EXHIBIT 10.35

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

    
EXECUTION VERSION
This instrument prepared by: Christopher J. Moore, Esq., Orrick, Herrington &
Sutcliffe LLP, 51 West 52nd Street, New York, New York, 10019, telephone (212)
506-5000, and co-prepared for purposes of complying with Mississippi law by
Ronald G. Taylor, MS Bar No. 7992, Butler, Snow, O’Mara, Stevens & Cannada,
PLLC, 1020 Highland Colony Parkway, Suite 1400, Ridgeland, MS 39157, telephone
(601) 948-5711.
After recording return to: Christopher J. Moore, Esq., Orrick, Herrington &
Sutcliffe LLP, 51 West 52nd Street, New York, New York, 10019.
Head Lessor: Tennessee Valley Authority, 400 West Summit Hill Drive, Knoxville,
TN 37902, telephone (865) 632-3366.
Head Lessee: Southaven Combined Cycle Generation LLC, Wilmington Trust, National
Association, 1100 North Market Street, Wilmington, DE, 19890, telephone (302)
636-6191.
Indexing instructions: SW ¼ of Section 15, Township 1 South, Range 8 West,
DeSoto County, Mississippi

Head Lease Agreement
Dated as of August 9, 2013
among
The United States of America,
Tennessee Valley Authority,
as Head Lessor
and
Southaven Combined Cycle Generation LLC,
as Head Lessee
________________________
Southaven Combined Cycle Facility
located in the City of Southaven, Mississippi

1

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 
 
Page

 
 
 
SECTION 1.
DEFINITIONS.........................................................................................................................
1

SECTION 2.
SUBLEASE OF THE UNDIVIDED
INTEREST....................................................................
1

SECTION 3.
TERM AND
RENT..................................................................................................................
2

Section 3.1.
Lease
Term.................................................................................................................
2

Section 3.2.
Rent for the Undivided
Interest..................................................................................
2

SECTION 4.
RIGHT OF QUIET
ENJOYMENT..........................................................................................
2

SECTION 5.
TRANSFERS OF THE UNDIVIDED
INTEREST.................................................................
2

SECTION 6.
TERMINATION; SURRENDER; AND
RETURN.................................................................
3

Section 6.1.
Surrender and Termination of this Head
Lease..........................................................
3

Section 6.2.
Termination of Head Lease at Option of Head
Lessee..............................................
3

Section 6.3.
Return.........................................................................................................................
3

SECTION 7.
LIENS.......................................................................................................................................
4

Section 7.1.
Head Lessee
Covenant...............................................................................................
4

Section 7.2.
Head Lessor
Covenant...............................................................................................
4

SECTION 8.
NONTERMINABILITY..........................................................................................................
4

SECTION 9.
MODIFICATIONS; REPLACEMENT
COMPONENTS........................................................
5

SECTION 10.
RELEASE OF
COMPONENTS..............................................................................................
5

SECTION 11.
NONMERGER.........................................................................................................................
5

SECTION 12.
APPLICATION OF PAYMENTS FROM GOVERNMENTAL ENTITY...............................
5

SECTION 13.
SECURITY FOR THE HEAD LESSEE'S
OBLIGATIONS...................................................
6

SECTION 14.
MISCELLANEOUS.................................................................................................................
6

Section 14.1.
Amendments and
Waivers.........................................................................................
6

Section 14.2.
Notices.......................................................................................................................
6

Section 14.3.
Survival......................................................................................................................
6

Section 14.4.
Successors and
Assigns..............................................................................................
6

Section 14.5.
Business
Day..............................................................................................................
7

Section 14.6.
Governing
Law...........................................................................................................
7

Section 14.7.
Severability................................................................................................................
7

Section 14.8.
Counterparts...............................................................................................................
7

Section 14.9.
Headings and Table of
Contents................................................................................
7

Section 14.10.
Further
Assurances.....................................................................................................
7

Section 14.11.
Effectiveness..............................................................................................................
7

Section 14.12.
Measuring
Life...........................................................................................................
7

Section 14.13.
Limitation of
Liability................................................................................................
8

Section 14.14.
Effect of the Facility
Lease........................................................................................
8

i

--------------------------------------------------------------------------------

TABLE OF CONTENTS
(continued)

 
 
Page

 
 
 
Section 14.15.
Separate Tax
Parcels..................................................................................................
8

Section 14.16.
Waiver of
Abatement.................................................................................................
8

Section 14.17.
Co-tenancy.................................................................................................................
8

Section 14.18.
Successors and
Assigns..............................................................................................
9

 
 
 
Appendix A Definitions
 
 
 
 
Attachment A Description of the Facility
 
Attachment B Description of the Facility Site
 
Attachment C Permitted Closing Date Liens
 

ii

--------------------------------------------------------------------------------

Head Lease Agreement
This HEAD LEASE AGREEMENT, dated as of August 9, 2013 (this “Head Lease”), among
THE UNITED STATES OF AMERICA (the “Government”), TENNESSEE VALLEY AUTHORITY, a
wholly owned corporate agency and instrumentality of the United States (“TVA”)
(the Government, solely for purposes of Section 2, and TVA, collectively,
together with their successors and permitted assigns, the “Head Lessor”), and
SOUTHAVEN COMBINED CYCLE GENERATION LLC, a Delaware limited liability company
(together with its successors and permitted assigns, the “Head Lessee”).
WHEREAS, TVA holds title to the Southaven Combined Cycle Facility, a combined
cycle generating facility with a summer net generation capacity of approximately
774 megawatts, located in the City of Southaven, Mississippi (as more
particularly described on Attachment A hereto, the “Facility”), which is located
on the Facility Site (as more particularly described in Attachment B hereto);
WHEREAS, the Head Lessor holds title to the Undivided Interest, and desires to
lease the Undivided Interest to the Head Lessee, and the Head Lessee desires to
lease the Undivided Interest from the Head Lessor, in each case on the terms and
conditions provided herein; and
WHEREAS, pursuant to the Ground Lease, the Head Lessee will lease the Ground
Interest from the Head Lessor for a term equal to the term of this Head Lease;
NOW, THEREFORE, in consideration of the premises, the mutual agreements herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1.    DEFINITIONS

Unless the context otherwise requires, capitalized terms used in this Head
Lease, including those used in the recitals, and not otherwise defined herein
shall have the respective meanings set forth in Appendix A hereto. The general
provisions of Appendix A shall apply to terms used in this Head Lease and
specifically defined herein.
SECTION 2.    LEASE OF THE FACILITY

The Head Lessor hereby leases the Undivided Interest to the Head Lessee, upon
the terms and conditions set forth herein, for the term described below, and the
Head Lessee hereby leases the Undivided Interest, upon the terms and conditions
set forth herein, from the Head Lessor. The Head Lessor and the Head Lessee
understand and agree that (a) 100% of the legal title to the Facility is vested
in the Head Lessor, (b) the Head Lessee is leasing a 90% undivided interest in
the Facility and all rights in respect thereof from the Head Lessor in
accordance with the terms of this Head Lease, (c) the Head Lessor is retaining a
10% undivided interest in the Facility and all rights in respect thereof, (d)
each of the Head Lessor (and any

1

--------------------------------------------------------------------------------

successor, assignee or lessee of its 10% undivided interest) and the Head Lessee
(and any permitted successor, assignee or lessee of its 90% undivided interest)
shall have a right to nonexclusive possession of the Facility and collectively
the Head Lessor, the Head Lessee and their respective successors, assignees and
lessees shall have the right to exclusive possession of the Facility subject to
Permitted Liens, including the Permitted Closing Date Liens set forth in
Attachment C hereto, and (e) this Head Lease is intended to be a lease of
personal property under Mississippi law. The Undivided Interest also includes
the Owner Lessor’s Percentage Interest in (i) all Modifications which are
incorporated in the Facility and which pursuant to Section 8.3 of the Facility
Lease and Section 9 hereof become subject to this Head Lease, and (ii) all
Replacement Components which become part of the Facility pursuant to Section 7.2
of the Facility Lease and Section 10 hereof.
SECTION 3.    TERM AND RENT

Section 3.1.    Head Lease Term. The term of this Head Lease shall commence on
the Closing Date and shall terminate at 11:59 p.m. (New York City time) on
November 9, 2044, subject to earlier termination pursuant to the express terms
hereof (the “Head Lease Term”). Notwithstanding anything to the contrary set
forth in this Section 3.1, in no event shall the Head Lease Term terminate so
long as the Head Lessee’s interest under this Head Lease shall be subject to the
Lien of the Lease Indenture.

Section 3.2.    Rent for the Undivided Interest.

(a)    The Head Lessee hereby agrees to pay the Head Lessor rent of $400,000,000
(the “Head Lease Rent”) on the Closing Date for the entire Head Lease Term. The
Head Lessor acknowledges receipt of such amount in full satisfaction of the Head
Lessee’s obligation to pay rent during the Head Lease Term.

(b)    Head Lease Rent paid pursuant to Section 3.2(a) shall be retained by the
Head Lessor in any and all events which are contemplated, prospective or
possible under the provisions and conditions of this Head Lease and the other
Transaction Documents and shall be absolute and irrevocable under any
circumstances whatsoever, including any rescission or termination of this Head
Lease, in whole or in part.

SECTION 4.    RIGHT OF QUIET ENJOYMENT

The Head Lessor agrees that, during the Head Lease Term, neither the Head
Lessor, any Affiliate nor any other Person claiming title superior to, or by,
through or under it shall interfere with or interrupt the quiet enjoyment of the
use, operation and possession by the Head Lessee of the Undivided Interest
subject to the terms hereof; provided that, the Head Lessor’s covenant does not
relate to actions of the Lease Indenture Trustee.
SECTION 5.    TRANSFERS OF THE FACILITY; CONVEYANCE OF TITLE

The Head Lessee agrees that, prior to the expiration or earlier termination of
the Facility Lease Term, it shall not assign, transfer or convey the Head
Lessee’s leasehold interest in the Undivided Interest, in whole or in part,
except as part of the Head Lessee’s transfer of all or part of the Owner
Lessor’s Interest pursuant to, and as permitted or required by, the Transaction
Documents. The Head Lessor acknowledges and agrees that (a) the Undivided
Interest will be leased to the Facility Lessee pursuant to the Facility Lease,
(b) the

2

--------------------------------------------------------------------------------

Head Lessee shall have the right to transfer and convey all or part of the Head
Lessee’s leasehold interest in the Undivided Interest under and in accordance
with Sections 5.1, 15.2, 16 and 18.2 of the Facility Lease in connection with
the transfer thereunder of all or part of the Owner Lessor’s Interest (or, in
connection with a partial termination pursuant to Section 15.2 of the Facility
Lease, the Relevant Portion of the Undivided Interest), (c) the Head Lessee’s
interest hereunder may be transferred together with the Owner Lessor’s Interest
to the Lease Indenture Trustee or an Affiliate of the Lease Indenture Trustee or
any other Person who is the purchaser thereof in foreclosure of the Lien of the
Lease Indenture or by deed in lieu of any such foreclosure or after any such
foreclosure or deed in lieu of foreclosure or in connection with the exercise of
the Owner Lessor’s remedies under Section 18.2 of the Facility Lease, and
(d) the Facility Lessee shall have the right to sublease the Undivided Interest
in accordance with Section 20.2 of the Facility Lease.
SECTION 6.    TERMINATION; SURRENDER; AND RETURN

Section 6.1.    Surrender and Termination of this Head Lease.

(a)    The Head Lessee shall surrender all of its interest in this Head Lease
upon (i) the termination in whole of the Facility Lease pursuant to Section 15.2
thereof, (ii) the expiration of the Facility Lease Term in accordance with
Section 16 of the Facility Lease, or (iii) the expiration or termination of the
Head Lease Term in accordance herewith.

(b)    If the Facility Lease is terminated pursuant to Section 15.2 thereof in
part with respect to a Relevant Portion of the Undivided Interest, this Head
Lease shall terminate in part with respect to such Relevant Portion of the
Undivided Interest on the same date and time as the termination of the Facility
Lease with respect to such Relevant Portion.

Section 6.2.    Termination of Head Lease at Option of Head Lessee. At any time
on or following (a) termination of the Facility Lease pursuant to Section 18.2
thereof, or (b) the expiration of the Facility Lease Term in circumstances under
which the Facility Lessee is required to deliver possession of the Undivided
Interest to the Owner Lessor in accordance with Section 5 of the Facility Lease,
the Head Lessee may elect to terminate this Head Lease upon written notice to
the Head Lessor, in each case without any obligation or liability to the Head
Lessor. In connection with any termination of this Head Lease pursuant to this
Section 6.2, the Head Lessee shall return the Undivided Interest to the Head
Lessor in accordance with Section 6.3.

Section 6.3.    Return. Upon (a) surrender of the Head Lessee’s interest in this
Head Lease pursuant to Section 6.1(a), (b) termination of this Head Lease in
whole pursuant to Section 6.2, or (c) termination of this Head Lease in part
with respect to a Relevant Portion of the Undivided Interest pursuant to Section
6.1(b), the Head Lessee shall (i) return the Undivided Interest or the Relevant
Portion of the Undivided Interest, as the case may be, to the Head Lessor, by
delivering possession of the same to the Head Lessor at its location on the
Facility Site, and (ii) execute, acknowledge and deliver a release, surrender or
conveyance of all its right, title, interest and estate in the Undivided
Interest or the Relevant Portion of the Undivided Interest, as the case may be,
to the Head Lessor, to be prepared by and at the expense of the Head Lessor in a
form

3

--------------------------------------------------------------------------------

reasonably satisfactory to the Head Lessee, in each case on an “as is,” “where
is,” and “with all faults” basis and otherwise without representation or
warranty other than as to the absence of Owner Lessor’s Liens.

SECTION 7.    LIENS

Section 7.1.    Head Lessee Covenant. The Head Lessee agrees that it shall
(a) not, directly or indirectly, create, incur, assume or suffer to exist, any
Owner Lessor’s Liens, (b) promptly notify the Head Lessor and, so long as the
Lien of the Lease Indenture has not been discharged, the Lease Indenture
Trustee, of the imposition of any such Owner Lessor’s Lien of which the Head
Lessee is aware, and (c) promptly, at its own expense, take such action as may
be necessary to fully discharge or release any such Owner Lessor’s Lien;
provided, however, that the Head Lessee shall not be in breach of this covenant
so long as it shall be diligently contesting such Lien and such contest shall
not present any material risk of the sale, foreclosure or loss of the Owner
Lessor’s Interest or any part thereof or the rights of the Head Lessor or, so
long as the Lien of the Lease Indenture has not been terminated or discharged,
the Lease Indenture Trustee under the Transaction Documents.

Section 7.2.    Head Lessor Covenant. The Head Lessor agrees that it shall
(a) not, directly or indirectly, create, incur, assume or suffer to exist any
Lien on or with respect to the Undivided Interest or any interest therein or in,
to or on its interest in this Head Lease, other than Permitted Liens,
(b) promptly notify the Head Lessee and, so long as the Lien of the Lease
Indenture has not been discharged, the Lease Indenture Trustee of the imposition
of any such Lien (other than Permitted Liens) of which the Head Lessor is aware,
and (c) promptly, at its own expense, take such action as may be necessary to
fully discharge or release any such Lien (other than Permitted Liens); provided,
however, that the Head Lessor shall not be in breach of this covenant so long as
it shall be diligently contesting such Lien and such contest shall not present
any material risk of the sale, foreclosure or loss of the Owner Lessor’s
Interest or any part thereof or the rights of the Head Lessee or, so long as the
Lien of the Lease Indenture has not been terminated or discharged, the Lease
Indenture Trustee under the Transaction Documents.

SECTION 8.    NONTERMINABILITY

Neither the rights nor obligations of the Head Lessee or the Head Lessor under
this Head Lease shall be terminated, extinguished, diminished, lost or otherwise
impaired prior to the expiration or early termination of the Head Lease Term in
accordance herewith by any circumstances of any character, including: (a) any
loss or destruction of, or damage to, or failure to complete construction of,
all or any part of the Facility, the Facility Site or any Component for any
reason whatsoever and of whatever duration, (b) the condemnation, requisitioning
(by eminent domain or otherwise), expropriation, seizure or other taking of
title to or use of all or a portion of the Facility Site or the Facility or any
portion or Component thereof, or interest therein, by any Governmental Entity or
otherwise, (c) any prohibition, limitation or restriction on the use by any
Person of all or any part of its property or the interference with such use by
any Person, or any eviction by paramount title or otherwise, (d) any inadequacy,
incorrectness or failure of the description of the Facility Site, the Facility,
the Undivided Interest, the Ground Interest or any part thereof or any rights or
property in which an interest is intended to be granted or conveyed by this Head
Lease, (e) insolvency, bankruptcy,

4

--------------------------------------------------------------------------------

reorganization or similar proceedings by or against the Head Lessor, the Head
Lessee or any other Person, (f) the failure by the Head Lessee or the Head
Lessor to comply with Section 7 hereof or with any other Transaction Documents,
or (g) any other reason whatsoever, whether similar or dissimilar to any of the
foregoing.
SECTION 9.    MODIFICATIONS; REPLACEMENT COMPONENTS

The Owner Lessor’s Percentage Interest in all Required Modifications, all
Nonseverable Modifications and all Modifications financed by the Owner Lessor by
an Additional Equity Investment or a Supplemental Financing pursuant to Section
11.2 of the Participation Agreement shall automatically upon being affixed to or
incorporated into the Facility become subject to this Head Lease without any
action by any Person whatsoever and shall be deemed to be a part of the
Undivided Interest for all purposes of this Head Lease. No interest in any
Removable Modification shall become subject to this Head Lease unless the Owner
Lessor shall have leased such Removable Modification in accordance with Section
5.2 of the Facility Lease. The Owner Lessor’s Percentage Interest in all
Replacement Components incorporated in the Facility in accordance with the
Facility Lease shall automatically become subject to this Head Lease without any
action by any Person whatsoever and shall be deemed to be a part of the
Undivided Interest for all purposes of this Head Lease.
SECTION 10.    RELEASE OF COMPONENTS

Whenever a Component is replaced or any surplus or obsolete Component is removed
because it is no longer necessary for the use, operation or maintenance of the
Facility, in each case pursuant to, and in accordance with, Section 7.2 of the
Facility Lease, and thereafter ceases to be subject to the Facility Lease, the
Head Lessee’s interest in such replaced, surplus or obsolete Component shall
automatically and without further act of any Person be released from this Head
Lease, and the Head Lessee shall, upon the written request of, and at the cost
and expense of, the Head Lessor, execute and deliver to, and as directed in
writing by, the Head Lessor an appropriate instrument (in due form for
recording) releasing such replaced, surplus or obsolete Component from this Head
Lease.
SECTION 11.    NONMERGER

The reversionary interests of the Head Lessor in the Undivided Interest shall
not merge into any interests in the Undivided Interest leased by, through or
under this Head Lease even if such reversionary interests and such leased
interests are at any time vested in or held directly or indirectly by the same
Person, but this Head Lease shall nonetheless remain in full force and effect in
accordance with its terms notwithstanding such vesting or holding.
Notwithstanding this Section 11, nothing shall preclude termination of this Head
Lease pursuant to Section 6.1.
SECTION 12.    APPLICATION OF PAYMENTS FROM GOVERNMENTAL ENTITY

Any payments received during or with respect to the Facility Lease Term by the
Head Lessor or by the Head Lessee from any Governmental Entity with respect to
the seizure, expropriation, condemnation or requisition of the use of, or title
to, the Undivided Interest shall be applied in accordance with Section 10.2 of
the Facility Lease. Any payments received with respect to the period beginning
upon the early termination or expiration of the Facility Lease Term and ending
at the end of the Head Lease Term by the Head Lessor

5

--------------------------------------------------------------------------------

or by the Head Lessee from any Governmental Entity with respect to the seizure,
expropriation, condemnation or requisition of the use of, or title to the
Undivided Interest shall be paid over to, or retained by, the Head Lessee. Any
payment received with respect to the period after the Head Lease Term by the
Head Lessor or by the Head Lessee from any Governmental Entity with respect to
the seizure, expropriation, condemnation or requisition of the use of, or title
to, the Undivided Interest shall be paid over to, or retained by, the Head
Lessor.
SECTION 13.    SECURITY FOR THE HEAD LESSEE’S OBLIGATIONS

In order to secure the Lessor Notes, the Head Lessee will by the Lease Indenture
assign and grant a Lien to the Lease Indenture Trustee in and to all of the Head
Lessee’s right, title and interest in, to and under this Head Lease and the
Owner Lessor’s Interest, including its leasehold interest in the Undivided
Interest, other than Excepted Payments and subject to Excepted Rights. The Head
Lessor hereby consents to such assignment and to the creation of such Lien and
acknowledges receipt of a copy of the Lease Indenture, it being understood that
such consent shall not affect any requirement or the absence of any requirement
for any consent under any other circumstances. TO THE EXTENT, IF ANY, THAT THIS
HEAD LEASE CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM
COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY
INTEREST IN THIS HEAD LEASE MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF
ANY COUNTERPART HEREOF OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE
IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE
LEASE INDENTURE TRUSTEE ON THE SIGNATURE PAGE THEREOF.
SECTION 14.    MISCELLANEOUS

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

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

Section 14.3.    Survival. Except as expressly set forth herein, the warranties
and covenants made by each party hereto shall not survive the expiration or
termination of this Head Lease in accordance with the terms hereof.

Section 14.4.    Successors and Assigns.

(a)    This Head Lease shall be binding upon and shall inure to the benefit of,
and shall be enforceable by, the parties hereto and their respective successors
and permitted assigns as permitted by and in accordance with the terms hereof.
(b)    The Head Lessor hereby consents to the entry by the Head Lessee into, and
the performance by the Head Lessee of, the Transaction Documents. Except as
expressly provided herein or in

6

--------------------------------------------------------------------------------

any other Transaction Document, neither party may assign its interests or
transfer its obligations herein without the consent of the other party hereto.

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

Section 14.6.    Governing Law. This Head Lease shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New York
(without regard to conflicts of laws principles other than as provided in
Section 5-1401 of the NY General Obligations Law), except to the extent that
Mississippi law or U.S. federal law shall apply.

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

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

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

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

Section 14.11.    Effectiveness. This Head Lease has been dated as of the date
first above written for convenience only. This Head Lease shall become effective
on the Effective Date.

Section 14.12.    Measuring Life. If and to the extent that any of the rights
and privileges granted under this Head Lease, would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule or law relating to
the vesting of interests in property or the suspension of the power of
alienation of property, then it is agreed that notwithstanding any other
provision of this Head Lease, such options, rights and privileges, subject to
the respective conditions hereof governing the exercise of such options, rights
and privileges, shall be exercisable only during (a) the longer of (i) a period
which shall end twenty-one (21) years after the death of the last survivor of
the descendants living on the date of the execution of this Head Lease of the
following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W. Reagan, George H.W. Bush,

7

--------------------------------------------------------------------------------

William J. Clinton, George W. Bush and Barack H. Obama, or (ii) the period
provided under the Uniform Statutory Rule Against Perpetuities, or (b) the
specific applicable period of time expressed in this Head Lease, whichever of
(a) and (b) is shorter.

Section 14.13.    Limitation of Liability. It is expressly understood and agreed
by the parties hereto that (a) this Head Lease is executed and delivered by
Wilmington Trust, National Association (“Wilmington”), not individually or
personally but solely as the Lessor Manager of the Head Lessee under the Owner
Lessor LLC Agreement, in the exercise of the powers and authority conferred and
vested in it pursuant thereto, (b) each of the representations, undertakings and
agreements herein made on the part of the Head Lessee is made and intended not
as personal representations, undertakings and agreements by Wilmington, but is
made and intended for the purpose for binding only the Head Lessee, (c) nothing
herein contained shall be construed as creating any liability on Wilmington,
individually or personally, to perform any covenant either expressed or implied
contained herein, all such liability, if any, being expressly waived by the
parties hereto or by any Person claiming by, through or under the parties
hereto, and (d) under no circumstances shall Wilmington be personally liable for
the payment of any indebtedness or expenses of the Head Lessee or be liable for
the breach or failure of any obligation, representation, warranty or covenant
made or undertaken by the Head Lessee under this Head Lease.

Section 14.14.    Effect of the Facility Lease. Except for its obligations under
Sections 4, 6, or 7.1 hereof, by entering into the Facility Lease, the Head
Lessee shall be deemed to have complied with any covenant or agreement made by
it hereunder with respect to the operation, maintenance and use of the Undivided
Interest during the Facility Lease Term, without necessity of any action by the
Head Lessee and regardless of whether the Facility Lessee complies with its
corresponding obligations under the Facility Lease.

Section 14.15. Separate Tax Parcels. Neither the Head Lessor nor the Head Lessee
will seek to have, or assist or cooperate in having, the Undivided Interest
separately assessed as a tax parcel for ad valorem tax purposes. The Head Lessor
and the Head Lessee agree to cooperate in opposing such separate assessment of
the Undivided Interest.

Section 14.16. Waiver of Abatement. The Head Lessee waives any right under
Section 89-7-3 of the Mississippi Code Annotated, as the same may be amended
from time to time, to abate rent because of damage to the Facility Site or the
Facility.

Section 14.17. Co-tenancy. The Head Lessor and the Head Lessee intend for their
respective rights as tenants-in-common in the Facility under Applicable Law to
be modified and supplemented by the terms of this Head Lease and, following
termination of the Facility Lease, the Support Agreement. Without limiting the
foregoing, to the extent inconsistent with this Head Lease and, following
termination of the Facility Lease, the Support Agreement, and to the extent
permitted by law, the Head Lessor and the Head Lessee, on its own behalf and on
behalf of its successors and assigns, disclaim the application of fiduciary
duties imposed on co-tenants, any right for reimbursement for repairs and
improvements made by a co-tenant, and any right to a share of rents or profits
generated by a co-tenant.

8

--------------------------------------------------------------------------------

Section 14.18. Waiver of Partition. Each of the Head Lessor and the Head Lessee,
on its own behalf and on behalf of its successors and assigns, hereby waives any
right, whether pursuant to statute including Section 11-21-3 of the Mississippi
Code of 1972, as amended, or common law, to partition the Facility or any
interest or portion thereof, and such wavier will continue in effect until the
termination of this Head Lease in accordance with its terms. Until termination
of this Head Lease, each of the Head Lessee and the Head Lessor agrees not to
commence any action of any kind seeking any form of partition with respect
thereto.

[Signature page follows.]

9

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Head Lessor and the Head Lessee have caused this Head
Lease to be duly executed and delivered by their respective officers thereunto
duly authorized on the dates of their respective acknowledgments and effective
as of the Effective Date.
 
THE UNITED STATES OF AMERICA
By: Tennessee Valley Authority, as legal agent
 
 
By: /s/ John M. Hoskins                   
       Name: John M. Hoskins
       Title: Senior Vice President and Treasurer and Interim Chief Risk Officer
       Date: August 1, 2013

STATE OF Tennessee         )    
) ss.:
COUNTY OF Knox            )
Personally appeared before me, the undersigned authority in and for the said
county and state, on this 1st day of August, 2013, within my jurisdiction, the
within named John M. Hoskins, who acknowledged to me that he is Senior Vice
President, Treasurer, Interim Chief Risk Officer of Tennessee Valley Authority,
a wholly owned corporate agency and instrumentality of the United States of
America and agent for the United States of America, and that for and on behalf
of Tennessee Valley Authority as agent for the United States of America, and as
the act and deed of the United States of America, he executed the above and
foregoing instrument, after first having been duly authorized by Tennessee
Valley Authority and the United States of America so to do.
/s/ Joshua L. McGill     
Notary Public

My Commission expires:
May 1, 2016

(Head Lease)

--------------------------------------------------------------------------------

 
TENNESSEE VALLEY AUTHORITY,
as Head Lessor
 
By: /s/ John M. Hoskins                   
       Name: John M. Hoskins
       Title: Senior Vice President and Treasurer and Interim Chief Risk Officer
       Date: August 1, 2013

STATE OF Tennessee        )
) ss.:
COUNTY OF Knox         )
Personally appeared before me, the undersigned authority in and for the said
county and state, on this 1st day of August, 2013, within my jurisdiction, the
within named John M. Hoskins, who acknowledged to me that he is Senior Vice
President, Treasurer, Interim Chief Risk Officer of Tennessee Valley Authority,
a wholly owned corporate agency and instrumentality of the United States of
America, and that for and on behalf of the Tennessee Valley Authority, and as
its act and deed, he executed the above and foregoing instrument, after first
having been duly authorized so to do.
/s/ Stephanie L. Raley     
Notary Public

My Commission expires:
May 1, 2016

(Head Lease)

--------------------------------------------------------------------------------

                            
 
SOUTHAVEN COMBINED CYCLE
GENERATION LLC,
as Head Lessee
By: Wilmington Trust, National Association, not in its individual capacity, but
solely as Lessor Manager under the Owner Lessor LLC Agreement
 
 
By: /a/ Rita Marie Ritrovato                  
       Name: Rita Marie Ritrovato
       Title: Assistant Vice President
       Date: August 1, 2013

STATE OF Delaware        )
) ss.:
COUNTY OF New Castle    )
Personally appeared before me, the undersigned authority in and for the said
county and state, on this 1 day of August, 2013, within my jurisdiction, the
within named Rita Marie Ritrovato, who acknowledged to me that she is Assistant
Vice President of Wilmington Trust, National Association, a national banking
association and Lessor Manager of Southaven Combined Cycle Generation LLC, a
Delaware limited liability company (the “Owner Lessor”), and that for and on
behalf of Wilmington Trust, National Association solely as Lessor Manager of the
Owner Lessor, and as the act and deed of Wilmington Trust, National Association
solely as Lessor Manager of the Owner Lessor, and as the act and deed of the
Owner Lessor, he executed the above and foregoing instrument, after first having
been duly authorized by Wilmington Trust, National Association and the Owner
Lessor so to do.
    
/s/ Mark H. Brzoska
Notary Public

My Commission expires:
January 6, 2014

(Head Lease)

--------------------------------------------------------------------------------

The name and address of the Head Lessor are:

HEAD LESSOR:
Tennessee Valley Authority

400 West Summit Hill Drive
Knoxville, Tennessee 37902
Telephone No.: (865) 632-3366
Facsimile No.: (865) 632-6673

and (for purposes of Section 2 hereof):

United States of America
c/o Tennessee Valley Authority
400 West Summit Hill Drive
Knoxville, Tennessee 37902
Telephone No.: (865) 632-3366
Facsimile No.: (865) 632-6673

The name and address of the Head Lessee are:

HEAD LESSEE: Southaven Combined Cycle Generation LLC
Wilmington Trust, National Association
1100 North Market Street
Wilmington, Delaware 19890-1600
Telephone No.: (302) 636-6191
Facsimile No.: (302) 636-4140
E-mail: jparedes@wilmingtontrust.com
Attention: Corporate Trust Administration

    

(Head Lease)

--------------------------------------------------------------------------------

*Receipt of the original counterpart of the foregoing Head Lease is hereby
acknowledged on this 9th day of August, 2013.
                            
 
WILMINGTON TRUST COMPANY,
not in its individual capacity, but solely as Lease Indenture Trustee
By: Wilmington Trust, National Association, not in its individual capacity, but
solely as Lessor Manager under the Owner Lessor LLC Agreement
 
 
By: /s/ Jose L. Paredes              
       Name: Jose L. Paredes
       Title: Assistant Vice President
 

STATE OF Delaware            )
) ss.:
COUNTY OF New Castle        )
Personally appeared before me, the undersigned authority in and for the said
county and state, on this 5 day of August, 2013, within my jurisdiction, the
within named Jose L. Paredes, who acknowledged to me that he is Assistant Vice
President of Wilmington Trust Company, and that for and on behalf of Wilmington
Trust Company, and as the act and deed of Wilmington Trust Company solely as
Lease Indenture Trustee, he executed the above and foregoing instrument, after
first having been duly authorized by Wilmington Trust Company so to do.
    
/s/ Jacqueline Solone
Notary Public
My Commission expires:
March 9, 2015

(Head Lease)

--------------------------------------------------------------------------------

    
Appendix A
to
Head Lease

DEFINITIONS

APPEN. A-1

--------------------------------------------------------------------------------

Appendix A
___________________________________________
Definitions
___________________________________________

Southaven Combined Cycle Facility

--------------------------------------------------------------------------------

Appendix A - Definitions
GENERAL PROVISIONS
In this Appendix A and each Transaction Document (as hereinafter defined),
unless otherwise provided herein or therein:
(a)    the terms set forth in this Appendix A or in any such Transaction
Document shall have the meanings herein provided for and any term used in a
Transaction Document and not defined therein or in this Appendix A but in
another Transaction Document shall have the meaning herein or therein provided
for in such other Transaction Document;
(b)    any term defined in this Appendix A by reference to another document,
instrument or agreement shall continue to have the meaning ascribed thereto
whether or not such other document, instrument or agreement remains in effect;
(c)    words importing the singular include the plural and vice versa;
(d)    words importing a gender include either gender;
(e)    a reference to a part, clause, section, paragraph, article, party, annex,
appendix, exhibit, schedule or other attachment to or in respect of a
Transaction Document is a reference to a part, clause, section, paragraph, or
article of, or a part, annex, appendix, exhibit, schedule or other attachment
to, such Transaction Document unless, in any such case, otherwise expressly
provided in any such Transaction Document;
(f)    a reference to any statute, regulation, proclamation, ordinance or law
includes all statutes, regulations, proclamations, ordinances or laws varying,
consolidating or replacing the same from time to time, and a reference to a
statute includes all regulations, policies, protocols, codes, proclamations and
ordinances issued or otherwise applicable under that statute unless, in any such
case, otherwise expressly provided in any such statute or in such Transaction
Document;
(g)    a definition of or reference to any document, instrument or agreement
includes an amendment or supplement to, or restatement, replacement,
modification or renovation of, any such document, instrument or agreement unless
otherwise specified in such definition or in the context in which such reference
is used;
(h)    a reference to a particular section, paragraph or other part of a
particular statute shall be deemed to be a reference to any other section,
paragraph or other part substituted therefor from time to time;
(i)    if a capitalized term describes, or shall be defined by reference to, a
document, instrument or agreement that has not as of any particular date been
executed and delivered and such document, instrument or agreement is attached as
an exhibit to the Participation Agreement (as hereinafter defined),

2

--------------------------------------------------------------------------------

such reference shall be deemed to be to such form and, following such execution
and delivery and subject to paragraph (h) above, to the document, instrument or
agreement as so executed and delivered;

(j)    a reference to any Person (as hereinafter defined) includes such Person’s
successors and permitted assigns;
(k)    any reference to “days” shall mean calendar days unless “Business Days”
(as hereinafter defined) are expressly specified;
(l)    if the date as of which any right, option or election is exercisable, or
the date upon which any amount is due and payable, is stated to be on a date or
day that is not a Business Day, such right, option or election may be exercised,
and such amount shall be deemed due and payable, on the next succeeding Business
Day with the same effect as if the same was exercised or made on such date or
day (without, in the case of any such payment, the payment or accrual of any
interest or other late payment or charge, provided such payment is made on such
next succeeding Business Day);
(m)    words such as “hereunder”, “hereto”, “hereof” and “herein” and other
words of similar import shall, unless the context requires otherwise, refer to
the whole of the applicable document and not to any particular article, section,
subsection, paragraph or clause thereof;
(n)    a reference to “including” shall mean including without limiting the
generality of any description preceding such term, and for purposes hereof and
of each Transaction Document the rule of ejusdem generis shall not be applicable
to limit a general statement, followed by or referable to an enumeration of
specific matters, to matters similar to those specifically mentioned;
(o)    all accounting terms not specifically defined herein or in any
Transaction Document shall be construed in accordance with GAAP;
(p)    the word “or” need not be exclusive; and
(q)    unless the context or the specific provision otherwise requires, whenever
in the Transaction Documents a provision requires that the rating of a Person or
the Lessor Notes be confirmed, such provisions shall be deemed to mean that each
Rating Agency shall have confirmed the rating of the senior long term unsecured
debt of such Person or the Lessor Notes, if then rated by such Rating Agency, a
copy of which confirmation shall be delivered by TVA to the Equity Investor, the
Owner Lessor and, so long as the Lien of the Lease Indenture shall not have been
terminated or discharged, to the Lease Indenture Trustee and shall be without
indication that such Person or the Lessor Notes, as the case may be, has been
placed on credit watch, credit review, or any similar status with negative
implications or which does not indicate the direction of the potential ratings
change.

3

--------------------------------------------------------------------------------

DEFINED TERMS
“2013 Lessor Notes” shall mean the 3.846% Series 2013 Bonds due August 15, 2033
issued on the Closing Date by the Owner Lessor and any Lessor Notes issued in
replacement therefor pursuant to Section 2.9 of the Lease Indenture.
“Actual Knowledge” shall mean, with respect to any Transaction Party, actual
knowledge of, or receipt of written notice by, an officer (or other employee
whose responsibilities include the administration of the Transaction) of such
Transaction Party; provided that neither the Lease Indenture Trustee nor the
Lessor Manager shall be deemed to have Actual Knowledge of any fact solely by
virtue of an officer of the Lease Indenture Trustee or the Lessor Manager, as
the case may be, having actual knowledge of such fact unless such officer is an
officer in the Corporate Trust Administration Department of the Lease Indenture
Trustee or the Lessor Manager, as the case may be, responsible for the
administration of this transaction.
“Additional Equity Investment” shall mean the amount, if any, provided by the
Equity Investor to finance all or a portion of the cost of any Modification
financed pursuant to Section 11.2(a) of the Participation Agreement.
“Additional Facility” shall have the meaning specified in Section 4.4 of the
Ground Lease.
“Additional Lessor Notes” shall have the meaning specified in Section 2.12 of
the Lease Indenture.
“Additional Owner” shall have the meaning specified in Section 4.4 of the Ground
Lease.
“Affiliate” of a particular Person shall mean any Person directly or indirectly
controlling, controlled by or under common control with such particular Person.
For purposes of this definition, “control” when used with respect to any
particular Person shall mean the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms “controlling” and
“controlled” have meanings correlative to the foregoing; provided, however, that
under no circumstances shall the Trust Company be considered an Affiliate of any
of the Owner Lessor, the Equity Investor, any Equity Investor Member or any
Southaven Holdco Note Purchaser, nor the Owner Lessor, any Equity Investor, any
Equity Investor Member or any Southaven Holdco Note Purchaser be considered an
Affiliate of the Trust Company; provided, further, that no Federal Governmental
Entity shall be considered to be an Affiliate of TVA.
“After-Tax Basis” shall mean, with respect to any payment to be received by any
Person, the amount of such payment (the base payment) supplemented by a further
payment (the additional payment) to that Person so that the sum of the base
payment plus the additional payment shall, after deduction of the amount of all
Federal, state and local income Taxes required to be paid by such Person in
respect of the receipt or accrual of the base payment and the additional payment
(taking into account any reduction in such income Taxes resulting from tax
benefits realized or to be realized by the recipient as a result of the payment
or the event giving rise to the payment), be equal to the amount required to be
received. Such calculations shall be made on the basis of the highest generally
applicable Federal, state and local income tax rates applicable to the

4

--------------------------------------------------------------------------------

Person for whom the calculation is being made for all relevant periods, and
shall take into account the deductibility of state and local income Taxes for
Federal income tax purposes.
“Applicable Law” shall mean, without limitation, all applicable laws, including
all Environmental Laws, and treaties, judgments, decrees, injunctions, writs and
orders of any court, arbitration board or Governmental Entity and rules,
regulations, orders, ordinances, licenses and permits of any Governmental
Entity.
“Applicable Percentage ” shall have the meaning specified in Section 1 of the
Support Agreement.
“Applicable Rate” shall mean 4.95% per annum.
“Appraisal Procedure” shall mean (except with respect to the Closing Appraisal
and any appraisal to determine Fair Market Sales Value after a Lease Event of
Default shall have occurred and be continuing) an appraisal conducted by an
appraiser or appraisers in accordance with the procedures set forth in this
definition of “Appraisal Procedure.” The Equity Investor and TVA will consult
with the intent of selecting a mutually acceptable Independent Appraiser. If a
mutually acceptable Independent Appraiser is selected, the Fair Market Sales
Value shall be determined by such Independent Appraiser. If the Equity Investor
and TVA are unable to agree upon a single Independent Appraiser within a 15-day
period, one shall be appointed by the Equity Investor, and one shall be
appointed by TVA (or its designee), which Independent Appraisers shall attempt
to agree upon the value, period, amount or other determination that is the
subject of the appraisal. If either the Equity Investor or TVA does not appoint
its appraiser, the determination of the other appraiser shall be conclusive and
binding on the Equity Investor and TVA. If the appraisers appointed by the
Equity Investor and TVA are unable to agree upon the value, period, amount or
other determination in question, such appraisers shall jointly appoint a third
Independent Appraiser or, if such appraisers do not appoint a third Independent
Appraiser, the Equity Investor and TVA shall jointly appoint the third
Independent Appraiser. In such case, the average of the determinations of the
three appraisers shall be conclusive and binding on the Equity Investor and TVA,
unless the determination of one appraiser differs from the middle determination
by more than twice the amount by which the third determination differs from the
middle determination, in which case the determination of the most disparate
appraiser shall be excluded, and the average of the remaining two determinations
shall be conclusive and binding on the Equity Investor and TVA.
“Appraiser” shall mean DAI Management Consultants, Inc.
“Appropriations Act Paragraph” shall have the meaning specified in Section
3.1(v) of the Participation Agreement.
“Arbitration Proceeding” shall mean a procedure whereby the party seeking to
arbitrate a dispute concerning an amount payable under the Support Agreement
shall provide written notice of its intention to arbitrate at the time and to
the other party of the Support Agreement. Such notice (i) shall specify the
section or sections of the Support Agreement which authorizes or authorize an
Arbitration Proceeding, (ii) provide reasonable detail of the item or items in
dispute, and (iii) set forth the name and address of the person designated to
act as the arbitrator on behalf of the party providing such notice. Within
20 Business Days after such notice is

5

--------------------------------------------------------------------------------

given, the party to which such notice was given shall give notice to the first
party, specifying the name and address of the person designated to act as
arbitrator on its behalf. If the second party fails to notify the first party of
the appointment of its arbitrator within such 20 Business Day period, then the
appointment of the second arbitrator shall be made in the same manner as
hereinafter provided for the appointment of a third arbitrator. The arbitrators
so chosen shall meet within 10 Business Days after the second arbitrator is
appointed and within 20 Business Days thereafter shall decide the dispute. If
within such period they cannot agree upon their decision, they shall within
10 Business Days thereafter appoint a third arbitrator and, if they cannot agree
upon such appointment, the third arbitrator shall be appointed upon their
application or upon the application of either party, by the American Arbitration
Association, or any organization which is a successor thereto from a panel of
arbitrators having expertise in the business of operating simple cycle
combustion turbines. The three arbitrators shall meet and decide the dispute
within 20 Business Days of the appointment of the third arbitrator. Any decision
or determination in which two of the three arbitrators shall concur or, if no
two of the three arbitrators shall concur, the decision or determination of the
arbitrator last selected shall be final and binding upon the parties. In
designating arbitrators and in deciding the dispute, the arbitrators shall act
in accordance with the rules of the American Arbitration Association then in
force, subject, however, to express provisions to the contrary, if any,
contained in the Support Agreement. In the event that the American Arbitration
Association or a nationally recognized successor shall not then be in existence,
the arbitration shall proceed under comparable laws or statutes then in effect.
The parties to the arbitration shall be entitled to present evidence and
argument to the arbitrators. Each party shall pay (i) the fees and expenses of
the arbitrator appointed by or on its behalf, and (ii) equal shares of (a) the
other expenses of the arbitration properly incurred and (b) the fees and
expenses of the third arbitrator, if any. For purposes of this definition, the
Facility User shall be deemed to be one party and TVA shall be deemed to be the
other party.
“Assigned Documents” shall have the meaning specified in clause (2) of the
Granting Clause of the Lease Indenture.
“Assignment and Assumption Agreement” shall mean an assignment and assumption
agreement in form and substance substantially in the form of Exhibit F to the
Participation Agreement.
“Bankruptcy Code” shall mean the United States Bankruptcy Code of 1978, as
amended from time to time, 11 U.S.C. §101 et seq.
“Base Rate” shall mean the rate of interest publicly announced from time to time
by Citibank, N.A. at its New York office as its base rate for domestic
commercial loans, such rate to change as and when such base rate changes. For
purpose of this definition, “base rate” shall mean that rate announced by
Citibank, N.A. from time to time as its base rate as that rate may change from
time to time with changes to occur on the date Citibank, N.A.’s base rate
changes.
“Basic Lease Rent” shall have the meaning specified in Section 3.2 of the
Facility Lease.

6

--------------------------------------------------------------------------------

“Basic Lease Rent (Debt Portion)” for any Rent Payment Date shall mean the
amount set forth under the heading “Basic Lease Rent (Debt Portion)” on Schedule
1 of the Facility Lease for such Rent Payment Date.
“Basic Lease Rent (Equity Portion)” for any Rent Payment Date shall mean the
amount set forth under the heading “Basic Lease Rent (Equity Portion)” on
Schedule 1 of the Facility Lease for such Rent Payment Date.
“Benefit Plan” shall mean an employee benefit plan as defined in Section 3(3) of
ERISA that is subject to Title I of ERISA, a plan as defined in Section 4975(e)
of the Code that is subject to Section 4975 of the Code or any entity that is
deemed to hold the assets of any such employee benefit plan or plan by virtue of
such employee benefit plan’s or plan’s investment in such entity.
“Bond Resolution” shall mean the Basic Tennessee Valley Authority Power Bond
Resolution adopted October 6, 1960, as amended.
“Business Day” shall mean any day other than a Saturday, a Sunday, or a day on
which commercial banking institutions are authorized or required by law,
regulation or executive order to be closed in Wilmington, Delaware, Knoxville,
Tennessee, or the city and the state in which the Corporate Trust Office of the
Lease Indenture Trustee, the Lessor Manager or the Equity Manager is located.
“Called Amount” shall mean the amount of the Equity Investment that is being
repaid, determined by reference to the Termination Value (Equity Portion) with
respect to the applicable Termination Date.
“Capability” shall mean the amount of Energy, expressed in megawatt hours, that
can be generated by the Facility.
“Capacity” shall mean megawatts of electric energy generating capacity.
“Capital Expenditure Budget” shall have the meaning set forth in Section 3.4(a)
of the Support Agreement.
“Claim” shall mean any liability (including in respect of negligence (whether
passive or active or other torts), strict or absolute liability in tort or
otherwise, warranty, latent or other defects (regardless of whether or not
discoverable), statutory liability, property damage, bodily injury or death),
obligation, loss, settlement, damage, penalty, claim, action, suit, proceeding
(whether civil or criminal), judgment, penalty, fine and other legal or
administrative sanction, judicial or administrative proceeding, cost, expense or
disbursement, including reasonable legal, investigation and expert fees,
expenses and reasonable related charges, of whatsoever kind and nature, but
excluding Taxes.
“Closing” shall have the meaning specified in Section 2.2(a) of the
Participation Agreement.
“Closing Appraisal” shall mean the appraisal, dated the Closing Date, prepared
by the Appraiser for the use of TVA.

7

--------------------------------------------------------------------------------

“Closing Date” shall have the meaning specified in Section 2.2(a) of the
Participation Agreement.
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
“Co-Equity Manager” shall mean a co-Manager appointed pursuant to Section 23 of
the Equity Investor LLC Agreement.
“Co-Lessor Manager” shall mean a co-Independent Manager appointed pursuant to
Section 16.6 of the Owner Lessor LLC Agreement.
“Collateral” shall have the meaning specified in the Granting Clause of the
Owner Lessor Mortgage.
“Common Facilities” shall mean all property and facilities intended for common
use in the operation of the Units, as more particularly described on Exhibit A
to the Facility Lease, and shall include any Modifications to such facilities
which become subject to the Head Lease during the Facility Lease Term and any
Modifications to the Common Facilities made in accordance with the Support
Agreement.
“Competitor” shall have the meaning specified in Section 7.1(b) of the
Participation Agreement.
“Component” shall mean any appliance, part, instrument, appurtenance, accessory,
furnishing, equipment or other property of whatever nature that may from time to
time be incorporated in any Unit or the Facility, except to the extent
constituting Modifications.
“Confidential Information” shall have the meaning specified in Section 13.2 of
the Participation Agreement.
“Construction Cost” shall mean, with respect to any Modification, the actual
cost or purchase price (after deducting amounts realized as the salvage value of
any component or item of equipment which is being replaced by the Modification,
determined in accordance with Prudent Industry Practice), including, without
limitation, (i) all costs of architectural and engineering services, labor,
materials, equipment, supplies, personnel training, testing, permits and
licenses, and legal services, (ii) payroll, including related fringe benefits
and payroll Taxes, of direct full time employees of TVA allocable on an actual
time basis to such acquisition or construction and not included in costs
described in clause (vi) below, (iii) reasonable and allocable traveling
expenses including use of TVA’s transportation equipment, (iv) all costs
relating to injury or damage claims and claims by contractors or suppliers
arising under construction contracts and arising out of such acquisition or
construction, (v) all Taxes legally required to be paid with respect to such
acquisition or construction if paid by TVA, and (vi) administrative and other
overhead costs of TVA as apportioned by TVA to such Modification in accordance
with the Uniform System of Accounts, applicable to such acquisition or
construction of such Modification, all in accordance with the Capital
Expenditure Budget in effect from time to time.
“Contract Year” shall mean the 12-month period commencing at 12:01 a.m. on
January 1 of each year and ending at 12:01 a.m. on the following January 1,
except that the first Contract Year shall begin on the Service

8

--------------------------------------------------------------------------------

Commencement Date and the last Contract Year shall end on the Final Shutdown
Date.
“CTG” shall have the meaning specified in Attachment A to the Head Lease.
“Debt Portion” shall mean the separate portions of the Net TV Amount (Debt
Portion), which portions correspond to the 2013 Lessor Notes and each series of
Additional Lessor Notes that may have been issued from time to time and are
determined by multiplying (a) the Net TV Amount (Debt Portion), by (b) the
fraction (i) the numerator of which is the outstanding principal amount of the
applicable 2013 Lessor Notes or such series of Additional Lessor Notes and (ii)
the denominator of which is the aggregate outstanding principal amount of the
2013 Lessor Notes and the Additional Lessor Notes.
“Deed of Trust Trustee” shall mean W. Rodney Clement, Jr., Esq.
“Defaulting Facility User” shall have the meaning specified in Section 2.7(a) of
the Support Agreement.
“Discounted Value” shall mean, with respect to the Called Amount of any Equity
Investment, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Amount from their respective scheduled due dates to
the Settlement Date with respect to such Called Amount, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which return on the Equity Investment is payable)
equal to the Reinvestment Yield with respect to such Called Amount.
“Dollars” or the sign “$” shall mean United States dollars or other lawful
currency of the United States.
“DTC” shall mean The Depository Trust Company, a New York corporation.
“Early Buy Out” shall have the meaning specified in Section 15.1 of the Facility
Lease.
“Early Buy Out Date” shall have the meaning specified in Section 15.1 of the
Facility Lease.
“Early Buy Out Notice” shall have the meaning specified in Section 15.1 of the
Facility Lease.
“Effective Date” shall mean the Closing Date.
“Election Notice” shall have the meaning specified in Section 13.1 of the
Facility Lease.
“Eligible Customer” shall have the meaning specified in the Transmission
Services Guidelines.
“Energy” shall mean megawatt hours of electric energy.
“Enforcement Notice” shall have the meaning specified in Section 5.1 of the
Lease Indenture.
“Engineering Consultant” shall mean Sargent & Lundy LLC.

9

--------------------------------------------------------------------------------

“Engineering Report” shall mean the report of the Engineering Consultant, dated
April 15, 2013.
“Entergy” shall mean Entergy Mississippi, Inc. or its successor entity.
“Entergy Point of Interconnection” shall have the meaning specified in Section 1
of the Support Agreement.
“Entergy Substation” shall have the meaning specified in Section 1 of the
Support Agreement.
“Entergy Transmission System” shall mean the facilities owned and controlled by
Entergy or a successor entity that are used to provide transmission service
under Entergy’s or such successor entity’s open access transmission tariff.
“Environmental Condition” shall mean any action, omission, event, condition or
circumstance, including the presence of any Hazardous Substance, that does or is
reasonably likely to (i) require assessment, investigation, abatement,
correction, removal or remediation by order of an applicable Governmental Entity
pursuant to any Environmental Law, (ii) give rise to any obligation or liability
of any nature (whether civil or criminal, arising under a theory of negligence
or strict liability, or otherwise) under any Environmental Law, or (iii)
constitute a violation of or non-compliance with any Environmental Law.
“Environmental Laws” shall mean any federal, state or local laws, common law,
ordinances, rules, orders, statutes, decrees, judgments, injunctions,
directives, permits, licenses, approvals, codes and regulations relating to the
environment, human health, natural resources or Hazardous Substances, now or
hereafter in effect and as each may from time to time be amended, supplemented
or supplanted.
“Equity Breakage” shall mean, with respect to a Called Amount, an amount equal
to the excess, if any, of the Discounted Value with respect to the Called Amount
of such Equity Investment over the amount of such Called Amount, provided that
the Equity Breakage may in no event be less than zero.
“Equity Collateral Agent” shall mean Wilmington Trust, National Association, or
any successor thereto, as collateral agent appointed pursuant to the Southaven
Holdco Note Purchase Documents.
“Equity Guarantor” shall have the meaning specified in Section 7.1 of the
Participation Agreement.
“Equity Guaranty” shall mean any guaranty agreement guaranteeing the obligations
of the Equity Investor or entered into pursuant to Section 7.1 of the
Participation Agreement in form and substance substantially in the form of
Exhibit G to the Participation Agreement.
“Equity Investment” shall mean the amount specified under the heading “Equity
Investment” in Schedule 4 to the Participation Agreement.

10

--------------------------------------------------------------------------------

“Equity Investor” shall have the meaning set forth in the introductory paragraph
to the Participation Agreement; provided that if the Membership Interests are
transferred pursuant to Section 7.1 of the Participation Agreement such that
more than one person is a holder thereof, the term “Equity Investor” shall be
deemed to include each holder of the Membership Interests.
“Equity Investor LLC Agreement” shall mean the limited liability company
agreement, dated on or about the Execution Date, between the Owner Participant,
Seven States and the Equity Manager.
“Equity Investor Members” shall mean any member of the Equity Investor,
including a profits member for purposes of the Code.
“Equity Investor’s Lien” shall mean, with respect to the Equity Investor, any
Southaven Holdco Note Purchaser, the Trust Company or the Equity Manager, any
Lien on the Facility, the Facility Site, the Lessor Estate or any part thereof
arising as a result of (i) Claims against or any act or omission of the Equity
Investor, a Southaven Holdco Note Purchaser, the Trust Company or the Equity
Manager or any Affiliate of any thereof that are not related to, or that are in
violation of, any Transaction Document or the transactions contemplated thereby
or that are in breach of any covenant or agreement of the Equity Investor, the
Trust Company or the Equity Manager set forth therein, (ii) Taxes against the
Equity Investor, any Southaven Holdco Note Purchaser, the Trust Company, the
Equity Manager or any respective Affiliate thereof that are not indemnified
against by TVA pursuant to any Transaction Document, or (iii) Claims against or
affecting the Equity Investor, any Southaven Holdco Note Purchaser, the Trust
Company, the Equity Manager or any respective Affiliate thereof arising out of
the voluntary or involuntary transfer by the Trust Company, the Equity Manager
or the Equity Investor (except as contemplated or permitted by the Transaction
Documents) of any portion of the Equity Investor’s Membership Interests.
“Equity Manager” shall have the meaning set forth in the introductory paragraph
of the Participation Agreement.
“Equity Placement Agent” shall mean Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
“Equity Pledge Agreement” shall mean the Pledge Agreement, dated on or about the
Closing Date, between the Equity Investor and the Equity Collateral Agent.
“Equity Portion” shall mean the separate portions of the Net TV Amount (Equity
Portion), which portions correspond to the Equity Investment and each series of
Additional Equity Investment that may have been issued from time to time and are
determined by multiplying (a) the Net TV Amount (Equity Portion), by (b) the
fraction (i) the numerator of which is the outstanding principal amount of the
applicable Equity Investment or such series of Additional Equity Investment and
(ii) the denominator of which is the aggregate outstanding principal amount of
the Equity Investment and the Additional Equity Investments.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.

11

--------------------------------------------------------------------------------

“Event of Loss” shall mean, with respect to any Unit or Units, any of the
following events:
(a)    loss of such Unit or Units or use thereof due to destruction or damage to
such Unit or Units or the Common Facilities that is beyond economic repair or
that renders such Unit or Units permanently unfit for normal use;
(b)    damage to such Unit or Units or the Common Facilities that results in an
insurance settlement with respect to such Unit or Units on the basis of a total
loss or an agreed constructive or a compromised total loss of such Unit or
Units; and
(c)    seizure, condemnation, confiscation or taking of, or requisition of title
to or use of, all or substantially all of a Unit or Units or the Common
Facilities by any Governmental Entity, which in the case of a requisition of use
prevents the Facility Lessee from operating and maintaining all or substantially
all of the Facility, such Unit or Units or the Facility Site for a period of 365
days or more, in each case following any contest thereof and exhaustion of all
permitted appeals or an election by TVA not to pursue such appeals.
“Evidences of Indebtedness” shall have the meaning specified in the Bond
Resolution.
“Excepted Payments” shall mean and include (a)(i) any indemnity or other payment
(whether or not constituting Supplemental Lease Rent and whether or not a Lease
Event of Default exists) payable to the Trust Company, the Equity Investor, the
Equity Manager, any Equity Investor Member, any Southaven Holdco Note Purchaser,
the Lessor Manager or to their respective successors and permitted assigns
(other than the Lease Indenture Trustee) pursuant to Section 2.4, 9.1 or 9.2 of
the Participation Agreement and Section 11.1 of the Owner Lessor LLC Agreement,
or (ii) any amount payable by TVA to the Owner Lessor, the Equity Investor, the
Lessor Manager, the Equity Manager, any Equity Investor Member or any Southaven
Holdco Note Purchaser to reimburse any such Person for its costs and expenses in
exercising its rights under the Transaction Documents; (b) insurance proceeds,
if any, payable to the Owner Lessor or the Equity Investor under insurance
separately maintained by the Owner Lessor or the Equity Investor with respect to
the Facility as permitted by Section 11.1 of the Facility Lease; (c) any amount
payable to the Equity Investor as the purchase price of the Equity Investor’s
Membership Interests in connection with any permitted sale or transfer thereof
pursuant to Section 7.1 of the Participation Agreement or Section 13 of the
Facility Lease; (d) any amounts payable to the Equity Investor upon exercise by
TVA of the Special Lessee Transfer pursuant to Section 12 of the Participation
Agreement; (e) all other fees expressly payable to the Owner Lessor, the Equity
Investor, the Lessor Manager, the Equity Manager or any Southaven Holdco Note
Purchaser under the Transaction Documents; (f) any amounts payable by TVA to the
Owner Lessor pursuant to Section 13.2 of the Facility Lease; and (g) any
payments in respect of interest to the extent attributable to payments referred
to above that constitute Excepted Payments.
“Excepted Rights” shall mean the rights specified in Section 5.6 of the Lease
Indenture.
“Excess Amount” shall have the meaning specified in Section 15.3 of the
Participation Agreement or Section 9.12 of the Lease Indenture, as applicable.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Exchange Date” shall mean, when used with respect to any Lessor Notes being
replaced and exchanged for Replacement Power Bonds, the date fixed for such
replacement and exchange by or pursuant to the Lease Indenture or the respective
Lessor Notes, which date shall be a Termination Date.

12

--------------------------------------------------------------------------------

“Excluded Assets”Excluded Assets shall mean have the meaning specified in
Attachment A to the Head Lease.
“Excluded Taxes” shall have the meaning specified in Section 9.2(b) of the
Participation Agreement.
“Execution Date” shall mean August 6, 2013.
“Existing Southaven Credit Agreement” shall mean the Amended and Restated Credit
Agreement, dated as of April 22, 2010, by and among Seven States, Seven States
Parent, JPMorgan Chase Bank, National Association, CoBank, ACB and Wells Fargo
Bank, National Association, as amended.
“Existing Southaven Lease Documents” shall mean the Joint Ownership Agreement,
dated as of April 30, 2008, between Seven States Parent and TVA, as amended,
modified and supplemented from time to time, and the Lease Agreement, dated
September 30, 2008, between Seven States and TVA, as amended, modified and
supplemented from time to time.
“Existing Southaven Loan Documents” shall have the meaning specified in the
Existing Southaven Credit Agreement.
“Expiration Date” shall mean August 15, 2033, the scheduled expiration date of
the Facility Lease Term.
“Facility” shall have the meaning specified in the first recital of the
Participation Agreement.
“Facility Lease” shall mean the Facility Lease-Purchase Agreement, dated as of
the Closing Date, between the Owner Lessor and TVA, substantially in the form of
Exhibit C to the Participation Agreement.
“Facility Lease Term” shall have the meaning specified in Section 3.1 of the
Facility Lease.
“Facility Lessee” shall mean TVA as lessee under the Facility Lease.
“Facility Lessee’s Interest” shall mean the Facility Lessee’s interest in and to
the Undivided Interest under the Facility Lease and the Ground Interest under
the Ground Sublease.
“Facility Operating Fee” shall have the meaning specified in Section 2.5 of the
Support Agreement.
“Facility Operation and Maintenance Expense” shall mean all payments made, costs
incurred, and obligations and liabilities incurred, by TVA for or in connection
with engineering, contract preparation, purchasing, repairing, insuring,
supervising, recruiting, training, expediting, inspecting, accounting, providing
legal services, testing, protecting, operating, insuring, using,
decommissioning, retiring, and

13

--------------------------------------------------------------------------------

maintaining the Facility, including Station Service Requirements and all such
payments made, and obligations incurred, during an operating emergency, and with
respect to the purchase of materials, supplies and spare parts, but excluding
the Construction Cost of Modifications and any other cost included in a Capital
Expenditure Budget. Facility Operation and Maintenance Expenses shall include
the properly allocable direct overheads of TVA in the operation and maintenance
of the Facility. Facility Operation and Maintenance Expenses shall be determined
under and in accordance with the Uniform System of Accounts and shall be in
accordance with the Operation and Maintenance Expense Budget in effect from time
to time. There shall be credited against Facility Operation and Maintenance
Expenses for such Month the proceeds of the sale by TVA of any surplus materials
or supplies constituting part of, or used in connection with, the Facility.
Facility Operation and Maintenance Expense shall not include any payments made
by the Ground Lessee for Taxes pursuant to Section 3.2 of the Ground Lease and
payments made, or costs incurred, for commodities, equipment or services
supplied by TVA to the Facility User under separate contract, including
transmission services supplied under contracts negotiated pursuant to Section
4.2 of the Support Agreement.
“Facility Site” shall mean the land on which the Facility is situated, as more
particularly described in Exhibit 1 to the Ground Lease.
“Facility User” shall have the meaning specified in Section 1 of the Support
Agreement.
“Fair Market Rental Value” or “Fair Market Sales Value” shall mean with respect
to any property or service as of any date, the cash rent or cash price
obtainable in an arm’s length lease, sale or supply, respectively, between an
informed and willing lessee or purchaser under no compulsion to lease or
purchase and an informed and willing lessor or seller or supplier under no
compulsion to lease or sell or supply the property or service in question, and
shall, in the case of an Owner Lessor’s Interest, be determined (except as
otherwise provided below or in the Transaction Documents) on the basis that (a)
the Facility is located on the Facility Site and the conditions contained in
Sections 7 and 8 of the Facility Lease shall have been complied with in all
respects, (b) the lessee or buyer shall have rights in, or an assignment of, the
Transaction Documents to which the Owner Lessor is a party and the obligations
relating thereto and (c) the Owner Lessor’s Interest is free and clear of all
Liens (other than Owner Lessor’s Liens, Equity Investor’s Liens and Lease
Indenture Trustee’s Liens) and taking into account (i) the remaining term of the
Ground Lease and the Ground Sublease, and (ii) in the case of the Fair Market
Rental Value, the terms of the Facility Lease and the Transaction Documents. If
the Fair Market Sales Value of the Owner Lessor’s Interest is to be determined
during the continuance of a Lease Event of Default or in connection with the
exercise of remedies by the Owner Lessor pursuant to Section 18 of the Facility
Lease, such value shall be determined by an appraiser appointed by the Owner
Lessor on an “as-is,” “where-is” and “with all faults” basis and shall take into
account all Liens (other than Owner Lessor’s Liens, Equity Investor’s Liens and
Lease Indenture Trustee’s Liens); provided, however, in any such case where the
Owner Lessor shall be unable to obtain constructive possession sufficient to
realize the economic benefit of the Owner Lessor’s Interest, Fair Market Sales
Value of the Owner Lessor’s Interest shall be deemed equal to $0. If in any case
other than in the preceding sentence the parties are unable to agree upon a Fair
Market Sales Value of the Owner Lessor’s Interest within 30 days after a request
therefor has been made, the Fair Market Sales Value of the Owner Lessor’s
Interest shall be determined by appraisal pursuant to the Appraisal Procedures.
Any fair market value determination of a Severable Modification shall

14

--------------------------------------------------------------------------------

take into consideration any liens or encumbrances to which the Severable
Modification being appraised is subject and which are being assumed by the
transferee.
“Federal Power Act” shall mean the Federal Power Act, as amended.
“FERC” shall mean the Federal Energy Regulatory Commission.
“Final Determination” shall mean (i) a decision, judgment, decree or other order
by any court of competent jurisdiction, which decision, judgment, decree or
other order has become final after all allowable appeals or rehearings by either
party to the action have been exhausted or the time for filing such appeal has
expired, or in any case where judicial review shall at the time be unavailable
because the proposed adjustment involves a decrease in net operating loss
carryforward or a business credit carryforward, a decision, judgment, decree or
other order of an administrative official or agency of competent jurisdiction,
which decision, judgment, decree or other order has become final (i.e., where
all administrative appeals have been exhausted by all parties thereto), (ii) a
closing agreement entered into under section 7121 of the Code, or any other
settlement agreement entered into in connection with an administrative or
judicial proceeding, or (iii) 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.
“Final Shutdown” shall mean the permanent removal from operation and commercial
service of the Facility.
“Final Shutdown Date” shall mean the date on which Final Shutdown occurs.
“Fitch” shall mean Fitch, Inc. and any successor thereto.
“FMV Net Termination Value” shall have the meaning set forth in Section 18.2(d)
of the Facility Lease.
“GAAP” shall mean generally accepted accounting principles used in the United
States consistently applied.
“Government” shall mean the United States of America.
“Governmental Entity” shall mean and include the Government, any national
government, any political subdivision of a national government or of any state,
county or local jurisdiction therein or any board, commission, department,
division, organ, instrumentality, court or agency of any thereof, but shall not
include TVA.
“Ground Interest” shall mean a 90% undivided interest in the Facility Site
together with (i) all rights under Applicable Law as a tenant-in-common of the
Facility Site with the Ground Lessor as owner/holder of the remaining 10%
undivided interest (or any successor, assignee or lessee of Ground Lessor’s 10%
undivided interest) in the Facility Site, as such rights of a tenant-in-common
are modified by the Ground Lease (including Sections 12.19 and 12.20 thereof)
and, following termination of the Ground Sublease, the Support Agreement, and
(ii) the right to nonexclusive possession with the Ground Lessor as owner/holder
of the remaining 10%

15

--------------------------------------------------------------------------------

undivided interest (or any successor, assignee or lessee of Ground Lessor’s 10%
undivided interest) in the Facility Site.
“Ground Lease” shall mean the Ground Lease Agreement, dated as of the Closing
Date, among the Ground Lessor and the Ground Lessee, substantially in the form
of Exhibit B to the Participation Agreement.
“Ground Lease Term” shall have the meaning specified in Section 2.2 of the
Ground Lease.
“Ground Lessee” shall mean the Owner Lessor as lessee of the Ground Interest
under the Ground Lease.
“Ground Lessor” shall mean TVA and the Government (solely for purposes of
Section 2.1 of the Ground Lease), as lessor of the Ground Interest under the
Ground Lease.
“Ground Lessor’s Release Rights” shall have the meaning specified in Section 4.2
of the Ground Lease.
“Ground Sublease” shall mean the Ground Sublease Agreement, dated as of the
Closing Date, among the Ground Sublessor and the Ground Sublessee, substantially
in the form of Exhibit D to the Participation Agreement.
“Ground Sublease Term” shall have the meaning specified in Section 2.2 of the
Ground Sublease.
“Ground Sublessee” shall mean TVA and the Government (solely for purposes of
Section 2.1 of the Ground Sublease) as sublessee of the Ground Interest under
the Ground Sublease.
“Ground Sublessor” shall mean the Owner Lessor as sublessor of the Ground
Interest under the Ground Sublease.
“Hazardous Substance” shall mean any pollutant, contaminant, hazardous
substance, hazardous waste, toxic substance, chemical substance, extremely
hazardous substance, petroleum or petroleum derived substance, waste, or
additive, asbestos, PCBs, radioactive material, corrosive, explosive, flammable
or infectious material, lead, radon or other compound, element, material or
substance in any form whatsoever (including products) defined, regulated,
restricted or controlled by or under any Environmental Law.
“Head Lease” shall mean the Head Lease Agreement, dated as of the Closing Date,
among the Head Lessor and the Head Lessee, substantially in the form of Exhibit
A to the Participation Agreement.
“Head Lease Rent” shall have the meaning specified in Section 3.2(a) of the Head
Lease.
“Head Lease Term” shall have the meaning specified in Section 3.1 of the Head
Lease.
“Head Lessee” shall mean the Owner Lessor as lessee of the Undivided Interest
under the Head Lease.

16

--------------------------------------------------------------------------------

“Head Lessor” shall mean TVA and the Government (solely for purposes of Section
2 of the Head Lease) as lessor of the Undivided Interest under the Head Lease.
“HRSG” shall have the meaning specified in Attachment A to the Head Lease.
“Indemnitee” shall have the meaning specified in Section 9.1(a) of the
Participation Agreement.
“Indemnity Period” shall have the meaning specified in Section 11 of the Ground
Lease.
“Independent Appraiser” shall mean a disinterested, licensed industrial property
appraiser who is a member of the Appraisal Institute having experience in the
business of evaluating facilities similar to the Facility.
“Investment Banker” shall have the meaning specified in Section 2.10(b) of the
Lease Indenture.
“Lease Default” shall mean any event or circumstance that, with the passage of
time or the giving of notice, or both, would become a Lease Event of Default.
“Lease Event of Default” shall have the meaning specified in Section 17 of the
Facility Lease.
“Lease Indenture” shall mean the Indenture of Trust, Deed of Trust and Security
Agreement, dated as of the Closing Date, among the Owner Lessor, the Lease
Indenture Trustee and the Deed of Trust Trustee, substantially in the form of
Exhibit E to the Participation Agreement.
“Lease Indenture Estate” shall have the meaning specified in the Granting Clause
of the Lease Indenture.
“Lease Indenture Event of Default” shall have the meaning specified in Section
4.2 of the Lease Indenture.
“Lease Indenture Payment Default” shall mean any event or occurrence, which,
with the passage of time or the giving of notice or both, would become a Lease
Indenture Event of Default under Section 4.2(b) of the Lease Indenture.
“Lease Indenture Trustee” shall mean Wilmington Trust Company, not in its
individual capacity, but solely as Lease Indenture Trustee under the Lease
Indenture, and each other Person who may from time to time be acting as Lease
Indenture Trustee in accordance with the provisions of the Lease Indenture.
“Lease Indenture Trustee Office” shall mean the office to be used for notices to
the Lease Indenture Trustee from time to time pursuant to Section 9.5 of the
Lease Indenture.
“Lease Indenture Trustee’s Account” shall mean the account identified as the
Lease Indenture Trustee’s Account on Schedule 4 of the Participation Agreement.
“Lease Indenture Trustee’s Liens” shall mean any Lien on the Facility, the
Facility Site, the Lessor Estate or any part thereof arising as a result of (i)
Taxes against or affecting the Lease Indenture Trustee, or any

17

--------------------------------------------------------------------------------

Affiliate thereof, in its individual capacity that is not related to, or that is
in violation of, any Transaction Document or the transactions contemplated
thereby, (ii) Claims against or any act or omission of the Lease Indenture
Trustee, or Affiliate thereof, in its individual capacity that is not related
to, or that is in violation of, any Transaction Document or the transactions
contemplated thereby or that is in breach of any covenant or agreement of the
Lease Indenture Trustee specified therein, (iii) Taxes imposed upon the Lease
Indenture Trustee, or any Affiliate thereof, in its individual capacity that are
not indemnified against by TVA pursuant to any Transaction Document, or (iv)
Claims against or affecting the Lease Indenture Trustee, or any Affiliate
thereof, in its individual capacity arising out of the voluntary or involuntary
transfer by the Lease Indenture Trustee of any portion of the interest of the
Trust Company or the Lease Indenture Trustee in the Lessor Estate, other than
pursuant to the Transaction Documents.
“Leasehold Deed of Trust Trustee” shall mean W. Rodney Clement, Jr., Esq.
“Lessee Person” shall mean the Facility Lessee, any sublessee of the Facility
Lessee or any other Person using or having possession of the Undivided Interest
during the Facility Lease Term or any portion thereof and any Affiliate,
successor, assignee, transferee, agent or employee of any of the foregoing or
any Person claiming through any of the foregoing, except that none of the Owner
Lessor, the Equity Investor, the Equity Manager, any Southaven Holdco Note
Purchaser nor the Lease Indenture Trustee, nor any Affiliate, successor,
assignee, transferee, agent or employee of any of the foregoing, nor any Person
claiming through any of the foregoing, shall be a Lessee Person.
“Lessor Estate” shall mean all the estate, right, title and interest of the
Owner Lessor in, to and under the Undivided Interest, the Ground Interest and
the Transaction Documents, including all funds advanced to the Owner Lessor by
the Equity Investor, all installments and other payments of Basic Lease Rent,
Supplemental Lease Rent, Termination Value, condemnation awards, purchase price,
sale proceeds and all other proceeds, rights and interests of any kind for or
with respect to the estate, right, title and interest of the Owner Lessor in, to
and under the Undivided Interest, the Ground Interest, the Transaction
Documents, and any of the foregoing.
“Lessor Manager” shall have the meaning set forth in the introductory paragraph
of the Participation Agreement.
“Lessor Notes” shall mean the 2013 Lessor Notes and any Additional Lessor Notes.
“LGIP” shall have the meaning specified in Section 1 of the Support Agreement.
“Lien” shall mean any mortgage, security deed, security title, pledge, lien,
charge, encumbrance, lease, or security interest or title retention arrangement.
“List of Competitors” shall mean the initial list attached to the Participation
Agreement as Schedule 2, as amended from time to time pursuant to Section 7.1(b)
of the Participation Agreement.
“Majority in Interest of Noteholders” as of any date of determination, shall
mean Noteholders holding in aggregate more than 50% of the total outstanding
principal amount of Lessor Notes; provided, however, that

18

--------------------------------------------------------------------------------

any Lessor Notes held by TVA and/or any Affiliate of TVA shall not be considered
outstanding for purposes of this definition unless TVA and/or such Affiliate
shall hold title to all the Lessor Notes outstanding.
“Majority of Facility Users” shall have the meaning specified in Section 1 of
the Support Agreement.
“Make Whole Premium” shall mean, with respect to the Lessor Notes subject to
redemption pursuant to the Lease Indenture, an amount equal to the Discounted
Present Value of the Lessor Notes less the unpaid principal amount of such
Lessor Notes; provided that the Make Whole Premium shall not be less than zero.
For purposes of this definition, the “Discounted Present Value” of any Lessor
Notes subject to redemption pursuant to the Lease Indenture shall be equal to
the discounted present value of all principal and interest payments scheduled to
become due after the date of such redemption in respect of the Lessor Notes,
calculated using a discount rate equal to the sum of (i) the yield to maturity
on the U.S. Treasury security having a life equal to the remaining average life
of the Lessor Notes and (ii) 20 basis points; provided, however, that if there
is no U.S. Treasury security having a life equal to the remaining average life
of the Lessor Notes, such discount rate shall be calculated using a yield to
maturity interpolated or extrapolated on a straight-line basis (rounding to the
nearest calendar month, if necessary) from the yields to maturity for two U.S.
Treasury securities having lives most closely corresponding to the remaining
average life of the Lessor Notes.
“Material Adverse Effect” shall mean with respect to any Person a materially
adverse effect on (i) the business, assets, revenues, results of operations, or
financial condition of such Person, (ii) the ability of such Person to perform
its obligations under the Transaction Documents, or (iii) the validity or
enforceability of the Transaction Documents, the Liens granted thereunder, or
the rights and remedies thereto.
“Maximum Net Generating Capacity” shall mean the maximum net Capability of the
Facility to produce Energy under conditions existing from time to time.
“Member” shall have the meaning specified in Section 3.7(a) of the Support
Agreement.
“Membership Interests” shall mean the membership interests of the Equity
Investor in the Owner Lessor.
“Mississippi Real Property” shall have the meaning specified in Section 4.7 of
the Indenture.
“Modification” shall mean a modification, alteration, improvement, addition,
betterment or enlargement of the Facility, including any Required Modifications
and Optional Modifications, but not Components.
“Month” shall mean a calendar month.
“Moody’s” shall mean Moody’s Investors Service, Inc. and any successor thereto.
“Net TV Amount” shall mean the FMV Net Termination Value or the Sale Net
Termination Value, as applicable.

19

--------------------------------------------------------------------------------

“Net TV Amount (Debt Portion)” shall be the amount equal to the product of (a)
the applicable Net TV Amount as of the applicable Termination Date, multiplied
by (b) a fraction (i) the numerator of which is the Termination Value (Debt
Portion) as of such Termination Date and (ii) the denominator of which is the
Termination Value as of such Termination Date.
“Net TV Amount (Debt Portion) Rate” shall mean, with respect to the applicable
Debt Portion, a rate per annum equal to (a) 5.846% per annum with respect to the
Debt Portion that corresponds to the 2013 Lessor Notes; or (b) the interest rate
on the applicable Additional Lessor Notes plus two percent (2%) per annum with
respect to the Debt Portion that corresponds to such Additional Lessor Notes.
“Net TV Amount (Equity Portion)” shall be the amount equal to the product of (a)
the applicable Net TV Amount as of the applicable Termination Date, multiplied
by (b) a fraction (i) the numerator of which is the Termination Value (Equity
Portion) as of such Termination Date and (ii) the denominator of which is the
Termination Value as of such Termination Date.
“Net TV Amount (Equity Portion) Rate” shall mean, with respect to the applicable
Equity Portion, a rate per annum equal to (a) 6.95% per annum with respect to
the Equity Portion that corresponds to the Equity Investment; and (b) the
interest rate on the applicable Additional Equity Investment plus two percent
(2%) per annum with respect to the Equity Portion that corresponds to such
Additional Equity Investment.
“Nonseverable Modifications” shall mean any Modification that is not a Severable
Modification.
“Non-Defaulting Facility User” shall have the meaning specified in Section
2.7(a) of the Support Agreement.
“Note Register” shall have the meaning specified in Section 2.8 of the Lease
Indenture.
“Noteholder” shall mean any holder from time to time of outstanding Lessor
Notes, and each such holder’s successors and permitted assigns.
“Offering Circular” shall mean the Offering Circular, dated August 6, 2013 with
respect to the 2013 Lessor Notes.
“Officer’s Certificate” shall mean with respect to any Person a certificate
signed by the Responsible Officer of such Person.
“Operation and Maintenance Agreement” shall have the meaning specified in
Section 3.6(a) of the Support Agreement.
“Operating Committee” shall have the meaning specified in Section 3.7(a) of the
Support Agreement.
“Operation and Maintenance Expense Budget” shall have the meaning set forth in
Section 3.4(c) of the Support Agreement.

20

--------------------------------------------------------------------------------

“Operative Documents” shall mean the Participation Agreement, the Head Lease,
the Facility Lease, the Ground Lease, the Ground Sublease, any Equity Guaranty,
the Owner Lessor Mortgage, the Lease Indenture, the Lessor Notes, the Owner
Lessor LLC Agreement and the Support Agreement.
“Optional Modification” shall have the meaning specified in Section 8.2 of the
Facility Lease.
“Other Exchange Date Payment Amounts” shall mean the following amounts (without
duplication) to be paid by the Facility Lessee on the Exchange Date: (a) if the
Exchange Date is also a Rent Payment Date, Basic Lease Rent payable on such
Exchange Date; plus (b) all reasonable documented out-of-pocket costs and
expenses incurred by the Owner Lessor, the Equity Investor, the Southaven Holdco
Note Purchasers and the Lease Indenture Trustee in connection with the exercise
of the Early Buy Out (without duplication of any such costs and expenses payable
pursuant to the Facility Lease); plus (c) any other Supplemental Lease Rent
payments due and unpaid on the Exchange Date under any other Transaction
Document.
“Other Redemption Date Payment Amounts” shall mean the following amounts
(without duplication) to be paid by the Facility Lessee on the Redemption Date:
(a) if the Redemption Date is also a Rent Payment Date, Basic Lease Rent payable
on such Redemption Date; plus (b) all reasonable documented out-of-pocket costs
and expenses incurred by the Owner Lessor, the Equity Investor, the Southaven
Holdco Note Purchasers and the Lease Indenture Trustee in connection with the
exercise of the Early Buy Out (without duplication of any such costs and
expenses payable pursuant to the Facility Lease); plus (c) any other
Supplemental Lease Rent payments due and unpaid on the Redemption Date under any
other Transaction Document.
“Overdue Rate” (a) when used with reference to the Lessor Notes, Basic Lease
Rent (Debt Portion) or Termination Value (Debt Portion) shall mean two percent
(2%) per annum over the greater of (i) the Base Rate and (ii) the stated
interest rate on the Lessor Notes, (b) when used with reference to the Basic
Lease Rent (Equity Portion) or Termination Value (Equity Portion), shall mean
two percent (2%) over the greater of (A) the Base Rate and (B) 4.95% per annum
or (c) when used with reference to any amount which is due and owing and not
referenced in clause (a) or (b) of this definition, the Base Rate plus two
percent (2%) per annum.
“Owner Lessor” shall have the meaning set forth in the introductory paragraph to
the Participation Agreement.
“Owner Lessor LLC Agreement” shall mean the limited liability company agreement
of the Owner Lessor, dated on or about the Execution Date, between the Equity
Investor, and the Lessor Manager.
“Owner Lessor Mortgage” shall mean the Leasehold Deed of Trust and Security
Agreement, dated as of the Closing Date, made by the Owner Lessor to the
Leasehold Deed of Trust Trustee and TVA, substantially in the form of Exhibit I
to the Participation Agreement.
“Owner Lessor’s Account” shall mean the account identified as the Owner Lessor’s
Account on Schedule 4 to the Participation Agreement.

21

--------------------------------------------------------------------------------

“Owner Lessor’s Interest” shall mean the Owner Lessor’s right, title and
interest in and to (i) the Undivided Interest under the Head Lease, (ii) the
Ground Interest under the Ground Lease, and (iii) the Support Agreement.
“Owner Lessor’s Lien” shall mean any Lien on the Facility, the Undivided
Interest, the Facility Site, the Ground Interest, the Lessor Estate or any part
thereof arising as a result of (i) Taxes against or affecting the Trust Company,
the Lessor Manager or the Owner Lessor, or any respective Affiliate thereof that
is not related to, or that is in violation of, any Transaction Document or the
transactions contemplated thereby, (ii) Claims against, or any act or omission
of, the Trust Company, the Lessor Manager or the Owner Lessor, or any respective
Affiliate thereof, that is not related to, or that is in violation of, any
Transaction Document or the transactions contemplated thereby or that is in
breach of any covenant or agreement of the Trust Company, the Lessor Manager or
the Owner Lessor specified therein, (iii) Taxes imposed upon the Trust Company,
the Lessor Manager or the Owner Lessor, or any respective Affiliate thereof that
are not indemnified against by TVA pursuant to any Transaction Document, or (iv)
Claims against or affecting the Trust Company, the Lessor Manager or the Owner
Lessor, or any respective Affiliate thereof arising out of the voluntary or
involuntary transfer by the Trust Company, the Lessor Manager or the Owner
Lessor of any portion of the interest of the Trust Company, the Lessor Manager
or the Owner Lessor in the Owner Lessor’s Interest, other than pursuant to the
Transaction Documents.
“Owner Lessor’s Percentage Interest” shall mean an undivided interest equal to
90%.
“Owner Participant” shall mean GSS Holdings (Southaven), Inc. until such time,
if any, that it has transferred its membership interests in the Equity Investor
in accordance with the Equity Investor LLC Agreement, and, thereafter shall mean
such transferee or its permitted successor or assign.
“Partial Early Buy Out” shall mean TVA’s exercise of the Early Buy Out with
respect to less than all Units.
“Partial Event of Loss” shall mean an Event of Loss with respect to less than
all Units.
“Participation Agreement” shall mean the Participation Agreement, dated as of
the Execution Date, among TVA, the Owner Lessor, the Lessor Manager, the Equity
Manager, the Equity Investor and the Lease Indenture Trustee.
“Paying Agent” shall have the meaning specified in Section 2.6 of the Lease
Indenture.
“Permitted Closing Date Liens” shall mean those matters listed on Exhibit 2 to
the Ground Lease.
“Permitted Instruments” shall mean (a) Permitted Securities, (b) overnight loans
to or other customary overnight investments in commercial banks of the type
referred to in paragraph (d) below, (c) open market commercial paper of any
corporation (other than TVA or any Affiliate thereof) incorporated under the
laws of the United States or any state thereof which is rated not less than
“prime 1” or its equivalent by Moody’s and “A 1” or its equivalent by S&P
maturing within one year after such investment, or such other comparable rating
by a nationally recognized rating agency, (d) certificates of deposit issued by
commercial banks

22

--------------------------------------------------------------------------------

organized under the laws of the United States or any state thereof or a domestic
branch of a foreign bank (i) having a combined capital and surplus in excess of
$500,000,000 and (ii) which are rated “AA” or better by S&P and “Aa2” or better
by Moody’s, or such other comparable rating by a nationally recognized rating
agency; provided that no more than $20,000,000 may be invested in such deposits
at any one such bank, and (e) a money market fund registered under the
Investment Company Act of 1940, as amended, the portfolio of which is limited to
Permitted Securities.
“Permitted Liens” shall mean (i) the interests of TVA, the Equity Investor, the
Owner Lessor and the Lease Indenture Trustee under any of the Transaction
Documents; (ii) all Owner Lessor’s Liens, Equity Investor’s Liens and Lease
Indenture Trustee’s Liens; (iii) the interests of TVA in the Facility and the
Facility Site; (iv) Permitted Closing Date Liens; (v) Liens for Taxes either not
delinquent or being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the books of TVA if
required by generally accepted accounting principles, so long as such
proceedings shall not involve any danger of the sale, forfeiture or loss of any
part of the Undivided Interest or the Ground Interest; (vi) materialmen’s,
mechanics’, workers’, repairmen’s, employees’ or other like liens arising in the
ordinary course of business for amounts either not delinquent or being contested
in good faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of TVA if required by generally accepted
accounting principles, so long as such proceedings shall not involve any danger
of the sale, forfeiture or loss of any part of the Undivided Interest or the
Ground Interest; (vii) liens arising out of judgments or awards against TVA with
respect to which at the time an appeal or proceeding for review is being
prosecuted in good faith by TVA, so long as such judgment, award or appeal shall
not involve any danger of the sale, forfeiture or loss of any part of the
Undivided Interest or the Ground Interest; (viii) utility rights of way and
easements; and (ix) Liens permitted pursuant to Section 4.2 or 4.3 of the Ground
Lease.
“Permitted Post Facility Lease Term Liens” shall mean the Permitted Liens
referred to in clauses (ii), (iii) and (ix) of the definition thereof.
“Permitted Securities” shall mean securities (and security entitlements with
respect thereto) that (a) are (i) direct obligations of the United States of
America or obligations guaranteed as to principal and interest by the full faith
and credit of the United States of America, and (ii) securities issued by
agencies of the U.S. Federal government whether or not backed by the full faith
and credit of the United States rated “AA” and “Aa2” by S&P and Moody’s,
respectively, which, in either case under clauses (i) or (ii) are not callable
or redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such U.S. Government obligation or a specific payment of interest on or
principal of any such U.S. Government obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction in the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government obligation or the specific payment
of interest on or principal of the U.S. Government obligation evidenced by such
depository receipt, and (b) have a stated maturity no later than the date of the
expected use of the funds.

23

--------------------------------------------------------------------------------

“Person” shall mean any individual, corporation, cooperative, partnership, joint
venture, association, joint stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
“Personalty” shall have the meaning specified in the Granting Clause of the
Owner Lessor Mortgage.
“Phase I” shall mean the Phase I environmental site assessment required by
Section 4(u) of the Participation Agreement or Section 5.3 of the Facility
Lease.
“Plan” shall mean any “employee benefit plan” (as defined in Section 3(3) of
ERISA) that is subject to ERISA, any “plan” (as defined in Section 4975(e)(1) of
the Code) that is subject to Section 4975 of the Code, any trust created under
any such plan or any “governmental plan” (as defined in Section 3(32) of ERISA
or Section 414(d) of the Code) that is organized in a jurisdiction having
prohibitions on transactions with government plans similar to those contained in
Section 406 of ERISA or Section 4975 of the Code.
“Points of Interconnection” shall have the meaning specified in Section 1 of the
Support Agreement.
“Power” shall mean megawatts of Capacity and associated Energy.
“Proceeds” shall mean the proceeds from the sale of the 2013 Lessor Notes by the
Owner Lessor to the Noteholders on the Closing Date.
“Prohibited Transaction Class Exemption” shall mean a class exemption from the
applicable restrictions of Section 406 of ERISA and Section 4975 of the Code
issued by the Department of Labor.
“Prudent Industry Practice” shall mean, at a particular time, either (a) any of
the practices, methods and acts engaged in or approved by a significant portion
of the electric utility industry with respect to facilities similar in nature to
the Facility, or (b) any of the practices, methods and acts which, in the
exercise of reasonable judgment at the time the decision was made, could have
been expected to accomplish the desired result at the lowest reasonable cost
consistent with good business practices, reliability, safety and expedition.
“Prudent Industry Practice” is not intended to be limited to the optimum
practice, method or act to the exclusion of all others, but rather to be a
spectrum of possible practices, methods or acts.
“Purchase Agreement” shall mean the Asset Purchase Agreement, dated as of August
6, 2013, by and between TVA, as purchaser, and Seven States, as seller, of all
right, title and interest of Seven States in and to the Facility, the Facility
Site and certain related personal property and real property as set forth
therein.
“Quarter” means a calendar three-month period, ending on March 31, June 30,
September 30 or December 31.
“Rates” shall have the meaning specified in Section 5.4 of the Participation
Agreement.

24

--------------------------------------------------------------------------------

“Rating Agencies” shall mean S&P, Moody’s and Fitch and any other comparable
nationally recognized rating agency.
“Real Property” shall have the meaning specified in the Granting Clause of the
Owner Lessor Mortgage.
“Reasonable Basis” for a position shall exist if tax counsel may properly advise
reporting such position on a tax return in accordance with Formal Opinion 85-352
issued by the Standing Committee on Ethics and Professional Responsibility of
the American Bar Association (or any successor to such opinion).
“Rebuilding Closing Datee” shall have the meaning specified in Section 10.3(b)
of the Facility Lease.
“Redemption Date” shall mean, when used with respect to any Lessor Notes to be
redeemed, the date fixed for such redemption by or pursuant to the Lease
Indenture or the respective Lessor Notes, which date shall be a Termination
Date.
“Registrar” shall have the meaning specified in Section 2.8 of the Lease
Indenture.
“Regulatory Event of Loss” shall mean a condition or circumstance where, if
elected by the Owner Lessor, the Equity Investor or one or more affected
Southaven Holdco Note Purchasers (by notice to the Facility Lessee) within 12
months of obtaining knowledge of the event or circumstance causing a “Regulatory
Event of Loss,” the Owner Lessor, the Equity Investor or such affected Southaven
Holdco Note Purchaser or Purchasers become subject to rate of return regulation
or other applicable public utility law or regulation of a Governmental Entity
that, in the reasonable opinion of the Owner Lessor, the Equity Investor or such
affected Southaven Holdco Note Purchaser or Purchasers, is materially burdensome
to the Owner Lessor, the Equity Investor or such affected Southaven Holdco Note
Purchaser or Purchasers and cannot be remedied by cooperation among the parties
and the taking of reasonable measures to alleviate the source or consequence of
any such regulation or law, provided that: (i) such regulation or law is
applicable solely as a result of the participation of the Owner Lessor, the
Equity Investor or such affected Southaven Holdco Note Purchaser or Purchasers
in the transactions contemplated by the Transaction Documents and not as a
result of (A) any other investments, loans, or other business activities of the
Owner Lessor, the Equity Investor or such affected Southaven Holdco Note
Purchaser or Purchasers or their Affiliates or the nature of properties or
assets owned, held or otherwise available to the Owner Lessor, the Equity
Investor or such affected Southaven Holdco Note Purchaser or Purchasers or their
Affiliates, or (B) a failure of the Owner Lessor, the Equity Investor or such
affected Southaven Holdco Note Purchaser or Purchasers or their Affiliates to
perform routine, administrative or ministerial actions which would not have a
material adverse consequence on the Owner Lessor, the Equity Investor or such
affected Southaven Holdco Note Purchaser or Purchasers or their Affiliates; and
(ii) the Owner Lessor, the Equity Investor or such affected Southaven Holdco
Note Purchaser or Purchasers would no longer be subject to such law or
regulation if the Owner Lessor terminated the Head Lease and the Facility Lease
and transferred the Undivided Interest to the Head Lessor, the Equity Investor
disposed of its Membership Interests, or such affected Southaven Holdco Note
Purchaser or Purchasers disposed of its or their Southaven Holdco Notes as the
case may be.

25

--------------------------------------------------------------------------------

“Regulatory Event of Loss Termination Payment” shall mean, with respect to any
Termination Date, an amount equal to the product of (a) the Termination Value
(Equity Portion) with respect to such Termination Date, multiplied by (b) the
applicable Southaven Holdco Note Purchaser’s Percentage Interest of the Notes.
“Reinvestment Yield” shall mean, with respect to the Called Amount of any Equity
Investment, 0.50% over the yield to maturity implied by the yield(s) reported as
of 10:00 a.m. (New York City time) on the second Business Day preceding the
Settlement Date with respect to such Called Amount, on the display designated as
“Page PX1” (or such other display as may replace Page PX1) on Bloomberg
Financial Markets for the most recently issued actively traded on-the-run U.S.
Treasury securities (“Reported”) having a maturity equal to the Remaining
Average Life of such Remaining Scheduled Payments as of such Settlement Date. If
there are no such U.S. Treasury securities Reported having a maturity equal to
such Remaining Average Life, then such implied yield to maturity will be
determined by (a) converting U.S. Treasury bill quotations to bond equivalent
yields in accordance with accepted financial practice and (b) interpolating
linearly between the yields Reported for the applicable most recently issued
actively traded on-the-run U.S. Treasury securities with the maturities
(1) closest to and greater than such Remaining Average Life and (2) closest to
and less than such Remaining Average Life. The Reinvestment Yield shall be
rounded to the number of decimal places as appears in the interest rate of the
applicable Equity Investment. If such yields are not Reported or the yields
Reported as of such time are not ascertainable (including by way of
interpolation), then “Reinvestment Yield” shall mean, with respect to the Called
Amount of any Equity Investment, 0.50% over the yield to maturity implied by the
U.S. Treasury constant maturity yields reported, for the latest day for which
such yields have been so reported as of the second Business Day preceding the
Settlement Date with respect to such Called Amount, in Federal Reserve
Statistical Release H.15 (or any comparable successor publication) for the U.S.
Treasury constant maturity having a term equal to the Remaining Average Life of
such Called Amount as of such Settlement Date. If there is no such U.S. Treasury
constant maturity having a term equal to such Remaining Average Life, such
implied yield to maturity will be determined by interpolating linearly between
(1) the U.S. Treasury constant maturity so reported with the term closest to and
greater than such Remaining Average Life and (2) the U.S. Treasury constant
maturity so reported with the term closest to and less than such Remaining
Average Life. The Reinvestment Yield shall be rounded to the number of decimal
places as appears in the interest rate of the applicable Equity Investment.
“Related Party” shall mean, with respect to any Person or its successors and
assigns, an Affiliate of such Person or its successors and assigns and any
director, officer, servant, employee or agent of that Person or any such
Affiliate or their respective successors and assigns; provided that the Lessor
Manager and the Owner Lessor shall not be treated as Related Parties to each
other and neither the Owner Lessor nor the Lessor Manager shall be treated as a
Related Party to the Equity Investor except that, for purposes of Section 9 of
the Participation Agreement, the Owner Lessor will be treated as a Related Party
to the Equity Investor to the extent that the Owner Lessor acts on the express
direction or with the express consent of the Equity Investor.
“Released Property” shall have the meaning specified in Section 4.2 of the
Ground Lease.
“Relevant Portion of the Facility” shall mean the Unit or Units suffering an
Event of Loss.

26

--------------------------------------------------------------------------------

“Relevant Portion of the Undivided Interest” shall mean the Owner Lessor’s
Percentage Interest in the Relevant Portion of the Facility.
“Remaining Average Life” shall mean, with respect to any Called Amount, the
number of years obtained by dividing (i) such Called Amount into (ii) the sum of
the products obtained by multiplying (a) the return of equity component of each
Remaining Scheduled Payment with respect to such Called Amount by (b) the number
of years, computed on the basis of a 360-day year composed of twelve 30-day
months, that will elapse between the Settlement Date with respect to such Called
Amount and the scheduled due date of such Remaining Scheduled Payment.
“Remaining Scheduled Payments” shall mean, with respect to the Called Amount of
any Equity Investment, all payments of Basic Lease Rent (Equity Portion) that
would be due after the Settlement Date if no payment of such Called Amount were
made prior to its scheduled due date.
“Removable Modification” shall have the meaning specified in Section 8.3 of the
Facility Lease.
“Rent” shall mean Basic Lease Rent and Supplemental Lease Rent.
“Rent Payment Date” shall mean each August 15 and February 15, commencing
February 15, 2014, to and including August 15, 2033.
“Replacement Component” shall have the meaning specified in Section 7.2 of the
Facility Lease.
“Replacement Power Bond” shall have the meaning specified in Section 2.10(c) of
the Lease Indenture.
“Reported” shall have the meaning specified in the definition of Reinvestment
Yield in this Appendix A.
“Required Modification” shall have the meaning specified in Section 8.1 of the
Facility Lease.
“Responsible Officer” shall mean (a) with respect to a corporation or limited
liability company, its Chairman of the Board, its President, any Senior Vice
President, the Chief Financial Officer, any Vice President, the Treasurer, its
Independent Manager or any other management employee (i) that has the power to
take the action in question and has been authorized, directly or indirectly, by
the Board of Directors (or equivalent body) of such Person, (ii) working under
the direct supervision of such Chairman of the Board, President, Senior Vice
President, Chief Financial Officer, Vice President or Treasurer, and (iii) whose
responsibilities include the administration of the transactions and agreements
contemplated by the Transaction Documents, (b) with respect to the Lease
Indenture Trustee, an officer in its corporate trust administration department,
(c) with respect to TVA, its Chairman of the Board, its President, any Senior
Vice President, the Chief Financial Officer, any Vice President, the Treasurer
or any other management employee, (d) with respect to the Owner Lessor, the
Lessor Manager, and (e) with respect to the Equity Investor, the Equity Manager.

27

--------------------------------------------------------------------------------

“Revenues” shall have the meaning specified in the Granting Clause of the Lease
Indenture.
“S&P” shall mean Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc. or any successor thereto.
“Sale Net Termination Value” shall have the meaning set forth in Section 18.2(e)
of the Facility Lease.
“Scheduled Closing Date” shall mean August 9, 2013 or any date set for the
Closing in a notice of postponement pursuant to Section 2.3(a) of the
Participation Agreement.
“SEC” shall mean the Securities and Exchange Commission, as from time to time
constituted, created under the Securities Exchange Act of 1934.
“Secured Indebtedness” shall have the meaning specified in Section 1 of the
Lease Indenture.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Service Commencement Date” shall have the meaning specified in Section 1 of the
Support Agreement.
“Settlement Date” shall mean, with respect to the Called Amount of any Equity
Investment, the date, which shall be a Termination Date, on which such Called
Amount is to be repaid pursuant to Section 15 of the Facility Lease.
“Seven States” shall have the meaning specified in the recitals to the
Participation Agreement.
“Seven States Parent” shall mean Seven States Power Corporation, a
not-for-profit mutual benefit corporation created and existing under the laws of
the State of Tennessee.
“Seven States Profits Interest” shall mean the membership interest in the Equity
Investor held by Seven States.
“Seven States Transfer” shall mean the purchase by TVA of all right, title and
interest of Seven States in and to the Facility and the Facility Site pursuant
to the terms and conditions of the Purchase Agreement.
“Severable Modification” shall mean any Modification that is removable without
causing material damage to the Facility that cannot readily be repaired.
“Significant Lease Default” shall mean any of: (i) TVA shall fail to make any
payment of Basic Lease Rent or Termination Value on the relevant payment date or
after the same shall have become due and payable, (ii) TVA shall fail to make
any payment of Supplemental Lease Rent in excess of $250,000 (other than
Excepted Payments, or Termination Value or any amount determined by reference
thereto) on the relevant payment date after the same shall have become due and
payable, except to the extent such amounts are the subject of a good faith
dispute and have not been established to be due and payable, or (iii) an event
which is or, with the passage of time would be, a Lease Event of Default under
Section 17(e) or (f) of the Facility Lease.

28

--------------------------------------------------------------------------------

“Similar Law” shall mean any federal, state or local law that is substantially
similar to Title I of ERISA or Section 4975 of the Code.
“Southaven Holdco Notes” shall mean, with respect to any Southaven Holdco Note
Purchaser, the Southaven Holdco Note issued by the Equity Investor as of the
Closing Date to such Southaven Holdco Note Purchaser substantially in the form
attached as Exhibit 1 to the Southaven Holdco Note Purchase Agreement.
“Southaven Holdco Note Purchase Agreement” shall mean the Note Purchase
Agreement, dated as of the Execution Date, between the Equity Investor and the
Southaven Holdco Note Purchasers.
“Southaven Holdco Note Purchase Documents” shall mean the Southaven Holdco Note
Purchase Agreement, the Southaven Holdco Notes, the Equity Pledge Agreement and
the Equity Investor LLC Agreement.
“Southaven Holdco Note Purchaser” or “Southaven Holdco Note Purchasers” shall
mean the Persons set forth under the caption “Southaven HoldcoSouthaven Holdco
Note Purchaser’s Percentage Interest of the Notes” shall mean, as of any date of
determination, the percentage of the outstanding principal amount of Southaven
Holdco Notes held by the applicable Southaven Holdco Note Purchaser.
“Special Lessee Transfer” shall have the meaning specified in Section 12 of the
Participation Agreement.
“Special Lessee Transfer Amount” shall mean for any Termination Date, the amount
determined as follows: (i) the Termination Value (Equity Portion) under the
Facility Lease on such Termination Date; plus (ii) any unpaid Basic Lease Rent
(Equity Portion) due on or before such Termination Date; plus (iii) the Equity
Breakage.
“Station Service Requirements” shall mean the Capacity and Energy required
during any period (including initial start-up and testing) and supplied from any
source other than the Facility for operation of all on-site process and
auxiliary equipment and systems used or useful in connection with the operation
and maintenance of the Facility.
“STG” shall have the meaning specified in Attachment A to the Head Lease.
“Subordinated Resolution” shall mean the Tennessee Valley Authority Subordinated
Debt resolution adopted March 29, 1995, as amended and supplemented.
“Supermajority of Facility Users” shall have the meaning specified in Section 1
of the Support Agreement.
“Supplemental Financing” shall have the meaning specified in Section 11.2(b) of
the Participation Agreement.

29

--------------------------------------------------------------------------------

“Supplemental Lease Rent” shall mean any and all amounts, liabilities and
obligations (other than Basic Lease Rent or any amount determined by reference
thereto) that TVA assumes, agrees to or is required to pay under the Transaction
Documents (whether or not identified as “Supplemental Lease Rent”) to the Owner
Lessor or any other Person, including Termination Value and Make Whole Premium.
“Support Agreement” shall mean the Joint Operating and Support Agreement, dated
as of the Closing Date, between the Owner Lessor and TVA, substantially in the
form of Exhibit H to the Participation Agreement.
“Tax” or “Taxes” shall mean all fees, taxes (including sales taxes, use taxes,
stamp taxes, value added taxes, ad valorem taxes and property taxes (personal
and real, tangible and intangible)), levies, assessments, withholdings and other
charges and impositions of any nature, plus all related interest, penalties,
fines and additions to tax, now or hereafter imposed by any Federal, state,
local or foreign government or other taxing authority (including penalties or
other amounts payable pursuant to subtitle B of Title I of ERISA).
“Tax Advance” shall have the meaning specified in Section 9.2(g)(iii)(4) of the
Participation Agreement.
“Tax Benefit” shall have the meaning specified in Section 9.2(e) of the
Participation Agreement.
“Tax Claim” shall have the meaning specified in Section 9.2(g)(i) of the
Participation Agreement.
“Tax Event” shall mean any event or transaction that results in a Noteholder
being subject to U.S. federal income Tax on a different amount, in a different
manner or at a different time than would have been the case if such event had
not occurred.
“Tax Indemnitee” shall have the meaning specified in Section 9.2(a) of the
Participation Agreement.
“Term-Out Notice Date” shall have the meaning specified in Section 18.4 of the
Facility Lease.
“Term-Out Payment Dates” shall have the meaning specified in Section 18.4 of the
Facility Lease.
“Termination Date” shall mean each of the monthly dates during the Facility
Lease Term identified as a “Termination Date” on Schedule 2 of the Facility
Lease.
“Termination Value” for any Termination Date shall mean an amount equal to the
sum of (a) Termination Value (Debt Portion) and (b) Termination Value (Equity
Portion) for such Termination Date.
“Termination Value (Debt Portion))” for any Termination Date shall mean the
amount set forth under the heading “Termination Value (Debt Portion)” on
Schedule 2 of the Facility Lease for such Termination Date.

30

--------------------------------------------------------------------------------

“Termination Value (Equity Portion)” for any Termination Date shall mean the
amount set forth under the heading “Termination Value (Equity Portion)” on
Schedule 2 of the Facility Lease for such Termination Date.
“Transaction” shall mean, collectively, the transactions contemplated under the
Participation Agreement and the other Transaction Documents.
“Transaction Costs” shall mean the following costs to the extent substantiated
or otherwise supported in reasonable detail:
(i)    the cost of reproducing and printing the Transaction Documents and the
Offering Circular and all costs and fees, including filing and recording fees
and recording, transfer, mortgage, intangible and similar Taxes in connection
with the execution, delivery, filing and recording of the Head Lease, the
Facility Lease, the Ground Lease, the Ground Sublease and any other Transaction
Document, and any other document required to be filed or recorded pursuant to
the provisions hereof or of any other Transaction Document and any Uniform
Commercial Code filing fees in respect of the perfection of any security
interests created by any of the Transaction Documents or as otherwise reasonably
required by the Owner Lessor or the Lease Indenture Trustee;
(ii)    the reasonable fees and expenses of Hunton & Williams LLP, counsel to
the Equity Investor and the Southaven Holdco Note Purchasers, and Winston &
Strawn LLP, special counsel to the Southaven Holdco Note Purchasers for services
rendered in connection with the negotiation, execution and delivery of the
Participation Agreement and the other Transaction Documents;
(iii)    the reasonable fees and expenses of Bradley Arant Boult Cummings LLP,
Mississippi counsel to the Equity Investor and the Underwriters, for services
rendered in connection with the negotiation, execution and delivery of the
Participation Agreement and the other Transaction Documents;
(iv)    the reasonable fees and expenses of Orrick, Herrington & Sutcliffe LLP,
special counsel to TVA, and Butler, Snow, O’Mara, Stevens & Cannada, PLLC,
Mississippi counsel to TVA, for services rendered in connection with the
negotiation, execution and delivery of the Participation Agreement, the other
Transaction Documents and the Underwriting Agreement and the preparation of the
Offering Circular;
(v)    the reasonable fees and expenses of Morris James LLP, counsel to the
Owner Lessor, the Lessor Manager, the Equity Manager and the Equity Collateral
Agent, for services rendered in connection with the negotiation, execution and
delivery of the Participation Agreement and the other Transaction Documents;
(vi)    the reasonable fees and expenses of White & Case, LLP, counsel to the
Underwriters, for services rendered in connection with the negotiation,
execution and delivery of the Participation Agreement, the other Transaction
Documents and the Underwriting Agreement and the preparation of the Offering
Circular;

31

--------------------------------------------------------------------------------

(vii)    the reasonable fees and expenses of Richards, Layton & Finger, PA,
counsel to the Lease Indenture Trustee for services rendered in connection with
the negotiation, execution and delivery of the Participation Agreement and the
other Transaction Documents;
(viii)    the underwriting discounts and commissions payable to, and reasonable
out of pocket expenses of, the Underwriters;
(ix)    the reasonable fees and expenses of Ernst & Young LLP for services
rendered in connection with the Transaction;
(x)    the reasonable, documented out-of-pocket expenses of the Equity Investor,
each Southaven Holdco Note Purchaser, the Owner Participant, Seven States and
the Owner Lessor;
(xi)    the reasonable fees and expenses of Dentons US LLP, counsel to the Owner
Participant, and Miller & Martin PLLC, counsel to Seven States, each for
services rendered in connection with the Transaction;
(xii)    the reasonable fees and expenses of First Southwest Company, financial
advisor to Seven States, for services rendered in connection with the
Transaction;
(xiii)    the initial fees and expenses of the Lease Indenture Trustee in
connection with the execution and delivery of the Participation Agreement and
the other Transaction Documents to which it is or will be a party;
(xiv)    the initial fees and expenses of Wilmington, in its capacity as Lessor
Manager, Equity Manger and Collateral Agent, in connection with the execution
and delivery of the Participation Agreement and the other Transaction Documents
to which it is or will be a party;
(xv)    the fees and expenses of the Appraiser, for services rendered in
connection with delivering the Closing Appraisal required by Section 4 of the
Participation Agreement;
(xvi)    the fees and expenses of the Engineering Consultant, for services
rendered in connection with delivering the Engineering Report required by
Section 4 of the Participation Agreement;
(xvii)    the fees and expenses of Trinity Consultants, Inc. for services
rendered in connection with delivering the Phase I required by Section 4(u) of
the Participation Agreement;
(xviii)    the fees and expenses of PLS, Inc. for services rendered in
connection with delivering the map or drawing required by Section 4(s) of the
Participation Agreement;
(xvix) the fees and expenses of Fidelity National Title Insurance Company for
services rendered in connection with delivering the title report required by
Section 4(s) of the Participation Agreement; and

32

--------------------------------------------------------------------------------

(xvx)    the fees and expenses of the Rating Agencies in connection with the
rating of the Lessor Notes.
Notwithstanding the foregoing, Transaction Costs shall not include internal
costs and expenses such as salaries and overhead of whatsoever kind or nature
nor costs incurred by the parties to the Participation Agreement pursuant to
arrangements with third parties for services (other than those expressly
referred to above), such as the fees and expenses of financial analysis and
consulting, advisory services, and costs of a similar nature.
“Transaction Documents” shall mean the Operative Documents and the Southaven
Holdco Note Purchase Documents.
“Transaction Party(ies)” shall mean, individually or collectively as the context
may require, all or any of the parties to the Transaction Documents (including
the Trust Company and Wilmington Trust).
“Transferee” shall have the meaning specified in Section 7.1(a) of the
Participation Agreement.
“Transmission Services Guidelines” shall have the meaning specified in Section 1
of the Support Agreement.
“Treasury Regulations” shall mean regulations, including temporary regulations,
promulgated under the Code.
“Trust Company” shall have the meaning set forth in the introductory paragraph
to the Participation Agreement.
“Trust Indenture Act” shall mean the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed except as provided in Section
905 of such act; provided, however, that in the event the Trust Indenture Act of
1939 is amended after such date, “Trust Indenture Act” means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so amended.
“TVA” shall have the meaning set forth in the introductory paragraph to the
Participation Agreement.
“TVA (Entergy) Interconnection Facilities” shall have the meaning specified in
Section 1 of the Support Agreement.
“TVA Act” shall mean the Tennessee Valley Authority Act of 1933, as amended.
“TVA IA” shall have the meaning specified in Section 4.2(a) of the Support
Agreement.
“TVA Interconnection Facilities” shall have the meaning specified in Section 1
of the Support Agreement.
“TVA Point of Interconnection” shall have the meaning specified in Section 1 of
the Support Agreement.

33

--------------------------------------------------------------------------------

“TVA Substation” shall have the meaning specified in Section 1 of the Support
Agreement.
“TVA Transmission System” shall mean the facilities owned, controlled or
operated by TVA (or a successor entity) that are used to provide transmission
service under the Transmission Service Guidelines.
“TVA’s Percentage Interest” shall mean TVA’s 10% undivided interest in the
Facility and the Facility Site not subject to the Transaction.
“Uncontrollable Forces” shall have the meaning set forth in Section 7.2 of the
Support Agreement.
“Underwriters” shall mean Merrill, Lynch, Pierce, Fenner & Smith Incorporated,
Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC.
“Underwriting Agreement” shall mean the Underwriting Agreement, dated the
Execution Date, between TVA and the Underwriters.
“Undivided Interest” shall mean a 90% undivided interest in the Facility
together with (i) all rights under Applicable Law as a tenant-in-common of the
Facility with the Head Lessor as owner/holder of the remaining 10% undivided
interest (or any successor, assignee or lessee of the Head Lessor’s 10%
undivided interest) in the Facility, as such rights of a tenant-in-common are
modified by the Head Lease (including Sections 14.17 and 14.18 thereof) and,
following termination of the Facility Lease, the Support Agreement, (ii) the
right to nonexclusive possession with the Head Lessor as owner/holder of the
remaining 10% undivided interest (or any successor, assignee or lessee of the
Head Lessor’s 10% undivided interest) in the Facility, and (iii) following the
termination of the Facility Lease, the right to 90% of the capacity, energy and
ancillary services as may be available from the Facility from time to time.
“Uniform Commercial Code” or “UCC” shall mean the Uniform Commercial Code as in
effect in the applicable jurisdiction.
“Uniform System of Accounts” shall mean the Uniform System of Accounts
prescribed by FERC, as in effect on the Closing Date and as from time to time
and thereafter amended, or the chart of accounts and accounting classifications
which may be substituted for such Uniform System of Accounts from time to time
by FERC or its successor for such purpose.
“Unit” and collectively the “Units” shall mean each of the three (3) General
Electric Frame 7FA combustion turbine generators, together with the related
Aalborg heat recovery steam generator and the related General Electric A10 steam
turbine generator, and any Components exclusively related thereto, as more
particularly described on Exhibit A to the Facility Lease.
“U.S. Government Obligations” shall mean securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii) are not callable or redeemable at the option of the issuer
thereof,

34

--------------------------------------------------------------------------------

and shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such U.S. Government Obligation or a specific
payment of interest on or principal of any such U.S. Government Obligation held
by such custodian for the account of the holder of a depository receipt,
provided that (except as required by law) such custodian is not authorized to
make any deduction in the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of interest on or principal of the
U.S. Government Obligation evidenced by such depository receipt.
“Verifier” shall have the meaning specified in Section 3.4(c) of the Facility
Lease.
“Wilmington” shall mean Wilmington Trust, National Association.
“Wilmington Trust” shall have the meaning set forth in the introductory
paragraph to the Participation Agreement.
_______________
Copies of the Ground Lease, the Ground Sublease, the Head Lease, the Facility
Lease, the Indenture of Trust and the Support Agreement are of record with the
Office of the Chancery Clerk of DeSoto County, Mississippi.

35

--------------------------------------------------------------------------------

Index

2013 Lessor Notes.........................................................
4

 
Debt Portion..................................................................
9

Actual Knowledge.........................................................
4

 
Deed of Trust Trustee....................................................
9

Additional Equity Investment.......................................
4

 
Defaulting Facility User................................................
9

Additional Facility.........................................................
4

 
Discounted Value..........................................................
9

Additional Lessor Notes................................................
4

 
Dollars...........................................................................
9

Additional Owner..........................................................
4

 
DTC...............................................................................
9

Affiliate.........................................................................
4

 
Early Buy Out...............................................................
9

After-Tax Basis.............................................................
4

 
Early Buy Out Date.......................................................
9

Applicable Law.............................................................
5

 
Early Buy Out Notice....................................................
9

Applicable Percentage...................................................
5

 
Effective Date................................................................
9

Applicable Rate.............................................................
5

 
Election Notice..............................................................
9

Appraisal Procedure......................................................
5

 
Eligible Customer..........................................................
9

Appraiser.......................................................................
5

 
Energy...........................................................................
9

Appropriations Act Paragraph.......................................
5

 
Enforcement Notice......................................................
9

Arbitration Proceeding..................................................
5

 
Engineering Consultant.................................................
9

Assigned Documents.....................................................
6

 
Engineering Report.......................................................
10

Assignment and Assumption Agreement......................
6

 
Entergy..........................................................................
10

Bankruptcy Code...........................................................
6

 
Entergy Point of Interconnection..................................
10

Base Rate.......................................................................
6

 
Entergy Substation........................................................
10

Basic Lease Rent...........................................................
6

 
Entergy Transmission System.......................................
10

Basic Lease Rent (Debt Portion)...................................
7

 
Environmental Condition..............................................
10

Basic Lease Rent (Equity Portion)................................
7

 
Environmental Laws.....................................................
10

Benefit Plan...................................................................
7

 
Equity Breakage............................................................
10

Bond Resolution............................................................
7

 
Equity Collateral Agent.................................................
10

Business Day.................................................................
7

 
Equity Guarantor...........................................................
10

Called Amount..............................................................
7

 
Equity Guaranty............................................................
10

Capability......................................................................
7

 
Equity Investment.........................................................
10

Capacity.........................................................................
7

 
Equity Investor..............................................................
11

Capital Expenditure Budget..........................................
7

 
Equity Investor LLC Agreement...................................
11

Claim.............................................................................
7

 
Equity Investor Members..............................................
11

Closing..........................................................................
7

 
Equity Investor's Lien...................................................
11

Closing Appraisal..........................................................
7

 
Equity Manager.............................................................
11

Closing Date..................................................................
8

 
Equity Placement Agent................................................
11

Code..............................................................................
8

 
Equity Pledge Agreement..............................................
11

Co-Equity Manager.......................................................
8

 
Equity Portion...............................................................
11

Co-Lessor Manager.......................................................
8

 
ERISA...........................................................................
11

Collateral.......................................................................
8

 
Event of Loss................................................................
12

Common Facilities........................................................
8

 
Evidences of Indebtedness............................................
12

Competitor.....................................................................
8

 
Excepted Payments.......................................................
12

Component....................................................................
8

 
Expected Rights............................................................
12

Confidential Information...............................................
8

 
Excess Amount..............................................................
12

Construction Cost..........................................................
8

 
Exchange Act................................................................
12

Contract Year.................................................................
8

 
Exchange Date..............................................................
13

CTG...............................................................................
9

 
Excluded Assets............................................................
13

--------------------------------------------------------------------------------

Excluded Taxes.............................................................
13

 
Indemnity Period...........................................................
17

Execution Date..............................................................
13

 
Independent Appraiser...................................................
17

Existing Southaven Credit Agreement..........................
13

 
Investment Banker.........................................................
17

Existing Southaven Lease Documents..........................
13

 
Lease Default................................................................
17

Existing Southaven Loan Documents...........................
13

 
Lease Event of Default..................................................
17

Expiration Date.............................................................
13

 
Lease Indenture.............................................................
17

Facility...........................................................................
13

 
Lease Indenture Estate..................................................
17

Facility Lease................................................................
13

 
Lease Indenture Event of Default.................................
17

Facility Lease Term.......................................................
13

 
Lease Indenture Payment Default.................................
17

Facility Lessee...............................................................
13

 
Lease Indenture Trustee................................................
17

Facility Lessee's Interest...............................................
13

 
Lease Indenture Trustee Office.....................................
17

Facility Operating Fee...................................................
13

 
Lease Indenture Trustee's Account................................
17

Facility Operation and Maintenance Expense...............
13

 
Lease Indenture Trustee's Liens....................................
17

Facility Site...................................................................
14

 
Leasehold Deed of Trust Trustee..................................
18

Facility User..................................................................
14

 
Lessee Person................................................................
18

Fair Market Rental Value..............................................
14

 
Lessor Estate.................................................................
18

Fair Market Sales Value................................................
14

 
Lessor Manager.............................................................
18

Federal Power Act.........................................................
15

 
Lessor Notes..................................................................
18

FERC.............................................................................
15

 
LGIP..............................................................................
18

Final Determination......................................................
15

 
Lien...............................................................................
18

Final Shutdown.............................................................
15

 
List of Competitors.......................................................
18

Final Shutdown Date.....................................................
15

 
Majority in Interest of Noteholders...............................
18

Fitch..............................................................................
15

 
Majority of Facility Users.............................................
19

FMV Net Termination Value.........................................
15

 
Make Whole Premium..................................................
19

GAAP............................................................................
15

 
Material Adverse Effect................................................
19

Government...................................................................
15

 
Maximum Net Generating Capacity..............................
19

Governmental Entity.....................................................
15

 
Member.........................................................................
19

Ground Interest.............................................................
15

 
Membership Interests....................................................
19

Ground Lease................................................................
16

 
Mississippi Real Property..............................................
19

Ground Lease Term.......................................................
16

 
Modification..................................................................
19

Ground Lessee...............................................................
16

 
Month............................................................................
19

Ground Lessor...............................................................
16

 
Moody's.........................................................................
19

Ground Lessor's Release Rights....................................
16

 
Net TV Amount.............................................................
19

Ground Sublease...........................................................
16

 
Net TV Amount (Debt Portion).....................................
20

Ground Sublease Term..................................................
16

 
Net TV Amount (Debt Portion) Rate............................
20

Ground Sublessee..........................................................
16

 
Net TVA Amount (Equity Portion)................................
20

Ground Sublessor..........................................................
16

 
Net TVA Amount (Equity Portion) Rate.......................
20

Hazardous Substance....................................................
16

 
Non-Defaulting Facility User........................................
20

Head Lease....................................................................
16

 
Nonseverable Modifications.........................................
20

Head Lease Rent...........................................................
16

 
Note Register.................................................................
20

Head Lease Term...........................................................
16

 
Noteholder.....................................................................
20

Head Lessee..................................................................
16

 
Offering Circular...........................................................
20

Head Lessor...................................................................
17

 
Officer's Certificate.......................................................
20

HRSG............................................................................
17

 
Operation and Maintenance Agreement........................
20

Indemnitee.....................................................................
17

 
 
 

--------------------------------------------------------------------------------

Operation and Maintenance Expense Budget...............
20

 
Reinvestment Yield.......................................................
26

Operative Documents....................................................
21

 
Related Party.................................................................
26

Optional Modification...................................................
21

 
Released Property..........................................................
26

Other Exchange Date Payment Amounts......................
21

 
Relevant Portion of the Facility.....................................
26

Other Redemption Date Payment Amounts..................
21

 
Relevant Portion of the Undivided Interest...................
27

Overdue Rate.................................................................
21

 
Remaining Average Life...............................................
27

Owner Lessor................................................................
21

 
Remaining Scheduled Payments...................................
27

Owner Lessor LLC Agreement.....................................
21

 
Removable Modification...............................................
27

Owner Lessor Mortgage................................................
21

 
Rent...............................................................................
27

Owner Lessor's Account................................................
21

 
Rent Payment Date........................................................
27

Owner Lessor's Interest.................................................
22

 
Replacement Component..............................................
27

Owner Lessor's Lien......................................................
22

 
Replacement Power Bond.............................................
27

Owner Lessor's Percentage Interest..............................
22

 
Reported........................................................................
27

Owner Participant.........................................................
22

 
Required Modification..................................................
27

Partial Early Buy Out....................................................
22

 
Responsible Officer.......................................................
27

Partial Event of Loss.....................................................
22

 
Revenues.......................................................................
28

Participation Agreement................................................
22

 
S&P................................................................................
28

Paying Agent.................................................................
22

 
Sale Net Termination Value...........................................
28

Permitted Closing Date Liens.......................................
22

 
Scheduled Closing Date................................................
28

Permitted Instruments...................................................
22

 
SEC...............................................................................
28

Permitted Liens.............................................................
23

 
Secured Indebtedness....................................................
28

Permitted Post Facility Lease Term Liens.....................
23

 
Securities Act................................................................
28

Permitted Securities......................................................
23

 
Service Commencement Date.......................................
28

Person............................................................................
24

 
Settlement Date.............................................................
28

Personalty......................................................................
24

 
Seven States..................................................................
28

Phase
I...........................................................................
24

 
Seven States Parent.......................................................
28

Plan................................................................................
24

 
Seven States Profits Interest..........................................
28

Points of Interconnection..............................................
24

 
Seven States Transfer....................................................
28

Power.............................................................................
24

 
Severable Modification.................................................
28

Proceeds........................................................................
24

 
Significant Lease Default..............................................
28

Prohibited Transaction Class Exemption......................
24

 
Similar Law...................................................................
29

Prudent Industry Practice..............................................
24

 
Southaven Holdco Note Purchase Agreement..............
29

Purchase Agreement......................................................
24

 
Southaven Holdco Note Purchase Documents..............
29

Quarter...........................................................................
24

 
Southaven Holdco Note Purchaser...............................
29

Rates..............................................................................
24

 
Southaven Holdco Note Purchaser's Percentage
 
Rating Agencies............................................................
25

 
  Percentage Interest of the Notes..................................
29

Real Property.................................................................
25

 
Southaven Holdco Note Purchasers..............................
29

Reasonable Basis...........................................................
25

 
Southaven Holdco Notes...............................................
29

Rebuilding Closing Date...............................................
25

 
Special Lessee Transfer.................................................
29

Redemption Date...........................................................
25

 
Special Lessee Transfer Amount...................................
29

Registrar........................................................................
25

 
Station Service Requirements.......................................
29

Regulatory Events of Loss............................................
25

 
STG...............................................................................
29

Regulatory Event of Loss Termination Payment..........
26

 
Subordinated Resolution...............................................
29

--------------------------------------------------------------------------------

Supermajority of Facility User......................................
29

 
Trust Company..............................................................
33

Supplemental Financing................................................
29

 
Trust Indenture Act........................................................
33

Supplemental Lease Rent..............................................
30

 
TVA...............................................................................
33

Support Agreement.......................................................
30

 
TVA (Entergy) Interconnection Facilities.....................
33

Tax.................................................................................
30

 
TVA Act.........................................................................
33

Tax Advance..................................................................
30

 
TVA IA..........................................................................
33

Tax Benefit....................................................................
30

 
TVA Interconnection Facilities.....................................
33

Tax Claim......................................................................
30

 
TVA Point of Interconnection.......................................
33

Tax Event......................................................................
30

 
TVA Substation.............................................................
34

Tax Indemnitee..............................................................
30

 
TVA Transmission System............................................
34

Taxes.............................................................................
30

 
TVA's Percentage Interest.............................................
34

Termination Date...........................................................
30

 
U.S. Government Obligations.......................................
34

Termination Value.........................................................
30

 
UCC..............................................................................
34

Termination Value (Debt Portion).................................
30

 
Uncontrollable Forces...................................................
34

Termination Value (Equity Portion)..............................
31

 
Underwriters..................................................................
34

Term-Out Notice Date...................................................
30

 
Underwriting Agreement...............................................
34

Term-Out Payment Dates..............................................
30

 
Undivided Interest.........................................................
34

Transaction....................................................................
31

 
Uniform Commercial Code...........................................
34

Transaction Costs..........................................................
31

 
Uniform System of Accounts........................................
34

Transaction Documents.................................................
33

 
Unit................................................................................
34

Transaction Party(ies)...................................................
33

 
Units..............................................................................
34

Transferee......................................................................
33

 
Verifier...........................................................................
35

Transmission Services Guidelines................................
33

 
Wilmington....................................................................
35

Treasury Regulations.....................................................
33

 
Wilmington Trust..........................................................
35

--------------------------------------------------------------------------------

Attachment A
to
Head Lease

DESCRIPTION OF THE FACILITY
The Facility consists of the Units, Common Facilities, and any other equipment,
material or property owned or leased by TVA associated with the Units and Common
Facilities (except for Excluded Assets, as defined below), all of which are
located on, under, or over the Facility Site, which Facility Site is the real
property located in the City of Southaven, Mississippi and is described in
greater detail in Attachment B hereto. For the avoidance of doubt, the Facility
does not include the Facility Site.
Each Unit consists of one General Electric Frame 7FA.03 combustion turbine
(“CTG”), one Aalborg Pioneer GT8 heat recovery steam generator (“HRSG”) with
supplementary duct firing and one GE A10 steam turbine (“STG”) in a 1x1x1
configuration and all ancillary equipment relating thereto, except for the
equipment which constitutes Common Facilities.
The units are sometimes referred to as SCC 01, SCC 02 and SCC 03. The serial
numbers for each CTG-HRSG-STG group are as follows (CTG and STG serial numbers
are turbine / generator):
TVA Tag Number
CTG Serial Number
HRSG Serial Number
ST Serial Number
SCC 01
298002 / 338X339
102142
270T568 / 290T568
SCC 02
298003 / 338X340
102143
270T569 / 290T569
SCC 03
298004 / 338X341
102144
270T570 / 290T570

The Components for each Unit includes the following:

GE Mark V Gas Turbine Control System
GE Mark V Steam Turbine Control System
Forney -401550 low-NOX Duct Burner
Fuel Gas Heater
Main Step-up Transformer
Inlet Fogging System (not in use)
Inlet Filter System
CO2 Fire Protection System
MCC Room (EB Room) with DGP
EX2000 Gas Turbine Generator System
EX2000 Steam Turbine Generator System (brushless)
Fuel Gas Module
Gas Turbine Lube Oil Module
Steam Turbine Lube Oil Module

ATTACH. A-1

--------------------------------------------------------------------------------

Emissions Monitoring System
Feed Water System
Steam System
SCR Catalyst
Steam Turbine Hydraulic Module
Condensate System
Compressed Air System
Chemical Feed System
Steam and Water Sample System
Generator Hydrogen System
Cooling Tower and Circ Water System including Cooling Tower Transformers, MCC,
and Auxiliary Cooling System
Condenser
Station Service Transformers
Electric Steam Super Heater
Gas Turbine Generator Breaker
Steam Turbine Generator Breaker

The Common Facilities are property and facilities that are used for the
operation of the Units at the Facility. These shared facilities support the
Units. The Common Facilities are as follows:

Two LCI Starting Systems, including Transformers
Unit Auxiliary Transformer on Unit 1 and Unit 3 Common to Unit 2
Plant Water Treatment System
Demineralized Water Tank
Service Water / Fire Water Tanks
Potable Water System
Eye Wash System
Storm Water System
Process Water System
Compressor Wash System
Oil-Water Separation and Discharge System
Auxiliary Steam System and Auxiliary Boiler
Gas Supply Piping and Gas Yard
Fire Protection System
DeltaV DCS

The Excluded Assets shall, without limitation, be as follows:

Switchyard
Electrical transmission facilities and related equipment
All other property and facilities located on the Facility Site not necessary or
useful in
connection with the operation or support of the Units

ATTACH. A-2

--------------------------------------------------------------------------------

Attachment B
to
Head Lease
DESCRIPTION OF THE FACILITY SITE
Parcel 1

A parcel of land lying in the SW1/4 of Section 15 Township 1 South Range 8 West
in DeSoto County, State of Mississippi, being on the Southaven Combustion
Turbine Site and at the intersection of Tulane Road and Stateline Road, as shown
on US-TVA Drawing No. 112 MS 421 B 99(D) R.1 (formerly US-TVA Drawing No. 112 MS
422 B 100(D) R.0) and being more particularly described as follows:

Commencing at a concrete monument (found) (Coordinates: N. 275,703.11, E.
750,567.00), being NGS MON 153; thence S42°05'16"E, 13,353.72 feet to an angle
iron (set) on the accepted Mississippi-Tennessee state line being corner No.
SCBTS-1 and the Point of Beginning:

Thence leaving the point of beginning and said Mississippi-Tennessee state line
S02°11'31"W, 1,100.72 feet to a rebar (found) in the northern right of way of
Stateline Road, being corner No. SCBTS-2; thence continuing with said right of
way for the following two calls; N87°47'07"W, 304.06 feet to a rebar (found),
being corner No. SCBTS-3; thence N87°47'41" W, 104.99 feet to a (3/8") rebar
(found), being corner No. SCBTS-6; thence leaving said right of way N02°12'24"E,
206.98 feet to a (3/8") rebar (found), being corner No. SCBTS-5; thence parallel
with north right of way of Stateline Road N87°48'27"W, 1,260.36 feet to rebar
with cap (found) and stamped "THY INC. #888" in the eastern right of way of
Tulane Road, being corner No. SCBTS-7; thence with said right of way
N02°15'03"E, 899.31 feet to a rebar with cap (found) on the accepted
Mississippi-Tennessee state line, being corner No. SCBTS-8; thence leaving said
right of way and with said state line S87°36'39"E, 1,668.44 feet to the point of
beginning.

Located on VTM Quad Horn Lake, MS.
 
Positions of corners and directions of lines are referred to the Tennessee
Lambert State Coordinate System and NAD 83 (2007) Horizontal Datum.

ATTACH. B-1

--------------------------------------------------------------------------------

Attachment C
to
Head Lease
PERMITTED CLOSING DATE LIENS

Except for the liens listed below, the Liens reflected in the Commitment for
Title Insurance, Order No. 4307338, Revision 7, effective date August 2, 2013,
prepared by Fidelity National Title Insurance Company, attached to this
Attachment C, shall constitute Permitted Closing Date Liens.

1.
Deed of Trust of record in Book 2951, Page 634, as amended in First Amendment to
Deed of Trust Book 3018, Page 462 and Second Amendment to Deed of Trust Book
3157, Page 224, in the Chancery Clerk’s Office of DeSoto County, MS;

2.
UCC-1 Financing Statement recorded in Book 2951, Page 650 in the Chancery
Clerk’s Office of DeSoto County, MS;

3.
Memorandum of Joint Ownership Agreement of record in Book 128, Page 472, as
amended in Book 131, Page 425 in the Chancery Clerk’s Office of DeSoto County,
MS;

4.
Memorandum of Lease of record in Book 128, Page 480, as amended in Book 131,
Page 432 in the Chancery Clerk’s Office of DeSoto County, MS; and

5.
Collateral Assignment recorded in Book 128, Page 487 in the Chancery Clerk’s
Office of DeSoto County, MS.

ATTACH. C-1