor shall have full recourse to the assets of Vennont Yankee notwithstanding the existence of the Equipment or any other collateral or guarantees.
Waiver of Jury Trial. Each party to this agreement waives all right to i
trial by jury in any action or prdceeding to enforce or defend any rights under any of i
the Transaction Documents.
l l
l 1
21 NYFS08...;644%60#166st 317\\APDt'J93.XIN
Rules of Interpretation 1
J 1.
The singular includes the plural and the plural includes the singular.
2.
"or" is not exclusive.
3.
" include" and its derivatives are not limiting.
4.
A reference to an agreement or other document includes permitted I
supplements, amendments, waivers and consents under that agreement or document.
i i
5.
A reference to a Rule includes any amendment or modification or any e
comparable successor Rule.
i 6.
A reference to a Person includes its permitted successors and assigns, j
7.
Accounting terms have the meanings given by GAAP.
i 8.
A reference in a document to an Anicle, Section or attachment is to the Anicle, Section or attachment to that document.
9.
Any right may be exercised at any time and from time to time.
l 10.
All obligations in an agreement are continuing obligations throughout the term of the agreement.
11.
Headings are for convenience only and do not affect the meaning of the.
following text.
2 12.
References importing a gender include the other genders.
13.
Tenns not defined herein but defhed in the UCC have the ineamngs given therein.
14.
" hereof," " hen:in," " hereunder" and similar tenns in a document refer to the document as a whole.
15.
References to any Authority of the United States or any political subdivision thereof includes any successor Authority or any other Authority succeeding to the jurisdiction of such Authority.
22
~
NYFS08...WNOS66u MTAPD82493.X1N
i 1
Appendix B to the 1
Participation Agreement ASSUMPTIONS The assumptions on which the Basic Rent and Stipulated Loss Value are calculated include the following:
(1)
Each of the Tax Assumptions will be correct.
(2)
The Basic Term Commencement Date will be. April 15, 1995.
(3)
The Treasury Index on the Basic Term Commencement Date will be 5.26 Tc.
(4)
The Anal Equipment Cost will be $32,768,519.
(5)
Lease Transaction Costs will be 5600,000.
(6)
The Lease Commencement Date will be December 31,1994, and the portion of Equipment Cost paid by Lessor on such date will be $10,212,300 plus
$2,045,000 with respect to the Forging.
(7)
Each Installment Payment Date and the amount of each Installment Payment related thereto will be as follows:
Installment Payment Date:
Installment Payment:
January 1,1995 S 1,134,700 January 15, 1995 5 2,269,400 January 31, 1995 S 1,134,700 Febmary 13, 1995 5 2,269,400 1
March 1,1995 5 1,134,700 May 15,1995 S 2,269,400 June 1,1995 S10,298,919 l
NYFS08. : 60,47660 0%6 Ill7 AGRt:493 X5N
i Exhibit B to the I
Panicipation Agreement CONTRACTOR CONSENT, dated
,199_,by GENERAL ELECTRIC COMPANT, a New York corporation acting through its Power Generation Division ("Contactor").
Vermont Yankee Nuclear Power Corporation (" Vermont Yankee")
owns and operates a nuclear power plant (the " Facility") in Vernon, Vermont.
Contractor is constructing two low-pressure steam turbines and certain related equipment and modifying a forging (the " Forging") supplied by Vermont Yankee as a component thereof (collectively, the " Equipment"), for installation at the Facility pursuant to a contract between Vermont Yankee and Contractor for Low Pressure Turbine Retrofit Project, numbered VY-0293-02, and a contract between Vermont Yankee and Contractor for Nuclear Power Plant Pans and Services, each effective March 5,1993, as they relate to Verraont Yankee purchase order no. 93-55202-00 (as they may be amended, modified or supplemented from time to time, the
" Construction Contmets").
Vermont Yankee has assigned its rights under the Constmetion Contracts to TIFD VIII-H Inc. (" Lessor"). Contractor will transfer title to the Equipment (other than the Forging) upon initial delivery directly to Lessor and Lessor will purchase the Equipment. Lessor will simultaneously lease the Equipment to Vermont Yankee.
Contractor agrees to the following:
1.
CONSENT.
(a)
Contractor consents to any gant, assignment or transfer at any time and from time to time, of any right, title or interest (including any absolute assignment or any gnmt of a security interest) in, to, under or in respect of the Equipment or the Construction Contracts (1) from Vermont Yankee to a Financing Party, or from a Financing Pany to Vermont Yankee or from one Financing Pany to another Financing Party or
)
(2) in the event that a default by Vermont Yankee m
)
performance owed to any Financing Party under a financing document has occurred and is continuing, to any party acquiring any right, title or interest in the Equipment or the Construction Contracts by, through or FOTS 38. a674460,0~66 :1205 A GR 0059311 M
1 under a Financing Party, provided that such party assumes in writing the obligations of Lessor under this Contractor Consent.
(b)
" Financing Party" means any of Lessor (in any capacity), any security agent or other trustee or agent for any Financing Party, and their successors and assigns. " Assignment" means any assignment or transfer permitted by Section 1(a). " Assignee" means any assignee or transferee under an Assignment.
(c)
Subject to the provisions of this Contmetor Consent, Contractor agrees that each Financing Party and any other Assignee shall have all rights of Vennont Yankee under the Constmetion Contracts.
(d)
If the Construction Contracts shall be rejected or otherwise terminated in any bankmptcy or insolvency proceeding involving Vermont Yankee, Contractor shall, if requested by Lessor, enter into a new agreement with the current Assignee substantially in the form of the Constmetion Contracts (as modified by this Contractor Consent).
2.
WAIVER. Contractor agrees that no Assignment will constitute a breach or default under the Construction Contracts. Contractor waives and agrees not to assert any right it may have under the Construction Contracts, any other agreement, at law, in equity or otherwise, to object to or interfere with any Assignment.
3.
PERFORMANCE.
(a)
Contractor agrees to render performance of its obligations under the Constmetion Contracts to the Assignee then having the right to performance of that obligation in accordance with the terms of the Assignment. Contractor agrees that any Assignee is entitled to enforce the rights assigned to it as though it were named in place of Vermont Yankee in the Constmetion Contracts. Contractor agrees that it will accept performance by any Assignee of the obligations of Vermont Yankee. Any curing by any Assignee or any attempt by any Assignee to cure any default by Vermont Yankee under the Constmetion Contracts shall not be construed i
as an assumption by any Assignee of any of the obligations of Vermont Yankee under i
or in respect of the Construction Contracts. Contractor shall have no obligations to any subsequent Assignee (other than Lessor) unless and until written notice of such Assignment is received by Contractor.
l 2
hTFS08. 960 47660 0766tt:05 AGR0059311M
(b)
Contractor agrees that, on each shipment of the Equipment, it shall execute and deliver to Assignee a bill of sale, substantially in the form of Exhibit I hereto, transferring title to the Equipment then being shipped to Assignee.
4.
OBLIGATIONS. Contractor acknowledges that none of the Assignees has assumed any of Vermont Yankee's obligations under the Construction Contracts.
An Assignee may (but shall have no obligation to) assume any of Vennont Yankee's obligations under the Constmetion Contracts by delivering a written assumption of the obligations to Contractor. Unless an Assignee shall have delivered such an assumption, Contractor shall look only to Vermont Yankee for performarce of such obligations.
5.
VERMONT YANKEE'S AtmIORITY. Contmetor acknowledges that neither it nor Vermont Yankee shall have any authority to modify, amend, change or waive any provision of the Construction Contracts (including, without limitation, changing the production schedule, adding extra items or other change orders) so long as any Assignee (other than Vermont Yankee) shall have any right, title or interest (including a security interest) in any pan of the Equipment or the Constmetion Contracts without the prior written consent of such Assignee.
6.
REPRESENTATIONS AND WARRANTIES. Contractor represents and warrants that the following statements are true and correct:
(a)
This Contractor Consent and the Construction Contracts have been duly authorized, executed and delivered by Contmetor; (b)
Contractor has or will have prior to its transfer good and marketable title to the Equipment (other than the Forging), free and clear of all liens, mortgages, encumbrances, pledges, charges, leases, easements, servitudes, or security interests of any kind; (c)
Contractor has not been asked to or consented to any prior assignment of the Constmetion Contracts and there have been no defaults by Contractor or, to the best of Contractor's knowledge, by Vermont Yankee thereunder; and (d)
The constmetion of the Equipment under the Constmetion Contracts is on schedule and Contractor has no r a a to believe that each of the milestones specified in the Constmetion Cor c.t to be completed by a cenain date will not be completed by such date.
3 STF538. >6].47660F66;1205ACR0059311M
7.
NOTICES. Contmetor shall provide promptly to lessor (a) a copy of any written notice delivered to Vermont Yankee concerning any default or breach of the Construction Contracts or any event or condition that would give Contractor a right to terminate or modify the Construction Contracts and (b) copies of all notices and progress repons (other than operating information and requests) it delivers to Vermont Yankee under the Constmetion Contracts.
8.
TERMINATION. Notwithstanding any right Contractor may have under the Construction Contracts, at law, in equity or otherwise, Contractor shall not terminate the Constmetion Contracts unless (a) it shall have given Lessor at least 30 days prior written notice of its intent to terminate the Construction Contracts and the condition giving rise to such right of termination and (b) Vermont Yankee or Lessor shall have failed to cure such condition before such termination is effecdve or, if such condition cannot be cured within 30 days, Vermont Yankee or Lessor shall not have commenced and be diligently pursuing a cure.
9.
EFTECT OF CONSENT; CONIUCTS. Except as expressly provided herein, nothing in this Contractor Consent modifies, waives or alters the terms and conditions or the rights and obligations of the panies to the Constmetion Contracts or creates any additional obligations under the Construction Contracts for Contractor.
10.
SEVERABIIJn'. If any provision of this Contractor Consent shall be invalid, illegal or unenforceable in any jurisdiction, that provision shall continue to be valid and enforceable in any otherjurisdiction and the remaining provisions of this Contractor Consent shall continue to be valid and enforceable in all jurisdictions. To the extent permitted by law, Contractor waives any law that may render any provision of this document invalid, illegal or unenforceable.
11.
BENEFTT. Contractor, Vermont Yankee, lessor and their permitted successors and assigns are the only persons entitled to the benefit of this document.
12.
COUNTERPARIS. This Contractor Consent may be executed in any number of counterpans and on separate counterpans.
D.
GOVERNING law. This Contractor Consent and the rights and obligat6ns of Vermont Yankee, lessor and their permitted successors and assigns with tespect to this Contractor Consent shall be governed by and constmed in accordance with the internal law of the State of New York.
14.
JURISDICTION. Contractor, Lessor, och Financing Pany and each Assignee irrevocably submit to the jurisdiction of the state and federal couns in the 4
NYFSDL 960,47660f661005 AGR00593. LIM
Borough of Manhattan, State of New York, United States of America, in any suit, action or proceeding arising out of this Contractor Consent. Contractor, Lessor, each Financing Pany and each Assignee waive and agree not to assert any claim of lack of jurisdiction, improper venue, of inconvenient fonim or that this Contractor Consent or the rights or obligations of Contractor, Lessor, each Financing Pany or each Assignee may not be determined by any such court. A judgment of any such coun in any such suit, action or proceeding shall be conclusive and may be enforced in any other jurisdiction by a suit on the judgment. A copy of any such judgment, certified by the filing officer of the court in which entered, shall be conclusive evidence of such judgment.
IN WrTNESS WHEREOF, the undersigned has caused this Contractor Consent to be fully executed as of the date first written above.
GENERAL ELECTRJC COMPAhT By:
Name:
Title:
Acknowledged and accepted:
TIFD VIII-H INC.
By:
Name:
Title:
5 NYFsot.. n6047660ff61205 AGR00593.LtM
l Exhibit I to the Contractor Consent FORM OF BILL OF SALE Reference is made to that certain Contractor Consent, dated as of
,199_ (the " Contractor Consent"), by General Electric Company, a New York corporation acting through its Power Generation Division (" Contractor").
Capitalized terms used but not defined herein shall have the meamngs assigned to them in the Contractor Consent.
Contractor, for good and valuable consideration received from I.essor, hereby sells, assigns, transfers, conveys and delivers to Lessor, pursuant to the Construction Contracts, good and marketable title to the Equipment (other than the Forging) shipped on the date hereof, free and clear of any liens, claims or encumbrances, and Contractor hereby warrants that it will defend such title forever against all claims and demands whatsoever.
Contractor shall take all such further actions (including the execution of documents and instruments) as I2ssor shall reasonably request in order to evidence the conveyance intended by this Bill of Sale and the right, title and interest of I.essor in the Equipment acquired hereunder.
\\
IN WITNESS WHEREOF, this Bill of Sale has been executed this day of
, 199_.
~
l GENERAL ELECTRIC COMPANY By:
Name:
Title:
Acknowledged and accepted:
TIFD VIII-H INC.
I By:
Name:
Title:
6 STFS08.. :s6047660;0"66.! 05 AGR00593 L1M 4
Exhibit C to the Panicipation Agreement FORM OF BILL OF SALE Reference is made to that cenain Participation Agreement, dated as of March 31,1994 (the "Panicipation Agreement"), between Vermont Yankee Nuclear Power Corporation ("Vennont Yankee") and TIFD VIII-H Inc. ("I.essor"), and the other documents contemplated therein. Capitalized terms used but not defined herein shall have the meanmgs assigned to them in Appendix A to the Participation Agreement.
Vermont Yankee, for good and valuable considention received from Lessor, hereby sells, assigns, transfers, conveys and delivers to Lessor good and marketable title to the Forging, free and clear of any liens, claims or encumbrances other than Permitted Liens, and Vermont Yankee hereby warrants that it will defend such title forever against all claims and demands whatsoever.
Vermont Yankee shall take all such funher actions (including the execution of documents and instruments) as 12ssor shall reasonably request in order to evidence the conveyance intended by this Bill of Sale and the right, title and interest of Vermont Yankee in the Forging acquired hereunder.
IN WITNESS WHEREOF, this Bill of Sale has been executed this day of
,199 _.
VERMONT YANKEE NUCLEAR POWER CORPORATION By:
Name:
Title:
j Acknowledged and accepted:
TIFD VIII-H INC.
l l
l By:
Name:
Title:
l i
- OTS05. :1604?660766'1235.B1D1003.R7C
Exhibit D to the Participation Agreement FORM OF SECRETARY'S CERTIFICATE I,
, [ Assistant] Secretary of Vermont Yankee Nuclear Power Corporation, a Vermont corporation ("Vennont Yankee"), certify that:
1.
Capitalized terms used but not defined herein shall have the meani.ng assigned thereto in Appendix A to the Panicipation Agreement, dated as of March 31,1994 (the " Participation Agreement"), between Vennont Yankee and TIFD VIII-H Inc.
2.
Each person listed below duly holds the office of Vermont Yankee set forth opposite his name. Each person listed below has been authorized to execute and deliver each Transaction Document to which Vermont Yankee is a pany. The signature set forth opposite each person's name is the signature of such person.
Name:
Title:
Sienatug:
3.
The Cenificate of Incorporation of Vermont Yankee has not been amended since 4.
Vennont Yankee has not merged, consolidated, dissolved or sold any substantial pan of its assets out of the ordinary course of its business, nor has it authorized or taken any steps toward any merger, consolidation, dissolution or sale of any substantial part of its assets out of the ordinary course of its business.
5.
Attached as Exhibit 1 is a true and complete copy of the By-Laws, as amended, of Vermont Yankee. Such By-Laws are in full force and effect.
6.
Attached as Exhibit 2 is a true and complete copy of resolutions duly adopted by the Board of Directors of Vermont Yankee on 199.,_, authorizing the execution and delivery of the Transaction Documents.
NYFS08. :'60 47660,0'66'1 05 CRT92893.X$1 j
Such resolutions have not been modifial, amended, annulled, rescinded or revoked and are in full force and effect.
7.
Attached as Exhibit 3 are true and complete copies of all Contracts. There are no amendments, modifications, change orders, agreements or understandings (other than those set fonh in such copies) that affect any pany's obligation under any Contract. All Contracts are in full force and effect.
8.
Attached as Exhibit 4 are true and complete copies of the Indenture and the Second Mongage (as such terms are defined in Appendix A to the Participation Agreement). There are no amendments, modifications, agreements or understandings (other than those set fonh in such copies) that affect any pany's obligations under the Indenture and the Second Mortgage.
Each of the Indenture and the Second Mongage is in full force and effect.
Dated:
,199_
Name:
Title:
[ Assistant] Secretary ll l
2 l
STFS]8.. : 67C660 C'@l205<RT92893.X51
Exhibit E to the Participation Agreement FORM OF OFFICER'S CERTIFICATE Reference is made to the Panicipation Agreement, dated as of March 31,1994 (the "Panicipation Agreement"), between Vermont Yankee Nuclear Power Corporation (" Vermont Yankee") and TIFD VIII-H Inc. The definitions and mies of interpretation in Appendix A to the Participation Agreement apply to this cenificate.
Vermont Yankee cenifies that on and as of the date hereof:
1.
Vermont Yankee has performed all obligations that each Operative Document requires it to perform on or before the date hereof.
2.
No Default has occurred and is continuing. No Default would occur after giving effect to the Transactions to occur on the date hereof. No default has occurred and is continuing, and no default would occur after giving effect to the Transactions to occur on the date hereof, with respect to any material contract or agreement to which Vermont Yankee is a pany.
3.
Each representation and warranty made by Vermont Yankee in each Operative Document [(other than Section 7.6 of the Panicipation Agreement)] is tme and correct. Each such representation and warranty is true and correct after giving effect to the Transactions to occur on the date
. hereof.
4.
All the Permits listed on Schedule 2 to the Panicipation Agreement, and all other Permits that are (or, after giving effect to the Transactions to occur on the date hereof, will become) necessary or appropriate in connection with the Transactions have been obtained, are in full force and effect and are not subject to any appeals or funher Proceedings or to any unsatisfied condition that may allow material modification or revocation.
IN WITNESS WHEREOF, I have executed and delivered this cenificate as of this day of
,199_.
VERMONT YANKEE NUCLEAR POWER CORPORATION l
By:
Name:
Title:
Chief Financial Officer STF'DE. :,60 4460 0"60'.1005 CRTX4393 SSK
Exhibit F to the Participation Agreement FORM OF PERMIT CERTIFICATE I certify that attached are copies of all the Permits listed on Schedule 2 to the Panicipation Agreement, dated as of March 31,1994, between Vermont Yankee Nuclear Power Corporation and TIFD VIII-H Inc. (the "Panicipation Agreement"), and all other Permits that are (or, after giving effect to the Transactions to occur on the date hereof, will become) necessary or apprsp;iate in connection with the Transactions. Each Permit is in full force and effect and is not subject to any appeals or funher Proceedmgs or to any unsatisfied condition that may allow material modification or revocation. The definitions and rules of interpretation in Appendix A to the Panicipation Agreement apply to this cenificate.
Dated:
,199_
Name:
Title:
[ Assistant] Secretary NTFS08.. 360 47660 O'661205;CRT92893.29H
i i
Exhibit G to the Participation Agreement FORM OF ENGINEER'S CERTIFICATE The undersigned cenifies that it is familiar with the Equipment described in the Lease Agreement, dated as of
,199_ (the " Lease"),
between Vermont Yankee Nuclear Power Corporation ("Iessee") and TIFD VIII-H Inc. (" Lessor"), and that:
1.
The Equipment was placed in service on 2.
The Equipment and its installation comply with all specifications contained in the Construction Contracts.
3.
The Equipment has successfully completed all Performance Testing.
4.
The results of the Performance Testing and our inspection of the Equipment and the plans indicates that the Equipment will be able to generate, in commercial operation on a continuing basis and in accordance with all Energy Rules, at least 540 megawatts of electricity, subject only to reduction for cormal degradation, not to exceed 5 megawatts by the tenth year of opemtion.
Capitalized terms used but not defined herein have the meamngs given to them in Appendix A to the Lease.
Dated:
,199_
[ ENGINEER]
4 i
By:
Name:
Title:
hTFS08. :.604460.076E.10051CRT00*93T.J
Exhibit H to the Participation Agreement SUBSTANCE OF APPRAISAL 1.
The fair market value of the Equipment is estimated at $29,800,000 on the Basic Term Commencement Date, 2.
The remaining useful economic life of the Equipment at the end of the
-Basic Term and the Renewal Term is a period not less than 20% of the total estimated useful economic life of the Equipment.
3.
The Equipment will have a residual value, ignoring inflation, of at least 20% of the final Equipment Cost at the end of both the Basic Term and the Renewal Term.
4.
The Equipment will not be " limited use propeny" as described in IRS Revenue Procedure 75-21, and it is reasonable to expect the Equipment to be useful or useable in a commercially feasible manner by some person other than Lessee, a shareholder ofI.essee or a person related to Lessee such that the residual value of the Equipment at the end of the Lease Tenn may be realized.
5.
At the In-Service Date, the Equipment will not require any
)
improvements, modifications or additions to render it complete for its intended purpose.
6.
It will be commercially feasible for Lessee to remove, decontaminate and return the Equipment in accordance with retum provisions of the I. ease.
7.
Basic Rent during the Basic Term and the Renewal Term is a fair market value rent.
8.
The Equipment, as designed and constmeted, functions as a fully integrated and self-contained unit.
i 9
I 4
I NYF505.. a60'47660#66'1205tCRTOM93.53!
l Exhibit I-1 to the Participation Agreement (Draft Deinion of Renes & Gray)
TIFD VIII-M Inc.
1600 Summer Street, 5th Floor Stanford, Connecticut 06927 Re:
Dear Sirt i
We have acted as counsel to Vermont Yankee Nuclear Power Corporation, a vermont corporation (the " Company"), in connection with the Participation Agreement, dated as of March
,1994 (the
" Participation Agreement"), between TIFD VIII-H Inc. and the company and the related Lease Agreement, dated as of December i
1994 (the " Lease Agreement"), between the Company, as lessee, and TIFD VIII-H Inc., as lessor.
Capitalized terms used but not otherwise defined herein have the meanings set forth in Appendix A to the Participation Agreement.
As counsel to the Company, we are familiar with the records of the proceedings relating to the organization of the company and the actions taken by the Company relating to the Participation Agreement and the Lease Agreement.
In this connection, we have examined such certificates of public officials and of officers of the company and such other materials as we have deemed relevant and necessary as a basis for the opinions expressed herein.
we have relied upon such certificates and upon the representations in the Participation Agreement with i
respect to the accuracy of factual matters contained therein which were not independently established, we express no opinion as to the laws of any jurisdiction other than those of The commonwealth of Massachusetts and the federal laws of the United States of America.
We have reviewed an opinion to you dated today of Ryan Smith & Carbine, Ltd.,
counsel to the company, relating among other things, to the organization and existence of the Company and the jurisdiction of Vermont Authorities and we believe such opinion to satisfactory in form and substance and we have relied entirely upon such opinion with respect to the matters covered thereby.
We have made no independent investigation of any of the sponsors or of their obligations under the Power Contracts, the Additional Power contracts and the Capital Funds Agreement, but we have reviewed ancpa.W 2'd At:4J9 '8 S3d>J PT :0T rs, 28 tf:N
opinions to you dated today of counsel for such sponsors and believe such opinions to be satisfactory in form and substance.
We have relied entirely with respect to the matters covered thereby on said opinions and we believe you may properly rely thereon.
In our examination of documents, we have assumed the genuineness of all signatures (other than the signatures of officers of the Company), the authentioity of all documents submitted as originale, the conformity to the original documents of all documents submitted as copies, and the authenticity of the originals of such latter documents.
We attended the closing held today at which the Laase Agreement was executed and delivered and the other transactions scheduled to occur on the Lease Commencement Date were consummated.
i Based upon the foregoing and, to the extent indicated above upon the opinions of Ryan Smith & Carbine, Ltd. and counsel for the Sponsors, and subject to the limitations and qualifications set forth herein, we are of the opinion that:
1.
The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Vermont and has all requisite corporate power and authority to carry en its business as presently conducted and to enter into and perform its obligations under the Participation Agreement and the Lease Agreement.
2.
Each of the Participation Agreement, the Construction contracts, the construction Contracts Assignment, the Bill of Sale and the Lease Agreement has been duly authorized, executed and delivered by the Company and constitutes the valid and legally binding obligation of the company, enforceable against the company in accordance with its terms, subject to the qualification in the penultimate paragraph hereof.
3.
Each of the Power Contracts, the Additional Power Contracts and the capital runds Agreements (1) have been duly authorized, executed and delivered by tht respective parties thereto, (ii) are in full force and effect, and (iii) are the legal, valid and binding obligations of each of the parties thereto, enforceable in accordance with its terms subject to the qualification in the penultimate paragraph hereof and except that they are subject to the continuing jurisdiction with respect to rates of state and federal Authorities having jurisdiction in the premises.
4.
No authorization, approval, consent or other action by, or notice to or filing, declaration or registration with, any governmental authority or regulatory body or any other person or secon.n '
E'd AtrfD 'S 531M ST:0T PS, OE El e
i
entity is required in connection with the execution, delivery and performance by the Company of, or the validity and enforceability of, the Participation Agreement or the Lease Agreement.
In connection with your execution of the Lease Agreement, the Conpany has obtained the acknowledgement from the United States Nuclear Regulatory Commission (the "NRC"), in the form of an Order dated _.
, 1994 (the "NRC Order") that the financing transaction evidenced by the Lease is consistent with the Atomic Energy Act of 1954, as amended, and that you, as lessor, need not be named as a licensee of the NRC.
The NRC Order is final and in full force and effect and is not subject to appeal or to judicial, governmental or other review.
5.
The execution and delivery by the Company of the Participation Agreement, the Lease Agreement, the Construction contracts and the Construction contracts Assignment and compliance by the Company with the terms and provisions thereof (1) do not violate or conflict with the Certificate of Incorporation or By-laws of the Company or violate any law, ordinance, rule, statue or regulation to which the company is subject, and (ii) to the best of knowledge, after due inquiry and investigation, do not (a) violate or conflict with or result in a breach of any judgment, decree, injunction, order, arbitration award or governmental permit or license to which the company is subject, or (b) conflict with, or result in a breach of, or constitute a default (whether with notice or the lapse of time, or both) under, or result in the acceleration of, or the creation or imposition of (or the obligation to create or impose) any lien, charge or encumbrance upon any of the properties or assets of the company pursuant to, the terms of any indenture, mortgage or other agreement or instrument to which the Company is a party, by which the Company is bound, or to which any of the properties of assets of the Company are subject.
6.
There is no action, suit or other proceeding pending, or to our knowledge, threatened, before any court, governmental authority or arbitration board or tribunal, which questions the validity of the Participation Agreement or the Lease Agreement or in which there is a reasonable probability of an adverse decision that could materially and adversely affect the financial condition of the company or its ability to make pa p ents of Rent or to perform its obligations under the participation Agreement l
or the Lease Agreement.
We have not examined the title to the Equipment and, l
accordingly we express no opinion with respect thereto ar as to the due filing or recording of the Lease Agreement or any other instruments affecting such title.
In addition, we expresa no opinion as to the perfection or priority of any Liens.
t l
our opinion as to the enforceability in accordance with i
their respective terms of the instruhents referred to in JA RCCF2.vr
~3-l l
i l
t' ' d Wd9 ? SJdOM ST :OT t'6, OS &JW L.
paragraphs 2 and 3 abcVe is qualified to the extent that enforcament of the rights and remedies created thereby is subject to bankruptcy, insolvency, reorganization and similar laws of general application affecting the rights and remedies of creditors and, in the case of the Lease Agreement, to the extent the Lessor's ramedies may be affected by the provisions of the Atomic Energy Act of 1954, as amended, and the regulations thereunder, and to the extent that the availability of the remedy of specific performance, injunctive relief or other equitable remedy is subject to the discretion of the court before which any proceeding therefor may be brought.
This opinion is given solely for the benefit of the addresses hereof, and it is not intended that any other person or entity may rely upon the opinions stated herein.
The opinions expressed herein are limited to the matters set forth herein and no other opinions should be inferred beyond the matters expressly stated.
Very truly yours, Ropes & Gray imsen.vr S'd AS?3 "3 53dOd 9T :01 ti OE M94
Exhibit I-2 to the Participation Agreement (Draf t Oninion of Ryan Smith & Carbine. Ltd. ]
TIFD VIII-H Inc.
1600 Summer Street, 5th Floor Stamford, Connecticut 06927 Re:
Dear Sir:
We have acted as counsel to Vermont Yankee Nuclear Power Corporation, a Vermont corporation (the " Company"), in connection with the Participat'.on Agreement, dated as of March
, 1994 (the
" Participation Agreement"), between TIFD VIII-M Inc. and the Company and the ralated Lease Agreement, dated as of December, 1994 gthe " Lease Agreement"), between the Company, as lessee, and TIFh VIII-H Inc., as lessor.
Capitalized terms used but not otherw1:se defined herein have the meanings set forth in Appendix A to tite Participation Agreement.
As counsel to the company, we are familiar with the records of the proceedings relating to the organization of the company and the actions taken by the Company relating to the Participation Agreement and the Lease Agreement.
In this connection, we have examined such certificates of public officials and of officers of the Company and such other materials as we have deemed relevant and necessary as a basis for the opinions expressed herein.
We have relied upon such certificates and upon the representations in the Participation Agreement with respect to the accuracy of factual matters contained therein which were not independently established.
We express no opinion as to the laws of any jurisdiction other than those of the State of Vermont.
In our examination of documents, we have assumed the genuineness of all signatures (other than the signatures of officers of the Company), the authenticity of all documents submitted as originals, the conformity to the original documents of all documents submitted as copies, and the authenticity of the originals of such latter documents.
We attended the Closing held today at which the Lease Agreement was executed and delivered and the other transactions unnu.n gd AWD 3 S3GI 4T :0T t'in OS RM
1 i
scheduled to occur on the Lease Commencement Data were consummated.
Based upon the foregoing and, to the extent indicated above upon the opinions of Ryan Smith & Carbine, Ltd. and counsel for the Sponsors, and subject to the 1Leitations and qualifications set forth herein, we are of the opinion that:
1.
The company is a corporation duly organised, validly existing and in good standing under the laws of the State of vermont and has all requisite corporate power and authority to carry on its businese as presently conducted and to enter into and perform its obligations under the Participation Agreement and the Lease Agreement.
2.
Each of the Participation Agreement, the Construction Contracts, the construction contracts Assignment, the Bill of Sale and the Lease Agreement has been duly authorized, executed and delivered by the company and constitutes the valid and legally binding obligation of the company, enforceable against the company in accordance with its terms, subject to the qualification in the penultimate paragraph hereof.
3.
Each of the Powers contracts, the Additional Power contracts and the Capital Funds Agreements have been duly authorized, executed and delivered by the Company, are in full force and effect, and are the legal, valid and binding obligations of each of the Company, enforceable in accordance with its terms subject to the qualification in the penultimate paragaph hereof and except that they are subject-to the continuing jurisdiction with respect to rates of state and federal Authorities having jurisdiction in the presises.
t 4.
No authoriEation, approval, consent or other action by, or notice to or filing, declaration or registration with, any governmental authority or regulatory body is required in connection with the execution, delivery and performance by the company of, or the validity and enforceability of, the Participation Agreement or the Lease Agreement.
5.
The execution and delivery by the company of the Participation Agreement, the Lease Agreement and the Construction contracts Assignment and compliance by the Company with the terms and provisions thereof (i) do not violate or conflict with the Certificate of Incorporation or By-laws of the Company or violate any law, ordinance, rule, statue or regulation to which the Company is subject, and (11) to the best of knowledge, after due inquiry and investigation, do not (a) violate or conflict with or result in a breach of any judgment, decree, injunction, order, arbitration award or governmental permit or license to which the Company is subject, or (b) conflict with, or result in a breach l
of, or constitute a default (whether with notice or the lapse of namus.n i 4*d 4:rd 2 S3 DOM 41:2T PS, 2E WW
-W m-
time, or both) under, or result in the acceleration of, or the creation or imposition of (or the obligation to create or impose) any lien, charge or encumbrance upon any of the properties or assets of the company pursuant to, the terms of any indenture, mortgage or other agreement or instrument to which the company is a party, by which the Company is bound, or to which any of the properties of assets of the company are subject.
6.
There is no action, suit or other proceeding pending, or to our knowledge, threatened, before any court, governmental authority or arbitration board or tribunal in vermont, which questions the validity of the Participation Agreement or the Lease Agreement or in which there is a reasonable probability of an adverse decision that could materially and adversely affect the financial condition of the company or its ability to make payments of Rent or to perform its obligations under the Participation Agreement or the Lease Agreement.
We have not examined the title to the Equipment and, accordingly we express no opinion with respect thereto ar as to the due filing or recording of the Lease Agreement or any other instruments affecting such title.
In addition, we express no opinion as to the perfection or priority of any Liens.
Our opinion as to the enforceability in accordance with their respective terms of the instruments referred to in j
paragraphs 2 and 3 above is qualified to the extent that enforcenent of the rights and remedies created thereby is subject to bankruptcy, insolvency, reorganization and similar laws of general application affecting the rights and remedies of creditors and, in the case of the Lease Agreement, to the extent the the Lessor's remedies may be affected by the provisions of the Atomic Energy Act of 1954, as amended, and the regulations thereunder, and to the extent that the availability of the remedy of specific performance, injunctive relief or other equitable remedy is subject to the discretion of the court before which any proceeding therefor may be brought.
This opinion is given solely for the benefit of the addressee hereof, and it is not intended that any other person or entity may rely upon the opiniens stated herein.
The opinions expressed herein are limited to the matters set forth herein and no other opinions should be inferred beyond the matters expressly stated.
Very truly yours, Ryan Snith & Carbine, Ltd.
4 Jmtw.vT 4 d
8'd A0f) '8 53dod 8T :0T E OS El
Exhibit J to the Participation Agreement FORM OF SPONSOR COUNSEL OPINIO_N
,199_
TIFD VIII-H Inc.
1600 Summer Street, 5th Floor Stamford, CT 06927 12 dies and Gentlemen:
This opinion is furnished to you in connection with the Participation Agreement, dated as of March 31,1994, between Vermont Yankee Nuclear Power Corporation (" Vermont Yankee") and TIFD VIII-H Inc., and the other agreements and documents contemplated therein, relating to the lease by Vermont Yankee of two low-pressure steam turbines.
We have acted as counsel to (Sponsor] (the " Company") in connection with the execution and delivery by it of cenain of its agreements with Vermont Yankee, namely: (i) the Capital Funds Agreement, dated as of February 1,1968, as amended March 12,1968 and as of September 1,1993 (the " Capital Funds Agreement"); (ii) the Power Contract, dated as of February 1,1968, as amended as of June 1,1972, April 15,1983, April 24,1985, June 1,1985, May 6,1988, June 15,1989 and December 1,1989 (the " Power Contract"); and (iii) the Additional Power Contract, dated as of February 1,1984 (the " Additional Power Contract")
(collectively, the " Contracts").
We have examined:
(a)
Copies of the Certificate of Incorporation of the Company and all amendments thereto to date, and a recent certificate of the Secretary of State of as to the filing thereof and the legal existence of the Company; (b)
A copy of the By-Laws of the Company, certified by the Secretary of the Company as being in effect on a recent date; NYFS08.. :'60\\47660'0'66'1205ioPNN1893.K81
(c)
Records of meetings of the Company's stockholders and Board of Directors, including the votes adopted by the Board of Directors of the Company authorizing or ratifying the execution by the Company of the Contracts; (d)
Copies of the Contracts, executed or otherwise identified to our satisfaction; and (e)
Such other certificates, documents and papers as we have deemed advisable in connection with this opinion.
Basing our opinion on the foregoing and having regard for the principles of law we deem applicable, we are of the opinion that:
1.
The Company is duly incorporated, validly existing, and in good standing under the laws of its jurisdiction of incorporation,
,and has all requisite corporate power and authority to own and operate its properties and to carry on its business as now conducted.
2.
All orders, authorizations, approvals or consents of any federal, state or other governmental agency or authority required for the valid execution, delivery and performance by the Company of the Contracts have been obtained and are in full force and effect, subject, however, as to the performance thereof, to the continuing jurisdiction of the U.S. Federal Energy Regulatory Commission ("FERC") and any other federal governmental agency or authority having jurisdiction over the Company's operations.
3.
The execution, delivery and performance by the Company of the Contracts have not and will not violate any provisions of the Company's Certificate of Incorporations, By-Laws or any other agreement or instrument known to us by w hich the Company is bound or constitute a default thereunder or a violation thereof.
4.
The Contracts have been duly authorized (or ratified), executed and delivered by the Company and constitute legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms, except: (i) as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' and secured parties' rights and remedies generally, to 2
NYFS08., :i60\\47660'07661120ZCPNN1893.K51 1
4 o
l l
l the extent that the same may be constitutionally applied; (ii) to the extent that general equitable principles may limit the right to obtain the remedy of specific performance of obligations thereunder or injunctive relief or other equitable remedies; and (iii) that the Contracts may be subject to the continuing jurisdiction of FERC and any other federal governmental agencies or 1
authorities having jurisdiction over the Company's operations. In expressing our opinion as to the validity, binding effect and enforceability of the Contracts, we assume the due authorization of the Contracts on behalf of Vermont Yankee.
5.
The Company is not an investment company or an affiliated person of, or promoter or principal undenvriter for, an investment company, within the meaning of the Investment Company act of 1940, as amended.
The opinions herein are limited to the laws of and the federal laws of the ' United States, and we express no opinion as to the effect on the matters covered by this opinion of the laws of any otherjurisdiction.
The opinion is rendered solely for your benefit in connection with the transactions described above. This opinion may not be used or relied upon by any other person and may not be disclosed, quoted, filed with a governmental agency or otherwise referred to without our prior written consent.
Very tmly yours, 3
NYFS08.. : AN7660'0766;1205 OPNN1893.K8!
Exhibit K to the Panicipation Agreement FORM OF INDENTURE TRUSTEE CONFIRMATION
,199_
Chemical Bank, as Tmstee under the Indenture referred to below 55 Water Street New York, New York 10041 Attn: [ Trust Department]
Re:
Vemiont Yankee Nuclear Power Comoration Ladies and Gentlemen:
Reference is made to that cenain First Mortgage Indenture, dated as of October 1,1970, as modified and amended from time to time (the " Indenture"), between Vermont Yankee Nuclear Power Corpontion (" Vermont Yankee") and Chemical Bank, as tmstee thereunder ("Tmstee"). Reference is also made to that certain Participation Agreement, dated as of March 31,1994 (the "Panicipation Agreement"), between Vermont Yankee and TIFD VIII-H Inc. (" Lessor"), and the Lease Agreement (the
" Lease") contemplated thereunder.
Vermont Yankee is a pany to certain constmetion contracts for the construction and installation of two low-pressure steam turbines, a low-pressure turbine monoblock rotor forging (the " Forging") and cenain pans (collectively, the
" Equipment") at the Vermont Yankee Nuclear Power Station (the " Facility"). Pursuant to the Panicipation Agreement, the Lease and the other transaction documents thereto (collectively, the " Transaction Documents"), on delivery of the Equipment and the satisfaction of certain other conditions, lessor will take title to the Equipment and lease the Equipment to Vermont Yankee pursuant to the Lease.
With respect to the above, we request that Tmstee hereby confirm to us and to Lessor the following:
(1)
That the Equipment to be installed at the Facility is the personal propeny of Lessor, and is not attached to or pan of the real property of the Facility, and thus shall not be collateral under the Indenture; NYFS08.. :i604766050766\\l205'FRMN1693.S2L
(2)
That Tmstee shall permit Lessor access to the Equipment and, whether or not an event of default under the Indenture is occurring, shall not take any action to prevent Lessor's access to the Equipment; (3)
That in the event Trustee receives any insurance or condemnation I
proceeds with respect to the Facility which includes proceeds attributable to the Equipment, Tmstee shall pay over to Lessor all such proceeds which are attributable to the Equipment; and (4)
That the Forging is not subject to the lien of the Indenture.
VERMONT YANKEE NUCLEAR POWER j
CORPORATION a
By:
Name:
Title:
TIFD VIII-H INC.
By Name:
Title:
Accepted and agreed to:
CHEMICAL BANK, as Trustec By:
i Name:
Title:
5 c
2 NYFS08...:i60476Mh0766'1205 TkMN1693.S2L
-,ce,:
-,-,u...
Exhibit L to the Participation Agreement FORM OF SECOND MORTGAGE CONFIRMATION
,199_
Societe Generale, as Mongagee under the Second Mortgage referred to below Attn:
Re:
Vermont Yankee Nuclear Power Comoration Ladies and Gentlemen:
Reference is made to that certain Second Mortgage, Fixture Filing and Security Agreement, dated as of February 22,1990, as modified and amended from time to time (the "Second Mongage"), between Vermont Yankee Nuclear Power Corpontion
(" Vermont Yankee") and Societe Generale, as mortgagee thereunder ("Mongagee").
Reference is also made to that certain Panicipation Agreement, dated as of March 31, 1994 (the "Panicipation Agreement"), between Vermont Yankee and TIFD VIII-H Inc.
(" Lessor"), and the Lease Agreement (the " Lease") contemplated thereunder.
Vermont Yankee is a party to cenain constmetion contracts for the constmetion and installation of two low-pressure steam turbines, a low-pressure turbine monoblock rotor forging (the " Forging") and cenain parts (collectively, the
" Equipment") at the Vermont Yankee Nuclear Power Station (the " Facility"). Pursuant to the Panicipation Agreement, the Lease and the other transaction documents thereto (collectively, the " Transaction Documents"), on delivery of the Equipment and the satisfaction of certain other conditions, Lessor shall take title to the Equipment and lease the Equipment to Vermont Yankee pursuant to the Lease.
With respect to the above, we request that Mortgagee hereby conf'um to us and to Lessor the following:
NYFSC5.. :.604?660'07661235.FRMN2693 P3K
(1)
That the Equipment to be installed at the Facility is the personal propeny of Lessor, and is not attached to or pan of the real propeny of the Facility, and thus shall not be collateral under the Second Mortgage; l
(2)
That Mongagee shall permit Lessor access to the Equipment and, whether or not an event of default under the Second Mongage is occurring, shall not i
take any action to prevent Lessor's access to the Equipment; (3)
That in the event Mortgagee receives any insurance or condemnation proceeds with respect to the Facility which includes proceeds attributable to the Equipment, Mongagee shall pay over to Lessor all such proceeds which are attributable to the Equipment; and (4)
That the Forging is not subject to the lien of the Second Mongage.
VERMONT YANKEE NUCLEAR POWER CORPORATION By:
Name:
Title:
TIFD VIII-H INC.
By:
Name:
Title:
Accepted and agreed to:
SOCIETE GENERALE, as Mongagee By:
Name:
Title:
2 NYFS08.. A60,476&C66(1205 FRMN269LP3K
Exhibit M to the Participation Agreement l
FORM OF CONSTRUCTION CONTRACTS ASSIGNMENT CONSTRUCTION CONTRACTS ASSIGNMENT, dated as of
,199_, between VERMONT YANKEE NUCLEAR POWER CORPORATION, a Vermont corporation (" Assignor"), and TIFD VIII-H INC., a Delaware corporation (" Assignee").
W I T N E S S E T H:
WHEREAS, Assignor has entered into the Construction Contmets with Contractor for the construction and installation of the Equipment; and WHEREAS, Assignor has entered into the Panicipation Agreement, dated as of March 31,1994 (the " Participation Agreement"), with Assignee; and WHEREAS, Assignee, as Lessor, and Assignor, as lessee, shall enter into the I2ase dated as of the date hereof, pursuant to the terms and conditions of which Assignor will lease from Assignee the Equipment; NOW THEREFORE, in consideration of the mutual covenants herein i
contained, the parties hereto agree as follows:
1.
Definitions. Capitalized terms used but not defined herein shall have the meamngs assigned thereto in Appendix A to the Participation Agreement.
2.
Assignment. Assignor does hereby sell, assign and transfer to Assignee all of Assignor's right, title and interest in and to the Construction Contmets with respect to the Equipment, incicfag, without limitation, the right to purchase and take title to the Equipment. Assignee does hereby accept such assignment.
3.
Liability. It is expressly agreed that, anything herein contained to the contrary notwithstanding, Assignor shall at all times remain liable to Contractor under and in accordance with the Construction Contracts, and that Assignee shall not have any obligation or liability under the Construction Contracts by reason of, or arising out of, this Constmetion Contracts Assignment or be obligated to perform any of the obligations or duties of Assignor under the Constmetion Contracts.
4.
Further Aslumnces. Assignor agrees that at any time and from time to time, upon the written request of Assignee, Assignor shall promptly and duly i
NYFSO4.. d6047660.0766;1205AGRN2793778
\\
execute and deliver any and all such further instruments and documents and take such further action as Assignee may reasonably request in order to obtain the full benefits of this Constmetion Contracts Assignment and of the rights and powers hemin gmnted.
5.
Reoresentations and Warranties. Assignor represents and warrants that:
(i)
The Constmetion Contracts are in full force and effect and enforceable in accordance with their terms, Assignor is not in default themunder, Assignor has delivered tme and complete copies of the Constmetion Contracts (including all amendments, modifications, supplements and change orders) to Assignee, and Assignor has paid all amounts due on or prior to the date hereof to Contractor, under and in accordance with the Constmetion Contracts; (ii)
Assignor has not assigned or pledged, and hereby covenants that it will not assign or pledge, so long as this Constmetion Contracts Assignment shall remain in effect, the whole or any part of the rights hereby assigned to any Person other than Assignee; and (iii)
Assignor will not, so long as this Construction Contracts Assignment shall remain in effect, enter into any agreement with Contractor which would amend, modify, rescind, cancel or terminate the Construction
. Contracts without the prior written consent of Assignee.
6.
Actions of Assignee. Assignee agrees that it will not enter into any agreement with Contractor which would amend, modify, rescind, cancel or terminate the Constmetion Contracts without the prior written consent of Assignor, unless an Event of Default under the Lease or an event which, with the lapse of time or the giving of notice or both, would become such an Event of Default, has occurred and is continuing.
7.
Counternans. This Constmetion Contacts Assignment may be executed in several counterparts, such counterparts together constituting but one and the same instrument.
8.
Governing Law. THE TERMS OF THIS CONSTRUCTION CONTRACTS ASSIGNMENT AND ALL RIGHTS AND OBLIGATIONS HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
2 NYFS08.. 66047660\\0766\\t205\\AGRN7793.P7B
IN WITNESS WHEREOF, the parties hereto have cause this Constmetion Contracts Assignment to be duly executed as of the date first written above.
VERMONT YANKEE NUCLEAR POWER CORPORATION, as Assignor By:
Name:
Title:
TIFD VIII-H INC., as Assignee By:
Name:
Title:
l 3
NYFS08...:\\6047667566il205%CRN 793.P7B
Exhibit N to the Participation Agreement FORM OF NOTICE OF FUNDING
, 19__
TIFD VIII-H, Inc.
1600 Summer Street,5th Floor Stamford, Connecticut 06927 Ladies and Gentlemen:
Vermont Yankee Nuclear Power Corporation (" Vermont Yankee"),
irrevocably requests funding under the Panicipation Agreement, dated as of March 31,1994 (the "Panicipation Agmement"), between Vermont Yankee and TIFD VIII-H, Inc. The definitions and rules of interpretation in Appendix A to the Panicipation Agreement apply to this funding request. Vermont Yankee certifies that:
(1)
The proposed [ Lease Commencement Date] [ Installment Payment Date] [ Basic Term Commencement Date) is
,19_ _.
(2)
The aggregate amount of the requested funding on such date is 5
(3)
Attached are invoices fmm Contractor in the amount of the requested funding. The attached invoices are for amounts validly due and payable under the Construction Contracts and none of the attached invoices has been the basis of any previous request for funding.
(4)
Them is no reason to believe that the final Equipment Cost plus Lease Tansaction Costs will be more than $33,368,519.
VERMONT YANKEE NUCLEAR POWER CORPORATION By:
Name:
Title:
AT508. n6054766010766il20$fRM91393 V4F i
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Schedule 1 to the Participation Agreement ADDRESSES AND ACCOUNTS Address for Notices:
Acccount for Payments:
Vermont Yankee Nuclear Power Chittenden Bank Corpomtion P.O. Box 820 Ferry Road Burlington, Vermont 05401 Brattleboro, Vermont 05301 ABA No. 011600062 Attention: Vice President, Finance Account No. 016601632 Telephone: (802) 257-5271 Telecopy: (802) 257-4596 TIFD VIII-H Inc.
c/o GE Capital Global Pmject &
Stmetured Finance 1600 Summer Street Stamford, Connecticut 06927 Attention: Manager-Operations, Energy Ponfolio Telephone: (203) 357-6653 Telecopy: (203) 357-6970 NYF508. 660i47660T!66tl20$GC103004.580
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Schedule 2 to the Participation Agreement i
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PEPHITS
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Facility Operating License No. DPR-28, issued by the Nuclear Regulatory Commission, expires March 12, 2012.
L 2.
Materials License No. 44-13669-04, issued on April 21, 1988 i
by the Nuclear Regulatory Commission, expires May 31, 1993.
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Permits issued by Vermont Authorities r
Title Issuad Exciras Indirect Discharge Permit 12/31/90 9/30/95 (Re Sewage Disposal)
- ID-9-0036-1A Solid Waste Interim Permit 9/24/92 9/23/94
' (Ret Septage Spreading)
I
- # ID 253
/
Underground Storage Tank Permit 10/2/89 10/2/94 ID # 0000806 NPDES Permit 12/5/90 12/31/95 (Discharges to Conn. River)
EPA Permit f 0000264 VT Permit # 3-1199 i
't Air Contaminant Source
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Registration Certificate 7/1/93 6/30/94 j',
ID # WM2335 y
4.
. Vermont Asbestos certifications - see attached list il-5.
' The Company has the following other environmental permitst
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Indirect Discharge Partit #ID-9-003 6-1A Interim Solid Wasta Pe tuit #253 s
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Underground Storage Ta sk Permit #0000806 NPDES Permit Vt #3-119 3 l
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Air contaminant Source Registration certificate WWM2335
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VERMONT YANXtt VT ASSESTOS CERTITI< ATICNS UPDATED 12/06/93
,1 NAME SSN CERTTYP CERT /
DATE EXP%RDATE VERMONT YANKEE VT INITY 14032 08/01/93 08/01/94 VY FUCLEAR POWER ASB AFLY SIR 14033 08/01/93 0s/01/94 VYNP P! ANT ASB CONS DT 13731 04/06/93 04/06/94 1
1 l
BRUCE,WD 005524253 ABSPRODSG 14221 10/26/93 10/28/94 A53PROMON 14168 09/18/93 09/18/94 ASB5UPIR 14212 10/19/93, 10/19/94 INSMAGPLA 14254 11/05/93 11/05/94 PLMANALT 13750 04/10/93 04/10/94 PCMANALY 13759 04/10/93 04/10/94 OUIDO,P.D.
045384319 ASBPROMON 14321 12/28/93 12/28/94 As8 SUPER 14320 12/28/93 12/28/94
' 8 INSMAGPLA 14252 11/05/93 11/05/94 RIN5EL,D.H.
211703944 ASBPROMON 14315 12/22/93 12/22/94 ROLMQUIST,D.~ 008389774 ASEPROMON 14271 11/16/93 11/18/94 i
1,.HURST.T.L.
208261873 ASBPROMON 14167 09/18/93 09/18/94 g }t; 2"CCARTEY,0. T.
CO2406127 ASBPRODSC 14222 10/26/92 10/26/93 A53PROMON 14166 09/17/93 09/17/94 i
1j ASBSUPER 14215 10/19/93 10/19/94
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INSMAGPLA 14248 11/03/93
,11/C3/94 f:
ASBTIELD AXC,14777 04/10/93 04/10/94 FCMANALY 13764 04/10/93 04/10/94 I 'i!
PLMANALY 13765 04/10/93 04/10/94 iLIMILLER,E.C. 009229074 ASBPROMON 14160 09/17/93 09/17/94
') TMORNHILL,M.
017465700 ASBPROMON 14161 09/17/93 09/17/94 STUPAK,7 OC2386541 ASBFROMON 14169 09/15/93 09/1R/94 MAY,700D T.
009402323 ASEPROMON 14216 '10/19/93 10/19/94 MORRISSRTTE,R 002341046 AS8PROMON 14323 12/31/93
- 2/31/94
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PCMANALY 14787 11/03/93 11/03/94 4
l ASBTIILD ALL 147B8 11/03/93 11/03/94
\\jPRINCE,P 219464376 ASBPROMON 14264 11/10/93 11/10/94 i-SMITH,L.E.
146607552 ASBPROMON 14196 10/09/93 10/09/94 3
W~- LIAMS,M 195606178 ASBPROMON 14229 10/30/92 10/30/93 W. LEON, W.
001442573 ASBPROMON 14197 10/09/93 10/09/94 SCMULTZ,T' 010463406 ASBPROMON 14560 05/10/93 05/10/94
'5TUPAX,R 477903680 ASEPROMON 14624 07/16/93 07/16/94
! { LRTCMER,ET 140606925 ASBPROMON 14644 07/23/93 07/23/94
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r1AR 3a '94 05:48Pf1 ROPES & GRAY P.3 4
E?.hedule 3 to the Participation Agreement FILING 8 Precautionary Ucc Filings at:
1.
Vermont sacratary of State Ucc civision - Attention: Brenda 109 stata straat Montpelier, VT 05609-1101 2.
Brattisboro Town clerk 8s office Annette L. Cappy, Town Clerk 230 Main Street'
~
Brattlaboro, VT 05301 3.
Vernon Town Clark's office Sandy B. Harris, Town CitrX P.O. Box ils Vernon, VT 05254
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Schedule 4 to the Panicipation Agreement MILESTONES Installment Cumulative Milestone Event:
Payment Date:
Eauipment Cost:
Lease Commencement Date
$12,257,300 LPB inner casing machining January 1,1995
$13,392,000 complete LPA low pressure section January 15, 1995
$15,661,400 factory pre-assembly complete LPA delivery of low pressure January 31, 1995
$16,796,100 section components and inventory LPB low pressure section February 13,1995
$19,065,500 factory pre-assembly complete LPB delivery of low pressure March 1,1995
$20,200,200 section components and inventory Successful installation and May 15,1995
$22,469,600 successful start-up of low pressure sections Completion of post June 1,1995
$32,618,519 installation performance test NYFS08.. o6047660C66il:054CH330N.50A
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Schedule 6 to the Participation Agreement ERISA PIANS All Plans fi)
- 001 Retirement Plan of Vermont Yankee Nuclear Power Corporation i
for Local Union 300 of International Brotherhood of Electrical Workers
- 002 Vermont Yankee Nuclear Power Corporation Final Average Pay Pension Plan
- 003 Vermont Yankee Nuclear Power Corporation Thrift Plan for Management Employees
- 004 Vermont Yankee Nuclear Power Corporation Thrift Plan for Employees Who Are Members of The International Brotherhood of Electrical Workers Local 300 Title IV Planst Vermont Yankee Nuclear Power Corporation Final Average Pay Pension Plan Retirement Plan of Vermont Yankee Nuclear Power Corporation for Local Union 300 of International Brotherhood of Electrical i
Workers i
Multienolover Planst None ERISA Affiliates (11).
l None i
JAESCE6.YY g.d AIIdO I b3dOd IFIET b' TE W
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Participation Agreement schedule 7 to the ENVIRONMENTAL DISCLOSURES I
1.
The company is currently disposing of sludge from its septic tanks by spreading it over.a field on the property.
The sludge contains a small amount of radioactivity.
The
' Company has received permission from the NRC and state to undertake such disposal, some sludge has also been deposited in the Brattleboro town landfill.
2.
The Company is a PRP at the Maxey Flats site which is a federal superfund site facility in Kentucky that has been used for the disposal of low level radioactive wasta.
3.
The Company in the past received a notice of violation from the state replatory authorities relative to the use of the on-site septic systems.
The area of concern has been li j
addressed to the regulators ' satisfaction although there have never been any formal rescission of the notice of a
violation.
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i 4.
There is a small area of co ttamination beneath the plant li building.
The source of th e contamination was a drain line t
l running from the chemical I Lboratory to the radioactive
)],
waste building.
The line h ad leaked.
Upon discovery of the l'
leak, use of the line was d Lacontinued.
The contamination appears limited to the footprint of the building.
The Company is seeking permissi sn from applicable regulatory authorities to leave that c >ntamination in place.
The Company does not anticipate any problems in receiving that permission.
+
5.
The Company is registered a:s a generator with the State of j'
Hazardous waste g<inerated at the facility includes y;
minor amounts of chemicals <1 sed in the laboratory and during I.
n maintenance, as well as was':e oil.
It is shipped off-site
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through clean Harbors, Inc.
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6.
There aro four underground atorage tanks on-site which are identifind as follows:
Diesel fuel tank - 550 gal.
Gasoline tank - 1000 gal.
House heating boiler tank - 5000 gal.
John Deere Diesel tank'- 500 gal.
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i The company maintains the following above-ground outside storage tanks:
a.
4 radioactive waste tanks;
!, f 4 b.
1 liquid nitrogen tank; c.
2 fuel oil tanks; j
i d.
1 1500 gal waste oil tank l
3 e.
2 Water tanks; 1 contains radioactively I
contaminated water)
[
f.
3 tanks for chemicals for water treatment l
(sodium hypochlorite, sulfuric acid) 7 l )
7.
The facilities on-site do contain asbestos.
The facilities j
,were originally constructed using a substantial amount of j
asbestos as fireproofing.
The company has an ongoing g
abatement project under whi :h asbestos is removed or i
encapsulated in connection with maintenance and renovation
,]
projects.
The facilities contain one PCB transformer.
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8.
The company has filed notiens under federal law identifying i
releases of certain radioactive substances outside the plant g
building.
All notices have been approved by the NRC.
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9.
The following oil storage facilities are contained within the plant buildings; i
j, j
a.
Turbine lube oil bank 11 i
b.
Diesel generator iay tanks (2)
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c.
Bulk. drum storage areas (2) l d.
Waste oil burners (2)
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10.
The plant chemistry laborat ory contains a variety of 1,
i hazardous chamicals.
These are stored in quantities of 5 gallons or less.
Flammables are stored in safety cabinets.
11.
There are 5 large oil containing transformers outside the plant buildings as follows:
a.
Main transformer 19,730 gallons b.
Autecransformer 17,200 gallons c.
Startup transformars (2) 3720 gallon each d.
Auxiliary transfo rmer 4095 gallons 12.
The plans has 10 smaller oi l containing transformers in the building and around the pla it site.
These contain from 200 to 800 gallons of non-PCB oil.
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