Document:

Exhibit 10.33

EXHIBIT 10.33

This Asset Purchase 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 Asset Purchase Agreement were made to, and solely for the benefit of, the other parties to this Asset Purchase 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

ASSET PURCHASE AGREEMENT

By and between

TENNESSEE VALLEY AUTHORITY,
as Buyer

and

SEVEN STATES SOUTHAVEN, LLC,
as Seller
August 6, 2013
    

ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the “Agreement”) is made and entered this 6 day of August, 2013, by and between Seven States Southaven, LLC, a Delaware limited liability company (“Seller”), and Tennessee Valley Authority, a corporate agency and instrumentality of the United States Government created and existing under and by virtue of the Tennessee Valley Authority Act of 1933, as amended (“Buyer”).
RECITALS
A.    Whereas, Seller is the owner of that certain specified 90% undivided interest in the Facility and the Facility Site and certain other assets and properties described herein (collectively, the Facility, the Facility Site and such other assets and properties, as more fully described herein, are referred to as the “Acquired Assets,” and Seller’s 90% undivided interest in the Facility, the Facility Site and the Acquired Assets are referred to herein as the “Undivided Interest,”  the “Ground Interest” and the “Acquired Interest,” respectively);
B.    Whereas, Buyer owns the remaining 10% undivided interest in the Acquired Assets;
B.    Whereas, Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, the Acquired Assets in exchange for the payment of the Purchase Consideration and the assumption of the Assumed Liabilities, all as consideration for such purchase (the foregoing transactions being referred to collectively herein as the “Acquisition Transaction”);
C.    Whereas, it is a condition to the execution of this Agreement that Buyer, simultaneously with the execution and delivery of this Agreement, enters into the Participation Agreement, dated as of August 6, 2013, among (i) Buyer, (ii) Owner Lessor, (iii) Wilmington Trust, National Association, (iv) Equity Investor, and (v) Wilmington Trust Company (the “Participation Agreement”);
D.    Whereas, simultaneously with and as a condition to the Closing, Buyer and the other transaction parties will consummate the Lease/Leaseback Transaction as contemplated by the Participation Agreement and the other transaction documents, including, among other transactions, (i) the lease of the Undivided Interest and Ground Interest (both of which are being conveyed to Buyer from Seller as part of the Acquired Interest) by Buyer to Owner Lessor pursuant to and in accordance with the terms and conditions of (a) the Head Lease Agreement, to be dated as of the Closing, between Buyer and Owner Lessor (the “Head Lease”), and (b) the Ground Lease Agreement, to be dated as of the Closing, between Buyer and Owner Lessor (the “Ground Lease”), and (ii) the formation of the Equity Investor pursuant to the Equity LLC Agreement whereby Seller will receive the Profits Interest; and
E.    Whereas, on the Closing Date and subject to the satisfaction of the terms and conditions set forth in this Agreement and the simultaneous closing of the Lease/Leaseback Transaction, Buyer will purchase from Seller, and Seller will sell to Buyer, the Acquired Interest subject to Buyer’s obligations under the Participation Agreement, Head Lease, and Ground Lease to lease the Undivided Interest and the Ground 

Interest (both of which are being conveyed to Buyer from Seller as part of the Acquired Interest) to Owner Lessor.   
NOW, THEREFORE, in consideration of the covenants, promises, and representations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I    

DEFINITIONS

1.1    Capitalized Terms.  The following capitalized terms shall have the meanings set forth below:

“Accumulated Amortization Costs” shall have the meaning set forth in Section 2.1(g).
“Acquired Assets” shall have the meaning set forth in Section 2.1.
“Acquired Interest” shall have the meaning set forth in the recitals to this Agreement.
“Acquisition Transaction” shall have the meaning set forth in the recitals to this Agreement.
“Actions” shall mean all actions, suits, proceedings, arbitration, or governmental or regulatory investigations or audits.
“Affiliate” of any specified Person means any other Person that, directly or indirectly, controls, is controlled by, or is under common control with such Person.  For purposes of this definition “control” when used with respect to any particular Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract, or otherwise, and the terms “controlling,” “controlled,” and “under common control” have meanings correlative to the foregoing; provided, however, that any Person owning, directly or indirectly, ten percent (10%) or more of the securities having ordinary voting power for the election of directors or other members of the governing body of a corporation, or ten percent (10%) or more of the partnership or other ownership interests of any other Person, is deemed to control such corporation or other Person; and provided further that any federal Governmental Entity shall not be deemed to be an Affiliate of the Tennessee Valley Authority.
“Agreement” shall mean this Asset Purchase Agreement between Buyer and Seller (including all Exhibits and Schedules hereto) and all amendments hereto in accordance with Section 9.13.
“Ancillary Agreements” shall mean (i) the Bill of Sale, (ii) the Assignment and Assumption Agreement, (iii) the Termination Agreements, (iv) the Deeds, and (v) any additional agreements and instruments of sale, transfer, conveyance, assignment and assumption that may be executed and delivered 

by any party or any Affiliate thereof at or in connection with the Closing.
“Assigned Contracts” shall have the meaning set forth in Section 2.1(e).
“Assigned Permits” shall have the meaning set forth in Section 2.1(f).
“Assignment and Assumption Agreement” shall have the meaning set forth in Section 3.4(c)(ii).
“Assumed Liabilities” shall have the meaning set forth in Section 2.4.
“Bill of Sale” shall have the meaning set forth in Section 3.4(c)(i).
“Business Day” shall mean a day other than a Saturday, Sunday, or other day on which commercial banks in New York or Tennessee are authorized or required by law to close.
“Buyer Material Adverse Effect” shall mean an adverse change in, or a material adverse effect upon, the operations, business, properties, Liabilities (actual or contingent) or condition (financial or otherwise) of Buyer which would materially adversely affect the ability of Buyer to comply with its obligations hereunder.
“Closing” shall have the meaning set forth in Section 3.4.
“Closing Date” shall have the meaning set forth in Section 3.4.
“Code” shall mean the United States Internal Revenue Code of 1986, as amended.
“Conflict” shall mean any event or circumstance that would constitute a conflict, breach, violation or default (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit.
“Contract” shall mean any written or oral contract, agreement, plan, arrangement, undertaking, commitment, warranty, representation, or understanding of any nature, including any license, sublicense, lease, sublease, commitment, sale and purchase order, invoice, franchise, note, bond, mortgage, indenture, or covenant.
“Contract Consents and Assignments” shall refer, with respect to any required consent, waiver, assignment, or approval set forth in Schedule 4.3 of the Seller Disclosure Schedule, to the written form thereto necessary to vest in Buyer all rights of Seller under any Assigned Contract.
“Deed” means one or more special warranty deeds, substantially in the form of Exhibit H, conveying Seller’s 90% undivided interest in the Real Property included in the Acquired Assets, free and clear of all Liens other than Permitted Encumbrances, with legal descriptions sufficient for conveyance of such undivided interest in the Real Property of record, to be executed and delivered by Seller at the Closing.

“Easements” shall have the meaning set forth in Section 2.1(c).
“Escrow Account” shall have the meaning set forth in Section 2.1(g).
“Emission Allowances” shall mean all environmental credits, offsets and allowances issued under the federal Clean Air Act (42 U.S.C. § 7401 et seq.), any applicable emission budget programs, or any other state, regional or federal emission trading program, to specifically include the definition of NOx and SO2 allowances under the federal Acid Rain Program (40 C.F.R. 72); the NOx Budget Trading Program (40 C.F.R. 96); the CAIR NOx Trading Program (40 C.F.R. 96 Subpart AA); the CAIR SO2 Trading Program (40 C.F.R. Subpart AAA); and any approved rules or regulations implementing these provisions adopted by the State of Mississippi or any of its Governmental Entities pursuant to any applicable Law.
“Equity Investor” shall mean Southaven Holdco LLC, a Delaware limited liability company.
“Equity LLC Agreement” shall mean the limited liability company agreement of the Equity Investor, dated as of the Closing, between GSS Holdings (Southaven), Inc., a Delaware corporation, Seller, and Wilmington Trust, National Association, a national banking association, in its capacity as the “Equity Investor”, and attached hereto as Exhibit C.
“Exchange Act” shall mean the United States Securities Exchange Act of 1934, as amended.
“Excluded Assets” shall have the meaning set forth in Section 2.2.
“Excluded Liabilities” shall have the meaning set forth in Section 2.3.
“Facility” shall mean 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, DeSoto County, Mississippi, as more particularly described in Exhibit A hereto.
“Facility Books and Records” shall mean all books, records, papers, files, documents, or correspondence of any kind, whether in printed or electronic format, in the care, custody, or control of Seller that relate to the Facility, the Acquired Assets or the Assumed Liabilities, including copies of all Contracts, purchasing and sales records, customer and vendor lists, accounting and financial records (including records of development expenses), site control agreements, environmental reports, soils studies, engineering studies, feasibility studies, surveys, easement documents, title insurance policies, permitting documents, zoning information, invention disclosures, applications, registrations, certificates, grants, and all files and records relating to Facility Intellectual Property, and with respect to any of the foregoing, any related documentation and/or specifications.
“Facility Intellectual Property” shall mean any and all intellectual property that is owned by Seller, or that otherwise is, or at any prior time was, necessary for the development and exploitation of the Facility.  

“Facility Site” shall mean all those parcels of land upon which the Facility is located, as more particularly described in Exhibit B hereto.
“Facility Tangible Property” shall have the meaning set forth in Section 2.1(a).
“Governmental Entity” shall mean any court, tribunal, judicial or arbitral body, administrative agency or commission or any similar federal, state, county, local, municipal, or foreign or supranational governmental authority, instrumentality, agency or commission.
“Governmental Order” shall mean any order, writ, judgment, injunction, decree, stipulation, determination, ruling or award entered by or with any Governmental Entity.
“Governmental Permit” shall mean any franchise, permit, license, agreement, waiver, or authorization held or used in the conduct of a Person’s business and obtained from a Governmental Entity.
“Ground Interest” shall have the meaning set forth in the recitals to this Agreement.
“Ground Lease” shall have the meaning set forth in the recitals to this Agreement.
“Head Lease” shall have the meaning set forth in the recitals to this Agreement.
“Income Tax” shall mean any Tax imposed on or measured by net income or net profits (however denominated).
“Indebtedness” shall mean, with respect to any Person, all Liabilities, indebtedness, or obligations of any kind or nature, contingent or otherwise, including (i) all indebtedness for borrowed money or for the deferred purchase price of property or services; (ii) any other indebtedness that is evidenced by a note, bond, debenture, letter of credit or similar instrument or facility; (iii) all obligations under financing and operating leases; and (iv) all Indebtedness referred to in clauses (i) through (iii) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and Contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness.
“IRS” shall mean the United States Internal Revenue Service.
“Joint Ownership Agreement” shall mean the Joint Ownership Agreement, dated as of April 30, 2008, as amended, between Seven States Power Corporation and Tennessee Valley Authority, pursuant to which Tennessee Valley Authority, through two separate transactions, conveyed a ninety percent (90%) undivided interest in all rights, title and interests in the Acquired Assets to Seller, as the “Designated Entity” (as defined in the Joint Ownership Agreement) of Seven States Power Corporation.
“Law” shall mean any national, federal, state, municipal, local, foreign, supranational, or other statute, law, ordinance, rule, code, Governmental Order, or other requirement or rule of law.

“Lease” shall mean the Lease Agreement, dated September 30, 2008, as amended, between Seller and Buyer.
“Lease/Leaseback Transaction” shall mean the transactions contemplated by the Participation Agreement, the Head Lease, the Ground Lease, and such other transaction documents, whereby, among other things, (i) Buyer will lease the Undivided Interest and the Ground Interest (both of which are being conveyed to Buyer from Seller as part of the Acquired Interest) to Owner Lessor under the terms and conditions of the Head Lease and the Ground Lease, and (ii) Owner Lessor, among other things, will issue bonds and use the proceeds from such bond issuance (together with other sources of funding) to pay a portion of the rent owed to Buyer under the Head Lease.
“Liability” shall mean any and all debts, liabilities, obligations, and Indebtedness (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, whether incurred or consequential and whether due or to become due and whether or not required to be presented on a balance sheet prepared in accordance with generally accepted accounting principles in the United States), including those arising under any Law, Actions, or Governmental Order, those arising under any Contract, and any off-balance sheet liabilities.
“Lien” shall mean any mortgage, pledge, lien, security interest, charge, claim, equity, encumbrance, restriction on transfer, conditional sale or other title retention device or arrangement (including a capital lease), transfer for the purpose of subjection to the payment of any Indebtedness, preferential arrangement, or restriction on the creation of any of the foregoing, whether relating to any property or right or the income or profits therefrom, including any restriction on the use, voting, transfer, receipt of income, or other exercise of any attributes of ownership.
“Loss” and “Losses” shall have the meanings set forth in Section 7.3(a).
“Ordinary Course of Business” shall mean the usual, regular and ordinary course of business, as presently conducted consistent with past practice (including with respect to quantity and frequency).
“Owner Lessor” shall mean Southaven Combined Cycle Generation LLC, a Delaware limited liability company.
“Participation Agreement” shall have the meaning set forth in the recitals to this Agreement.
“Payoff Letter” shall have the meaning set forth in Section 3.4(c)(iv).
“Permitted Encumbrances” shall mean (i) mechanics, materialmens’ and similar Liens and Liens for Taxes, in each case arising in the Ordinary Course of Business and securing amounts not yet due and payable, (ii) zoning, Governmental Permit and other land use Laws regulating the use or occupancy of real property or activities conducted thereon that are imposed by any Governmental Entity, (iii) easements, 

covenants, conditions, restrictions, and other similar matters of record affecting title to real property, and (iv) any Liens identified in the title commitment(s) and UCC searches being obtained by Buyer that are not objected to by Buyer at least five (5) days prior to Closing. In the event Seller is unable to clear any Liens identified in such title commitment or UCC searches to which Buyer timely objects, Buyer shall have the option to terminate this Agreement or to proceed to Closing and accept such additional Liens as Permitted Encumbrances. 
“Person” shall mean any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity, as well as any syndicate or group of any of the foregoing that would be deemed to be a “person” under Section 13(d)(3) of the Exchange Act.
“Post-Closing Expenses” has the meaning set forth in Section 2.5(b).
“Profits Interest” shall mean the membership interests in the Equity Investor in the form of a “profits interest”, as more fully described in Section 7(c) of the Equity LLC Agreement.
“Purchase Consideration” has the meaning set forth in Section 2.5(a).
“Real Property” shall have the meaning set forth in Section 2.1(b).
“Seller Disclosure Schedule” shall have the meaning set forth in the preamble to Article IV.
“Seller Material Adverse Effect” shall mean an adverse change in, or a material adverse effect upon, the operations, business, properties, Liabilities (actual or contingent) or condition (financial or otherwise) of Seller which would materially adversely affect the ability of Seller to comply with its obligations hereunder.
“Southaven Credit Agreement” shall mean the Amended and Restated Credit Agreement, dated as of April 22, 2010, as amended, by and among Seller, as borrower, Seven States Power Corporation, as guarantor, JPMorgan Chase Bank, National Association, as administrative agent and a lender, CoBank, ACB, as a lender, Wells Fargo Bank, National Association, as a lender, and the other lenders referred to therein.  
“Tangible Intellectual Property” shall have the meaning set forth in Section 2.1(d).
“Tax” shall mean any and all federal, state, local or foreign taxes (including estimated taxes), assessments, and other governmental charges, duties, impositions and Liabilities, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, together with all interest, penalties and additions imposed with respect to such amounts and any obligations under any agreements or arrangements with any other Person with respect to such amounts and including any Liability for taxes of a predecessor entity.

“Tax Return” shall mean any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Termination Agreements” shall have the meaning set forth in Section 3.4(c)(iii).
“Termination Date” shall have the meaning set forth in Section 7.1.
“Undivided Interest” shall have the meaning set forth in the recitals to this Agreement.
1.2    Construction.  

(a)For purposes of this Agreement, whenever the context requires, the singular number will include the plural, and vice versa; the masculine gender will include the feminine and neuter genders; the feminine gender will include the masculine and neuter genders; and the neuter gender will include the masculine and feminine genders.  Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning.

(b)Each of the parties hereto has participated actively in the negotiation and drafting of this Agreement, and each party has been at all times during such negotiation represented by counsel.  Each party therefore waives the application of any law, regulation, holding, or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

(c)As used in this Agreement, the words “include” and “including” and variations thereof will not be deemed to be terms of limitation, but rather will be deemed to be followed by the words “without limitation.”

(d)The words “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement.

(e)Except as otherwise indicated, all references in this Agreement to “Articles,” “Schedules,” “Sections” and “Exhibits” are intended to refer to Articles, Schedules, Sections and Exhibits to this Agreement.

(f)References in this Agreement to the “knowledge” of Seller or Buyer, will be deemed to refer to the actual and/or constructive knowledge of the officers of Seller or Buyer (as applicable), as they would reasonably be expected to have with respect to any matter if they conducted a reasonable inquiry of the employees charged with administrative or operational responsibility for such matter.

(g)All references in this Agreement to “dollars” or “$” shall refer to the lawful currency of the United States.

(h)References in this Agreement to any document, instrument or agreement (i) shall include all exhibits, schedules and other attachments thereto, and (ii) shall mean such document, instrument or agreement as amended, modified or supplemented from time to time.

(i)The headings in this Agreement are for convenience of reference only, will not be deemed to be a part of this Agreement, and will not be referred to in connection with the construction or interpretation of this Agreement.

ARTICLE II

SALE AND PURCHASE OF ASSETS

2.1    Purchase and Sale of Assets.  On the Closing Date and subject to the terms and conditions set forth in this Agreement (including Section 2.6) and, for the avoidance of doubt, subject to Buyer's obligations under the Participation Agreement, Head Lease, and Ground Lease to lease the Undivided Interest and the Ground Interest (both of which are being conveyed to Buyer from Seller as part of the Acquired Interest) to Owner Lessor, Seller shall sell, convey, grant, assign, transfer and deliver to Buyer, and Buyer shall purchase, acquire and accept title to and ownership from Seller, all of Seller’s right, title and interest (including any undivided interests held by Seller as a tenant-in-common with any other Person) in and to the following assets, rights and properties, of every kind, nature, character and description, whether real, personal, or mixed, and whether owned (including any joint ownership interests), leased, licensed or contracted for, and wherever located, but in each case excluding all Excluded Assets, with good title, free and clear of any Liens except for Permitted Encumbrances (collectively, the “Acquired Assets”):

(a)    The Facility, and all machinery, mobile or otherwise, equipment, vehicles, pumps, fittings, tools, parts, apparatus, consumables, furniture and furnishings, meter equipment, leased personal property and other tangible movable property located at the Facility Site or purchased by Seller exclusively or principally for use or consumption at the Facility that are not tangible embodiments of Facility Intellectual Property, including the property listed or described in Schedule 2.1(a) (collectively, the “Facility Tangible Property”);
    
(b)      the parcels of real or immovable property (including the Facility Site), water rights and other real or immovable property rights described in Schedule 2.1(b), together with all buildings, fixtures, component parts, other constructions and other improvements thereon and thereto (collectively, the “Real Property”);

(c)    all privileges, licenses, rights-of-way, servitudes, and easements in gross, related to the Real Property held by Seller as well as the right, by way of license, right-of-way, servitude, easement or the like, to permit access to the Facility, including those described in Schedule 2.1(c) (the “Easements”);

(d)    the Facility Intellectual Property, including the Facility Intellectual Property identified on Schedule 2.1(d), and all tangible embodiments thereof (such tangible embodiments, the “Tangible Intellectual Property”);

(e)    all rights of Seller under the Contracts set forth on Schedule 2.1(e) (the “Assigned Contracts”);

(f)    all Governmental Permits held or used by Seller in connection with the use or operation of the Acquired Assets and the Facility, and all pending applications therefor or renewals thereof, including those listed on Schedule 2.1(f) (the “Assigned Permits”);

(g)    all funds, except the Excluded Assets, held in Seller’s deposit account #2000028949756 at Wells Fargo Bank (the “Escrow Account”), which funds  are referred to as the “Accumulated Amortization Costs”; 

(h)    all accounts, rights, or allowances involving Emissions Allowances, as listed or described on Schedule 2.1(h), and all rights to any future Emissions Allowances, if any, that will be granted or allocated to be held in accounts maintained in the name of Seller at any time after the date of this Agreement (other than those Emissions Allowances used in the ordinary course of operation of the Facility prior to the Closing); 

(i)    all prepaid assets and expenses related to the Facility, including the prepaid assets and expenses identified on Schedule 2.1(i) hereto, and all rights of Seller in respect of payments made under the Assigned Contracts on or prior to the Closing Date;

(j)    all Facility Books and Records; all information and documentation related to the Facility, including vendor, supplier, advertiser, or other lists; all sales data; all advertising or other promotional materials, sales literature, graphics and artwork; all user manuals and similar documentation; all studies and reports, including all environmental studies and impact reports, meteorological reports, surveys, title reports and engineering studies; and all other printed, electronic, or written materials or data (including any and all documentation relating to Facility Intellectual Property, whether for use internally or externally); in the case of any of the foregoing, whether in printed or electronic format, related to the Facility; and to the extent not listed above, the items listed or described in Schedule 2.1(j);

(k)    all claims, causes of action, deposits, prepayments, refunds, rights of recovery, rights of set-off, and rights of recoupment, of any kind or character, including all causes of action, past or present, and rights to damages and other remedies in connection with the Acquired Assets, but other than any Excluded Assets;

(l)    all other assets held by Seller necessary or convenient for the ownership or operation of the Facility (other than any Excluded Assets); 

(m)    all goodwill associated with any of the foregoing and the Facility; and 

(n)    to the extent not described above, all assets acquired by Seller under the Joint Ownership Agreement.

2.2    Excluded Assets.  Seller is reserving, and is not selling to Buyer, the following assets (all such excluded assets, the “Excluded Assets”) specified in Schedule 2.2. 

2.3    Liabilities Not Assumed. Buyer shall not assume any Liability for payment of Income Taxes of Seller, including on the Excluded Assets and on Seller’s net income from the portion of rent received under the Lease for reimbursement of Administrative and General Expenses (as defined in the Lease)  (the “Excluded 

Liabilities”), which Seller shall retain and pay, satisfy, discharge, and perform all such Excluded Liabilities.  Without limiting the generality of the foregoing, Buyer shall not assume and shall not be liable for any of the following Liabilities or obligations of Seller: (a) any Liabilities related to the Excluded Assets; (b) any Indebtedness for borrowed money or otherwise of Seller, including any Indebtedness under the Southaven Credit Agreement; and (c) all lawsuits, claims and other Liabilities of Seller arising in connection with any Actions unrelated to the Acquired Assets.

2.4    Assumed Liabilities.  As of the Closing, Buyer hereby agrees to assume and be responsible for all Liabilities of Seller relating to Seller’s ownership of the Acquired Assets (collectively, the “Assumed Liabilities”), except for the Excluded Liabilities.

2.5    Purchase Price; Profits Interest; Post Closing Expenses.  

(a)    The consideration for the Acquired Interest (the “Purchase Consideration”) will be (a) the payment, in full and in immediately available funds, in an amount equal to all outstanding Indebtedness, as of the Closing, of Seller under the Southaven Credit Agreement; (b) the assumption of the obligations under the Assigned Contracts; and (c) the assumption of the Assumed Liabilities.  In addition, simultaneously with the Closing, Buyer will enter into the Lease/Leaseback Transaction, pursuant to which Seller will receive the Profits Interest.  

(b)    Buyer will reimburse Seller for its reasonable, out-of-pocket expenses relating to the Acquisition Transaction and actually incurred by Seller after the Closing (the “Post-Closing Expenses”).  Within forty-five (45) days after the Closing, Seller shall submit to Buyer an invoice documenting Seller’s Post-Closing Expenses, and Buyer shall pay all undisputed amounts of Post-Closing Expenses within thirty (30) Business Days of its receipt of Seller’s invoice.  Following the resolution of any dispute relating to the withholding of any payment of Post-Closing Expenses and a determination that Buyer is obligated to pay for such disputed amounts, Buyer will make payment for such withheld Post-Closing Expenses, plus any interest accrued at the Overdue Rate (as defined in the Participation Agreement) on such withheld Post-Closing Expenses.  

2.6    Subsequent Requirements. Buyer agrees that simultaneous with the Closing, Buyer shall consummate the Lease/Leaseback Transaction, including (a) the lease of the Undivided Interest and the Ground Interest (both of which are being conveyed to Buyer from Seller as part of the Acquired Interest) to Owner Lessor pursuant to the Head Lease and the Ground Lease; and (b) the receipt by Seller of the Profits Interest.  

ARTICLE III

EFFECTIVENESS, CLOSING AND CLOSING DELIVERIES

3.1    Effectiveness.  The effectiveness of this Agreement shall be subject to the satisfaction of each of the following conditions precedent: 

(a)    Each of Buyer and Seller shall have delivered an executed counterpart of this Agreement.

(b)    The Participation Agreement shall have been executed and delivered by the parties thereto, and Buyer shall deliver to Seller a copy of the fully executed Participation Agreement.  

(c)    Seller shall have delivered to Buyer the following: (i) a certificate of a duly authorized officer of Seller, dated the date of this Agreement, certifying the incumbency and specimen signatures of the officers of Seller executing this Agreement and any Ancillary Agreement to which Seller is a party and that (A) attached thereto is a true and correct copy of the resolutions duly adopted by the board of directors or other governing body of Seller authorizing the execution and delivery of this Agreement and the Ancillary Agreements to which Seller is a party and the consummation of the transactions contemplated hereby, and (B) attached thereto is a true and correct copy of the operating agreement of Seller as in effect on the date of this Agreement; (ii) a certificate of formation for Seller issued by the Secretary of State of Delaware; and (iii) a good standing certificate for Seller issued by the Secretary of State of Delaware.

(d)    Buyer shall have delivered to Seller the following: a certificate of a duly authorized officer of Buyer, dated the date of this Agreement, certifying the incumbency and specimen signatures of the officers of Buyer executing this Agreement and any Ancillary Agreement to which Buyer is a party and that attached thereto is a true and correct copy of the resolutions duly adopted by the board of directors or other governing body of Buyer authorizing the execution and delivery of this Agreement and the Ancillary Agreements to which Buyer is a party and the consummation of the Acquisition Transaction.

3.2    Conditions Precedent to Buyer’s Obligation to Close.  Buyer’s obligation to purchase the Acquired Assets and to take the other actions required to be taken by Buyer at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Buyer in whole or in part):

(a)    All conditions precedent to the obligations of the other parties to the Participation Agreement shall have been satisfied or waived other than conditions precedent which are not in the control of Buyer or cannot be satisfied prior to the consummation of the Acquisition Transaction contemplated hereby. 

(b)    Each of the representations and warranties of Seller contained in Article IV hereof that are qualified as to materiality shall be true and correct in all respects on and as of the Closing Date with the same force and effect as though the same had been made on and as of the Closing Date (except that any such representations and warranties that are made as of a specific date need to be true and correct in all respects only as of such date), and each of the representations and warranties of Seller contained in Article IV hereof that are not qualified as to materiality shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as though the same had been made on and as of the Closing Date (except that any such representations and warranties that are made as of a specific date need to be true and correct in all material respects only as of such date).  

(c)        All of the covenants and obligations that Seller is required to perform or to comply with pursuant to this Agreement at or prior to the Closing shall have been duly performed and complied with.

(d)    All authorizations, consents, orders or approvals of, or declarations or filings with, or expiration of waiting periods imposed by, any Governmental Entity necessary for the consummation of the transactions contemplated by this Agreement shall have been filed, occurred or been obtained, and Seller shall have obtained, in form and substance reasonably satisfactory to Buyer, all other required consents to the transactions contemplated hereby and shall have arranged for the release on or prior to the Closing Date of all Liens (other than Permitted Encumbrances) which encumber any of the Acquired Assets.

(e)    All limited liability company actions and proceedings to be taken and all documents to be executed and delivered by Seller in connection with the consummation of the transactions contemplated hereby, shall be reasonably satisfactory in form and substance to Buyer and its counsel.    

(f)    No order of any court or other Governmental Entity restraining, prohibiting or enjoining the consummation of the transactions contemplated hereby shall be in effect or be threatened or sought by any Governmental Entity.

(g)    Buyer shall have received each of the certificates, documents, agreements and other instruments set forth in Section 3.4(c) hereof.

(h)    The Closing Date shall have occurred on or prior to August 15, 2013.

3.3    Conditions Precedent to Seller’s Obligations to Close.  The obligation of Seller to consummate the Acquisition Transaction on the Closing Date is, at the option of Seller, subject to the satisfaction of the following conditions:

(a)    Each of the representations and warranties of Buyer contained in Article V hereof shall be true and correct in all material respects as of the Closing Date with the same force and effect as though the same had been made on and as of the Closing Date.

(b)    All authorizations, consents, orders or approvals of, or declarations or filings with, or expiration of waiting periods imposed by, any Governmental Entity necessary for the consummation of the transactions contemplated by this Agreement shall have been filed, occurred or been obtained.

(c)    All corporate actions and proceedings to be taken and all documents to be executed and delivered by Buyer in connection with the consummation of the transactions contemplated hereby shall be reasonably satisfactory in form and substance to Seller and its counsel.

(d)    No order of any court or other Governmental Entity restraining, prohibiting or enjoining the consummation of the transactions contemplated hereby shall be in effect or be threatened or sought by any Governmental Entity.

(e)    Seller shall have received the executed counterparts of the Equity LLC Agreement from the parties thereto.

(f)    Seller shall have received each of the certificates, documents, agreements and other instruments set forth in Section 3.4(d) hereof.

(g)    All conditions precedent to the obligations of the other parties to the Participation Agreement shall have been satisfied or waived other than conditions precedent which are not in the control of Seller or cannot be satisfied prior to the consummation of the Acquisition Transaction contemplated hereby.

3.4    The Closing.

(a)    The closing of the Acquisition Transaction (the “Closing”) will take place at the offices of Orrick, Herrington & Sutcliffe LLP in New York City, New York, or at such other location as shall be mutually agreeable to Buyer and Seller.  As used herein, the term “Closing Date” shall mean the date on which each of the conditions precedent to Buyer’s and Seller’s obligations hereunder set forth in Sections 3.2 and 3.3 are satisfied (or are waived by (i) in the case of any conditions precedent to Buyer’s obligations hereunder, Buyer and (ii) in the case of any conditions precedent to Seller’s obligations hereunder, Seller).

(b)    All corporate actions and proceedings taken and all documents to be executed and delivered by the parties at the Closing shall be deemed to have been taken and executed simultaneously and no proceedings shall be deemed taken nor any documents executed or delivered until all have been taken, executed and delivered.

(c)    At the Closing, Seller shall deliver to Buyer the following:

(i)    Such bills of sale, endorsements, assignments, and other good and sufficient instruments of transfer and conveyance to vest in Buyer good, valid and marketable title to the Acquired Interest, free and clear of all Liens (except Permitted Encumbrances), in accordance herewith, including a bill of sale in the form of Exhibit D (the “Bill of Sale”);

(ii)    An executed counterpart of the assignment and assumption agreement in the form of Exhibit E (the “Assignment and Assumption Agreement”);  

(iii)    An executed counterpart of the termination agreements, each in the form of Exhibit F (the “Termination Agreements”);

(iv)    A payoff letter executed by the Administrative Agent with respect to the Southaven Credit Agreement in the form of Exhibit G (the “Payoff Letter”);

(v)    The Deeds; 

(vi)    A certificate of Seller, dated the Closing Date, signed by a duly authorized officer of Seller, certifying as to the matters set forth in Section 3.2(b) and (c) hereof;

(vii)    To the extent not already in Buyer’s possession and in Seller’s possession or control, all of the Acquired Assets existing in tangible form, including the Assigned Contracts, the Assigned Permits, the Tangible Intellectual Property and the Facility Books and Records; 

(viii)    A legal opinion of counsel to Seller addressed to Buyer, dated the Closing, with respect to the valid existence of Seller and Seller's authority to enter into this Agreement and in form and substance reasonably satisfactory to Buyer; 

(ix)    Seller shall have transferred the Accumulated Amortization Costs in the Escrow Account, except for the Excluded Assets, to Buyer into such account designated by Buyer; and

(x)    Such other documents and instruments as may be reasonably requested by Buyer or its counsel to effectuate the terms of this Agreement.

(d)    At the Closing, Buyer shall deliver to or on behalf of Seller the following:

(i)    Cash consideration in the amount of $445,934,894.80 payable to the Administrative Agent for the benefit of the lenders under the Southaven Credit Agreement, which amount shall be equal to the amount set forth in the Payoff Letter to pay in full all outstanding Indebtedness, as of the Closing, of Seller under the Southaven Credit Agreement;

(ii)    A legal opinion of counsel to Buyer addressed to Seller, dated the Closing, with respect to the valid existence of Buyer and Buyer’s authority to enter into this Agreement and in form and substance reasonably satisfactory to Seller; 

(iii)    an executed counterpart of the Termination Agreements; and

(iv)    an executed counterpart of the Assignment and Assumption Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER 

Seller hereby represents and warrants to Buyer as follows, as of the date of this Agreement and as of the Closing Date, subject to the exceptions specifically disclosed in the disclosure schedules prepared by Seller and attached to this Agreement (the “Seller Disclosure Schedule”). 

 
4.1    Organization.  Seller is a limited liability company duly organized, validly existing, and in good standing under the Laws of the State of Delaware.  Seller has the power and authority to own, lease, and operate its respective assets and properties and to carry on its respective businesses as now being conducted.  Seller is qualified to do business in the States of Mississippi and Tennessee.  
4.2    Authority.

(a)    Seller has all requisite limited liability company power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is a signatory, to perform its respective obligations under this Agreement and such Ancillary Agreements, and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the Ancillary Agreements to which Seller is a signatory by Seller, and the performance by Seller of its obligations under this Agreement and the Ancillary Agreements to which Seller is a signatory, and consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary limited liability company action on the part of Seller, and no further limited liability company action is required on the part of Seller to approve this Agreement, such Ancillary Agreements and the transactions contemplated hereby and thereby.

(b)    This Agreement has been, and each of the Ancillary Agreements to which Seller is a signatory will be, duly executed and validly delivered by Seller.  This Agreement and each of such Ancillary Agreements constitute a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.  

4.3    Conflicts.  The execution and delivery of this Agreement and the Ancillary Agreements to which Seller is a signatory by Seller do not, and the performance of this Agreement and such Ancillary Agreements does not and shall not, (a) Conflict with or violate any (i) provisions of the certificate of formation, limited liability company agreement, or other organizational documents of Seller, or (ii) to Seller’s knowledge, any Law applicable to Seller or by which its assets (including the Acquired Assets) are bound or affected, or (b) to Seller’s knowledge, except for the Southaven Credit Agreement which must be paid in full at Closing, result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair the rights of, or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration, or cancellation of any of the Acquired Assets pursuant to any Contract to which Seller is a party or by which any Acquired Asset is bound or affected (other than any Contract relating to the Facility to which Buyer is a party as to which no representation or warranty is made).  Without limiting the foregoing, there are no existing Contracts, options, or commitments, whether written or oral, granting to any Person the right to acquire any of Seller’s right, title, or interest in or to any of the Acquired Assets or any interest therein, except this Agreement (other than any Contract relating to the Facility to which Buyer is a party as to which no representation or warranty is made). To Seller’s knowledge, Schedule 4.3 of the Seller Disclosure Schedule lists all consents, assignments, waivers, and approvals under any Assigned Contracts to which Seller is a party that are required to be obtained in 

connection with the direct or indirect assignment of such Assigned Contracts to Buyer and consummation of the transactions contemplated hereby.

4.4    Title to Properties, Absence of Liens.  

(a)    To the extent Seller acquired good, valid and marketable title to the Acquired Interest from Buyer pursuant to the transactions consummated under the Joint Ownership Agreement, (i) Seller has good, valid, and marketable title to the Acquired Interest, free and clear of all Liens (excluding Permitted Encumbrances and those Liens described on Schedule 4.4 of the Seller Disclosure Schedule), and (ii) as of the Closing, Buyer will have good, valid, and marketable title in the Acquired Interest, free and clear of all Liens (excluding Permitted Encumbrances).  Except as set forth in Schedule 4.3 of the Seller Disclosure Schedule, Seller has the right to sell, assign, transfer, convey, and deliver the Acquired Interest to Buyer without penalty or restriction.    No Lien attributable to Seller or anyone acting by or through Seller (other than Buyer as to which no representation or warranty is made) on any Acquired Interest shall exist, be created or result from the consummation of the transactions contemplated by this Agreement or the Ancillary Agreements other than as contemplated in the Participation Agreement.

(b)    The Acquired Interest constitutes all of the properties, assets, and rights that are used or held by Seller for use in connection with the Facility or the Facility Site. 

4.5    Compliance with Laws.  To Seller’s actual knowledge, Seller is not (by virtue of any past or present action, any omission to act or any occurrence or state of facts whatsoever) in violation or in breach of any provision or term of any Law applicable to Seller or the conduct of its business, except where such violation would not reasonably be expected to have a Seller Material Adverse Effect; provided that no representation or warranty is made as to any Law applicable to the Facility or the construction, operation or maintenance thereof.

4.6    Tax Matters. 

(a)    Seller and its Affiliates have prepared and timely filed all Income Tax Returns required to be filed by Seller or any of its Affiliates with any Governmental Entity, and have paid in full all Income Taxes due and payable by Seller and Seven States Power Corporation. 

(b)    Neither Seller nor Seven States Power Corporation has been delinquent in the payment of any Income Tax of Seller or Seven States Power Corporation, nor is there any Income Tax deficiency outstanding, proposed, or assessed against Seller or Seven States Power Corporation.  Seller has not executed any waiver of any statute of limitations on or extended the period for the assessment or collection of any Tax, except as disclosed in Schedule 4.6 of the Seller Disclosure Schedule.

(c)    No audit or other examination of any Income Tax Return of Seller or Seven States Power Corporation currently is in process, and neither Seller nor Seven States Power Corporation has been notified of any request for any such audit or other examination, except as disclosed in Schedule 4.6 of the Seller Disclosure Schedule.  

(d)    Neither Seller nor Seven States Power Corporation has any Liability for unpaid Income Taxes, whether asserted or unasserted, contingent or otherwise, which has not been properly accrued or reserved against.

(e)    Seller has no actual knowledge of any claim for any Liabilities for overdue Taxes for which Buyer would become liable as a result of the transactions contemplated by this Agreement or the Ancillary Agreements.

(f)    Other than as combined entity with Seven States Power Corporation, Seller (i) is not and has never been a part of a consolidated, combined, or affiliated group of corporations for Tax purposes and (ii) it not a party to a Tax sharing or allocation Contract, and has no Liability under any such Contract, except in each case of clause (ii), the Lease and the Joint Ownership Agreement, both of which will be terminated as of the Closing in accordance with the Termination Agreements.  Seller is disregarded as an entity separate from Seven States Power Corporation for federal Income Tax purposes.

(g)    To Seller’s actual knowledge, all Taxes which Seller is (or was) required by Law to withhold or collect in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party have been duly withheld or collected, and have been timely paid over to the proper authorities to the extent due and payable.

4.7    Litigation.  To Seller’s actual knowledge, there is no Action of any nature pending, or to the knowledge of Seller, threatened, against Seller relating to the Acquired Assets or the Facility or which seeks to restrain or prohibit or otherwise challenges the execution, delivery and performance of this Agreement or the consummation, legality or validity of the transactions contemplated hereby; provided that no representation or warranty is made with regard to any Action against or involving Buyer. 

4.8    Brokers’ and Finders’ Fees.  Seller has not incurred, nor will it incur, directly or indirectly, any Liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby, other than financial advisory fees, investment banker fees and underwriter fees incurred by Seller but subject to reimbursement by Buyer pursuant to the terms of the Lease. 

4.9    No Subsidiaries.  Seller does not hold any stock or membership interests in any other entity.  Seven States Power Corporation does not hold any stock or membership interests in any other entity, other than Seller.  

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller as of the date of this Agreement and the Closing Date as follows.  
5.1    Organization and Standing.  Buyer is a corporate agency and instrumentality of the United States Government created and existing under and by virtue of the Tennessee Valley Authority Act of 1933, as amended. 

5.2    Authority.

(a)    Buyer has full power and authority to execute and deliver this Agreement and the Ancillary Agreements, to perform its obligations under this Agreement and the Ancillary Agreements, and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Ancillary Agreements by Buyer and the performance by Buyer of its obligations under this Agreement and the Ancillary Agreements and consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary official action of Buyer.

(b)    This Agreement has been, and each of the Ancillary Agreements will be, duly executed and validly delivered by Buyer.  This Agreement constitutes a valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.  The Ancillary Agreements to which Buyer is a signatory will, upon execution and delivery in accordance with the terms of this Agreement, constitute valid and binding agreements of Buyer, enforceable against Buyer in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.  

5.3    No Conflict.  The execution and delivery of this Agreement by Buyer does not, and the execution and delivery of the Ancillary Agreements, and the performance of this Agreement and the Ancillary Agreements by Buyer will not (i) Conflict with or violate any Law applicable to Buyer or by which its properties are bound or affected, where such violation would reasonably be expected to have a Buyer Material Adverse Effect; or (ii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair the rights of Buyer under, or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration, or cancellation under, or result in the creation of a Lien on any of the assets or properties of Buyer, pursuant to any Contract to which Buyer is a party, in any case where such breach, default, impairment, alteration, right of termination, or similar event described herein would reasonably be expected to have a Buyer Material Adverse Effect.

5.4    Compliance with Laws.  To Buyer’s actual knowledge, Buyer is not (by virtue of any past or present action, any omission to act or any occurrence or state of facts whatsoever) in violation or in breach

of any provision or term of any Law applicable to Buyer’s operation of the Facility that will have any adverse effect on Seller that is not fully indemnified by Buyer.

5.5    Litigation.  To Buyer’s actual knowledge, there is no Action of any nature pending, or to the knowledge of Buyer, threatened, against Buyer relating to the Acquired Assets or the Facility or which seeks to restrain or prohibit or otherwise challenges the execution, delivery and performance of this Agreement or the consummation, legality or validity of the transactions contemplated hereby; provided that no representation or warranty is made with regard to any Action against or involving Seller but not Buyer.

5.6    Brokers’ and Finders’ Fees.  Buyer has not incurred, and will not incur, directly or indirectly, any Liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement.

ARTICLE VI

COVENANTS

6.1    Operation of Business.  Between the date of this Agreement and the Closing, Seller shall conduct its business only in the Ordinary Course of Business.

6.2    Notification of Certain Matters.  Seller shall give prompt notice to Buyer of any and all of the following:  (a) the occurrence or existence of any fact, circumstance or event which would result in any representation or warranty made by Seller in Article IV of this Agreement to be untrue or inaccurate in any material respect; and (b) any failure of Seller to comply in any material respect with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 6.2 shall not (i) limit or otherwise affect any remedies available to Buyer or (ii) constitute an acknowledgment or admission of a breach of this Agreement. 

6.3    Public Disclosure.  Seller shall not issue any press release or make any public statement or disclosure with respect to the transactions contemplated by this Agreement, except as may be required by applicable Law.  

6.4    Consents.  

(a)    Prior to the Closing and as necessary from time to time after the Closing, Seller shall cooperate with Buyer’s efforts to obtain all consents, waivers, and approvals required under any of the Assigned Contracts so as to permit the sale and transfer of all the Acquired Assets to Buyer pursuant to this Agreement. 

(b)    In addition to Seller’s obligations under Sections 6.4(a) and 6.5, if a Contract Consent and Assignment for any Assigned Contract is not obtained on or before the Closing, Seller shall cooperate, at no expense to Seller) with Buyer after the Closing to obtain such necessary Contract Consent and Assignment to effectuate the transfer, assignment and assumption of any Assigned Contract.  Within five (5) Business Days of the receipt of the necessary Contract Consent and Assignment for any such Assigned Contract, Seller shall execute and deliver to Buyer an assignment and assumption agreement (or similar 

instrument of transfer), in form and substance reasonably satisfactory to both parties, to consummate the transfer of the Assigned Contract.

(c)    If after the Closing Buyer is unable to obtain such Contract Consent and Assignment for any Assigned Contract, then (i) at the request and expense of Buyer, Seller shall take such commercially reasonable actions as shall be necessary for Buyer to enjoy the full benefit of any such Assigned Contract, (ii) at the request of Seller, but at Buyer’s expense, Buyer shall take such actions as shall be necessary to hold Seller harmless from any of the burdens or obligations of any such Assigned Contract, and (iii) Seller shall not take any action without the consent of Buyer that would cause a breach of such Assigned Contract or otherwise give the counterparty the right to terminate or suspend its performance under such Assigned Contract.

6.5    Additional Documents and Further Assurances.   At any time or from time to time after the Closing, at the request of Buyer and without any further consideration, Seller shall (a) execute and deliver to Buyer such other instruments of sale, transfer, conveyance, assignment and confirmation; (b) provide such materials and information; and (c) take such other actions, as Buyer may reasonably deem necessary or desirable in order more effectively to transfer, convey, and assign to Buyer, to confirm Buyer’s title to all of the Acquired Assets, to render effective the consummation of the transactions contemplated hereunder, and, to the fullest extent permitted by Law, to put Buyer in actual possession and operating control of each of the Acquired Assets and to assist Buyer in exercising all rights with respect thereto, and otherwise to cause Seller to fulfill its obligations under this Agreement and any Ancillary Agreements to which Seller is a signatory.  

6.6    Payment of All Taxes.  Seller shall pay in a timely manner all Income Taxes imposed on Seller or Seven States Power Corporation resulting from or payable in connection with the sale of the Acquired Assets pursuant to this Agreement. 

6.7    Payment of Other Excluded Liabilities.  Seller shall pay, or make adequate provision for the payment, in full all of the Excluded Liabilities.  If any such Excluded Liabilities are not so paid or provided for, or if Buyer, acting in good faith, reasonably determines that failure to make any payments will impair Buyer's use or enjoyment of the Acquired Interest or conduct of the business previously conducted by Seller with the Acquired Interest, Buyer may, at any time after the Closing Date and upon prior notice to Seller, elect to make all such payments directly (but shall have no obligation to do so) and demand payment from Seller.  If Seller does not object to Buyer’s notice that Buyer intends to make such payment on behalf of Seller, Buyer may direct that the Profits Interest be paid directly to Buyer to reimburse Buyer for such payment. 

6.8    Tax Treatment.  Notwithstanding any other provisions herein, for federal, state and local franchise and Income Tax purposes only, Seller and Buyer acknowledge and agree that Buyer is, has been (in the case of (a), since Buyer began leasing the Acquired Interest under the Lease) and, immediately after the Closing, will be, treated as the (a) owner of the Acquired Interest, including the Undivided Interest and the Ground Interest, (b) owner of the Accumulated Amortization Costs deposited into the Escrow Account, and (c) obligor of the Indebtedness under the Southaven Credit Agreement.  Consistent with the foregoing, Buyer and Seller agree not to treat (i) the transfer of the Acquired Interest to Buyer, including the transfer of 

the Undivided Interest, the Ground Interest and the Accumulated Amortization Costs in the Escrow Account (exclusive of the Excluded Assets) pursuant to this Agreement, as a transfer, sale, exchange or other disposition of the Acquired Interest, including the Undivided Interest, the Ground Interest and the Accumulated Amortization Costs in the Escrow Account, or (ii) the Profits Interests as forming part of the Purchase Consideration for the Acquired Interest, in each case, solely for U.S. federal Income Tax and applicable state and local  franchise and Income Tax purposes unless otherwise required by a final non-appealable judgment of a court of competent jurisdiction or advised in writing by nationally-recognized tax counsel that such treatment is inconsistent with applicable Law, provided that a copy of such opinion is delivered to the other party. 

6.9    Waiver of Implied Warranties.  Buyer and its agents, consultants and representatives have had a reasonable opportunity to inspect the Acquired Assets.  Except for the representations and warranties of Seller set forth in this Agreement or any Ancillary Agreement to which Seller is a signatory, Buyer acknowledges that Seller is not making any other representations or warranties, written or oral, statutory, express or implied, to Buyer, and that all other express or implied warranties (including warranties of merchantability and fitness for a particular purpose) are specifically disclaimed.  

Without limiting the foregoing, Buyer acknowledges, except as specifically set forth herein, that (A) the Acquired Interest IS being sold and transferred “as is, where is” and (B) none of Seller or any of its affiliates or representatives have made any representation or warranty concerning (i) the Acquired interest, or any future revenues, costs, expenditures, cash flows, results of operations, or financial condition or prospects of the Facility, (II) condition, value or quality of Acquired Assets, properties and operations of the Facility or the prospects of, and risks faced by, the Facility, or (iii) the business, assets or liabilities of Seller.  Seller, on behalf of itself and its affiliates, hereby disclaims all liability and responsibility for any representation, warranty, statement or information not included in this agreement that was made, communicated or furnished (orally or in writing) to Buyer or any of its affiliates or representatives. 

6.10    Satisfaction of Conditions Precedent.  Each party agrees to use all commercially reasonable efforts to satisfy the conditions precedent applicable to such party in Section 3.2 or Section 3.3, as the case may be.  

ARTICLE VII

INDEMNIFICATION

7.1    Survival of Representations and Warranties.  The representations and warranties of Seller and Buyer contained in this Agreement, or in any certificate or other instrument delivered pursuant to this Agreement (including any Ancillary Agreement), shall terminate on that date that is three (3) years after the 

Closing Date (the “Termination Date”).  If a written notice of claim pursuant to this Article VII has been given prior to the Termination Date by Buyer or Seller, then the relevant representations and warranties shall continue to survive as to such claim until the claim has been finally resolved; provided that the giving of notice prior to the Termination Date will not affect, extend or in any way modify the applicable statute of limitations related to such claim.  

7.2    Indemnification.  

(a)    By Buyer to Seller.  If the Closing occurs, Buyer shall indemnify, defend, and hold harmless Seller, its officers, directors, agents, employees, consultants, advisers, and attorneys from any and all claims, based on any Laws whatsoever, for Losses incurred or sustained by such party, directly or indirectly, as a result of, in connection with or arising out of (i) any material inaccuracy in or material breach of any representation or warranty of Buyer contained in this Agreement, any Ancillary Agreement, or in any certificate, instrument, or other document delivered by Buyer pursuant to this Agreement or any Ancillary Agreement; (ii) any failure by Buyer to perform in any material respect or comply in any material respect with any covenant applicable to it contained in this Agreement, any Ancillary Agreement, or in any certificate, instrument, or other document delivered by Seller pursuant to this Agreement or any Ancillary Agreement; (iii) any Assumed Liabilities; or (iv) any Liabilities arising from or relating to the ownership, use, and operation of the Acquired Assets after the Closing.  

(b)    By Seller to Buyer.  If the Closing occurs, Seller shall indemnify and hold harmless Buyer, its officers, directors, agents, employees, consultants, advisers, and attorneys from any and all claims, based on any Laws whatsoever, for Losses incurred or sustained by such party, directly or indirectly, as a result of, in connection with or arising out of  (i) any material inaccuracy in or material breach of any representation or warranty of Seller contained in this Agreement, any Ancillary Agreement to which Seller is a signatory, or in any certificate, instrument, or other document delivered by Seller pursuant to this Agreement or any such Ancillary Agreement; (ii) any failure by Seller to perform in any material respect or comply in any material respect with any covenant applicable to it contained in this Agreement, in any Ancillary Agreement, or in any certificate, instrument, or other document executed and delivered by Seller pursuant to this Agreement or any Ancillary Agreement to which Seller is a signatory; or (iii) any Excluded Assets or Excluded Liabilities.

7.3    Losses and Limitation of Liability.  

(a)    For purposes of Section 7.2 of this Agreement, “Loss” or “Losses” shall mean any claims, losses, Liabilities, damages, deficiencies, diminution in value, costs, and expenses, including reasonable attorneys’ fees and the expenses of investigation and defense (whether or not involving third party claims).

(b)    Buyer acknowledges and agrees that if Seller is required to indemnify Buyer for any Losses as contemplated under Section 7.2(a) of this Agreement, other than in the case of fraud, willful misconduct or intentional misrepresentation, Buyer’s sole recourse for such indemnification obligation will not exceed Seller’s Profits Interest or amounts previously paid or to be paid in respect thereof. 

(c)    NEITHER PARTY SHALL BE LIABLE FOR ANY LOST OR PROSPECTIVE PROFITS AND IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE TOHER PARTY FOR ANY OTHER SPECIAL, INDIRECT, CONSEQUENTIAL OR INCIDENTAL LOSSES OR DAMAGES (IN TORT, CONTRACT OR OTHERWISE) UNDER OR WITH RESPECT TO THIS AGREEMENT.

ARTICLE VIII

TERMINATION

8.1    Termination.  By notice given prior to or at the Closing, subject to Section 8.2, this Agreement may be terminated as follows:

(a)    by Buyer if a material breach of any provision of this Agreement has been committed by Seller and such breach has not been cured within thirty (30) days or waived by Buyer;

(b)    by Seller if a material breach of any provision of this Agreement has been committed by Buyer and such breach has not been cured within thirty (30) days or waived by Seller;

(c)    by Buyer if any condition in Section 3.2 has not been satisfied as of  August 15, 2013, or if satisfaction of such a condition by such date is or becomes impossible (other than through the failure of Buyer to comply with its obligations under this Agreement), and Buyer has not waived such condition on or before such date;

(d)    by Seller if any condition in Section 3.3 has not been satisfied as of August 15, 2013, or if satisfaction of such a condition by such date is or becomes impossible (other than through the failure of Seller to comply with its obligations under this Agreement), and Seller has not waived such condition on or before such date; and
 
(e)    by mutual consent of Buyer and Seller.

8.2    Limitation on Liability; Effect of Termination.  With respect to the occurrence of any event in Section 8.1, (a) the non-breaching party may, in the case of Section 8.1(a) or (b), sue for specific performance as contemplated under Section 9.12 (Specific Performance) or terminate the Agreement pursuant to the provisions of Section 8.1, or (b) either party may, in the case of Section 8.1(c), (d) or (e), terminate the Agreement pursuant to the provisions of Section 8.1.  If the Agreement is terminated pursuant to this Article VIII, the Agreement shall become void and have no effect, without any Liability to any Person in respect hereof or of the Acquisition Transaction contemplated hereby, unless the Agreement is terminated pursuant to Section 8.1(a) or (b) as a result of fraud, willful misconduct or intentional misrepresentation of or by the breaching party, in which case the terminating party shall have the right to pursue all legal remedies (at law or in equity) against the breaching party.

ARTICLE IX

GENERAL PROVISIONS

9.1    Notices.  All notices, requests, demands, claims, and other communications required or permitted hereunder shall be in writing and shall be deemed given upon receipt if delivered personally or by recognized commercial delivery service, or mailed by registered or certified mail (return receipt requested), or sent via facsimile (with acknowledgment of complete transmission and confirmed in writing by mail simultaneously dispatched) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

(a)    if to Buyer, to:

Tennessee Valley Authority
Attention: Treasurer
400 West Summit Hill Drive
Knoxville, Tennessee 37902
Telephone No.: 865-632-3366
Fax No.:  865-632-6673
E-mail:  leasenotices@tva.gov

(b)    if to Seller to:

Seven States Southaven, LLC
Attention: President
1206 Broad Street
Chattanooga, TN 37402  
Telephone No.: 423-756-6511
Fax No.: 423-267-9424

With a copy to:
Carlos Smith
Miller & Martin, PLLC
832 Georgia Avenue
Chattanooga, TN 37402
Telephone No.: 423-785-8359
Fax No.:  423-785-8480

9.2    Expenses.  Subject to the reimbursement and indemnification obligations of Buyer under the Joint Ownership Agreement and the Lease, all fees and expenses incurred in connection with this Agreement and the Ancillary Agreements, including all legal, accounting, financial advisory, consulting and all other fees and expenses of third parties incurred by a party hereto, in connection with the negotiation and effectuation of the terms and conditions of this Agreement, the Ancillary Agreements, and the transactions contemplated hereby, shall be the obligation of the respective party incurring such fees and expenses.

9.3    Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective assigns as permitted by and in accordance with the terms hereof.

9.4    Entire Agreement.  Subject to the provisions of the Termination Agreements, relative to continuing obligations of Buyer under the Joint Ownership Agreement and the Lease, this Agreement, the Exhibits and Schedules hereto, the Ancillary Agreements, the Seller Disclosure Schedule, and the documents and instruments and other agreements among the parties hereto referenced herein constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings both written and oral, among the parties with respect to the subject matter hereof and thereof. 

9.5    Assignment.    

(a)    Neither Buyer nor Seller may assign this Agreement without the prior written consent of the other party.  For avoidance of doubt, the foregoing shall not relieve Buyer of its obligations under the Participation Agreement, Head Lease, and Ground Lease to lease the Undivided Interest and the Ground Interest (both of which are being conveyed to Buyer from Seller as part of the Acquired Interest) to Owner Lessor. 

(b)    Seller may not assign its Profits Interest to any party without the prior written consent of Buyer, which consent may be withheld in Buyer’s sole discretion; provided that Seller may assign its Profits Interest to its parent, Seven States Power Corporation, or a subsidiary thereof, as permitted under the Equity LLC Agreement.
 
9.6    Severability.  In the event that any provision of this Agreement or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto.  The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

9.7    Other Remedies.  Any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy.

9.8    Consent to Jurisdiction; Waiver of Trial by Jury.

(a)    Each Party (i) hereby irrevocably submits to the exclusive jurisdiction of the United States District Court for the Eastern District of Tennessee for the purpose of any Action arising out of this Agreement or any Ancillary Agreement that is brought by either of the Parties or their successors or assigns, (ii) hereby irrevocably agrees that all claims with respect to such Action shall be heard and determined in the above-named court, and (iii) to the extent permitted by applicable Law, hereby irrevocably waives, and agrees not to assert, by the way of motion, as a defense, or otherwise in any such Action, any claim that: (A) 

it is not personally subject to the jurisdiction of the above-named court; (B) that the Action is brought in an inconvenient forum; (C) that the venue of the Action is improper; or (D) that this Agreement or any Ancillary Agreement may not be enforced in or by the above-named court.

(b)    TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY IN ANY SUCH ACTION ARISING OUT OF THIS LEASE, THE ASSIGNMENT AND ASSUMPTION AGREEMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE PARTIES OR THEIR SUCCESSORS OR ASSIGNS.  

9.9    Governing Law.  In all respects, including matters of construction, validity, and performance, this Agreement shall be governed by, and construed in accordance with, the federal Laws of the United States of America; provided however, that (a) the Laws of the State of Mississippi shall govern as to matters affecting real property in the State of Mississippi where there is no such applicable federal Law or the federal Law requires adoption of a state law for a rule of decisions with respect to such matters, and (b) the Laws of the State of Tennessee shall govern where there is no such applicable federal Law or federal Law requires adoption of state Law for a rule of decision as to matters other than with respect to matters affecting real property in the State of Mississippi. To the fullest extent permitted by Law, Buyer and Seller hereby unconditionally and irrevocably waive any claim to assert that the Law of any other jurisdiction governs this Agreement, except as expressly otherwise provided above.

9.10    Restriction of Benefits. No member of or delegate to Congress or Resident Commission, or any officer, employee, special government employee, or agent of Buyer shall be admitted to any share or part of this Agreement or to any benefit that may arise from it unless the Agreement be made with a corporation for its general benefit. Seller shall not offer or give, directly or indirectly, to any officer, employee, special government employee, or agent of Buyer, any gift, gratuity, favor, entertainment, loan, or any other thing of monetary value, except as provided in 5 C.F.R. Part 2635 (as amended, supplemented, or replaced).  Any breach of this Section 9.10 shall constitute a material breach of this Agreement.  

9.11    No Third Party Beneficiaries.  This Agreement shall not confer any rights or remedies upon any person or entity other than the parties hereto, their respective successors and permitted assigns, and the parties entitled to indemnification under Section 7.2.

9.12    Specific Performance.  Seller acknowledges that the Acquisition Transaction is unique and that Buyer will be irreparably injured should the Acquisition Transaction not be consummated in a timely fashion.  Consequently, Buyer will not have an adequate remedy at law if Seller fails to sell the Acquired Interest when required to do so hereunder.  In such event, Buyer shall have the right, in addition to any other remedy available in equity or law, to specific performance of such obligation by Seller, subject to (a) Buyer’s performance of its obligations hereunder, and (b) the other terms and conditions hereof.  Buyer acknowledges that the Acquisition Transaction is unique and that Seller will be irreparably injured should the Acquisition Transaction not be consummated in a timely fashion.  Consequently, Seller will not have an adequate remedy at law if Buyer fails to purchase the Acquired Assets when required to do so hereunder.  In such event, Seller shall have the right, in addition to any other remedy available in equity or law, to specific performance of 

such obligation by Buyer, subject to (i) Seller’s performance of its obligations hereunder, and (ii) the other terms and conditions hereof.  It is accordingly agreed that the non-breaching party shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which such party is entitled at law or in equity.

9.13    Amendment.  This Agreement may be amended by the parties hereto at any time only by execution of an instrument in writing signed by each of the parties hereto.

9.14    Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

9.15    Confidentiality.  Seller agrees that this Agreement, the Ancillary Agreements, and the terms and conditions hereof and thereof are confidential, and Seller shall not disclose this Agreement, any Ancillary Agreement, or any term or condition hereof or thereof to any Person, except as required by applicable Law and as specified in Section 6.3.

9.16    No Fiduciary Relationships.  The relationship between Buyer, on the one hand, and Seller, on the other hand, is solely that of buyer and seller.  Buyer does not have (and shall not be deemed to have) any fiduciary relationship or similar duty to Seller arising out of or in connection with this Agreement or the transactions contemplated hereby, and there is no partnership, agency or joint venture relationship between Buyer, on the one hand, and Seller, on the other hand, by virtue of this Agreement or any transaction contemplated herein.

9.17    Joint Preparation of Agreement.  The language used in this Agreement is the language chosen by both of the parties to express their mutual intent.  The parties do not intend that any rule of strict construction or interpretation shall be applied against either party on the grounds that such party drafted this Agreement nor do they intend that any such principle of interpretation shall be used to resolve any alleged ambiguity.

[Signature Page Follows]

IN WITNESS WHEREOF, Buyer and Seller have caused this Asset Purchase Agreement to be signed as of the date first written above.
	
			
	"SELLER"
	 
	Seven States Southaven, LLC.

	 
	 
	a Delaware limited liability company

	 
	 
	 

	 
	 
	By:  /s/ Jack W. Simmons                   

	 
	 
	Name:  Jack W. Simmons

	 
	 
	Title:  President

	 
	 
	 

	"BUYER"
	 
	Tennessee Valley Authority,

	 
	 
	a corporate agency and instrumentality of the United States of America

	 
	 
	 

	 
	 
	By:  /s/ John M. Hoskins                      

	 
	 
	Name:  John M. Hoskins

	 
	 
	Title:  Senior Vice President and Treasurer and Interim Chief Risk Officer

EXHIBIT A

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, 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.  
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
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
Switchyard
Electrical transmission facilities and related equipment

EXHIBIT B

Description of 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.

EXHIBIT C

Form of Equity LLC Agreement

LIMITED LIABILITY COMPANY AGREEMENT
OF
SOUTHAVEN HOLDCO LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) is entered into as of this 6th day of August, 2013 by GSS Holdings (Southaven), Inc., a Delaware corporation, as the holder of the sole capital interest in the Company (“GSS Holdings”), Seven States Southaven, LLC, a Delaware limited liability company, as the holder of a profits interest in the Company (“Seven States” or the “Non-Capital Member”, and together with GSS Holdings, the “Members” and each individually, a “Member”) and Wilmington Trust, National Association, not in its individual capacity, but solely as manager of the Company (the “Manager”), in order to form a limited liability company.
Section 1.     Name.  The name of the limited liability company formed hereby is SOUTHAVEN HOLDCO LLC (the “Company”).

Section 2.     Definitions.  Capitalized terms not defined herein shall have the meanings set forth in the Note Purchase Agreement, dated as of August 6, 2013, among the Company and the Purchasers party thereto (the “Note Purchase Agreement”).  

Section 3.    Purpose.  The Company is formed solely for the object and purpose of, and the nature of the business to be conducted and promoted by the Company is limited to, (i) acting as member of and acquiring and holding a limited liability company interest in, Southaven Combined Cycle Generation LLC, a Delaware limited liability company, and (ii) engaging in any and all activities necessary, convenient or incidental to the foregoing, including, without limitation, entering into, and performing its obligations under, the Transaction Documents to which it is a party.

Section 4.     Formation.  Prior to the date hereof, the Certificate of Formation of the Company was executed and filed by an authorized person with the Secretary of State of the State of Delaware and such filing is hereby ratified.  The Manager shall execute and file any required amendments to the Certificate of Formation and shall do all other acts requisite for the constitution of the Company as a limited liability company under the laws of the State of Delaware or any other applicable law.  The existence of the Company as a separate legal entity shall continue until the cancellation of the Certificate of Formation of the Company as provided in the Limited Liability Company Act of the State of Delaware (the “Act”).

Section 5.    Registered Office.  The address of the registered office of the Company in the State of Delaware is Wilmington Trust, National Association, 1100 North Market Street, Wilmington, Delaware 19890-1600, attention: Corporate Trust Administration.  Under no circumstances shall the Company conduct any of its business in the State of Mississippi without the consent of GSS Holdings.

Section 6.     Registered Agent.  The name and address of the registered agent of the Company for service of process on the Company in the State of Delaware is Wilmington Trust, National 

Association, 1100 North Market Street, Wilmington, Delaware 19890-1600, attention: Corporate Trust Administration.

Section 7.    Members; Limited Liability Company Interests; Limitations on Non-Capital Member’s Interest.  

(a)    On the date hereof, there shall be two (2) Members, GSS Holdings and Seven States.  Seven States shall hold a separate class of limited liability company interest and shall be the sole Non-Capital Member.  

(b)    The limited liability company interest of GSS Holdings in the Company shall include the rights provided herein and all other rights of a “member” under the Act and shall constitute securities within the meaning of Article 8 of the Uniform Commercial Code (including, without limitation, Section 8‐102(a)(15) thereof) as in effect from time to time in the State of Delaware and shall be governed by Article 8 of the Uniform Commercial Code (including, without limitation, Article 8‐103(c) thereof) as in effect from time to time in the State of Delaware. GSS Holdings may withdraw as a Member (i) pursuant to a termination of the Agreement in accordance with Section 11 below and (ii) prior to a termination of the Agreement, upon thirty (30) days’ prior written notice to the Manager, Seven States, the Purchasers and TVA; provided that such withdrawal shall be effective upon the (x) admission of a substitute member appointed pursuant to the following sentence and (y) designation of such substitute member as tax matters partner pursuant to Section 4.1 of the Allocation and Tax Matters Agreement.  If GSS Holdings withdraws as a Member pursuant to clause (ii), GSS Holdings shall appoint as its successor a substitute member, which substitute member shall be a corporate services organization such as Corporation Services Company, CT Corporation, National Registered Agents, Inc., Wilmington Trust Company, Stewart Management Company, Lord Securities Corporation, AMACAR Group or another company of recognized standing providing similar services, subject to the prior written consent of TVA, such consent not to be unreasonably withheld, delayed or conditioned.  This Agreement shall be amended to reflect the admission of such substitute member.

(c)    The limited liability company interest of the Non-Capital Member shall be non-voting and shall not include any rights other than the right to receive payment of the Seven States Return as provided herein, the right to review the books and records of the Company solely with respect to the Seven States Return or the calculation or payment thereof, and such other rights as are expressly provided to the Non-Capital Member herein.  The Non-Capital Member may withdraw as a Member by providing five (5) Business Days’ written notice to GSS Holdings and TVA, whereupon the limited liability company interest of the Non-Capital Member shall terminate without further action by any party and the Non-Capital Member shall have no further rights hereunder.

Section 8.    Manager and Officers.  Wilmington Trust, National Association is hereby appointed, and upon execution of this Agreement shall be, the Manager of the Company.  The Manager shall be deemed to be a “Manager” of the Company within the meaning of the Act.  The Company shall have such officers with such authority as the Manager shall determine.

Section 9.    Powers.  The business and affairs of the Company shall be managed solely by the Manager, who shall have the authority to bind the Company and to do any and all acts necessary or convenient for the furtherance of the purpose of the Company, including, without limitation, the authority to execute and deliver, and to perform its obligations under, the Note Purchase Agreement, the Notes, the Company Pledge Agreement, the Participation Agreement and each other Transaction Document to which the Company is a party on behalf of the Company and to execute and deliver powers of attorney granting authority to execute and deliver the Note Purchase Agreement, the Notes, the Company Pledge Agreement, the Participation Agreement and each other Transaction Document to which the Company is a party and other documents, instruments or agreements on behalf of the Company.  Each of the Members hereby transfers to the Manager its voting rights, if any, relating to the Company, such transfer to be irrevocable for so long as the Notes remain outstanding and the other Transaction Documents remain in effect.  The Manager shall not be liable to the Company or the Members in connection with its management of the business and affairs of the Company or in connection with its exercise of such voting rights, other than as a result of its gross negligence or willful misconduct.  No Member shall have any authority to bind, influence, direct and control the Company.

Section 10.    Dissolution.  The Company shall dissolve, and its affairs shall be wound up, upon the first to occur of the following:  (a) final payment in full of all obligations of the Company, whether or not then due, under the Transaction Documents, and release and termination of the lien created pursuant to the Company Pledge Agreement in accordance with its terms, (b) the written consent of the Manager, approved in writing by TVA, and so long as the lien of the Indenture has not been terminated or discharged, the Lease Indenture Trustee, (c) the entry of a decree of judicial dissolution under Section 18‐802 of the Act or (d) the termination of the legal existence of GSS Holdings or the occurrence of any other event which terminates the continued membership of GSS Holdings in the Company unless the business of the Company is continued in a manner permitted by this Agreement or the Act.  Upon the occurrence of any event that causes GSS Holdings to cease to be a Member of the Company, to the fullest extent permitted by law, the personal representative of GSS Holdings is hereby authorized to, within thirty (30) days after the occurrence of the event that terminated the continued membership of GSS Holdings, agree in writing (i) to continue the Company and (ii) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that terminated the continued membership of GSS Holdings in the Company.  In accordance with Section 18‐801 of the Act, the Company shall not be dissolved, and shall continue to exist, upon the resignation, “Bankruptcy” (as defined in this Section 10) or dissolution of a Member, including without limitation a resignation of the Manager in accordance with Section 11 hereof.  Notwithstanding any other provision of this Agreement, (x) the Bankruptcy of GSS Holdings shall not cause GSS Holdings to cease to be a Member and (y) neither the Bankruptcy of either GSS Holdings or the Non-Capital Member, nor the termination of the legal existence of the Non-Capital Member, nor the occurrence of  any event which terminates the limited liability interest of the Non-Capital Member, shall cause the Company to dissolve, and upon the occurrence of any such event under either of clauses (x) or (y), the business of the Company shall continue without dissolution.  

For purposes of this Agreement, “Bankruptcy” shall mean, with respect to a Person, (a) if such Person (i) makes a general assignment for the benefit of creditors, (ii) files a voluntary petition in 

bankruptcy, (iii) is adjudged bankrupt or insolvent, or has entered against it an order for relief, in any bankruptcy or insolvency proceeding, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any bankruptcy or similar proceeding, or (vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the Person or of all or any substantial part of its properties, or (b) (i) if sixty (60) days after the commencement of any proceeding against such Person seeking reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, the proceeding has not been dismissed, or (ii) appointment without such Person’s consent or acquiescence of a trustee, receiver or liquidator of such Person or of all or any substantial part of its properties.  The foregoing definition of “Bankruptcy” is intended to replace and shall supersede and replace the definition of “Bankruptcy” set forth in Sections 18‐101(1) and 18‐304 of the Act.  
Section 11.    Resignation of Manager.  Upon the final payment in full of all obligations of the Company, whether or not then due, under the Transaction Documents and the release and termination of the Company Pledge Agreement in accordance with its terms, the Manager shall be deemed automatically to have resigned as the manager of the Company and shall automatically cease to be the manager of the Company and all of its authority and power as manager of the Company shall be deemed transferred to GSS Holdings without any further act, vote or pre-approval of any Person.  In the event of such resignation of the Manager and transfer of the Manager’s authority and power to act as manager of the Company to GSS Holdings, GSS Holdings will be entitled to compensation for acting as manager of the Company in accordance with prevailing market rates for such services in effect at such time, to be further agreed among the parties at the time of such resignation and transfer.

Section 12.    Capital Contribution.  The amount listed on Schedule I has been contributed on behalf of GSS Holdings to the Company.

Section 13.    Additional Capital Contribution.  No Member is required to make any additional capital contribution to the Company.

Section 14.     Distributions to Members. 
 
(a)    All cash received by the Company, less all expenses and capital expenditures of the Company and any amounts required to be withheld by the Company, in each case in accordance with this Agreement and the Services Agreement, dated as of August 6, 2013, by and between the Company and Global Securitization Services, LLC, shall be distributed to the Purchasers in accordance with the Note Purchase Agreement and the Notes and, thereafter, to Non-Capital Member pursuant to clause (b) below.  Subject to the Act and clause (b) below, no distributions shall be made to any Member by the Company until the final payment and satisfaction in full of all of the obligations of the Company under the Note Purchase Agreement, the Notes, the Company Pledge Agreement and the other Transaction Documents.

(b)    On each Note Payment Date, the Manager shall cause the Company to distribute to the Non-Capital Member, to the extent available from Distributable Net Income (and not used to pay the Notes), an amount equal to the Seven States Return. 

Section 15.    Capital Accounts and Allocations.

(a)    The Manager shall maintain a separate capital account (“Capital Account”) for each Tax Member in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv).  This Section 15 is intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2) and shall be interpreted and applied in a manner consistent with such Treasury Regulations. 

(b)    After giving effect to any allocations required by Section 15(c), items of income, gain, loss and deduction of the Company for each fiscal year will be allocated among the Tax Members by the Manager in whatever ratios are necessary to cause the Capital Account balance of each Tax Member to be equal to (A) the amount it would be entitled to receive (i) pursuant to Section 14, in the case of GSS Holdings and the Non-Capital Member, and (ii) pursuant to the Notes, in the case of any Purchaser, if the Company were to sell all of its assets for an amount equal to their respective book values and all Company liabilities were satisfied (limited with respect to each liability for which no Tax Member is liable (a “non-recourse liability”) to the book value of the asset securing such non-recourse liability) and the Company were to distribute the proceeds in liquidation minus (B) such Tax Member’s share of “partnership minimum gain” (as such term is defined in U.S. Treasury Regulations Sections 1.704-2(b)(2) and 1.704-2(d)) and “partner nonrecourse debt minimum gain” (as such term is defined in U.S. Treasury Regulations Section 1.704-2(i)(2)).

(c)    For each fiscal year, items of income, deduction, gain, loss or credit as determined for U.S. federal income tax purposes shall be allocated among the Tax Members in such manner as equitably reflects amounts allocated to the Capital Accounts of the Tax Members under this Agreement.  Such allocations shall be made pursuant to the principles of Sections 704(b) and 704(c) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), and U.S. Treasury Regulations Sections 1.704-1(b)(2)(iv)(f), 1.704-1(b)(2)(iv)(g), 1.704-1(b)(4)(i), 1.704-2(f), 1.704-2(i)(4) and 1.704-3(e), or the successor provisions to such Code Sections and U.S. Treasury Regulations.  Notwithstanding anything to the contrary in this Agreement, there shall be allocated to the Tax Members such gains or income as shall be necessary to satisfy the “qualified income offset” requirements of Treasury Regulations § 1.704-1 (b)(2)(ii)(d).

Section 16.    Transfers; Assignments.  

(a)    The Non-Capital Member may not transfer or assign in whole or in part its interest in the Company without the consent of TVA, other than a transfer in whole to (i) Seven States Power Corporation (“Seven States Parent”) in connection with a merger with or consolidation into Seven States Parent, a liquidation of Seven States or otherwise, or (ii) an entity 

if, but only if, Seven States Parent owns, directly or indirectly 100% of the stock, membership interest and other equity of such entity (a “Seven States Subsidiary”) in connection with a merger with or consolidation into a Seven States Subsidiary, a liquidation of Seven States or otherwise; provided that, no transfer or assignment to Seven States Parent or a Seven States Subsidiary under this Section 16(a) shall be permitted unless such transferee assumes all obligations of Seven States under the Purchase Agreement, including any indemnification obligations of Seven States under Section 7.2(b) of the Purchase Agreement.  

(b)    Except as provided in Section 7(b) and the Company Pledge Agreement, GSS Holdings may not transfer or assign in whole or in part its interest in the Company without the consent of the Purchasers and TVA. 

(c)    Any attempted transfer or assignment in violation of this Section 16 shall be void ab initio.

Section 17.    Termination of Non-Capital Interest; Removal of the Non-Capital Member.  Notwithstanding any other provision of this Agreement, if the Facility Lease is terminated or otherwise expires or the Non-Capital Member (i) liquidates, dissolves or otherwise winds up (including by reason of “Bankruptcy” (as defined in Section 10)), merges into or consolidates with any Person (other than, in accordance with Section 16 hereof, Seven States Parent or a Seven States Subsidiary), (ii) is transferred directly or indirectly in whole or in part by Seven States Parent or a Seven States Subsidiary without the consent of TVA (including by transfer of an upstream ownership interest in a Seven States Subsidiary or by merger of Seven States into another entity not wholly owned by Seven States Parent), (iii) transfers or assigns, or attempts to transfer or assign, its interest hereunder in violation of Section 16, or (iv) withdraws as a Member or otherwise consents to the termination of its interest in the Company, the limited liability company interest of the Non-Capital Member in the Company shall terminate immediately without further action by any party, the Non-Capital Member shall cease to be a member of the Company and shall have no further rights hereunder, the business of the Company shall continue without dissolution with GSS Holdings as the sole Member of the Company and at the request of either GSS Holdings or the Non-Capital Member, this Agreement shall be amended to reflect such termination of such interest.  

Section 18.    Admission of Additional Members.  No additional members may be admitted to the Company, except as provided in Section 7(b); provided that, in the event of a transfer by Seven States of its interest in the Company to Seven States Parent, a Seven States Subsidiary or any other transferee in accordance with Section 16, such transferee shall become the Non-Capital Member and this Agreement shall, at the request of either GSS Holdings or such transferee, be amended to reflect such transfer. 

Section 19.    Exculpation and Indemnification.  Neither the Manager nor the Members, nor any     employee, representative, agent or Affiliate of the Manager or the Members (collectively, the “Covered Persons”), shall be liable to the Company or any other Person who is bound by this Agreement for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of the authority conferred on such Covered Person by this Agreement, except that a Covered Person shall be liable for any such loss, damage or claim incurred by reason of such Covered Person’s (x) gross 

negligence or willful misconduct or (y) breach of its express obligations under this Agreement or any other Transaction Document.  The foregoing provisions shall survive the termination of this Agreement.

Section 20.    Indemnification.  The Company shall assume liability for, and shall indemnify, protect, save and hold harmless the Manager and GSS Holdings (and any other Person acting as a successor of either) and the respective officers, directors, partners, employees, servants and agents of each of the Manager and GSS Holdings (each such Person being referred to as an “Indemnified Person”) against and from any and all Claims and Taxes that may be imposed on, incurred by or asserted at any time against any Indemnified Person in any way relating to or arising out of the execution, delivery and performance of this Agreement or any other document contemplated hereby, the creation, acceptance, operation or administration of the Company, the Company assets, any of the properties included therein, the administration of the Company’s assets or any action or inaction of the Manager or GSS Holdings hereunder (including the reasonable costs and expenses of defending itself against any Claim in connection with the exercise or performance of any of its powers or duties hereunder), except only that the Company shall not be required to indemnify (x) any Indemnified Person for any Claims resulting from acts that would constitute the willful misconduct or gross negligence of such Indemnified Person or (y) GSS Holdings for any Taxes based on net income or net profits, or any franchise taxes, with respect to its interest in the Company.

Section 21.    Limited Liability of Members and Manager.  Except as otherwise expressly provided by the Act and Section 19 of this Agreement, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be the debts, obligations and liabilities solely of the Company, and neither the Members nor the Manager shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a member or a manager of the Company.  The failure of the Company to observe any formalities or requirements relating to the exercise of its power or management of its business affairs under the Act, this Agreement or any other Transaction Document shall not be grounds for imposing personal liability on the Members, the Manager or any member stockholder, director, partner, officer, agent or employee of the Members or the Manager for the liabilities of the Company.

Section 22.    Acceptance of Appointment of Manager.  By its execution hereof, Wilmington Trust, National Association accepts its appointment as Manager of the Company.  By accepting the appointment of Manager of the Company, Wilmington Trust, National Association shall not be liable for any claim, cost, fee, tax, expense or penalty to third-parties, the Company, any Member or any other Manager except to the extent that any such claim, cost, fee, tax, expense or penalty is attributable to the gross negligence or willful misconduct of Wilmington Trust, National Association or breach of its express obligations under this Agreement or any other Transaction Document.

Section 23.    Co-Manager.  At any time or times, for the purpose of meeting the legal requirements of any jurisdiction in which any part of the property of the Company may at the time be located, the Manager shall have the power to appoint one or more Persons (who may be officers of the Manager) or institutions to act as co-Manager, jointly with the Manager or separately from the Manager at 

the direct written instruction of the Members, in either case as required by state law, of all or any part of the property of the Company, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity as aforesaid, any property, title, right or power deemed necessary or desirable.  All provisions of this Agreement that are for the benefit of the Manager shall extend to and apply to each co-Manager appointed pursuant to this Section 23.

Section 24.    Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflict of laws.  Each of the parties hereto agrees that this Agreement has been entered into by the parties hereto in express reliance upon 6 Del. C. § 2708.

Section 25.    Special Provisions.

(a)    The Company shall be operated in such a manner that it would not be substantively consolidated in the bankruptcy estate of either Member, any Affiliate of a Member or any other Person such that its separate existence from the Members or such other Person would be disregarded in the event of bankruptcy or insolvency of a Member or such other Person and in such regard, the Manager shall cause the Company to:

i.    maintain its bank accounts, books, accounting records, financial statements (to the extent any are prepared), payroll and other company documents and records separate from those of any Affiliate or any other Person;

ii.    maintain its books, records and agreements separate from those of any Affiliate or any other Person;

iii.    not commingle its funds and other assets with those of any Affiliate or any other Person and hold its assets in its own name and maintain such assets in a manner that it would not be costly or difficult to segregate, ascertain or identify the assets from those of each Member, any Affiliate, the Purchasers or any other Person;

iv.    act and conduct its business solely in its own name and through its own authorized officers and agents, and in all respects hold itself out as a legal entity separate and distinct from any Affiliate or any other Person;

v.    observe all limited liability company formalities and comply with all applicable laws, ordinances or governmental rules or regulations to which it is subject and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of its properties or to the conduct of its business;

vi.    conduct its business in its own name or under any trade name as will not be reasonably likely to cause confusion as to identity or separate existence;

vii.    pay all its liabilities, obligations and Indebtedness, including all administrative expenses and compensation to employees, consultants or agents, if any, and all operating expenses, out of its own funds;

viii.    maintain a sufficient number of employees, if any, in light of its contemplated business operations;

ix.    separately manage its liabilities from those of any Affiliate or any other Person, and not identify itself or any Affiliate or any other Person as a division or part of the other;

x.    not pledge its assets for the benefit of any other Person or guarantee or become obligated for the debts of any Affiliate or any other Person or hold out its credit as being available to satisfy the obligations of others, except as contemplated by the Transaction Documents;

xi.    not acquire obligations or securities of any Affiliate or any other Person;

xii.    not make loans to any Affiliate or any other Person, except as contemplated by the Transaction Documents;
    
xiii.    not engage in transactions with any Affiliate or any other Person, except as contemplated by the Transaction Documents;

xiv.    allocate fairly and reasonably any overhead for shared office space and any other common expenses for facilities, goods or services provided to multiple entities;

xv.    prepare and file its own tax returns, if any, as may be required under applicable law, to the extent (1) not part of a consolidated group filing a consolidated return or returns or (2) not treated as a division for tax purposes of another taxpayer, and pay any taxes so required to be paid under applicable law;

xvi.    prepare and maintain separate financial statements (except that the Company may be included in the consolidated financial statements of another Person where required by GAAP, provided that such financial statements contain a footnote to the effect that the Company is a separate legal entity, the assets of which are not available to satisfy the debts of such Person), which may be prepared by one or more independent accountants;

xvii.    except as provided in the Transaction Documents, maintain an arm’s-length relationship with its Affiliates and each Member, each Affiliate of the Members, the Purchasers and any parties furnishing goods and services to the Company;

xviii.    maintain adequate capital in light of its contemplated business purpose, transactions and liabilities;

xix.    not acquire any obligations or securities of the Members or any Affiliate;

xx.    use stationery, invoices and checks separate from any Affiliate or any other Person;

xxi.    hold itself out as a separate legal entity and correct any known misunderstanding regarding its separate identity; and

xxii.    except as otherwise provided in the Transaction Documents, deposit all of its funds in checking or savings accounts, time deposits or certificates of deposit in its own name or invest such funds in its own name.

Failure of the Company, GSS Holdings or the Manager on behalf of the Company, to comply with any of the foregoing covenants or any other covenants contained in this Agreement shall not affect the status of the Company as a separate legal entity or the limited liability of the Members or the Manager.
(b)    The Company shall not:

i.    incur, create, guarantee or assume any Indebtedness other than as provided for in the Transaction Documents; or

ii.    except as permitted by the Transaction Documents, invest in, make or permit to remain outstanding any loan or advance to or any deposit with, or acquire any stock or securities of any Person; or

iii.    without the prior written consent of the Manager (acting in the best interests of the Company), voluntarily file, or consent to the filing of, a petition for bankruptcy, reorganization, assignment for the benefit of creditors or similar proceeding; or

iv.    initiate any proceedings for its dissolution, liquidation, consolidation, merger or sale of all or substantially all of its assets; or

v.    form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or otherwise); or

vi.    elect to be treated as a corporation for U.S. federal income tax purposes.

(c)    Each Purchaser shall be treated as a partner in the Company for U.S. federal income tax purposes and each such Purchaser’s Note shall represent, for U.S. federal income tax purposes, such Purchaser’s direct ownership of a “capital interest” in the Company within the meaning of Rev. Proc. 93-27, 1993-2 C.B. 343.  The interest in the Company held by the Non-

Capital Member shall be treated as a “profits interest” within the meaning of Rev. Proc. 93-27, 1993-2 C.B. 343.  The Company agrees not to elect to treat itself as other than a partnership for U.S. federal income tax purposes and agrees not to  make any claims or file any returns for U.S. federal income tax purposes in any manner inconsistent with the foregoing treatment unless otherwise required by law.  

Section 26.    Definitions.  For the purposes of this Agreement, the following terms shall have the meanings set forth below:

i.    “Affiliate” means any Person (i) which owns beneficially, directly or indirectly, any of the limited liability company interests of the Company, or which is otherwise in control of the Company, whether directly or indirectly through one or more intermediaries, (ii) of which more than ten percent (10%) of the outstanding equity interest is owned beneficially, directly or indirectly, by any Person described in clause (i) above, or (iii) which is controlled by or under common control of any Person described in clause (i) above; provided that for the purpose of this definition, the terms “control” and “controlled by” shall have the meanings assigned to them in Rule 405 under the Securities Act of 1933, as amended. 

ii.    “Distributable Net Income” shall mean the excess of (i) the sum of cash receipts of all kinds of the Company over (ii) the sum of cash disbursements for the expenses of the Company, or amounts reserved against liabilities (contingent or otherwise) of the Company (which shall include principal payments on the Notes, together with any other payments required to be made thereunder or under any Note Purchase Document.

iii.    “Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization, or government or any agency or political subdivision thereof or any other entity.

iv.    “Seven States Return” means, for each Note Payment Date, an amount equal to 2.05/7ths of Distributable Net Income, which amount shall in no event exceed the amount set forth on Schedule II corresponding to such Note Payment Date; and 

v.    “Tax Member” means GSS Holdings, the Non-Capital Member and any Purchaser.

Section 27.    Guidance and Interpretation of this Agreement. 

(a)    The Manager shall not be required to take or refrain from taking any action hereunder or contemplated hereby if it shall have determined, or shall have been advised by counsel, that such performance is likely to involve the Manager in personal liability, is contrary to the terms of this Agreement, of the Transaction Documents to which the Company or the Manager is a party, or of any document contemplated hereby to which the Company or the Manager is a 

party or is otherwise contrary to law.  If at any time the Manager determines that it requires or desires guidance regarding the application of any provision of this Agreement, any Transaction Document to which the Manager or the Company is a party, or any other document to which the Manager or the Company is a party, or regarding compliance with any direction it receives hereunder, then the Manager may deliver a notice to GSS Holdings (or, if related to the reduction of, extension of the time for, or elimination of payment of the Seven States Return, the Members) requesting written instructions as to such application or compliance, and such instructions by GSS Holdings on behalf of the relevant Members shall constitute full and complete authorization and protection for actions taken and other performance by the Manager in reliance thereon.  Until the Manager has received such instructions from GSS Holdings after delivering such notice, it may refrain from taking any action with respect to the matters described in such notice.

(b)    In the event that the Manager is uncertain as to the application, intent or meaning of any provision of this Agreement, any Transaction Document to which the Manager or the Company is a party or any other document to which the Manager or the Company is a party, or such provision is ambiguous as to its application or is, or appears to be, in conflict with any other applicable provision hereof, or in the event that this Agreement permits any determination by the Manager or is silent or incomplete as to the course of action that the Manager is required to take with respect to a particular set of facts, the Manager may seek instructions from GSS Holdings (or, if related to the reduction of, extension of the time for, or elimination of payment of the Seven States Return, the Members) and shall not be liable to any Person to the extent that it acts in good faith in accordance with the instructions of GSS Holdings on behalf of the relevant Members; provided that if the Manager shall not have received instructions from GSS Holdings on behalf of the relevant Members pursuant to its request within 20 days after the date of such request, until instructed otherwise by GSS Holdings on behalf of the relevant Members, the Manager may, but shall be under no duty to, take or refrain from taking such action as it shall deem consistent with the terms of this Agreement or any Transaction Document, and the Manager shall have no liability to any person for any such action or inaction.  GSS Holdings, on behalf of the relevant Members, shall seek consent under the Note Purchase Documents before providing any instructions to the Manager. 

(c)    Notwithstanding that a termination of the Facility Lease or other exercise of remedies under the Transaction Documents may reduce, eliminate or delay the payment of the Seven States Return and without limiting the application of the last sentence of Section 9, the Non-Capital Member shall have no authority to bind, influence, direct or control the Company or the Manager, including without limitation any decision or other action regarding the declaration or waiver of a Lease Event of Default, the exercise of remedies under the Transaction Documents or to take any other action under or with respect to the Transaction Documents, and any rights of the Company under the Transaction Documents may be exercised without regard to the Non-Capital Member’s limited liability company interest in the Company or the Seven States Return.

Section 28.    Amendments.  This Agreement may not be amended without the consent of GSS Holdings, the Purchasers, TVA and, so long as the lien of the Lease Indenture has not been terminated or discharged, the Lease Indenture Trustee; provided that, subject to the terms of the Transaction Documents, no amendment may reduce, extend the time of or eliminate payment of the Seven States Return without the consent of the Non-Capital Member; and provided, further that the consent of the Purchasers or the Lease Indenture Trustee shall not be required to amend the Agreement to reduce, extend the time of or eliminate payment of the Seven States Return, to eliminate the interest of the Non-Capital Member in accordance with Section 17 or to admit Seven States Parent as the Non-Capital Member pursuant to Section 18.  TVA and the Lease Indenture Trustee are intended beneficiaries of the provisions of this Agreement applicable to it and shall have the right to enforce such provisions hereof.

Section 29.    Financial Records and Tax Filings.  The Manager is authorized to, and shall, hire, at the expense of the Company, a certified public accountant to (a) determine capital allocations as set forth in Section 15 hereof, (b) prepare and file tax returns for the Company as set forth in Section 25(a)(xv) hereof and (c) prepare the financial statements of the Company as set forth in Section 25(a)(xvi) hereof.

*    *    *

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Agreement as of the date first above written.
	
			
	GSS HOLDINGS (SOUTHAVEN), INC.
	 
	SEVEN STATES SOUTHAVEN, LLC

	 
	 
	 

	By:  ________________________________
	 
	By:  ________________________________

	Name:
	 
	Name:

	Title:
	 
	Title:

	 
	 
	 

	WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Manager
	 
	 

	 
	 
	 

	By:  ________________________________
	 
	 

	Name:
	 
	 

	Title:
	 
	 

                                    
Schedule I
CAPITAL CONTRIBUTION
    
GSS Holdings (Southaven), Inc.                                      $100    

Schedule I
Page 1

Schedule II
MAXIMUM AMOUNT OF SEVEN STATES RETURN
	
							
	Note Payment Dates
	Maximum Amount of Seven 
States Return

	February 15, 2014
	 
	 
	 
	410,000.00
	

	 

	August 15, 2014
	 
	 
	 
	401,613.67
	

	 

	February 15, 2015
	 
	 
	 
	392,933.82
	

	 

	August 15, 2015
	 
	 
	 
	383,950.18
	

	 

	February 15, 2016
	 
	 
	 
	374,652.11
	

	 

	August 15, 2016
	 
	 
	 
	365,028.60
	

	 

	February 15, 2017
	 
	 
	 
	355,068.27
	

	 

	August 15, 2017
	 
	 
	 
	344,759.33
	

	 

	February 15, 2018
	 
	 
	 
	334,089.58
	

	 

	August 15, 2018
	 
	 
	 
	323,046.39
	

	 

	February 15, 2019
	 
	 
	 
	311,616.69
	

	 

	August 15, 2019
	 
	 
	 
	299,786.94
	

	 

	February 15, 2020
	 
	 
	 
	287,543.16
	

	 

	August 15, 2020
	 
	 
	 
	274,870.84
	

	 

	February 15, 2021
	 
	 
	 
	261,754.99
	

	 

	August 15, 2021
	 
	 
	 
	248,180.08
	

	 

	February 15, 2022
	 
	 
	 
	234,130.06
	

	 

	August 15, 2022
	 
	 
	 
	219,588.28
	

	 

	February 15, 2023
	 
	 
	 
	204,537.54
	

	 

	August 15, 2023
	 
	 
	 
	188,960.03
	

	 

	February 15, 2024
	 
	 
	 
	183,728.00
	

	 

	August 15, 2024
	 
	 
	 
	178,312.86
	

	 

	February 15, 2025
	 
	 
	 
	172,708.18
	

	 

	August 15, 2025
	 
	 
	 
	166,907.34
	

	 

	February 15, 2026
	 
	 
	 
	160,903.47
	

	 

	August 15, 2026
	 
	 
	 
	154,689.46
	

	 

	February 15, 2027
	 
	 
	 
	148,257.97
	

	 

	August 15, 2027
	 
	 
	 
	141,601.37
	

	 

	February 15, 2028
	 
	 
	 
	134,711.79
	

	 

	August 15, 2028
	 
	 
	 
	127,581.08
	

	 

	February 15, 2029
	 
	 
	 
	120,200.79
	

	 

	August 15, 2029
	 
	 
	 
	112,562.19
	

	 

	February 15, 2030
	 
	 
	 
	104,656.24
	

	 

	August 15, 2030
	 
	 
	 
	96,473.58
	

	 

	February 15, 2031
	 
	 
	 
	88,004.53
	

	 

	August 15, 2031
	 
	 
	 
	79,239.06
	

	 

	February 15, 2032
	 
	 
	 
	70,166.80
	

	 

	August 15, 2032
	 
	 
	 
	60,777.01
	

	 

	February 15, 2033
	 
	 
	 
	51,058.58
	

	 

	August 15, 2033
	 
	 
	 
	41,000.00
	

	 

Schedule II
Page 1

    
EXHIBIT D

Form of Bill of Sale

BILL OF SALE
Seven States Southaven, LLC, a Delaware limited liability company (“Seller”), in accordance with the Asset Purchase Agreement (the “APA”), dated as of August 6, 2013, by and between Seller and Tennessee Valley Authority (“Buyer”), a corporate agency and instrumentality of the United States of America created by and existing under and by virtue of the Tennessee Valley Authority Act of 1933, as amended, and acting as to Real Property as agent and in the name of the United States of America, and in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration (the sufficiency and receipt of which are hereby acknowledged), does hereby sell, deliver, assign, transfer and convey unto Buyer all of Seller’s undivided ninety percent (90%) interest that constitute personal property, including the  Facility Tangible Property, the Tangible Intellectual Property and the other Acquired Assets set forth in Section 2.1 of the APA, in each case as described and limited by the terms and provisions of the APA (collectively, “Conveyed Assets”).  The Conveyed Assets do not include and specifically exclude the Excluded Assets.
All capitalized terms in this Bill of Sale used but not defined herein have the meanings set forth in the APA.
TO HAVE AND TO HOLD the Conveyed Assets unto Buyer and Buyer’s heirs, legal representatives, successors and assigns forever.
THE CONVEYED ASSETS ARE CONVEYED AS IS, WHERE IS, AND WITH ALL FAULTS AS OF THE DATE OF THIS BILL OF SALE, WITHOUT ANY REPRESENTATION OR WARRANTY WHATSOEVER AS TO ITS CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, MERCHANTABILITY OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED AND SELLER SPECIFICALLY DISCLAIMS ANY SUCH WARRANTY, GUARANTY OR REPRESENTATION, ORAL OR WRITTEN, PAST OR PRESENT, EXPRESS OR IMPLIED, CONCERNING THE CONVEYED ASSETS.
The Conveyed Assets are further conveyed subject to the right of Southaven Combined Cycle Generation LLC, a Delaware limited liability company (“Owner Lessor”) to lease (simultaneous with the acquisition of the Conveyed Assets) from Buyer the Undivided Interest (which is being conveyed to Buyer from Seller as part of the Conveyed Assets) acquired under the APA and hereunder.  The lease of the Undivided Interest shall be subject to and in accordance with all of the terms, conditions, restrictions and requirements with respect thereto contained herein and in that certain (i) Participation Agreement, dated August 6, 2013, among Buyer, Owner Lessor, Wilmington Trust, National Association, Southaven Holdco LLC, a Delaware limited liability company, and Wilmington Trust Company; and (ii) Head Lease Agreement, dated August 9, 2013, between Buyer and Owner Lessor.
Nothing in this Bill of Sale, express or implied, is intended to or shall confer upon any other person or persons (including, without limitation, any employee or collective bargaining representatives thereof) any rights, benefits or remedies of any nature whatsoever under or by reason of this Bill of Sale.

This Bill of Sale shall be binding upon and inure solely to the benefit of the parties hereto and their respective successors (whether by operation of law or otherwise), legal representatives, heirs and permitted assigns.
This Bill of Sale, including all matters of construction, validity and performance, shall be governed and construed in the same manner as set forth in Section 9.9 of the APA.
This Bill of Sale is delivered pursuant to and is subject to the APA.  In the event of any conflict between the terms of the APA and the terms of this Bill of Sale, the terms of the APA shall prevail.
[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, Seller and Purchaser have signed and delivered this Bill of Sale as of the ___ day of August, 2013.
	
			
	 
	 
	SELLER:

	 
	 
	SEVEN STATES SOUTHAVEN, LLC,
a Delaware limited liability company

	 
	 
	 

	 
	 
	By:  ________________________________

	 
	 
	Name:

	 
	 
	Title:

Bill of Sale

	
			
	 
	 
	BUYER:

	 
	 
	TENNESSEE VALLEY AUTHORITY,
a corporate agency and instrumentality of the United States of America

	 
	 
	 

	 
	 
	By:  ________________________________

	 
	 
	Name:

	 
	 
	Title:

Bill of Sale

    
EXHIBIT E

Form of Assignment and Assumption

SEVEN STATES ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS Seven States ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of August 9, 2013, by and between Seven States Southaven, LLC, a Delaware limited liability company (“Assignor”), and Tennessee Valley Authority, a corporate agency and instrumentality of the United States of America created by and existing under and by virtue of the Tennessee Valley Authority Act of 1933, as amended, and acting as to Real Property as agent and in the name of the United States of America (“Assignee”).

WHEREAS, in accordance with and pursuant to that certain Asset Purchase Agreement (the “APA”), dated August 6, 2013, by and between Assignor and Assignee, Assignor desires to assign to Assignee all of Assignor’s right title and interest in the Acquired Assets, and Assignee desires to assume from Assignor, all of the Assumed Liabilities.

All capitalized terms in this Seven States Assignment and Assumption Agreement used but not defined herein have the meanings set forth in the APA.

NOW, THEREFORE, in accordance with the APA, the parties do hereby covenant and agree as follows and take the following actions:

1.    Assignor does hereby transfer, assign, and convey unto Assignee all of Assignor’s right, title, and interest (comprising a ninety percent (90%) undivided ownership share) in and to the Acquired Assets previously acquired by Assignor from Assignee under and pursuant to that certain TVA Assignment and Assumption Agreement, dated September 30, 2008, and that certain TVA Assignment and Assumption Agreement, dated as of April 17, 2009, together with any replacements or additions thereto as of the date hereof, to the full extent of Assignor’s current interest in such Acquired Assets and to the extent the same are transferable by Assignor, but excluding the Excluded Assets, comprising the following:

(a)    the Facility Tangible Property;
(b)    the Easements;
(b)    the Tangible Intellectual Property;
(c)    the Assigned Contracts set forth on Exhibit A attached hereto;
(d)    the Assigned Permits;
(e)    the Accumulated Amortization Costs;
(f)    the Facility Books and Records, and other Acquired Assets set forth in Section 2.1(j) of the APA;
(g)    all right, title, and interest of Assignor, if any, in and to the names Southaven Power and Southaven Power Plant; and
(h)    the Acquired Assets set forth in Sections 2.1(h), (i), (k), (l), (m), and (n) of the APA

2.    THE ACQUIRED ASSETS DESCRIBED IN SECTION 1 OF THIS SEVEN STATES ASSIGNMENT AND ASSUMPTION AGREEMENT ARE CONVEYED “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS” AS OF THE DATE OF THIS SEVEN STATES ASSIGNMENT AND ASSUMPTION AGREEMENT, WITHOUT ANY REPRESENTATION OR WARRANTY WHATSOEVER AS TO THEIR CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, MERCHANTABILITY, OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED, AND ASSIGNOR SPECIFICALLY DISCLAIMS ANY SUCH WARRANTY, GUARANTY, OR REPRESENTATION, ORAL OR WRITTEN, PAST OR PRESENT, EXPRESS OR IMPLIED, CONCERNING THE ACQUIRED ASSETS.

3.    The Acquired Assets described in Section 1 of this Seven States Assignment and Assumption Agreement are conveyed to Assignor, and Assignor accepts the Acquired Assets subject to all of the terms, conditions, restrictions, and obligations of and under the APA and any other agreements or provisions in agreements between Assignor and Assignee required or contemplated thereby or executed in connection therewith.  The respective ownership interests conveyed to Assignee as provided for in this Seven States Assignment and Assumption Agreement shall be undivided and shall not be subject to partition.

4.    Prior to the date hereof and as necessary from time to time after the Closing, Assignor shall (i) cooperate with Assignee’s efforts to obtain all consents, waivers, and approvals required under any of the Assigned Contracts so as to permit the sale and transfer of all the Acquired Assets to Assignee pursuant to the APA and this Seven States Assignment and Assumption Agreement and (ii) perform its obligations under Section 6.4 and Section 6.5 of the APA to effectuate the transactions contemplated hereunder and under the APA, subject to Assignee’s obligations to reimburse Assignor for its costs pursuant to Section 6.4 of the APA. 
5.    This Seven States Assignment and Assumption Agreement shall be binding upon, and inure solely to the benefit of, the parties to this Seven States Assignment and Assumption Agreement and their respective successors (whether by operation of law or otherwise), legal representatives, and permitted assigns.
6.    This Seven States Assignment and Assumption Agreement, including all matters of construction, validity, and performance, shall be governed and construed in the same manner as set forth in the APA.

7.    This Seven States Assignment and Assumption Agreement is delivered pursuant to and is subject to the APA.  In the event of any conflict between the terms of the APA and the terms of this Seven States Assignment and Assumption Agreement, the terms of the APA shall prevail.

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

IN WITNESS WHEREOF, this Seven States Assignment and Assumption Agreement has been signed and delivered by the parties to be effective as of the date first above written.

	
			
	 
	 
	ASSIGNOR:

	 
	 
	SEVEN STATES SOUTHAVEN, LLC,
a Delaware limited liability company

	 
	 
	 

	 
	 
	By:  ________________________________

	 
	 
	Name:  Jack W. Simmons

	 
	 
	Title:  President and Chief Executive Officer

	 
	 
	 

	 
	 
	ASSIGNEE:

	 
	 
	TENNESSEE VALLEY AUTHORITY,
a corporate agency and instrumentality of the United 
States of America

	 
	 
	 

	 
	 
	By:  ________________________________

	 
	 
	Name:  John M. Hoskins

	 
	 
	Title:  Senior Vice President and Treasurer and Interim
Chief Risk Officer

EXHIBIT A
ASSIGNED CONTRACTS

		
	1.
	Master Power Purchase and Sale Agreement (Tolling Agreement) between Southaven Power, LLC and Tennessee Valley Authority, dated as of August 22, 2006

		
	2. 
	Conversion Services Confirmation of Master Power Purchase and Sale Agreement (Tolling Agreement) between Southaven Power, LLC and Tennessee Valley Authority, dated as of August 22, 2006

		
	3.
	Agreement Extending Conversion Services Confirmation and Master Power Purchase and Sale Agreement (Tolling Agreement) between Southaven Power, LLC and Tennessee Valley Authority, dated as of August 31, 2007

		
	4.
	Amendment No. 2 to Conversion Services Confirmation between Southaven Power, LLC and Tennessee Valley Authority, dated as of September 6, 2007

		
	5.
	Facility Letter Agreement,  by and between Texas Gas Transmission Corporation and Southaven Power, LLC, dated as of October 23, 2000

		
	6.
	Amendment to Facility Letter Agreement, by and between Texas Gas Transmission Corporation and Cogentrix Energy, LLC, dated as of January 31, 2001

		
	7.
	License and Indemnity Agreement, by and between Texas Gas Transmission Corporation and Southaven Power, LLC, dated as of March 27, 2002

		
	8.
	Gas Metering Agreement, between Texas Gas Transmission Corporation and Southaven Power, LLC, dated as of June 1, 2000

		
	9.
	Interconnection Agreement OOPAP-263655, between Tennessee Valley Authority and     Southaven Power, LLC, dated as of October 10, 2000

		
	10.
	Amended and Restated Interconnection and Operating Agreement, by and between Southaven Power, LLC and Entergy Mississippi, Inc., dated as of October 20, 2000

		
	11.
	Long Term Service Agreement, by and between Southaven Power, LLC and General Electric International, Inc., dated as of October 1, 2001, effective October 21, 2002, as amended by Amendment No. 1, effective as of April 22, 2009, and Amendment No. 2, effective as of November 21, 2009

		
	12.
	Parts Sharing Agreement, by and between Cogentrix Parts Company, Inc. and Various Project Affiliates, dated as of October 1, 2001, as amended by Amendment No. 1, dated as of April 26, 2012

13.    Amended and Restated Sewer Agreement, between the City of Southaven and     Southaven Power, LLC, dated as of August 23, 2000

Software License Agreements

Software license agreements relating to the following software, and any updates thereto or replacements thereof:

(a)    CeDARs Breeze 75x
(b)    DeltaV 
(c)    GE MarkV with HMI

EXHIBIT F

Form of Termination Agreement

TVA No. 00072495, Termination

TERMINATION OF LEASE AGREEMENT

THIS TERMINATION OF LEASE AGREEMENT (the “Termination of Lease Agreement”) is made and entered into as of the 9th day of August, 2013, by and between Seven States Southaven, LLC, a Delaware limited liability company (“Southaven”) and Tennessee Valley Authority, a corporate agency and instrumentality of the United States Government created and existing under and by virtue of the Tennessee Valley Authority Act of 1933, as amended, 16 U.S.C. Sections 831 - 831ee (2006 & Supp V 2011), and acting as to real property as agent in the name of the United States of America, as lessee (“TVA”). All capitalized terms not otherwise defined in this Termination of Lease Agreement shall have the meanings given to them in the Lease (as defined herein).

BACKGROUND STATEMENT

WHEREAS, Southaven and TVA entered into that certain Lease Agreement dated September 30, 2008, numbered as TVA Contract No. 00072495, which was amended on April 17, 2009, on April 22, 2010, and on April 18, 2013 (collectively, the “Lease”), pursuant to which TVA leases from Southaven the “Leased Premises,” which consist of Southaven’s 90% undivided ownership interest in the Purchased Assets, as more particularly defined in the Lease; and

WHEREAS, the Term of the Lease was to expire on or before April 30, 2010, which date was previously extended to September 5, 2013; and

WHEREAS, TVA and Southaven have determined to terminate the Lease in conjunction with the transfer of all assets currently owned by Southaven and subject to the Lease, but to preserve the obligation of TVA to pay any remaining Administrative and General Expenses portion of the Basic Rent under Section 3.3(a) of the Lease (the “Administrative Costs”) and to preserve the indemnification provisions thereunder for a period of three (3) years;

NOW, THEREFORE, for and in consideration of the premises, the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, TVA and Southaven agree as follows:

1.    Termination of Lease.  Subject to the conditions contained in this Termination of Lease Agreement, the Lease shall terminate, and shall be of no further force or effect, as of the close of business on August 9, 2013 (the “Termination Date”).  

2.    Release from Future Obligations. Each party shall be released from all of its obligations, duties and liabilities under the Lease from and after the Termination Date, excluding: (a) TVA’s obligation to pay Southaven a final installment of the Administrative Costs pursuant to Section 3.3(a) (including any adjustment to Administrative Costs pursuant to clauses (i) or (ii) of Section 3.3(a) of the Lease) thereunder and (b) each party’s indemnification obligations under Article 13 of the Lease for any indemnifiable claims 

or losses arising prior to the Termination Date, which indemnification obligations shall survive termination thereof for a period of three (3) years after the Termination Date. Southaven agrees to provide an invoice to TVA within forty-five days after the Termination Date for all costs described in item (a) above, and TVA shall pay such amounts within fifteen (15) days of receipt. 

3.    Wind-down/Transition.  The effectiveness of this Termination of Lease Agreement is expressly subject to and conditioned upon the consummation of all conditions precedent set forth in that certain Asset Purchase Agreement dated August 6, 2013, between TVA and Southaven.

4.    Binding Effect.  This Termination of Lease Agreement shall be governed by and construed in accordance with the laws of the United States of America, except to the extent the laws of the State of Mississippi or Tennessee govern any portion of the Leased Premises, and shall be binding upon and inure to the benefit of the parties hereto and their respective successors, representatives and assigns.  In the event of any inconsistency or conflict between the terms of this Termination of Lease Agreement and of the Lease, the terms hereof shall control.  Time is of the essence of all of the terms of this Termination of Lease Agreement.

IN WITNESS WHEREOF, Southaven and TVA have caused this Termination of Lease Agreement to be executed by their duly authorized representatives as of the day and year first above written.
 
	
			
	SOUTHAVEN
	 
	TVA:

	Seven States Southaven, LLC
a Delaware limited liability company
	 
	Tennessee Valley Authority

	 
	 
	 

	By:  ________________________________
	 
	By:  ________________________________

	Name:  ______________________________
	 
	Name:  ______________________________

	Title:  _______________________________
	 
	Title:  _______________________________

        

TVA No. 00069956, Termination

TERMINATION OF JOINT OWNERSHIP AGREEMENT

THIS TERMINATION AGREEMENT (the “Termination Agreement”) is made and entered into as of the 9th day of August, 2013, by and between Seven States Southaven, LLC, a Delaware limited liability company (“Southaven”) and Tennessee Valley Authority, a corporate agency and instrumentality of the United States Government created and existing under and by virtue of the Tennessee Valley Authority Act of 1933, as amended, 16 U.S.C. Sections 831 - 831ee (2006 & Supp V 2011), and acting as to real property as agent in the name of the United States of America, as lessee (“TVA”). All capitalized terms not otherwise defined in this Termination Agreement shall have the meanings given to them in the JOA (as defined herein).

BACKGROUND STATEMENT

WHEREAS, TVA and Seven States Power Corporation (“SSPC”), a Tennessee corporation and the parent of Southaven, previously entered into that certain Joint Ownership Agreement, dated April 30, 2008, numbered as TVA Contract No. 00069956, which was subsequently amended by Supplement No. 1 dated September 2, 2008, Supplement No. 2 dated September 30, 2008, Supplement No. 3 dated April 17, 2009, Supplement No. 4 dated April 22, 2010, and Supplement No. 5 dated April 18, 2013 (as so amended, the “JOA”); and 

WHEREAS, on September 30, 2008, SSPC designated Southaven as the “Designated Entity” under the JOA, assigned all its rights under the JOA to Southaven, and specified the Elected Percentage under the JOA to be equal to 90%; and

WHEREAS, the JOA anticipated Long Term Arrangements to be completed on or before April 30, 2010, which date was previously extended to September 5, 2013; and

WHEREAS, TVA and Southaven have determined that the Long Term Arrangements will not be consummated as anticipated under the JOA and now desire to terminate the JOA in conjunction with the transfer of all assets currently owned by Southaven and subject to the JOA, but to preserve the indemnification provisions of the JOA for a period of three (3) years;

NOW, THEREFORE, for and in consideration of the premises, the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, TVA and Southaven agree as follows:

1.    Termination of JOA.  Subject to the conditions contained in this Termination Agreement, the JOA shall terminate, and shall be of no further force or effect, as of the close of business on August 9, 2013 (the “Termination Date”).  

    

2.    Release from Future Obligations. Each party shall be released from all of its obligations, duties and liabilities under the JOA from and after the Termination Date, excluding each party’s indemnification obligations under Section 10 of the JOA for any indemnifiable claims or losses arising prior to the Termination Date, which indemnification obligations shall survive termination thereof for a period of three (3) years after the Termination Date. 

3.    Wind-down/Transition.  The effectiveness of this Termination Agreement is expressly subject to and conditioned upon the consummation of all conditions precedent set forth in that certain Asset Purchase Agreement dated August 6, 2013, between TVA and Southaven.

4.    Binding Effect.  This Termination Agreement shall be governed by and construed in accordance with the laws of the United States of America and the State of Tennessee, and shall be binding upon and inure to the benefit of the parties hereto and their respective successors, representatives and assigns.  In the event of any inconsistency or conflict between the terms of this Termination Agreement and of the JOA, the terms hereof shall control.  Time is of the essence of all of the terms of this Termination Agreement.

IN WITNESS WHEREOF, Southaven and TVA have caused this Termination Agreement to be executed by their duly authorized representatives as of the day and year first above written.
 
	
			
	SOUTHAVEN
	 
	TVA:

	Seven States Southaven, LLC
a Delaware limited liability company
	 
	Tennessee Valley Authority

	 
	 
	 

	By:  ________________________________
	 
	By:  ________________________________

	Name:  ______________________________
	 
	Name:  ______________________________

	Title:  _______________________________
	 
	Title:  _______________________________

 

EXHIBIT H

Form of Deed

 

____________________________Space Above Line for Official Use Only__________________________

	
		
	Prepared by[ and return to]:

[_______], Attorney
[Tennessee Valley Authority]
[1101 Market Street, SP 3L]
[Chattanooga, Tennessee 37402-2801]
[Telephone:  (423) 751-6317]
	Co-Prepared by for purposes of complying with Mississippi Law[ and return to]:
Butler, Snow, O’Mara, Stevens & Cannada, PLLC
Attn: Ronald G. Taylor, MS Bar No. 7992
Post Office Box 6010
Ridgeland, Mississippi  39158-6010
Telephone: (601) 948-5711

	Grantor:
Seven States Southaven, LLC
Attn: John I. Cooke
1206 South Broad Street
Chattanooga, Tennessee 37402
Telephone: (423) 756-6511
	Grantee:
United States of America
Tennessee Valley Authority
Attn: James E. Norris
400 West Summit Hill Drive
Knoxville, Tennessee 37902
Telephone:  (865) 632-4464

	Indexing Instructions:

To the Chancery Clerk of DeSoto County, Mississippi:
The real property described herein is situated in the Southwest Quarter of Section 15, Township 1 South, Range 8 West and the Southeast Quarter of Section 16, Township 1 South, Range 8 West, all in DeSoto County, Mississippi.

TVA TRACT NO. XSCBTS-1 S.1X
SPECIAL WARRANTY DEED
THIS INDENTURE, made and entered into as of the 9th day of August, 2013, by and between SEVEN STATES SOUTHAVEN, LLC, a Delaware limited liability company (hereinafter sometimes referred to as “GRANTOR”), and the UNITED STATES OF AMERICA (hereinafter sometimes referred to as “GRANTEE”), acting herein by and through its legal agent, the TENNESSEE VALLEY AUTHORITY (hereinafter sometimes referred to as “TVA”), a corporation created and existing under an Act of Congress known as the Tennessee Valley Authority Act of 1933, as amended.
W I T N E S S E T H

WHEREAS, GRANTOR, by virtue of Special Warranty Deed from TVA dated September 26, 2008, of record in Deed Book 594, page 475, in the office of the Chancery Court Clerk of DeSoto County, Mississippi, and virtue of Special Warranty Deed from TVA dated April 17, 2009, of record in Deed Book 606, page 527, in the office of the Chancery Court Clerk of DeSoto County, Mississippi, acquired an undivided ninety percent (90%) interest (the “Acquired Interest”) in and to Parcels 1 and 2, and certain easement rights over, under, and across Parcel 3, which parcels are more particularly described in Exhibit A, which is attached hereto and made a part hereof (Parcels 1, 2, and 3 collectively referred to herein as the “Property”); and
WHEREAS, GRANTOR and TVA have entered into that certain Asset Purchase Agreement dated August 6, 2013 (the “APA”), pursuant to which TVA has purchased all of the GRANTOR’S right, title, and interest in and to the Acquired Interest in the Property; 
WHEREAS, simultaneous with the execution and delivery of the APA, TVA entered into the Participation Agreement, dated August 6, 2013 (“Participation Agreement”), among TVA; Southaven Combined Cycle Generation LLC, a Delaware limited liability company (“Owner Lessor”); Wilmington Trust, National Association; Southaven Holdco LLC, a Delaware limited liability company; and Wilmington Trust Company; 
WHEREAS, TVA is acquiring the Acquired Interest in the Property under the APA subject to the right of Owner Lessor to lease (simultaneous with the acquisition of the Acquired Interest) from TVA the undivided ninety percent (90%) interest in Parcel 1 as described in Exhibit A conveyed hereunder pursuant to the terms and conditions of the Ground Lease Agreement, dated August 9, 2013 (“Ground Lease”), between TVA and Owner Lessor; and
NOW THEREFORE, for and in consideration of the covenants, promises and obligations set forth in the APA, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, GRANTOR does hereby grant, bargain, sell, transfer, specially warrant and convey to GRANTEE, subject to the provisions of the APA, and any revisions or supplements thereto, the Acquired Interest in the Property, as described in said Exhibit A.
This conveyance and its special warranty is subject to any and all prior reservations and/or exceptions to oil, gas, and other minerals and rights incidental thereto and any and all restrictions, covenants, easements, dedications, rights-of-way, and other matters of record affecting the Property, and Owner Lessor’s right to lease from TVA the undivided ninety percent (90%) interest in Parcel 1 as described in Exhibit A conveyed hereunder pursuant to the terms of the Ground Lease.
GRANTOR shall not be responsible for any ad valorem taxes or special assessments which may be imposed upon the Property. 
TO HAVE AND TO HOLD the Acquired Interest in the Property together with all rights and appurtenances thereto belonging unto GRANTEE, its successors, and assigns forever.
And GRANTOR does hereby covenant that it is seized and possessed of the Property; that said land is free and clear of liens and encumbrances except as set forth herein; and that, subject to the conditions, reservations, restrictions, exceptions, and/or limitations contained herein, it will warrant and defend the title thereto against the lawful demands of all persons claiming by, through, or under the GRANTOR, but not further or otherwise.

IN WITNESS WHEREOF, GRANTOR has caused this instrument to be executed as of the ___ day of _____________________, 2013, by its duly authorized officer.
	
			
	 
	 

	 
	SEVEN STATES SOUTHAVEN, LLC,
a Delaware limited liability company

	 

	 
	 

	 
	By:
	_____________________________

	 
	 
	  Name:

	 
	 
	  Title:

	
				
	STATE OF TENNESSEE
	)
	 
	 

	 
	)
	SS
	 

	COUNTY OF HAMILTON
	)
	 
	 

Personally appeared before me, the undersigned authority in and for the said county and state, on this ________ day of __________________, 2013, within my jurisdiction, the within named ____________________________, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed in the above and foregoing Special Warranty Deed and acknowledged that he/she executed the same in his/her representative capacity, and that by his/her signature on the instrument, and as the act and deed of the person or entity upon behalf of which he/she acted, executed the above and foregoing Special Warranty Deed, after first having been duly authorized so to do.
	
		
	 
	 

	 
	 

	Notary Public
	 

	 
	 

	My Commission Expires:
	 

[Affix official seal, if applicable]

 

EXHIBIT A
SOUTHAVEN COMBUSTION TURBINE SITE

Parcel 1 (Acquisition Tract SCBTS-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.

Parcel 2 (Acquisition Tract SCBTS-2)
A parcel of land lying in the SE1/4 of Section 16 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 S33°33’03”E, 12,943.26 feet to a rebar (found) in the west right of way of Tulane Road, being corner No. SCBTS-9 and the Point of Beginning:
Thence leaving the point of beginning and said right of way N87°55’13”W, 225.69 feet to a nail (60d) (found), being corner No. SCBTS-10;
thence N87°42’13”W, 420.76 feet to a rebar without cap (found), being corner No. SCBTS-11; thence N02°36’46”E, 209.28 feet to a rebar without cap (found), being corner No. SCBTS-12; thence N87°28’38”W, 210.14 feet to an iron pipe (1.5”) (found), being corner No. SCBTS-13; thence S02°13’39”W, 209.42 feet to a pin (found), being corner No. SCBTS-14;
thence S02°43’42”W, 155.47 feet to a rebar with cap (found) in the north right of way of Stateline Road, being corner No. SCBTS-15;
thence with road said right of way N87°43’40”W, 415.16 feet to a rebar (found), being corner No. SCBTS-16;
thence N02°24’39”E, 673.73 feet to an iron pipe (1.5”) (found), being corner No. SCBTS-17; thence S87°35’36”E, 434.83 feet to a rebar (found), being corner No. SCBTS-18;
thence N02°19’08” E, 435.00 feet to a rebar (found) on the accepted Mississippi-Tennessee state line, being corner No. SCBTS-19;
thence with said state line for the following calls:
S87°35’34”E, 311.41 feet to an angle iron (set), being corner No. SCBTS-26;
thence S87°35’28”E, 523.19 feet to an iron pipe (found) in the west right of way of Tulane Road, being Corner No. SCBTS-20;
thence leaving said state line and with said road right of way S02°15’57”W, 206.15 feet to a rebar (found), being corner No. SCBTS-21;
thence leaving said right of way N87°38’49”W, 158.80 feet to a rebar (found), being corner No. SCBTS-22;
thence S02°07’35”W, 209.14 feet to an iron pipe (found), being corner No. SCBTS-23;
thence S87°29’48”E, 158.20 feet to a rebar (found) in the western right of way of Tulane Road, being corner No. SCBTS-24;
thence with said road right of way S02°15’14”W, 534.74 feet to the point of beginning and containing 23.14 acres.

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.
This description was prepared from an ALTA survey dated May 1, 2000 and a survey dated December 18, 2007 by:
Tennessee Valley Authority 
MR 4B-C
Chattanooga, TN 37402-2801

Parcel 3 - Transmission Line Easement (Acquisition Tract SCBTS-4-TL)
An easement for transmission line purposes as described in that certain Transmission Line Easement dated November 21, 2000, between Entergy Mississippi, Inc. and Southaven Power, LLC, recorded December 8, 2000 in Deed Book 384, page 81 over, under and across a parcel of land lying in the SE1/4 of Section 16 Township 1 South Range 8 West in Desoto County, State of Mississippi, being on the Southaven Combustion Turbine Site, 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 S29°12’19”E, 12,075.19 feet to a point in the western line of tract SCBTS-2, being corner SCBTS-33 and the Point of Beginning:
Thence leaving the point of beginning and said western line of tract SCBTS-2 N89°54’39”W,
417.53 feet to a point, being corner No. SCBTS-34;
thence N44°04’03”W, 81.72 feet to a point, being corner No. SCBTS-35;
thence N45°55’57”E, 150.00 feet to a point, being corner No. SCBTS-36;
thence S44°04’03”E, 18.29 to a point, being Corner No. SCBTS-37;
thence S89°54’39”E, 360.18 to a point, being Corner No. SCBTS-38;
thence S02°24’35”W, 150.12 feet to the point of beginning and containing 1.51 acres.

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.
This description was prepared from an ALTA survey dated May 1, 2000 and a survey dated December 18, 2007 by:
Tennessee Valley Authority
MR 4B-C
Chattanooga, TN 37402-2801

	
			
	Prepared by:

	 
	 
	 

	[___________], Attorney

	[Tennessee Valley Authority]

	[1101 Market Street, SP 3L]

	[Chattanooga, Tennessee 37402-2801]

	[Telephone: (423) 751-6317]

TVA TRACT NO. XSCBTS-2 S. 1X
SPECIAL WARRANTY DEED
THIS INDENTURE, made and entered into as of the 9th day of August, 2013, by and between the SEVEN STATES SOUTHAVEN, LLC, a Delaware limited liability company (hereinafter sometimes referred to as “GRANTOR”), and the UNITED STATES OF AMERICA (hereinafter sometimes referred to as “GRANTEE”), acting herein by and through its legal agent, the TENNESSEE VALLEY AUTHORITY (hereinafter sometimes referred to as “TVA”), a corporation created and existing under an Act of Congress known as the Tennessee Valley Authority Act of 1933, as amended.
W I T N E S S E T H
WHEREAS, GRANTOR, by virtue of Special Warranty Deed from TVA dated September 26, 2008, of record as Instrument No. 08130042 in the office of the Register of Shelby County, Tennessee, and virtue of Special Warranty Deed from TVA dated April 17, 2009, of record as Instrument No. 09044949 in the office of the Register of Shelby County, Tennessee, acquired an undivided ninety percent (90%) interest (the “Acquired Interest”) in and to Parcel 1 and the benefits of a Transmission Line Corridor in, on, over, and across the Transmission Line Corridor Parcel, which parcels are more particularly described in Exhibit A, which is attached hereto and made a part hereof (Parcel 1 and the Transmission Line Corridor Parcel collectively referred to herein as the “Property”); and
WHEREAS, GRANTOR and TVA have entered into that certain Asset Purchase Agreement dated August 6, 2013 (the “APA”), pursuant to which TVA has purchased all of the GRANTOR’S right, title, and interest in and to the Acquired Interest in the Property; and
NOW THEREFORE, for and in consideration of the covenants, promises and obligations set forth in the APA, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, GRANTOR does hereby grant, bargain, sell, transfer, and convey to GRANTEE, subject to the provisions of the APA, and any revisions or supplements thereto, the Acquired Interest in the Property, as described in said Exhibit A.
This conveyance and its warranty is subject to any and all prior reservations and/or exceptions to oil, gas, and other minerals and rights incidental thereto and any and all restrictions, covenants, easements, dedications, rights-of-way, and other matters of record affecting the Property.
GRANTOR shall not be responsible for any ad valorem taxes or special assessments that may be imposed upon the Property.

TO HAVE AND TO HOLD the Acquired Interest in the Property together with all rights and appurtenances thereto belonging unto GRANTEE, its successors, and assigns forever.
And GRANTOR does hereby covenant that it is seized and possessed of the Property; that said land is free and clear of liens and encumbrances except as set forth herein; and that, subject to the conditions, reservations, restrictions, exceptions, and/or limitations contained herein, it will warrant and defend the title thereto against the lawful demands of all persons claiming by, through, or under the GRANTOR, but not further or otherwise.

TVA TRACT NO. XSCBTS-2 S. 1X

IN WITNESS WHEREOF, GRANTOR has caused this instrument to be executed as of the ___ day of August, 2013, by its duly authorized officer.
	
			
	 
	SEVEN STATES SOUTHAVEN, LLC,
a Delaware limited liability company

	 
	 

	 
	By:
	 

	 
	 
	Name:

	 
	 
	Title:

	
				
	STATE OF TENNESSEE
	)
	 
	 

	 
	)
	 
	 

	COUNTY OF HAMILTON
	)
	 
	 

On the ____ day of______________, 2013, before me appeared [__________], to me personally known, who, being by me duly sworn, did say that [__] is the [_________], of SEVEN STATES SOUTHAVEN, LLC, the within named GRANTOR, a Delaware limited liability company, and that such person, as the duly authorized officer of GRANTOR, executed the foregoing instrument for the purpose therein contained.
WITNESS my hand and official seal of office in Chattanooga, Tennessee, the day and year aforesaid.
	
		
	 
	 

	Notary Public
	 

	 
	 

	My Commission Expires: ______________________
	 

	
		
	Name and address of Grantor:
Seven States Southaven, LLC
1206 South Broad Street
Chattanooga, Tennessee 37402
Telephone: (423) 756-6511
	Address of Grantee:
United States of America
Tennessee Valley Authority
400 West Summit Hill Drive
Knoxville, Tennessee 37902
Telephone:  (865) 632-3366

Tax Parcel Number: 076-1440-0-00021-0

TVA Tract No. XSCBTS-2 S.1X

AFFIDAVIT OF EXEMPTION FROM TRANSFER TAX
	
				
	STATE OF TENNESSEE
	)
	 
	 

	 
	)
	 
	 

	COUNTY OF SHELBY
	)
	 
	 

The undersigned hereby offers this instrument for recording within the meaning of the statutes of the State of Tennessee, and hereby swears and affirms that the transfer hereunder to the UNITED STATES OF AMERICA is exempt from transfer tax.
	
		
	 
	 

	 
	Affiant

Sworn to and subscribed before me this ______ day of _________________, 2013.
	
					
	 
	 
	 

	 
	 

	Title:
	 
	 

	 
	 

	My Commission Expires:
	 
	 

EXHIBIT A
SOUTHAVEN COMBUSTION TURBINE SITE

Parcel 1 (Acquisition Tract SCBTS-3)
A parcel of land lying in the in the Third Civil District of Shelby County, State of Tennessee, being on the Southaven Combustion Turbine Site and at the intersection of Tulane Road and Windsor 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 S41°31’41”E, 10,982.12 feet to an iron pipe with cap (found) in the west right of way of Tulane Road being corner No. SCBTS-32 and the Point of Beginning:
Thence leaving the point of beginning and with said right of way S02°12’12”W, 1,617.62 feet to a rebar (found), being corner No. SCBTS-25;
thence N88°17’26”W, 27.82 feet to an iron pipe (found), being corner No. SCBTS-20
thence N87°35’28”W, 523.19 feet to an angle iron (set), being Corner No. SCBTS-26;
thence N02°21’10”E, 126.18 feet to an angle iron (set), being Corner No. SCBTS-27;
thence N02°21’15”E, 238.59 feet to an angle iron (set), being Corner No. SCBTS-30;
thence N02°20’30”E, 1,271.29 feet to an iron pipe (2”) (found) in the south line of Windsor Road, being corner No. SCBTS-31;
thence with said south line S85°41’42”E, 547.38 feet to the point of beginning and containing
20.51 acres.

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.
This description was prepared from an ALTA survey dated May 1, 2000 and a survey dated December 18, 2007 by:
Tennessee Valley Authority
MR 4B-C
Chattanooga, TN 37402-2801

TVA TRACT NO. XSCBTS-2 S. 1X

Transmission Line Corridor 
A parcel of land lying in the in the Third Civil District of Shelby County, State of Tennessee, being on the Southaven Combustion Turbine Site and at the intersection of Tulane Road and Windsor 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 S34°33’26”E, 11,764.90 feet to an angle iron (set) being corner No. SCBTS-27 and the Point of Beginning:
Thence leaving the point of beginning N54°36’16”W, 480.01 feet to an angle iron (set), being Corner No. SCBTS-28;
thence N35°24’01”E, 200.01 feet to an angle iron (set), being Corner No. SCBTS-29 
thence S54°36’16”E, 349.90 feet to an angle iron (set), being Corner No. SCBTS-30; 
thence S02°21’15”W, 238.59 feet to the point of beginning and containing 1.91 acres.
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.
This description was prepared from an ALTA survey dated May 1, 2000 and a survey dated December 18, 2007 by:
Tennessee Valley Authority
MR 4B-C
Chattanooga, TN 37402-2801

DISCLOSURE SCHEDULES
to the
ASSET PURCHASE AGREEMENT
by and between
Tennessee Valley Authority,
as Buyer,
and
Seven States Southaven, LLC,
as Seller

Dated as of August 6, 2013

SCHEDULES

	
		
	Item
	Description

	 
	 

	Schedule 2.1(a)
	Facility Tangible Property

	Schedule 2.1(b)
	Real Property

	Schedule 2.1(c)
	Easements

	Schedule 2.1(d)
	Tangible Intellectual Property

	Schedule 2.1(e)
	Assigned Contracts

	Schedule 2.1(f)
	Assigned Permits

	Schedule 2.1(h)
	Emissions Allowances

	Schedule 2.1(i)
	Prepaid Assets and Expenses

	Schedule 2.1(j)
	Facility Books and Records

	Schedule 2.2
	Excluded Assets

	Schedule 4.3
	Seller’s Consents and Approvals

	Schedule 4.4
	Liens

	Schedule 4.6
	Tax Matters

General Terms
		
	1.
	Any terms used in these Disclosure Schedules but not defined herein shall have the same meanings ascribed thereto in the Asset Purchase Agreement (the “Agreement”), dated as of August 6, 2013, by and among Seven States Southaven, LLC (“Seller”), and Tennessee Valley Authority (“Buyer”), of which these Disclosure Schedules are a part.

		
	2.
	Any disclosures contained in these Disclosure Schedules that refer to a document are qualified in their entirety by reference to the text of such document.

		
	3.
	No disclosure of any matter contained in these Disclosure Schedules shall create an implication that such matter, or any matter like it, is required to be disclosed on any Disclosure Schedule, is material, constitutes a Seller Material Adverse Effect or would meet any criterion or legal standard specified in the Agreement.

		
	4.
	The headings contained in these Disclosure Schedules are for reference only and shall not affect in any way the meaning or interpretation of these Disclosure Schedules.

		
	5.
	Each exception and other response to the Agreement set forth in this Disclosure Schedule is identified by reference to, or has been grouped under a heading referring to, a specific individual section or subsection of the Agreement, and, except as otherwise specifically stated or as is reasonably apparent with respect to such exception, relates only to such section or subsection.

		
	6.
	Seller may, from time to time prior to the Closing, notify Buyer of any changes or additions to any of Seller’s Disclosure Schedules to the Agreement by delivering amendments or supplements thereto, if any, as of a reasonably current date prior to the Closing.  Such notification, change, addition, amendment or supplement by Seller shall have no effect for purposes of determining whether Buyer’s conditions to Closing set forth in Section 3.2 of the Agreement have been fulfilled.  If the Closing occurs, all matters disclosed by Seller pursuant to any such notification, change, addition, amendment or supplement made prior to the Closing shall be deemed to be included in the Disclosure Schedules as of the Closing and shall be deemed to have cured any breach or inaccuracy of any representation or warranty in this Agreement (it being understood that the consummation of the Closing will be deemed to constitute a waiver of such breach).

SCHEDULE 2.1(a)
FACILITY TANGIBLE PROPERTY

1.  The Facility, as more fully described in Exhibit A of the Agreement.

SCHEDULE 2.1(b)
REAL PROPERTY

Real Property Located in Mississippi

Parcel 1:  The Facility Site (Acquisition Tract SCBTS-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.

Parcel 2 (Acquisition Tract SCBTS-2)
A parcel of land lying in the SE1/4 of Section 16 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 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 S33°33’03”E, 12,943.26 feet to a rebar (found) in the west right of way of Tulane Road, being corner No. SCBTS-9 and the Point of Beginning:
Thence leaving the point of beginning and said right of way N87°55’13”W, 225.69 feet to a nail (60d) (found), being corner No. SCBTS-10;
thence N87°42’13”W, 420.76 feet to a rebar without cap (found), being corner No. SCBTS-11; thence N02°36’46”E, 209.28 feet to a rebar without cap (found), being corner No. SCBTS-12; thence N87°28’38”W, 210.14 feet to an iron pipe (1.5”) (found), being corner No. SCBTS-13; thence S02°13’39”W, 209.42 feet to a pin (found), being corner No. SCBTS-14;
thence S02°43’42”W, 155.47 feet to a rebar with cap (found) in the north right of way of Stateline Road, being corner No. SCBTS-15;
thence with road said right of way N87°43’40”W, 415.16 feet to a rebar (found), being corner No. SCBTS-16;
thence N02°24’39”E, 673.73 feet to an iron pipe (1.5”) (found), being corner No. SCBTS-17; thence S87°35’36”E, 434.83 feet to a rebar (found), being corner No. SCBTS-18;
thence N02°19’08” E, 435.00 feet to a rebar (found) on the accepted Mississippi-Tennessee state line, being corner No. SCBTS-19;
thence with said state line for the following calls:
S87°35’34”E, 311.41 feet to an angle iron (set), being corner No. SCBTS-26;
thence S87°35`28”E, 523.19 feet to an iron pipe (found) in the west right of way of Tulane Road, being Corner No. SCBTS-20;
thence leaving said state line and with said road right of way S02°15’57”W, 206.15 feet to a rebar (found), being corner No. SCBTS-21;
thence leaving said right of way N87°38’49”W, 158.80 feet to a rebar (found), being corner No. SCBTS-22;
thence S02°07’35”W, 209.14 feet to an iron pipe (found), being corner No. SCBTS-23;
thence S87°29’48”E, 158.20 feet to a rebar (found) in the western right of way of Tulane Road, being corner No. SCBTS-24;
thence with said road right of way S02°15’14”W, 534.74 feet to the point of beginning and containing 23.14 acres.

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.
This description was prepared from an ALTA survey dated May 1, 2000 and a survey dated December 18, 2007 by:
Tennessee Valley Authority 
MR 4B-C
Chattanooga, TN 37402-2801

Parcel 3 - Transmission Line Easement (Acquisition Tract SCBTS-4-TL)
An easement for transmission line purposes as described in that certain Transmission Line Easement dated November 21, 2000, between Entergy Mississippi, Inc. and Southaven Power, LLC, recorded December 8, 2000 in Deed Book 384, page 81 over, under and across a parcel of land lying in the SE1/4 of Section 16 Township 1 South Range 8 West in Desoto County, State of Mississippi, being on the Southaven Combustion Turbine Site, as shown on 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 S29°12’19”E, 12,075.19 feet to a point in the western line of tract SCBTS-2, being corner SCBTS-33 and the Point of Beginning:
Thence leaving the point of beginning and said western line of tract SCBTS-2 N89°54’39”W,
417.53 feet to a point, being corner No. SCBTS-34;
thence N44°04’03”W, 81.72 feet to a point, being corner No. SCBTS-35;
thence N45°55’57”E, 150.00 feet to a point, being corner No. SCBTS-36;
thence S44°04’03”E, 18.29 to a point, being Corner No. SCBTS-37;
thence S89°54’39”E, 360.18 to a point, being Corner No. SCBTS-38;
thence S02°24’35”W, 150.12 feet to the point of beginning and containing 1.51 acres.

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.
This description was prepared from an ALTA survey dated May 1, 2000 and a survey dated December 18, 2007 by:
Tennessee Valley Authority
MR 4B-C
Chattanooga, TN 37402-2801

Real Property Located in Tennessee
Parcel 1 (Acquisition Tract SCBTS-3)
A parcel of land lying in the in the Third Civil District of Shelby County, State of Tennessee, being on the Southaven Combustion Turbine Site and at the intersection of Tulane Road and Windsor Road, as shown on 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 S41°31’41”E, 10,982.12 feet to an iron pipe with cap (found) in the west right of way of Tulane Road being corner No. SCBTS-32 and the Point of Beginning:
Thence leaving the point of beginning and with said right of way S02°12’12”W, 1,617.62 feet to a rebar (found), being corner No. SCBTS-25;
thence N88°17’26”W, 27.82 feet to an iron pipe (found), being corner No. SCBTS-20
thence N87°35’28”W, 523.19 feet to an angle iron (set), being Corner No. SCBTS-26;
thence N02°21’10”E, 126.18 feet to an angle iron (set), being Corner No. SCBTS-27;
thence N02°21’15”E, 238.59 feet to an angle iron (set), being Corner No. SCBTS-30;
thence N02°20’30”E, 1,271.29 feet to an iron pipe (2”) (found) in the south line of Windsor Road, being corner No. SCBTS-31;
thence with said south line S85°41’42”E, 547.38 feet to the point of beginning and containing
20.51 acres.

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.
This description was prepared from an ALTA survey dated May 1, 2000 and a survey dated December 18, 2007 by:
Tennessee Valley Authority
MR 4B-C
Chattanooga, TN 37402-2801

Transmission Line Corridor 
A parcel of land lying in the in the Third Civil District of Shelby County, State of Tennessee, being on the Southaven Combustion Turbine Site and at the intersection of Tulane Road and Windsor Road, as shown on US-TVA Drawing No. 112 MS 421 B 99(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 S34°33’26”E, 11,764.90 feet to an angle iron (set) being corner No. SCBTS-27 and the Point of Beginning:
Thence leaving the point of beginning N54°36’16”W, 480.01 feet to an angle iron (set), being Corner No. SCBTS-28;
thence N35°24’01”E, 200.01 feet to an angle iron (set), being Corner No. SCBTS-29; 
thence S54°36’16”E, 349.90 feet to an angle iron (set), being Corner No. SCBTS-30; 
thence S02°21’15”W, 238.59 feet to the point of beginning and containing 1.91 acres.

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.
This description was prepared from an ALTA survey dated May 1, 2000 and a survey dated December 18, 2007 by:
Tennessee Valley Authority
MR 4B-C
Chattanooga, TN 37402-2801

SCHEDULE 2.1(c)
EASEMENTS

		
	1.
	Transmission Line Easement, dated November 21, 2000, by and between Entergy     Mississippi, Inc. and Southaven Power, LLC

		
	2.
	Transmission Line Easement, dated December 12, 2000, by and between Cogentrix     Southaven Properties, LLC and Southaven Power, LLC

		
	3.
	Transmission Line Easement, dated May 24, 2001, by and between Cogentrix Southaven     Properties, LLC and Southaven Power, LLC

		
	4.
	Transmission Line Corridor Rights, granted pursuant to Interconnection Agreement, dated October 10, 2000, by and between Tennessee Valley Authority and Southaven Power, LLC, for the tract defined by Instrument KS 6360, dated December 4, 2000

SCHEDULE 2.1(d)
TANGIBLE INTELLECTUAL PROPERTY

Any software license agreements identified as Assigned Contracts, including all updates thereto and replacements thereof.

SCHEDULE 2.1(e)
ASSIGNED CONTRACTS

		
	1. 
	Master Power Purchase and Sale Agreement (Tolling Agreement) between Southaven Power, LLC and Tennessee Valley Authority, dated as of August 22, 2006

		
	2. 
	Conversion Services Confirmation of Master Power Purchase and Sale Agreement (Tolling Agreement) between Southaven Power, LLC and Tennessee Valley Authority, dated as of August 22, 2006

		
	3.
	Agreement Extending Conversion Services Confirmation and Master Power Purchase and Sale Agreement (Tolling Agreement) between Southaven Power, LLC and Tennessee Valley Authority, dated as of August 31, 2007

		
	4.
	Amendment No. 2 to Conversion Services Confirmation between Southaven Power, LLC and Tennessee Valley Authority, dated as of September 6, 2007

		
	5.
	Facility Letter Agreement,  by and between Texas Gas Transmission Corporation and     Southaven Power, LLC, dated as of October 23, 2000

		
	6.
	Amendment to Facility Letter Agreement, by and between Texas Gas Transmission     Corporation and Cogentrix Energy, LLC, dated as of January 31, 2001

		
	7.
	License and Indemnity Agreement, by and between Texas Gas Transmission Corporation     and Southaven Power, LLC, dated as of March 27, 2002

		
	8.
	Gas Metering Agreement, between Texas Gas Transmission Corporation and Southaven Power, LLC, dated as of June 1, 2000

		
	9.
	Interconnection Agreement OOPAP-263655, between Tennessee Valley Authority and     Southaven Power, LLC, dated as of October 10, 2000

		
	10.
	Amended and Restated Interconnection and Operating Agreement, by and between     Southaven Power, LLC and Entergy Mississippi, Inc., dated as of October 20, 2000

		
	11.
	Long Term Service Agreement, by and between Southaven Power, LLC and General Electric International, Inc., dated as of October 1, 2001, effective October 21, 2002, as amended by Amendment No. 1, effective as of April 22, 2009, and Amendment No. 2, effective as of November 21, 2009

		
	12.
	Parts Sharing Agreement, by and between Cogentrix Parts Company, Inc. and Various Project Affiliates, dated as of October 1, 2001, as amended by Amendment No. 1, dated as of April 26, 2012

		
	13.
	Amended and Restated Sewer Agreement, between the City of Southaven and Southaven     Power, LLC, dated as of August 23, 2000

Software License Agreements

Software license agreements relating to the following software, and any updates thereto or replacements thereof:

(a)    CeDARs Breeze 75x
(b)    DeltaV 
(c)    GE MarkV with HMI

SCHEDULE 2.1(f)
ASSIGNED PERMITS

		
	1.
	Southaven NPDES Water Control Permit, DeSoto County, Permit Number MSP091679,     dated as of December 8, 2005

		
	2.
	Permit to Divert or Withdraw for Beneficial Use the Public Waters MS-GW-15453, dated     as of October 26, 1999

		
	3.
	Well Permit To Divert or Withdraw for Beneficial Use the Public Waters MS-GW-    15555, dated as of October 10, 2000

		
	4.
	Well Permit to Divert or Withdraw for Beneficial Use the Public Waters MS-GW-15556,     dated as of October 10, 2000

		
	5.
	Well Permit To Divert or Withdraw for Beneficial Use the Public Waters MS-GW-    15557, dated as of  October 10, 2000

		
	6.
	Well Permit To Divert or Withdraw for Beneficial Use the Public Waters MS-GW-    15558, dated as of  October 10, 2000

		
	7.
	Well Permit To Divert or Withdraw for Beneficial Use the Public Waters MS-GW-    15559, dated as of  October 10, 2000

		
	8.
	Well Permit To Divert or Withdraw for Beneficial Use the Public Waters MS-GW-    15560, dated as of  October 10, 2000

		
	9.
	Storm Water Baseline General Permit For Industrial Activities, Permit Number MSR001420, dated as of October 8, 2005

		
	10.
	Department of the Army, Wetlands Permit, Coverage Number 000190060, dated as of     November 11, 2000

		
	11.
	Amended and Restated Sewer Agreement, between the City of Southaven and Southaven     Power, LLC, dated as of August 23, 2000

		
	12.
	Municipal Development Agreement, by and between the City of Southaven, Mississippi and Cogentrix Energy, LLC, dated as of June 7, 1999

		
	13.
	Southaven Power, LLC, State of Mississippi Air Pollution Control Title V Permit No.     0680-00095 issued May 24, 2005

		
	14.
	Southaven Power, LLC, Southaven Power Project, State Line and Tulane Road Southaven, Mississippi, State of Mississippi Air Pollution Control Permit No. 0680-00095 issued April 25, 2000

		
	15.
	FAA Determination of No Hazard to Air Navigation No. 00-ASO-0941-OE, dated as of March 16, 2000

		
	16.
	Southaven Power, LLC, DeSoto County, Acid Rain Certificate of Representation, dated as of October 11, 2007

		
	17.
	FCC Radio License, WQFJ225 held by Southaven Power, LLC

SCHEDULE 2.1(h)
EMISSIONS ALLOWANCES

All Emissions Allowances held in the name of Seven States Southaven, LLC (Facility ID 55269) as of the Closing Date.

SCHEDULE 2.1(i)
PREPAID ASSETS AND EXPENSES

1.    None.

SCHEDULE 2.1(j)
FACILITY BOOKS AND RECORDS

1.    None

SCHEDULE 2.2
EXCLUDED ASSETS

		
	1.
	All accumulated interest earned on the Accumulated Amortization Costs in the Escrow Account shall remain with Seller.

		
	2.
	Seller’s right to indemnification by Buyer pursuant to Section 2 of the Termination of Joint Ownership Agreement, dated August 9, 2013.

		
	3.
	Seller’s rights (i) to any payments from Buyer under Section 3.3(a) of the Lease Agreement, and (ii) to indemnification by Buyer, in each case pursuant to Section 2 of the Termination of Lease Agreement, dated August 9, 2013. 

SCHEDULE 4.3
CONSENTS AND APPROVALS

		
	1.
	Consent Agreement to Assignment of Parts Sharing Agreement, dated June 20, 2013, by and among CGX Parts Company, Inc. (f/k/a Cogentrix Parts Company, Inc.); Seven States Southaven, LLC; Tennessee Valley Authority; and Green Country Energy, LLC. 

		
	2.
	Consent to Assignment of Contract, dated June 3, 2013, between Tennessee Valley Authority and General Electric International, Inc. (countersigned on June 11, 2013) relating to the Long Term Service Agreement, dated October 21, 2002, as amended as of April 22, 2009 and November 21, 2009, between General Electric International, Inc. Seven States Southaven, LLC and Tennessee Valley Authority.

		
	3.
	Consent to Assignment of Contracts, dated May 17, 2013, between Tennessee Valley Authority and Texas Gas Transmission, LLC, f/k/a Texas Gas Transmission Corporation (“Texas Gas”) (countersigned on June 4, 2013) relating to (i) the Facility Letter Agreement between Texas Gas and Southaven Power, LLC (“Southaven”), dated October 23, 2000, and the Amendment to Facility Letter Agreement between Texas Gas and Cogentrix Energy, LLC, dated January 31, 2001, (ii) License and Indemnity Agreement between Texas Gas and Southaven, dated March 27, 2002, and (iii) the Gas Metering Agreement between Texas Gas and Southaven, dated June 1, 2000.  

		
	4.
	Notification of and Consent to Assignment of Contract, dated July 31, 2013, by Seven States Southaven, LLC, Tennessee Valley Authority, and Entergy Services, Inc. (countersigned on August 5, 2013) relating to the Amended and Restated Interconnection and Operating Agreement, dated October 20, 2000, between Southaven Power, LLC and Entergy Mississippi, Inc. - TVA Contract No. 00072832.

SCHEDULE 4.4
LIENS

1.     None.

SCHEDULE 4.6
TAX MATTERS

		
	1.
	None.Exhibit 10.34

EXHIBIT 10.34

This Facility Lease-Purchase 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 Facility Lease-Purchase Agreement were made to, and solely for the benefit of, the other parties to this Facility Lease-Purchase 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.
Owner Lessor: Southaven Combined Cycle Generation LLC, Wilmington Trust, National Association, 1100 North Market Street, Wilmington, DE, 19890, telephone (302) 636-6191.
Facility Lessee: Tennessee Valley Authority, 400 West Summit Hill Drive, Knoxville, TN 37902, telephone (865) 632-3366.
Indexing instructions: SW 1⁄4 of Section 15, Township 1 South, Range 8 West, DeSoto County, Mississippi

Facility Lease-Purchase Agreement
Dated as of August 9, 2013
between
Southaven Combined Cycle Generation LLC,
as Owner Lessor
and
Tennessee Valley Authority,
as Facility Lessee
____________________________________________________________________________
Southaven Combined Cycle Facility
located in the City of Southaven, Mississippi

CERTAIN OF THE RIGHT, TITLE AND INTEREST OF THE OWNER LESSOR IN AND TO THIS FACILITY LEASE AND THE RENT DUE AND TO BECOME DUE HEREUNDER HAVE BEEN ASSIGNED AS COLLATERAL SECURITY TO, AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, WILMINGTON TRUST COMPANY, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS LEASE INDENTURE TRUSTEE UNDER A LEASE INDENTURE OF TRUST, DEED OF TRUST AND SECURITY AGREEMENT, DATED AS OF AUGUST 9, 2013, BETWEEN SAID LEASE INDENTURE TRUSTEE, AS SECURED PARTY, AND THE OWNER LESSOR, AS DEBTOR.  SEE SECTION 22 HEREOF FOR INFORMATION CONCERNING THE RIGHTS OF THE ORIGINAL HOLDER AND THE HOLDERS OF THE VARIOUS COUNTERPARTS HEREOF.

TABLE OF CONTENTS

	
				
	 
	 
	Page
	

	 
	 
	 

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

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

	Section 2.1.
	Sublease of the Undivided Interest............................................................................
	2
	

	Section 2.2.
	Title; Modifications; Replacements...........................................................................
	2
	

	SECTION 3.
	FACILITY LEASE TERM AND RENT
	2
	

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

	Section 3.2.
	Rent............................................................................................................................
	2
	

	Section 3.3.
	Supplemental Lease Rent...........................................................................................
	3
	

	Section 3.4.
	Adjustment of Lease Schedules.................................................................................
	3
	

	Section 3.5.
	Manner of Payments..................................................................................................
	5
	

	SECTION 4.
	DISCLAIMER OF WARRANTIES; RIGHT OF QUIET ENJOYMENT...............................
	5
	

	Section 4.1.
	Disclaimer of Warranties...........................................................................................
	5
	

	Section 4.2.
	Quiet Enjoyment........................................................................................................
	7
	

	SECTION 5.
	RETURN OF UNDIVIDED INTEREST.................................................................................
	7
	

	Section 5.1.
	Return.........................................................................................................................
	7
	

	Section 5.2.
	Condition Upon Delivery of Possession to Owner Lessor.........................................
	8
	

	Section 5.3.
	Environmental Assessment........................................................................................
	9
	

	Section 5.4.
	Deferred Maintenance on the Facility........................................................................
	9
	

	SECTION 6.
	LIENS.......................................................................................................................................
	9
	

	SECTION 7.
	MAINTENANCE; REPLACEMENTS OF COMPONENTS.................................................
	9
	

	Section 7.1.
	Maintenance...............................................................................................................
	9
	

	Section 7.2.
	Replacement of Components.....................................................................................
	10
	

	SECTION 8.
	MODIFICATIONS...................................................................................................................
	10
	

	Section 8.1.
	Required Modifications.............................................................................................
	10
	

	Section 8.2.
	Optional Modifications..............................................................................................
	11
	

	Section 8.3.
	Title to Modifications.................................................................................................
	11
	

	SECTION 9.
	NET LEASE.............................................................................................................................
	11
	

	SECTION 10.
	EVENTS OF LOSS..................................................................................................................
	12
	

	Section 10.1.
	Occurrence of Events of Loss....................................................................................
	13
	

TABLE OF CONTENTS
(continued)
	
				
	 
	 
	Page
	

	 
	 
	 

	Section 10.2.
	Condemnation Payments...........................................................................................
	27
	

	Section 10.3.
	Rebuild or Replace.....................................................................................................
	28
	

	Section 10.4.
	Application of Payments Not Relating to an Event of Loss......................................
	28
	

	SECTION 11.
	INSURANCE...........................................................................................................................
	29
	

	Section 11.1.
	Insurance by Owner Lessor........................................................................................
	29
	

	Section 11.2.
	Insurance by the Facility Lessee................................................................................
	29
	

	SECTION 12.
	INSPECTION...........................................................................................................................
	30
	

	SECTION 13.
	REGULATORY EVENT OF LOSS.........................................................................................
	30
	

	Section 13.1.
	Occurrence of a Regulatory Event of Loss................................................................
	31
	

	Section 13.2.
	Procedure for Termination With Respect to a Regulatory Event of Loss..................
	31
	

	SECTION 14.
	[RESERVED]...........................................................................................................................
	31
	

	SECTION 15.
	EARLY BUY OUT...................................................................................................................
	31
	

	Section 15.1.
	Election of Early Buy Out..........................................................................................
	31
	

	Section 15.2.
	Procedure for Exercise of an Early Buy Out.............................................................
	31
	

	Section 15.3.
	Replacement and Exchange of the Lessor Notes.......................................................
	31
	

	SECTION 16.
	TRANSFER UPON THE EXPIRATION DATE.....................................................................
	31
	

	SECTION 17.
	EVENTS OF DEFAULT..........................................................................................................
	32
	

	SECTION 18.
	REMEDIES..............................................................................................................................
	32
	

	Section 18.1.
	Remedies for Lease Event of Default........................................................................
	32
	

	Section 18.2.
	Additional Remedies for Specified Lease Events of Default....................................
	32
	

	Section 18.3.
	Application of Funds Held as Security; Liability for Basic Lease Rent, Costs and Expenses...................................................................................................................
	32
	

	Section 18.4
	Payment of FMV Net Termination Value or Sale Net Termination Value.................
	32
	

	Section 18.5.
	Cumulative Remedies................................................................................................
	33
	

	Section 18.6.
	No Delay or Omission to Be Construed as Waiver....................................................
	33
	

	SECTION 19.
	SECURITY INTEREST AND INVESTMENT OF SECURITY FUNDS..............................
	27
	

	SECTION 20.
	FACILITY LESSEE'S RIGHT TO SUBLEASE; AGREEMENT...........................................
	27
	

	Section 20.1.
	Assignment and Sublease..........................................................................................
	27
	

TABLE OF CONTENTS
(continued)

	
				
	 
	 
	Page
	

	 
	 
	 

	Section 20.2.
	Right to Sublease.......................................................................................................
	27
	

	SECTION 21.
	OWNER LESSOR'S RIGHT TO PERFORM.........................................................................
	28
	

	SECTION 22.
	SECURITY FOR OWNER LESSOR'S OBLIGATION TO THE LEASE INDENTURE TRUSTEE................................................................................................................................
	28
	

	SECTION 23.
	MISCELLANEOUS.................................................................................................................
	29
	

	Section 23.1.
	Amendments and Waivers.........................................................................................
	29
	

	Section 23.2.
	Notices.......................................................................................................................
	29
	

	Section 23.3.
	Survival......................................................................................................................
	30
	

	Section 23.4.
	Successors and Assigns..............................................................................................
	30
	

	Section 23.5.
	Intended Tax Treatment.............................................................................................
	31
	

	Section 23.6.
	Business Day..............................................................................................................
	31
	

	Section 23.7.
	Governing Law...........................................................................................................
	31
	

	Section 23.8.
	Severability................................................................................................................
	31
	

	Section 23.9.
	Counterparts...............................................................................................................
	31
	

	Section 23.10.
	Headings and Table of Contents................................................................................
	31
	

	Section 23.11.
	Further Assurances.....................................................................................................
	31
	

	Section 23.12.
	Effectiveness..............................................................................................................
	31
	

	Section 23.13.
	Measuring Life...........................................................................................................
	32
	

	Section 23.14.
	Owner Lessor Covenant.............................................................................................
	32
	

	Section 23.15.
	Limitation on Liability...............................................................................................
	32
	

	Section 23.16.
	Separate Tax Parcels..................................................................................................
	32
	

	Section 23.17.
	Waiver of Abatement.................................................................................................
	32
	

	Section 23.18.
	Co-tenancy.................................................................................................................
	32
	

	Section 23.19.
	Waiver of Partition.....................................................................................................
	33
	

	Section 23.20.
	Nonmerger..................................................................................................................
	33
	

	APPENDICES:
	 
	 

	Appendix A    Definitions
	 

	SCHEDULES:
	 
	 

	Schedule 1      Basic Lease Rent
	 

	Schedule 2      Termination Values
	 

TABLE OF CONTENTS
(continued)

	
			
	 
	 
	Page

	 
	 
	 

	EXHIBITS:
	 
	 

	Exhibit A     Description of the Facility
	 

	Exhibit B     Description of the Facility Site
	 

FACILITY LEASE-PURCHASE AGREEMENT
This FACILITY LEASE-PURCHASE AGREEMENT, dated as of August 9, 2013 (this “Facility Lease”), between SOUTHAVEN COMBINED CYCLE GENERATION LLC, a Delaware limited liability company (the “Owner Lessor”), and TENNESSEE VALLEY AUTHORITY, a wholly owned corporate agency and instrumentality of the United States (the “Facility Lessee” or “TVA”).
WITNESSETH:
WHEREAS, TVA is the owner of the Southaven Combined Cycle Facility located in the City of Southaven, Mississippi, a combined cycle generating facility with a summer net generation capacity of approximately 774 megawatts (as more particularly described on Exhibit A to this Facility Lease, the “Facility”), which is located on the Facility Site (as more particularly described on Exhibit B to this Facility Lease);
WHEREAS, the Facility Lessee holds title to the Facility, and, pursuant to the Head Lease, the Owner Lessor has leased the Undivided Interest from the Facility Lessee as of the Closing Date for the Head Lease Term;
WHEREAS, the Facility Lessee and the Owner Lessor desire to enter into this Facility Lease, which provides, among other terms, that the Facility Lease Term will commence upon the Closing Date;
WHEREAS, pursuant to and subject to the terms and conditions of this Facility Lease, the Owner Lessor will sublease the Undivided Interest to the Facility Lessee for the Facility Lease Term; 
WHEREAS, pursuant to the Ground Lease, the Owner Lessor is leasing from the Ground Lessor the Ground Interest for the Ground Lease Term; and
WHEREAS, pursuant to the Ground Sublease, the Owner Lessor will sublease the Ground Interest to the Facility Lessee, as Ground Sublessee, for the term provided therein.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1.    DEFINITIONS

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

SECTION 2.    SUBLEASE OF THE UNDIVIDED INTEREST

Section 2.1.    Sublease of the Undivided Interest.  The Owner Lessor hereby subleases the Undivided Interest to the Facility Lessee for the Facility Lease Term, and the Facility Lessee hereby subleases the Undivided Interest from the Owner Lessor for the Facility Lease Term, subject in each case to the terms set forth herein.  

Section 2.2    Title; Modifications; Replacements.  The Facility Lessee and the Owner Lessor understand and agree that (a) 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 the Head Lease, (b) this Facility Lease is a sublease and is subject to the Head Lease and the interest of the Head Lessor under the Head Lease, (c) the Head Lessor is retaining a 10% undivided interest in the Facility and all rights in respect thereof, (d) 100% of the legal title to the Facility is vested in the Head Lessor, (e) each of the Owner Lessor (and any permitted successor, assignee or lessee of its 90% undivided interest) and the Facility Lessee (and any successor, assignee or lessee of its 10% undivided interest) shall have a right to nonexclusive possession of the Facility and collectively the Owner Lessor, the Facility 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, and (f) this Facility Lease is intended to be a lease of personal property under Mississippi law.  The Facility Lessee and the Owner Lessor further understand and agree that the Owner Lessor’s Interest shall also include a leasehold interest in the Owner Lessor’s Percentage Interest in (A) all Modifications which are incorporated in the Facility and which pursuant to Section 8.3 hereof become subject to this Facility Lease, and (B) all Replacement Components which become part of the Facility pursuant to Section 7.2 hereof, and that any such Modifications and Replacement Components shall, immediately upon such incorporation or replacement, become subject to this Facility Lease and, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, the Lien of the Lease Indenture.

SECTION 3.    FACILITY LEASE TERM AND RENT

Section 3.1.    Facility Lease Term.  The term of this Facility Lease (the “Facility Lease Term”) shall commence on the Closing Date and shall terminate at 11:59 p.m., New York City time, on the Expiration Date, subject to earlier termination (a) in whole pursuant to Sections 15 or 18 hereof, or (b) in part with respect to a Relevant Portion of the Undivided Interest pursuant to Section 15 hereof; provided, however, that if a Significant Lease Default shall have occurred prior to the then scheduled expiration of the Facility Lease Term and is continuing on such date, the Facility Lease Term shall be extended until such time as either (i) such Significant Lease Default has been cured and all relevant amounts due and payable by TVA hereunder and under the other Transaction Documents have been paid, or (ii) the Facility Lessee has delivered possession of the Undivided Interest to the Owner Lessor in accordance with the terms hereof, including as a result of the exercise of the dispossessory remedies set forth in Section 18.2 hereof.

Section 3.2.    Rent.  The Facility Lessee hereby agrees to pay to the Owner Lessor basic lease rent (“Basic Lease Rent”) for the lease of the Undivided Interest during the Facility Lease Term in installments payable on each Rent Payment Date in the amount set forth opposite such Rent Payment Date under the 

columns entitled “Basic Lease Rent (Debt Portion)” and “Basic Lease Rent (Equity Portion)” on Schedule 1 hereto, subject to adjustment in accordance with Section 3.4 hereof.  In the event this Facility Lease shall have been terminated in part pursuant to Section 15 with respect to a Relevant Portion of the Undivided Interest, Basic Lease Rent payable on any Rent Payment Date thereafter shall be determined by multiplying the amount calculated pursuant to the immediately preceding sentence by a fraction, the numerator of which is the number of Units that continue to be subject to this Facility Lease and the Head Lease after giving effect to such termination and the denominator of which is the number of Units subject to this Facility Lease immediately prior to such partial termination, and Basic Lease Rent and Termination Value shall be adjusted downward by such amount in accordance with Section 3.4.  All Basic Lease Rent to be paid pursuant to this Section 3.2 shall be payable in the manner set forth in Section 3.5.

Section 3.3.    Supplemental Lease Rent.  The Facility Lessee also agrees to pay to the Owner Lessor, or to any other Person entitled thereto as expressly provided herein or in any other Transaction Document, as appropriate, any and all Supplemental Lease Rent, promptly as the same shall become due and owing, or where no due date is specified, promptly after demand by the Person entitled thereto, and on an After-Tax Basis to the extent such Supplemental Lease Rent is paid in order to pay, or reimburse the Owner Lessor or the Lease Indenture Trustee for, costs or expenses of the Owner Lessor or the Lease Indenture Trustee under any Transaction Document and in the event of any failure on the part of the Facility Lessee to pay any Supplemental Lease Rent, the Owner Lessor shall have all rights, powers and remedies provided for herein.  The Facility Lessee will also pay as Supplemental Lease Rent, to the extent permitted by Applicable Law, an amount equal to interest at the Overdue Rate on any part of any payment of Basic Lease Rent not paid when due for any period for which the same shall be overdue and on any Supplemental Lease Rent not paid when due (whether on demand or otherwise) for the period from such due date until the same shall be paid.  All Supplemental Lease Rent to be paid pursuant to this Section 3.3 shall be payable in the manner set forth in Section 3.5.

Section 3.4.    Adjustment of Lease Schedules.  

(a)    The Facility Lessee and the Owner Lessor agree that Basic Lease Rent shall be adjusted after the Closing Date, either upwards or downwards, to reflect (i) a reduction in Basic Lease Rent in connection with a partial termination of the Facility Lease pursuant to Section 15 calculated in accordance with the second sentence of Section 3.2, (ii) a reduction in Basic Lease Rent in connection with the prepayment of one or more Southaven Holdco Notes in connection with a Regulatory Event of Loss calculated in accordance with Section 13.2(c), (iii) either a reduction or an increase in Basic Lease Rent to reflect the principal amount, amortization and interest rate on any Additional Lessor Notes issued pursuant to Section 2.12 of the Lease Indenture in connection with (A) a refinancing of the Lessor Notes pursuant to Section 11.1 of the Participation Agreement or (B) a Supplemental Financing pursuant to Section 11.2 of the Participation Agreement, and (iv) a reduction in Basic Lease Rent (Equity Portion) in connection with a termination of the Seven States Profits Interest, calculated pursuant to Section 11.4 of the Participation Agreement.  Any adjustments pursuant to this Section 3.4 shall be calculated in a manner to ensure that Basic Lease Rent payable hereunder is in an amount sufficient to (1) enable the Owner Lessor to pay the principal of and interest on the Lessor Notes (after taking into account such Additional Lessor Notes issued pursuant 

to Section 11.2 of the Participation Agreement and refinancing of Lessor Notes in accordance with Section 11.1 of the Participation Agreement, as applicable) due and payable on each scheduled payment date in respect of such Lessor Note, and (2) preserve the return on and of the Equity Investment and, in the case of a Supplemental Financing, any Additional Equity Investment made pursuant to Section 11.2 of the Participation Agreement, as contemplated at the time the Equity Investment or Additional Equity Investment, if any, was made through the end of the Facility Lease Term calculated in a manner consistent with the initial calculation of the return on and of the Equity Investment of the Owner Lessor and the Equity Investor, including as to the U.S. federal, state and local income tax consequences of the return on and of such investment and of the receipt of Basic Lease Rent and Supplemental Lease Rent by the Owner Lessor for the payment of amounts due and payable by the Owner Lessor under or with respect to the Lessor Notes or the Lease Indenture; provided that, in connection with any adjustments of Basic Lease Rent (Equity Portion) made pursuant to Section 3.4(a)(iv), or any other adjustment of Basic Lease Rent thereafter, the amount sufficient to preserve the return on and of the Equity Investment under clause (2) above shall be the amount necessary to make principal and interest payments on the Southaven Holdco Notes.  The adjustments contemplated by this Section 3.4 will result in corresponding adjustments to the Termination Values.  Any adjustment pursuant to this Section 3.4(a) shall be made subject to and in compliance with Section 3.4(b) hereof.

(b)    Anything herein or in any other Transaction Document to the contrary notwithstanding, Basic Lease Rent payable on any Rent Payment Date, whether or not adjusted in accordance with this Section 3.4, shall, in the aggregate, be in an amount at least sufficient to pay in full the scheduled principal of and interest payments on the Lessor Notes on such Rent Payment Date.  Anything herein or in any other Transaction Document to the contrary notwithstanding, Termination Values on any date under this Facility Lease, whether or not adjusted in accordance with this Section 3.4, shall, together with Basic Lease Rent due and owing on such date, be in an amount at least sufficient to pay in full the principal of, and accrued interest on, the Lessor Notes payable on such date.

(c)    Any adjustment pursuant to this Section 3.4 shall initially be computed by the Facility Lessee, subject to the verification procedure described in this Section 3.4(c).  Once computed, the results of such computation shall promptly be delivered by the Facility Lessee to the Owner Lessor.  Within 20 days after the receipt of the results of any such adjustment, the Owner Lessor may request that a nationally recognized firm of independent public accountants (which firm shall not be the primary accountants for the Facility Lessee, the Owner Lessor, the Equity Investor or the Lease Indenture Trustee) jointly selected by the Owner Lessor and the Facility Lessee (the “Verifier”) verify, after consultation with the Owner Lessor and the Facility Lessee, the accuracy of such adjustment in accordance with this Section 3.4.  The Owner Lessor and the Facility Lessee hereby agree, subject to the execution by the Verifier of an appropriate confidentiality agreement, to provide the Verifier with all information and materials (other than income tax returns) as shall be necessary in connection therewith.  If the Verifier confirms that such adjustment is in accordance with this Section 3.4, it shall so certify to the Facility Lessee and the Owner Lessor and such certification shall be final, binding and conclusive on the Facility Lessee, the Owner Lessor and the Equity Investor.  If the Verifier concludes that such adjustment is not in accordance with this Section 3.4, and the adjustments to Basic Lease Rent or Termination Value calculated by the Verifier are different from those 

calculated by the Facility Lessee, then it shall so certify to the Facility Lessee and the Owner Lessor and the Verifier’s calculation shall be final, binding and conclusive on the Facility Lessee, the Owner Lessor and the Equity Investor.  If the Owner Lessor does not request verification of any adjustment within the period specified above, the computation provided by the Facility Lessee shall be final, binding and conclusive on the Facility Lessee, the Owner Lessor and the Equity Investor.  The final determination of any adjustment hereunder shall be set forth in an amendment to this Facility Lease, executed and delivered by the Owner Lessor and the Facility Lessee; provided, however, that any omission to execute and deliver such amendment shall not affect the validity and effectiveness of any such adjustment.  The reasonable fees, costs and expenses of the Verifier in verifying an adjustment pursuant to this Section 3.4 shall be paid by the Facility Lessee.  Notwithstanding anything herein to the contrary, the sole responsibility of the Verifier shall be to verify the calculations hereunder and matters of interpretation of this Facility Lease or any other Transaction Document shall not be within the scope of the Verifier’s responsibilities.

Section 3.5.    Manner of Payments.  All Rent (whether Basic Lease Rent or Supplemental Lease Rent) shall be paid by the Facility Lessee in lawful currency of the United States of America in immediately available funds to the recipient not later than 12:00 p.m. (New York City time) on the date due.  All Rent payable to the Owner Lessor (other than Excepted Payments) shall be paid by the Facility Lessee to the Owner Lessor by payment to the Owner Lessor’s Account, or to such other place as the Owner Lessor shall notify the Facility Lessee in writing; provided, however, that so long as the Lien of the Lease Indenture has not been discharged, the Owner Lessor hereby irrevocably directs (it being agreed and understood that such direction shall be deemed to have been revoked after the Lien of the Lease Indenture shall have been fully discharged in accordance with its terms), and the Facility Lessee agrees, that all payments of Rent (other than Excepted Payments) payable to the Owner Lessor shall be paid by wire transfer directly to the Lease Indenture Trustee’s Account or to such other place as the Lease Indenture Trustee shall notify the Facility Lessee in writing pursuant to the Lease Indenture.  Payments constituting Excepted Payments shall be made to the Person entitled thereto at the address for such Person set forth in the Participation Agreement, or to such other place as such Person shall notify the Facility Lessee in writing.

SECTION 4.    DISCLAIMER OF WARRANTIES; RIGHT OF QUIET ENJOYMENT

Section 4.1.    Disclaimer of Warranties.

(a)    Without waiving any claim the Facility Lessee may have against any manufacturer, vendor or contractor, THE FACILITY LESSEE ACKNOWLEDGES AND AGREES SOLELY FOR THE BENEFIT OF THE OWNER LESSOR, THE LESSOR MANAGER, THE EQUITY INVESTOR AND THE LEASE INDENTURE TRUSTEE THAT (i) THE FACILITY AND EACH COMPONENT THEREOF IS OF A SIZE, DESIGN, CAPACITY AND MANUFACTURE ACCEPTABLE TO THE FACILITY LESSEE, (ii) THE FACILITY LESSEE IS SATISFIED THAT THE FACILITY AND EACH COMPONENT THEREOF IS SUITABLE FOR THEIR RESPECTIVE PURPOSES, (iii) NONE OF THE OWNER LESSOR, THE LESSOR MANAGER, THE EQUITY INVESTOR OR THE LEASE INDENTURE TRUSTEE IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND, (iv) THE UNDIVIDED INTEREST IS LEASED HEREUNDER TO THE EXTENT PROVIDED HEREBY FOR THE FACILITY LEASE TERM SPECIFIED HEREIN SUBJECT TO ALL APPLICABLE LAWS NOW 

IN EFFECT OR HEREAFTER ADOPTED, INCLUDING (A) ZONING REGULATIONS, (B) ENVIRONMENTAL LAWS AND (C) BUILDING RESTRICTIONS, AND IN THE STATE AND CONDITION OF EVERY PART THEREOF WHEN THE SAME FIRST BECAME SUBJECT TO THIS FACILITY LEASE, WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND BY THE OWNER LESSOR, THE LESSOR MANAGER, THE EQUITY INVESTOR OR THE LEASE INDENTURE TRUSTEE AND (v) THE OWNER LESSOR LEASES FOR THE FACILITY LEASE TERM SPECIFIED HEREIN AND THE FACILITY LESSEE TAKES THE UNDIVIDED INTEREST UNDER THIS FACILITY LEASE “AS-IS”, “WHERE-IS” AND “WITH ALL FAULTS”, AND THE FACILITY LESSEE ACKNOWLEDGES THAT NONE OF THE OWNER LESSOR, THE LESSOR MANAGER, THE EQUITY INVESTOR OR THE LEASE INDENTURE TRUSTEE MAKES NOR SHALL BE DEEMED TO HAVE MADE, AND EACH EXPRESSLY DISCLAIMS, ANY AND ALL RIGHTS, CLAIMS, WARRANTIES OR REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN, OPERATION, MERCHANTABILITY OF THE UNDIVIDED INTEREST OR AS TO THE TITLE TO THE UNDIVIDED INTEREST, THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE FACILITY OR CONFORMITY THEREOF TO SPECIFICATIONS, FREEDOM FROM PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT, THE ABSENCE OF ANY LATENT OR OTHER DEFECT, WHETHER OR NOT DISCOVERABLE, OR AS TO THE ABSENCE OF ANY OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT THERETO, except that the Owner Lessor represents and warrants that on the Closing Date, the Undivided Interest will be free of Owner Lessor’s Liens.  It is agreed that all such risks, as between the Owner Lessor, the Lessor Manager, the Equity Investor and the Lease Indenture Trustee on the one hand and the Facility Lessee on the other hand are to be borne by the Facility Lessee with respect to acts, occurrences or omissions prior to or during the Facility Lease Term.  None of the Owner Lessor, the Lessor Manager, the Equity Investor or the Lease Indenture Trustee shall have any responsibility or liability to the Facility Lessee or any other Person with respect to any of the following: (1) any liability, loss or damage caused or alleged to be caused directly or indirectly by the Facility or any Component or by any inadequacy thereof or deficiency or defect therein or by any other circumstances in connection therewith; (2) the use, operation or performance of the Facility, any Unit or any Component thereof or any risks relating thereto; or (3) the construction, delivery, operation, servicing, maintenance, repair, improvement, replacement or decommissioning of the Facility, any Unit or any Component thereof.  The provisions of this Section 4.1(a) have been negotiated, and, except to the extent otherwise expressly stated, the foregoing provisions are intended to be a complete exclusion and negation of any representations or warranties of the Owner Lessor, the Lessor Manager, the Equity Investor and the Lease Indenture Trustee, express or implied, with respect to the Undivided Interest, the Facility, any Unit or any Components thereof that may arise pursuant to any Applicable Law now or hereafter in effect, or otherwise.

(b)    From and after the Effective Date, the Owner Lessor hereby appoints irrevocably and constitutes the Facility Lessee its agent and attorney-in-fact for the duration of the Facility Lease Term, coupled with an interest, to assert and enforce, from time to time so long as the Owner Lessor does not have the right to exercise remedies pursuant to Section 18.2, in the name and for the account of the Owner Lessor and the Facility Lessee, as their interests may appear, but in all cases at the sole cost and expense of the 

Facility Lessee, whatever claims and rights the Owner Lessor may have in respect of the Undivided Interest, the Facility, any Unit or any Component thereof, against any manufacturer, vendor or contractor, or under any express or implied warranties relating to the Undivided Interest, the Facility, any Unit or any Component thereof; provided, however, that, the Owner Lessor may revoke such appointment, by written notice to the Facility Lessee, if (i) a Lease Event of Default shall have occurred and be continuing, (ii) any manufacturer, vendor or contractor is in default or otherwise not in compliance with its obligations or warranties relating to the Facility, the Unit or any Component thereof and (iii) the Facility Lessee has failed to diligently pursue the enforcement of rights under the respective warranties against such manufacturer, vendor or contractor, and such failure could reasonably be expected to result in a material adverse effect on the operation and maintenance of the Facility or the Facility Site.

Section 4.2.    Quiet Enjoyment.  The Owner Lessor expressly agrees that, notwithstanding any provision of any other Transaction Document, but without limiting the rights and remedies which may be available to the Owner Lessor (and the Lease Indenture Trustee as its assignee) under and in accordance with Section 18, neither it, the Lessor Manager, the Equity Investor, the Equity Manager nor any other party acting by, through or under the Owner Lessor, the Lessor Manager, the Equity Investor or the Equity Manager shall interfere with or interrupt the quiet enjoyment of the use, operation and possession by the Facility Lessee of the Undivided Interest prior to the expiration or early termination of this Facility Lease in accordance with the terms hereof.

SECTION 5.    RETURN OF UNDIVIDED INTEREST

Section 5.1.    Return.  Upon the early termination of this Facility Lease pursuant to Section 18.2 or, if the Facility Lessee shall fail to satisfy the requirements set forth in Section 16, the exercise of dispossessory remedies under Section 18.2 on or after the Expiration Date, the Facility Lessee, at its own expense, shall deliver possession of the Undivided Interest (together with the Owner Lessor’s Percentage Interest in all Modifications to the Facility that shall have become subject to the Head Lease pursuant to Section 9 of the Head Lease and this Facility Lease pursuant to Section 8.3 hereof), subject to the terms and conditions of the Support Agreement, to the Owner Lessor or any permitted transferee or assignee of the Owner Lessor.  The Facility Lessee shall effect delivery of the Undivided Interest at its own cost and expense by surrendering the Undivided Interest into the possession of the Owner Lessor or such transferee or assignee and by executing and delivering to the Owner Lessor or such transferee or assignee an instrument or instruments in form and substance reasonably acceptable to the Owner Lessor evidencing surrender by the Facility Lessee of the Facility Lessee’s right to the Undivided Interest under this Facility Lease and to the possession thereof.  In connection with such return, the Facility Lessee shall, subject to the terms and conditions of the Support Agreement, (a) assign, to the extent permitted by Applicable Law, and shall cooperate with all reasonable requests of the Owner Lessor for purposes of obtaining, or enabling the Equity Investor, the Owner Lessor or such transferees or assignees to obtain, any and all licenses, permits, approvals and consents of any Governmental Entities or other Persons that are or will be required to be obtained by the Equity Investor, the Owner Lessor or such transferee or assignee in connection with the use, operation or maintenance of the Facility and the Undivided Interest on or after such return in compliance with Applicable Law; and (b) provide 

the Owner Lessor or a permitted transferee or assignee of the Owner Lessor, subject to any equipment manufacturer-imposed conditions of confidentiality, copies of all documents, instruments, plans, maps, specifications, manuals, drawings and other documentary materials relating to the installation, maintenance, operation, construction, design, modification or repair of the Undivided Interest, the Facility or any portion thereof, as shall be in the Facility Lessee’s possession and shall be reasonably appropriate or necessary for the ownership, possession, operation or maintenance of the Undivided Interest or the Facility.

Section 5.2.    Condition Upon Delivery of Possession to Owner Lessor.  In connection with the delivery of possession of the Undivided Interest by the Facility Lessee to the Owner Lessor pursuant to Section 5.1, the Facility Lessee shall ensure, at the Facility Lessee’s sole cost and expense, that the Undivided Interest or the Facility, as applicable, complies with each of the following conditions:

(a)    the Facility (including all Required Modifications and Nonseverable Modifications) will be in at least as good condition as if it had been maintained, repaired and operated during the Facility Lease Term in compliance with the provisions of this Facility Lease, ordinary wear and tear and degradation excepted;

(b)    the Undivided Interest shall be free and clear of all Liens other than Permitted Post Facility Lease Term Liens;

(c)    the Facility control capability will be operational such that the Facility can be operated independently of any other power generation facility owned or operated by the Facility Lessee; 

(d)    the Facility shall have at least the capability and functional ability to perform, substantially at the ratings for which it was designed in normal commercial operation, all functions for which it was designed (normal wear and tear and degradation excepted); 

(e)    no Component shall be a temporary Component and any Replacement Component shall comply with Prudent Industry Practice; and

(f)    the Facility Lessee, at the request of the Owner Lessor, shall lease (subject to all existing encumbrances) to the Owner Lessor (or its designee) at the then Fair Market Rental Value thereof under the Head Lease, determined by agreement between the Facility Lessee and the Owner Lessor or, absent agreement, by an appraisal conducted according to the Appraisal Procedures, the Owner Lessor’s Percentage Interest in any or all Optional Modifications that are Removable Modifications and which have been made to the Facility during the Facility Lease Term and have not been removed prior to termination of this Facility Lease or the exercise of dispossessory remedies under Section 18.2.  The Facility Lessee shall enter into any amendments or modifications to the Head Lease necessary to cause such Optional Modifications or Removable Modifications to be subject thereto; provided that, title to such Optional Modifications or Removable Modifications will remain vested in the Head Lessor.  The appraiser’s fees and expenses incurred pursuant to this clause (f) shall be paid by the Owner Lessor.

Section 5.3.    Environmental Assessment.  In connection with the delivery of possession of the Undivided Interest by the Facility Lessee to the Owner Lessor pursuant to Section 5.1, the Facility Lessee shall, at the reasonable request of the Owner Lessor, arrange for the preparation and delivery as promptly as practicable, but in no event later than ninety (90) days following such request, which request may be given at any time during the continuance of a Significant Lease Default (provided that in the case of a Significant Lease Default of the type described in clause (i) or (ii) of the definition thereof, only if such Significant Lease Default has been continuing for at least forty-five (45) days), of a Phase I or comparable environmental assessment prepared by a licensed environmental consulting firm (selected by the Facility Lessee and reasonably acceptable to the Lease Indenture Trustee, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, and the Owner Lessor) identifying any Environmental Condition on, under or relating to the Facility and the Facility Site, including the compliance or non-compliance thereof with Environmental Law.  In the event the Phase I discloses an Environmental Condition that requires a response action pursuant to any applicable Environmental Law or discloses non-compliance with applicable Environmental Laws, the Facility Lessee shall, at its own cost and expense, make arrangements for the prompt and diligent correction or remediation, in compliance with applicable Environmental Law, of such Environmental Condition or non-compliance and shall promptly reimburse the Owner Lessor for all reasonable costs and expenses, if any, incurred by the Owner Lessor associated with such corrective measures.

Section 5.4.    Deferred Maintenance on the Facility.  In connection with the delivery of possession of the Undivided Interest by the Facility Lessee to the Owner Lessor pursuant to Section 5.1, the Facility Lessee will, at the cost and expense of the Facility Lessee, perform such maintenance on the Facility that is required to satisfy the conditions described in Section 5.2.  If the Facility Lessee is unable to perform such requested maintenance, it will use reasonable efforts to arrange on behalf of the Owner Lessor and with no liability to the Owner Lessor to have such maintenance performed by a Person acceptable to the Owner Lessor.  The Facility Lessee shall promptly pay such rates charged by any Person in connection with such requested maintenance.

SECTION 6.    LIENS

The Facility Lessee will 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 Facility Lease or its interest in any other Transaction Document, except Permitted Liens, and the Facility Lessee shall promptly notify the Owner Lessor of the imposition of any such Lien of which the Facility Lessee is aware and shall promptly, at its own expense, take such action as may be necessary to fully discharge or release any such Lien.
SECTION 7.    MAINTENANCE; REPLACEMENTS OF COMPONENTS

Section 7.1.    Maintenance.  The Facility Lessee, at its own cost and expense, will (a) cause the Facility to be maintained in accordance with Prudent Industry Practice, and will not operate the Facility other than in compliance with all Applicable Laws of any Governmental Entity having jurisdiction (provided that the Facility Lessee may contest, in good faith and by appropriate proceedings, the validity or applicability of any such Applicable Law), and (b) make, or cause to be made, all necessary repairs, renewals and 

replacements thereof in accordance with Prudent Industry Practice.  Nothing in this Facility Lease or in the other Transaction Documents will require TVA to operate the Facility; provided that, if and when TVA does operate the Facility, the Facility shall be operated in accordance with Prudent Industry Practice.

Section 7.2.     Replacement of Components.  In the ordinary course of maintenance, service, repair or testing, the Facility Lessee, at its own cost and expense, may remove or cause or permit to be removed from the Facility any Component; provided, however, that the Facility Lessee shall cause such Component to be replaced by a replacement Component which shall be free and clear of all Liens (except Liens on TVA’s Percentage Interest therein and other Permitted Liens) and in as good operating condition as the Component replaced, assuming that the Component replaced was maintained in accordance with this Facility Lease (each such replacement Component being herein referred to as a “Replacement Component”).  If any Component that is subject to the Head Lease and this Facility Lease is at any time removed from the Facility, such Component shall remain subject to the Head Lease and this Facility Lease, wherever located, until such time as such Component shall be replaced by a Replacement Component that has been incorporated in the Facility and that meets the requirements for Replacement Components specified above.  Immediately upon any Replacement Component becoming incorporated in the Facility, without further act (and at no cost to the Owner Lessor and with no adjustment to Basic Lease Rent or Termination Value), (a) the removed Component shall no longer be subject to the Head Lease, this Facility Lease or the Lien of the Lease Indenture, and shall be free and clear of all rights of the Owner Lessor and the Lease Indenture Trustee, and (b) the Owner Lessor’s Percentage Interest in the Replacement Component shall automatically (i) become subject to the Head Lease, this Facility Lease and, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, the Lien of the Lease Indenture and (ii) be deemed a part of the Undivided Interest for all purposes of the Head Lease and this Facility Lease.  Notwithstanding anything in this Section 7.2 or elsewhere in this Facility Lease to the contrary, if the Facility Lessee has determined that a Component is surplus or obsolete and not necessary for the operation of the Facility in accordance with this Facility Lease, the Facility Lessee shall have the right to remove such Component without replacing such Component, and upon such removal, the removed Component shall no longer be subject to the Head Lease, this Facility Lease or the Lien of the Lease Indenture.

SECTION 8.    MODIFICATIONS

Section 8.1.    Required Modifications.  The Facility Lessee, at its own cost and expense, shall make or cause or permit to be made all Modifications to the Facility as are required by Applicable Law or any Governmental Entity having jurisdiction (each, a “Required Modification”); provided, however, that the Facility Lessee may, in good faith and by appropriate proceedings, diligently contest the validity or application of any Applicable Law in any reasonable manner which does not involve any material risk of (a) foreclosure, sale, forfeiture or loss of, or imposition of a material Lien on the Undivided Interest or any impairment of the use, operation or maintenance of the Facility in any material respect, or (b) any criminal or material civil liability being imposed on the Lessor Manager, the Equity Investor, the Equity Manager, any Southaven Holdco Note Purchaser, the Owner Lessor, the Lease Indenture Trustee or any Noteholder.

Section 8.2.    Optional Modifications.  The Facility Lessee at any time may, at its own cost and expense and without the consent of any other Person, make or cause or permit to be made any Modification to the Facility as the Facility Lessee considers desirable in the proper conduct of its business (any such Modification which is not a Required Modification being referred to as an “Optional Modification”).

Section 8.3.    Title to Modifications.  Title to all Modifications shall be with the Head Lessor.  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 (at no cost to the Owner Lessor and with no adjustment to Head Lease Rent, or except in the case of a Supplemental Financing and Additional Equity Investment, Basic Lease Rent or Termination Value) automatically upon being affixed to or incorporated into the Facility (a) become subject to the Head Lease and this Facility Lease and, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, the Lien of the Lease Indenture and (b) be deemed part of the Undivided Interest for all purposes of the Head Lease and this Facility Lease.  The Facility Lessee, at its own cost and expense, shall take such steps as either the Owner Lessor or, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, the Lease Indenture Trustee may reasonably require from time to time to confirm that the Owner Lessor’s Percentage Interest in the Modifications set forth in the preceding sentence are subject to the Head Lease and this Facility Lease and, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, the Lien of the Lease Indenture.  No Optional Modification which is a Severable Modification (other than such Optional Modifications which are financed by the Owner Lessor by an Additional Equity Investment or a Supplemental Financing pursuant to Section 11.2 of the Participation Agreement, any such Optional Modification that is a Severable Modification that has not been so financed is referred to as a “Removable Modification”) shall become subject to the Head Lease and this Facility Lease or the Lien of the Lease Indenture unless the Owner Lessor shall have elected to lease, in accordance with Section 5.2, such Removable Modification.  Removable Modifications may be removed by the Facility Lessee at any time prior to the exercise by the Owner Lessor of its remedies under Section 18.2 at the Facility Lessee’s cost and expense.  The Facility Lessee will repair, at its own cost and expense, any damage caused by its removal of any Removable Modifications.

SECTION 9.    NET LEASE

This Facility Lease is a “net lease” and the Facility Lessee’s obligation to pay all Basic Lease Rent payable hereunder, as well as any Termination Value (or amount computed by reference thereto) in lieu of Basic Lease Rent following termination of this Facility Lease, shall be absolute and unconditional under any and all circumstances and shall not be terminated, extinguished, diminished, lost or otherwise impaired by any circumstance of any character, including by (a) any setoff, counterclaim, recoupment, defense or other right which the Facility Lessee may have against the Owner Lessor, the Lessor Manager, the Equity Investor, the Equity Manager, any Southaven Holdco Note Purchaser, or the Lease Indenture Trustee, the Noteholders or any other Person, including any claim as a result of any breach by any of said parties of any covenant or provision in this Facility Lease or any other Transaction Document, (b) any lack or invalidity of title or other 

interest or any defect in the title or other interest, condition, design, operation, merchantability or fitness for use of the Facility or any Component or any portion thereof, or any eviction by paramount title or otherwise, or any unavailability of the Facility, the Facility Site, any Component or any portion thereof, (c) any loss or destruction of, or damage to, the Facility, the Facility Site or any Component or any portion thereof or interruption or cessation in the use or possession thereof or any part thereof by the Facility Lessee for any reason whatsoever and of whatever duration, (d) the condemnation, requisitioning, expropriation, seizure or other taking of title to or use of the Facility, the Undivided Interest, the Facility Site, the Ground Interest, any Component, or any part of the foregoing, by any Governmental Entity or otherwise, (e) the invalidity or unenforceability or lack of due authorization or other infirmity of this Facility Lease or any other Transaction Document, (f) the lack of right, power or authority of the Owner Lessor to enter into this Facility Lease or any other Transaction Document, (g) any ineligibility of the Facility, the Facility Site or any Component or any portion thereof for any particular use, whether or not due to any failure of the Facility Lessee to comply with any Applicable Law, (h) any event of “force majeure”, (i) any legal requirement similar or dissimilar to the foregoing, any present or future law to the contrary notwithstanding, (j) any insolvency, bankruptcy, reorganization or similar proceeding by or against the Facility Lessee or any other Person, (k) any Lien of any Person with respect to the Undivided Interest, the Facility, the Ground Interest or the Facility Site or any Component or any portion thereof, or (l) any other cause, whether similar or dissimilar to the foregoing, any present or future law notwithstanding, except as expressly set forth herein or in any other Transaction Document, it being the intention of the parties hereto that all Basic Lease Rent (and all amounts, including Termination Value (or amounts computed by reference thereto), in lieu of Basic Lease Rent following termination of this Facility Lease in whole or in part) payable by the Facility Lessee hereunder shall continue to be payable in all events in the manner and at times provided for herein.  All Rent, including Basic Lease Rent (and all amounts, including Termination Value (or amounts computed by reference thereto), in lieu of Basic Lease Rent following termination of this Facility Lease in whole or in part), shall not be subject to any abatement and the payments thereof shall not be subject to any setoff or reduction for any reason whatsoever, including any present or future claims of the Facility Lessee or any other Person against the Owner Lessor or any other Person under this Facility Lease or otherwise.  To the extent permitted by Applicable Law, the Facility Lessee hereby waives any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, cancel, quit or surrender this Facility Lease except in accordance with Sections 10, 13 or 15 hereof.  If for any reason whatsoever this Facility Lease shall be terminated in whole or in part by operation of law or otherwise, except as specifically provided herein, the Facility Lessee nonetheless agrees, to the extent permitted by Applicable Law, to pay to the Owner Lessor an amount equal to each installment of Basic Lease Rent and all Supplemental Lease Rent due and owing, at the time such payment would have become due and payable in accordance with the terms hereof had this Facility Lease not been so terminated.  Nothing contained herein shall be construed to waive any claim which the Facility Lessee might have under any of the Transaction Documents or otherwise or to limit the right of the Facility Lessee separately to make any claim it might have against the Owner Lessor or any other Person or to separately pursue such claim in such manner as the Facility Lessee shall deem appropriate.

SECTION 10.    EVENTS OF LOSS

Section 10.1.    Occurrence of Events of Loss.  The Facility Lessee will promptly notify the Owner Lessor and, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, the Lease Indenture Trustee of any damage to, or other event with respect to, any portion of the Facility which the Facility Lessee reasonably anticipates will cause an Event of Loss.  If an Event of Loss shall occur, then no later than eighteen (18) months following such occurrence, the Facility Lessee shall notify the Owner Lessor and, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, the Lease Indenture Trustee, in writing of its election to either (a) subject to the satisfaction of the conditions set forth in Section 10.3(a), rebuild or replace the Facility or a Relevant Portion of the Facility or (b) terminate this Facility Lease, in whole or in part with respect to a Relevant Portion of the Undivided Interest, as the case may be, by electing to effect an Early Buy Out pursuant to Section 15.1 hereof; provided, however, that the Facility Lessee may only elect to terminate the Facility Lease in part with respect to a Relevant Portion of the Undivided Interest to the extent that the Unit or Units not suffering an Event of Loss continue to be (or will be, after repairing in accordance with this Facility Lease any damage to such remaining Units which may have occurred as a result of the Event of Loss to a Relevant Portion of the Facility to which such partial termination relates) commercially viable in accordance with Prudent Industry Practice.  Subject to the last sentence of Section 15.1, the Facility Lessee may elect the option provided in clause (b) of the preceding sentence regardless of whether a Relevant Portion of the Facility is to be rebuilt or replaced.  If the Facility Lessee fails to make an election as provided above, an Event of Loss shall be deemed to occur with respect to the Facility or, if the Event of Loss relates to less than all of the Units, a Relevant Portion of the Facility, as of the end of the eighteen- (18-) month period referred to in the second sentence of this Section 10.1 and the Facility Lessee will be deemed to have made the election to terminate this Facility Lease, in whole or in part, as the case may be, by exercising its Early Buy Out pursuant to Section 15.2 and will be deemed to have delivered an Early Buy Out Notice pursuant to Section 15.2 as of the end of such eighteen- (18-) month period.

Section 10.2.    Condemnation Payments.  Any payments received at any time by the Owner Lessor, the Lease Indenture Trustee or the Facility Lessee from any Governmental Entity as a result of the occurrence of an Event of Loss described in clause (c) of the definition of Event of Loss shall be promptly paid to the Owner Lessor or, if the Lien of the Lease Indenture shall not have been discharged or terminated, to the Lease Indenture Trustee, to be held as security for the Facility Lessee’s obligations hereunder and under the other Transaction Documents, and shall be promptly applied, first, to satisfy the Facility Lessee’s obligation to pay Termination Value and other amounts required to be paid by it under Section 15.2(a), if any, and, so long as no Significant Lease Default shall then have occurred and be continuing, the balance shall be paid to or retained by, as applicable, the Facility Lessee.

Section 10.3.    Rebuild or Replace.  The Facility Lessee’s right to rebuild or replace the Facility or any Relevant Portion of the Facility pursuant to Section 10.1(a) shall be subject to the fulfillment, at the Facility Lessee’s sole cost and expense, in addition to the conditions contained in said clause (a), of the following conditions:

(a)    the Facility Lessee shall cause the rebuilding or replacement of the Facility or any Relevant Portion of the Facility to commence as soon as reasonably practicable after notifying the Owner Lessor and, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, the Lease Indenture Trustee pursuant to Section 10.1(a) of its election to rebuild or replace the Facility or any Relevant Portion of the Facility, and in all events within thirty-six (36) months of the occurrence of the event that caused such Event of Loss, and will cause work on such rebuilding or replacement to proceed diligently thereafter.  As the rebuilding or replacement of the Facility or any Relevant Portion of the Facility progresses and title to the rebuilt or replacement Facility or Relevant Portion of the Facility vests in the Head Lessor, an undivided interest equal to the Owner Lessor’s Percentage Interest in the rebuilt or replacement facilities shall become subject to the Head Lease, this Facility Lease and, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, the Lien of the Lease Indenture and be deemed a part of the Undivided Interest for all purposes of the Head Lease and this Facility Lease, automatically without any further act by any Person; and

(b)    within thirty (30) days after the date of the completion of such rebuilding or replacement (the “Rebuilding Closing Date”) the following documents shall be duly authorized, executed and delivered and, if appropriate, filed for recordation by the respective party or parties thereto and shall be in full force and effect, and an executed counterpart of each thereof shall be delivered to the Owner Lessor, the Lessor Manager and, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, the Lease Indenture Trustee: (i) supplements to the Head Lease and this Facility Lease subjecting the Owner Lessor’s Percentage Interest in the rebuilt or replacement facilities to the Head Lease and this Facility Lease (with no change in Head Lease Rent or in Basic Lease Rent as a result of such rebuilding or replacement), (ii) so long as the Lien of the Lease Indenture shall not have been terminated or discharged, supplements to the Lease Indenture subjecting the Owner Lessor’s Percentage Interest in the rebuilt or replacement facilities to the Lien of the Lease Indenture, (iii) such recordings and filings as may be reasonably requested by the Owner Lessor or the Lease Indenture Trustee to be made or filed, (iv) an opinion of counsel of the Facility Lessee, such counsel and such opinion to be reasonably satisfactory to the Owner Lessor and, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, the Lease Indenture Trustee to the effect that (A) the supplements to the Head Lease and this Facility Lease required by clause (i) above constitute effective instruments for subjecting the Owner Lessor’s Percentage Interest in the rebuilt or replacement facilities to the Head Lease and this Facility Lease, (B) the supplements to the Lease Indenture required by clause (ii) above, if any, constitute effective instruments for subjecting the Owner Lessor’s Percentage Interest in the rebuilt or replacement facilities to the Lien of the Lease Indenture, and (C) all filings and other action necessary to perfect and protect the Owner Lessor’s and, if applicable, the Lease Indenture Trustee’s interest in the rebuilt or replacement facilities have been accomplished, (v) a report by an independent engineer certifying that the rebuilt or replacement facilities are in a state of repair and condition required by this Facility Lease, and (vi) an Officer’s Certificate of the Facility Lessee as to compliance with this Section 10.3 and that no Lease Event of Default shall have occurred and be continuing as a result of the rebuilding or replacement.

Whether or not the transactions contemplated by this Section 10.3 are consummated, the Facility Lessee agrees to pay or reimburse, on an After-Tax Basis, any costs or expenses (including reasonable and documented legal fees and expenses) incurred by the Owner Lessor, the Lessor Manager and the Lease 

Indenture Trustee in connection with the transactions contemplated by this Section 10.3.
Section 10.4.    Application of Payments Not Relating to an Event of Loss.  In the event that during the Facility Lease Term the use of all or any portion of the Facility is requisitioned or taken by or pursuant to a request of any Governmental Entity under the power of eminent domain or otherwise for a period which does not constitute an Event of Loss, the Facility Lessee’s obligation to pay all installments of Basic Lease Rent shall continue for the duration of such requisitioning or taking.  The Facility Lessee shall be entitled to receive and retain for its own account all sums payable for any such period by such Governmental Entity as compensation for such requisition or taking of possession; provided, however, that if at the time of such payment a Significant Lease Default shall have occurred and be continuing, all such sums shall be paid to and held by the Lease Indenture Trustee, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, or thereafter, the Owner Lessor as security for the obligations of the Facility Lessee under this Facility Lease, and such amount shall be paid to the Facility Lessee only at such time as no Significant Lease Default shall be continuing.

SECTION 11.    INSURANCE

Section 11.1.    Insurance by Owner Lessor.  At any time, the Owner Lessor (either directly or in the name of the Equity Investor), the Equity Investor or the Lease Indenture Trustee may at its own expense and for its own account carry insurance with respect to its interest in the Undivided Interest or the Ground Interest.  Any insurance payments received from policies maintained by the Owner Lessor, the Equity Investor or the Lease Indenture Trustee pursuant to the previous sentence shall be retained by the Owner Lessor, the Equity Investor or the Lease Indenture Trustee, as the case may be.

Section 11.2.    Insurance by the Facility Lessee.  

(a)    If and for so long as the Facility Lessee is rated less than BBB+ by S&P or Baa1 by Moody’s, the Facility Lessee shall maintain (or cause to be maintained) property and commercial general liability insurance with respect to the Facility customarily carried by other operators of similar facilities of comparable size as the Facility and against such loss, damage or liability and with such deductibles as are customarily insured against.  Any such liability insurance required to be maintained pursuant to this Section 11.2(a) shall name the Owner Lessor, the Equity Investor, the Southaven Holdco Note Purchasers and, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, the Indenture Trustee as additional insureds.  Any such property insurance required to be maintained pursuant to this Section 11.2(a) shall, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, name the Lease Indenture Trustee (or the Owner Lessor if the Lien of the Lease Indenture has been discharged) as loss payee with respect to any claim in excess of $20 million and such amounts shall be paid to the Facility Lessee as and when needed to pay or reimburse the Facility Lessee for any costs to repair the damage to which such claim relates, with the balance, if any paid to the Facility Lessee upon completion of such repairs, or applied at the direction of the Facility Lessee to pay Termination Value or any other amounts payable by the Facility Lessee under Section 15 in connection with an Event of Loss.  During the period the Facility Lessee is required to maintain insurance pursuant to this Section 11.2(a), the Facility Lessee shall no less frequently 

than annually provide the Owner Lessor, the Equity Investor and, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, the Lease Indenture Trustee, a description of the insurance it is maintaining pursuant to this Section 11.2 and evidence which may at the Facility Lessee’s option, be in the form of an Officer’s Certificate, that all premiums in respect of such policies are current and that such insurance is in effect.

(b)    Notwithstanding Section 11.2(a), the Facility Lessee agrees that if and to the extent the Facility Lessee is insuring other gas-fired, combined cycle generating facilities similar to the Facility which are owned or leased by the Facility Lessee or self-insures for third party liability for the Facility Lessee’s operation of such other facilities owned or leased by the Facility Lessee, the Facility Lessee shall maintain (or cause to be maintained) insurance for property damage or third party liability, as the case may be, with respect to the Facility in comparable amounts, with comparable deductibles and on other terms substantially comparable to the insurance maintained with respect to such other facilities.  

SECTION 12.    INSPECTION

During the Facility Lease Term, the Owner Lessor, and, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, the Lease Indenture Trustee and their representatives may, during normal business hours, on reasonable notice to the Facility Lessee and at their own risk and expense (except, at the expense but not risk, of the Facility Lessee when a Significant Lease Default or a Lease Event of Default has occurred and is continuing), inspect the Facility and the records with respect to the operations and maintenance thereof, in the Facility Lessee’s custody; provided, however, that so long as no Significant Lease Default or Lease Event of Default shall have occurred and be continuing, each such Person (together with their representatives) shall only be entitled to make one inspection in any twelve- (12-) month period; provided, further, that the limitations on the number of inspections included in the preceding proviso shall not apply with respect to any such inspection made in connection with the occurrence of (a) a catastrophic failure of any Component or system which causes a forced outage in excess of sixty (60) days, (b) failure or malfunction of any equipment resulting in serious injury or death, (c) a significant curtailment of operations due to a final, nonappealable order of a Governmental Entity having jurisdiction over Environmental Laws or safety, or (d) cessation of operations of the Facility for more than one-hundred and eighty (180) days.  Any such inspection will not unreasonably interfere with the operation or maintenance of the Facility or the conduct by the Facility Lessee of its business and will be in accordance with Applicable Law and the Facility Lessee’s safety and security precautions and confidentiality undertakings, as applicable.  In no event shall the Owner Lessor, the Lessor Manager, the Equity Investor or the Lease Indenture Trustee have any duty or obligation to make any such inspection and such Persons shall not incur any liability or obligation by reason of not making any such inspection.
SECTION 13.    REGULATORY EVENT OF LOSS

Section 13.1.    Occurrence of a Regulatory Event of Loss.  The Owner Lessor and the Equity Investor shall promptly notify the Facility Lessee and, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, the Lease Indenture Trustee, of an event or occurrence of which it has Actual Knowledge that it reasonably believes constitutes a Regulatory Event of Loss with respect to it.  Such notice 

shall specify in reasonable detail the event or occurrence giving rise to such Regulatory Event of Loss and the materially burdensome rate of return regulation or other applicable public utility law or regulation of a Governmental Entity.  The Owner Lessor, the Equity Investor and the Facility Lessee shall reasonably cooperate and take reasonable measures to alleviate such Regulatory Event of Loss at the cost and expense of the party requesting such cooperation.  The Owner Lessor or the Equity Investor may elect to declare a Regulatory Event of Loss by giving notice to the Facility Lessee within twelve (12) months of obtaining Actual Knowledge of an event or circumstance which upon the giving of such notice would be a Regulatory Event of Loss (the “Election Notice”).  

Section 13.2.    Procedure for Termination With Respect to a Regulatory Event of Loss.  If a Regulatory Event of Loss occurs, then, within sixty (60) days of receiving the Election Notice from the Owner Lessor or the Equity Investor, the Facility Lessee shall elect one of the following:

(a)    If the event or occurrence giving rise to such Regulatory Event of Loss would be alleviated by transferring one or more Southaven Holdco Notes to the Facility Lessee, the Facility Lessee may purchase such Southaven Holdco Notes from the applicable Southaven Holdco Note Purchaser on the next succeeding Termination Date, for an amount equal to the Regulatory Event of Loss Termination Payment, in which case each such Southaven Holdco Note Purchaser shall transfer all of its right, title and interest in its Southaven Holdco Note by appropriate instruments of transfer without representations (other than that such Southaven Holdco Note is free and clear of any Liens) to the Facility Lessee or such other Person as the Facility Lessee shall designate;

(b)    If the event or occurrence giving rise to such Regulatory Event of Loss would be alleviated by transferring one or more Southaven Holdco Notes to another Person, the Facility Lessee may pay each Southaven Holdco Note Purchaser that holds such Southaven Holdco Notes on the next succeeding Termination Date the amount, if any, by which (i) the Regulatory Event of Loss Termination Payment, exceeds (ii) the net proceeds of the sale of such Southaven Holdco Note Purchaser’s Southaven Holdco Note pursuant to this clause (b) received by such Southaven Holdco Note Purchaser; provided that, if the Facility Lessee elects to make the payment pursuant to this clause (b), then such Southaven Holdco Note Purchaser shall sell its Southaven Holdco Note in such manner, to such Person and at such price as directed by the Facility Lessee, at the cost and expense of the Facility Lessee; provided, however, that if such sale does not occur on or before the Termination Date referred to in clause (a) above, then the Facility Lessee shall be deemed to have elected to purchase such Southaven Holdco Note Purchaser’s Southaven Holdco Note under clause (a) and shall make the payment required to be made thereunder to such Southaven Holdco Note Purchaser pursuant thereto on such Termination Date;

(c)    If the event or occurrence giving rise to such Regulatory Event of Loss would be alleviated by causing the Equity Investor to prepay one or more Southaven Holdco Notes, the Facility Lessee may cause the Equity Investor to prepay such Southaven Holdco Notes by paying to the Owner Lessor for distribution to the Equity Investor for prepayment of such Southaven Holdco Notes pursuant to the Southaven Holdco Note Purchase Agreement on the next succeeding Termination Date an amount equal to the Regulatory Event of Loss Termination Payment, whereupon Basic Lease Rent (Equity Portion) and Termination Value 

(Equity Portion) shall be reduced in accordance with Section 3.4 hereof in an amount equal to the product of (i) Basic Lease Rent (Equity Portion) or Termination Value (Equity Portion), as applicable, multiplied by (ii) the Southaven Holdco Note Purchaser’s Percentage Interest of the Notes; provided that, the Facility Lessee may only make an election under this clause (c) with respect to a Southaven Holdco Note if the Southaven Holdco Notes held by such Southaven Holdco Note Purchasers are less than a majority of the aggregate outstanding amount of Southaven Holdco Notes of the Equity Investor; or

(d)    If the event or occurrence giving rise to such Regulatory Event of Loss would be alleviated by transferring the Equity Investor’s Membership Interests in whole or in part to another Person, the Facility Lessee may pay the Equity Investor on the next succeeding Termination Date the amount, if any, by which (i) the Termination Value (Equity Portion), exceeds (ii) the net proceeds of the sale of Membership Interests pursuant to this clause (d) received by the Equity Investor; provided that, if the Facility Lessee elects to make the payment pursuant to this clause (d), then the Equity Investor shall sell such Membership Interests in such manner, to such Person (which, subject to Applicable Law, may be the Facility Lessee) and at such price as directed by the Facility Lessee, at the cost and expense of the Facility Lessee; provided, however, that if such sale does not occur on or before the Termination Date referred to in clause (a) above, then the Facility Lessee shall be deemed to have elected to purchase such Membership Interests and shall pay the Equity Investor an amount equal to the Termination Value (Equity Portion), in which case the Equity Investor shall transfer all of its right, title and interest in such Membership Interests by appropriate instruments of transfer without representations to the Facility Lessee or such other Person as the Facility Lessee shall designate.

(e)    The Facility Lessee may terminate the Facility Lease (in whole but not in part) by electing an Early Buy Out in accordance with Section 15.1 hereof.

Simultaneously with the payment of any amounts contemplated under clauses (a), (b), (c) or (d) of this Section 13.2 and as a condition to the sale, transfer or prepayment of the applicable Southaven Holdco Notes or Equity Investor’s Membership Interests, as applicable, the Facility Lessee shall pay all Basic Lease Rent (Equity Portion) and Supplement Lease Rent due and payable on the applicable Termination Date (including all costs and expenses of the Equity Investor, the Owner Lessor or any Southaven Holdco Note Purchaser incurred in connection therewith and all sales, use, value added and other Taxes required to be paid by the Facility Lessee to the Equity Investor or applicable Southaven Holdco Note Purchaser associated with the sale, transfer or retirement of the Southaven Holdco Note Purchaser’s Southaven Holdco Notes or Equity Investor’s Membership Interests, as applicable) whereupon the Facility Lessee shall cease to have any liability with respect to the Transaction Documents to such Southaven Holdco Note Purchaser in the case of the payment of amounts pursuant to clauses (a), (b) and (c) and to all Southaven Holdco Note Purchasers and the Equity Investor in the case of the payment of amounts pursuant to clause (d), except for obligations (including those under Sections 9.1 and 9.2 of the Participation Agreement) surviving pursuant to the express terms of any Transaction Document or which have otherwise accrued but not been paid as of the applicable Termination Date.  If necessary, the parties shall reasonably cooperate to cause the provisions of the Owner Lessor LLC Agreement to be amended to reflect the existence of more than one Equity Investor with a Membership Interest in the Owner Lessor.

SECTION 14.    [RESERVED]

SECTION 15.    EARLY BUY OUT

Section 15.1.    Election of Early Buy Out.  The Facility Lessee shall have the right, at its option and at any time (including (a) during the occurrence and continuance of a Significant Lease Default or Lease Event of Default so long as the Facility Lease shall not have been terminated by the Owner Lessor pursuant to Section 18.2, (b) following an Event of Loss pursuant to Section 10.1, and (c) following a Regulatory Event of Loss for which the Facility Lessee has made the election described in Section 13.2(e)), by giving written notice (the “Early Buy Out Notice”) to the Owner Lessor, the Lessor Manager, and, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, the Lease Indenture Trustee, to purchase the Owner Lessor’s Interest and terminate this Facility Lease, either in whole with respect to the entire Undivided Interest or in part with respect to a Relevant Portion of the Undivided Interest (an “Early Buy Out”).  In the case of an Early Buy Out other than in connection with an Event of Loss or a Regulatory Event of Loss, the Facility Lessee will specify a Termination Date in the Early Buy Out Notice upon which date such purchase and termination will occur (the “Early Buy Out Date”), which Early Buy Out Date shall occur on a date occurring at least thirty (30) days after the delivery of the Early Buy Out Notice.  In the case of an Early Buy Out in connection with an Event of Loss, the Early Buy Out Date shall occur on (i) the next Termination Date occurring at least one month after the Facility Lessee’s delivery of the Early Buy Out Notice, or (ii) if the Event of Loss shall be deemed to have occurred pursuant to the last sentence of Section 10.1, the Termination Date occurring next following thirty (30) days after the date as of which an Event of Loss shall have been so deemed to have occurred.  In the case of an Early Buy Out in connection with a Regulatory Event of Loss, the Early Buy Out Date shall be the Termination Date next succeeding the date of delivery of the Early Buy Out Notice pursuant to Section 13.2(d) with respect to such Regulatory Event of Loss.  The Facility Lessee may only purchase the Owner Lessor’s Interest in part or terminate the Facility Lease in part with respect to a Relevant Portion of the Undivided Interest to the extent that the Unit or Units not suffering an Event of Loss continue to be commercially viable in accordance with Prudent Industry Practice.  If the Facility Lessee exercises the Early Buy Out in connection with an Event of Loss or Regulatory Event of Loss and the Facility Lessee certifies either that (A) such Early Buy Out is in connection with an Event of Loss described in clause (c) of the definition thereof or a Regulatory Event of Loss, or (B) such Early Buy Out is in connection with an Event of Loss described in clauses (a) or (b) of the definition thereof and the Facility Lessee has no current intention to rebuild or replace the Facility or a Relevant Portion of the Facility, then such Early Buy Out shall constitute an Early Buy Out in connection with an Event of Loss or a Regulatory Event of Loss, as applicable, and no Make Whole Premium or Equity Breakage shall be due in connection with such Early Buy Out.

Section 15.2.    Procedure for Exercise of an Early Buy Out.

(a)    If the Facility Lessee shall have exercised its option under Section 15.1, then, on the Early Buy Out Date the Facility Lessee shall pay to the Owner Lessor (i) the Termination Value with respect to the Termination Date that coincides with the Early Buy Out Date, (ii) all amounts of Supplemental Lease Rent (including all reasonable and documented out-of-pocket costs and expenses of the Owner Lessor, the Lessor Manager, the Equity Investor, any Southaven Holdco Note Purchaser and the Lease Indenture Trustee, 

and all sales, use, value added and other Taxes associated with the exercise of the Early Buy Out pursuant to this Section 15 and required to be indemnified by the Facility Lessee pursuant to Section 9.2 of the Participation Agreement) on an After-Tax Basis due and payable on or prior to such Early Buy Out Date, (iii) any unpaid Basic Lease Rent due on or before such Early Buy Out Date, and (iv) other than in the case of an Early Buy Out exercised in connection with an Event of Loss or a Regulatory Event of Loss so long as the Facility Lessee has delivered the certificate referred to in the last sentence of Section 15.1, the Make Whole Premium, if any, due on the Lessor Notes being prepaid pursuant to this Section 15 and the Equity Breakage in respect of the Equity Investment.

(b)    Upon receipt by the Lease Indenture Trustee, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, or thereafter, the Owner Lessor, of the payments required to be made pursuant to Section 15.2(a), (i) Basic Lease Rent shall cease to accrue, in whole, in the case of an exercise of the Early Buy Out with respect to the entire Undivided Interest or in part, with respect to a Relevant Portion of the Undivided Interest, in the case of an exercise of the Early Buy Out with respect to a Relevant Portion of the Undivided Interest, calculated pursuant to Section 3.2, (ii) the Facility Lessee’s obligations hereunder shall terminate, in whole, in the case of an exercise of the Early Buy Out with respect to the entire Undivided Interest or in part, with respect to a Relevant Portion of the Undivided Interest, in the case of an exercise of the Early Buy Out with respect to a Relevant Portion of the Undivided Interest, except for Supplemental Lease Rent and other obligations (including those under Sections 9.1 and 9.2 of the Participation Agreement) surviving pursuant to the express provisions of any Transaction Document, (iii) this Facility Lease and the Head Lease shall terminate, in whole, in the case of an exercise of the Early Buy Out with respect to the entire Undivided Interest or in part, with respect to a Relevant Portion of the Undivided Interest, in the case of an exercise of the Early Buy Out with respect to a Relevant Portion of the Undivided Interest, (iv) the Owner Lessor shall, at the Facility Lessee’s cost and expense, execute and deliver to the Facility Lessee a release or termination of this Facility Lease, in whole, in the case of an exercise of the Early Buy Out with respect to the entire Undivided Interest, or in part, with respect to a Relevant Portion of the Undivided Interest, in the case of an exercise of the Early Buy Out with respect to a Relevant Portion of the Undivided Interest, (v) the Owner Lessor shall transfer (by an appropriate instrument of transfer in form and substance reasonably satisfactory to the Owner Lessor and prepared and recorded by and at the expense of the Facility Lessee) all of its right, title and interest in and to the Owner Lessor’s Interest, in whole, in the case of an exercise of the Early Buy Out with respect to the entire Undivided Interest, or in part, with respect to a Relevant Portion of the Undivided Interest, in the case of an exercise of the Early Buy Out with respect to a Relevant Portion of the Undivided Interest, to the Facility Lessee pursuant to this Section 15.2 and Section 6.2 of the Head Lease on an “as is,” “where is” and “with all faults” basis, without representations or warranties other than a warranty as to the absence of Owner Lessor’s Liens and a warranty of the Equity Investor as to the absence of Equity Investor’s Liens, and (vi) the Owner Lessor shall discharge the Lien of the Lease Indenture, in whole, in the case of an exercise of the Early Buy Out with respect to the entire Undivided Interest, or in part, with respect to a Relevant Portion of the Undivided Interest, in the case of an exercise of the Early Buy Out with respect to a Relevant Portion of the Undivided Interest, and execute and deliver appropriate releases and other documents or instruments necessary or desirable to effect the foregoing, all 

to be prepared, filed and recorded (as appropriate) by and at the cost and expense of the Facility Lessee.

Section 15.3.    Replacement and Exchange of the Lessor Notes.  In connection with any proper exercise of the Early Buy Out under this Section 15 with respect to the entire Undivided Interest, the Facility Lessee may, at its option, elect to replace and exchange in full all the Lessor Notes for Replacement Power Bonds and if (a) the Facility Lessee shall have replaced and exchanged the Lessor Notes for Replacement Power Bonds in accordance with Section 2.10(c) of the Lease Indenture, (b) all other conditions contained in such Section 2.10(c) thereof shall have been satisfied, and (c) no Significant Lease Default or Lease Event of Default shall have occurred and be continuing after giving effect to such replacement and exchange, then the obligation of the Facility Lessee to pay the Termination Value pursuant to Section 15.2 shall be reduced by the outstanding principal amount of and accrued interest on the Lessor Notes so replaced and exchanged by the Facility Lessee.

SECTION 16.    TRANSFER UPON THE EXPIRATION DATE

On or after the Expiration Date, so long as no Significant Lease Default shall then have occurred and be continuing and the Owner Lessor has not exercised dispossessory remedies under Section 18.2 in connection therewith, then upon payment of all amounts of Basic Lease Rent and all amounts of Supplemental Lease Rent then due and payable (including all reasonable out of pocket costs and expenses of the Owner Lessor, the Equity Investor and the Lease Indenture Trustee, all sales, use, value added and other Taxes required to be indemnified by the Facility Lessee pursuant to Section 9.2 of the Participation Agreement associated with the transfer to be effected pursuant to this Section 16 and any Basic Lease Rent due on or before the Expiration Date), (i) the Facility Lessee shall cease to have any liability to the Owner Lessor hereunder or under the other Transaction Documents, except for Supplemental Lease Rent and other obligations (including those under Sections 9.1 and 9.2 of the Participation Agreement) surviving pursuant to the express terms of any Transaction Document, (ii) subject to clause (i) above, this Facility Lease shall terminate, (iii) the Owner Lessor shall transfer to the Facility Lessee, at the Facility Lessee’s cost and expense, by an appropriate instrument of transfer (in form and substance reasonably satisfactory to the Owner Lessor and prepared by and at the expense of the Facility Lessee), all of its right, title and interest in and to the Owner Lessor’s Interest pursuant to this Section 16 and Section 6.2 of the Head Lease on an “as is,” “where is” and “with all faults” basis, without representations or warranties other than a warranty as to the absence of Owner Lessor’s Liens and a warranty of the Equity Investor as to the absence of Equity Investor’s Liens, and (iv) the Owner Lessor shall discharge the Lien of the Lease Indenture, and the Owner Lessor and the Equity Investor shall execute and deliver appropriate releases and other documents or instruments necessary or desirable to effect the foregoing, all to be prepared, filed and recorded (as appropriate) by and at the cost and expense of the Facility Lessee.  In connection with the transfer described in clause (iii) of the preceding sentence, the Owner Lessor (at the Facility Lessee’s cost and expense) shall (a) assign, to the extent permitted by Applicable Law, and shall cooperate with all reasonable requests of the Facility Lessee for purposes of obtaining, or enabling the Facility Lessee to obtain, any and all licenses, permits, approvals and consents of any Governmental Entities or other Persons that are held in the name of the Owner Lessor or the Lessor 

Manager and are or will be required to be obtained by the Facility Lessee in connection with the Facility Lessee’s ownership, use, operation and maintenance of the Facility on or after such transfer in compliance with Applicable Law.  Except for amounts expressly set forth in this Section 16 (including Supplemental Lease Rent and other obligations (including those under Sections 9.1 and 9.2 of the Participation Agreement) surviving pursuant to the express terms of any Transaction Document), the Facility Lessee shall not be obligated to pay any additional amounts or compensation to the Owner Lessor, the Lessor Manager, the Equity Investor, and the Equity Manager in connection with the transfer to the Facility Lessee of the Owner Lessor’s Interest pursuant to this Section 16.
SECTION 17.    EVENTS OF DEFAULT

The following events shall constitute a “Lease Event of Default” hereunder (whether any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any Governmental Entity):
(a)    the Facility Lessee shall fail to make any payment of Basic Lease Rent or Termination Value after the same shall have become due and such failure shall have continued for five (5) Business Days after the same shall become due; or

(b)    the Facility Lessee shall fail to make any payment of Supplemental Lease Rent (other than Excepted Payments, unless the Equity Investor shall have declared a default with respect thereto, and Termination Value described in clause (a)), after the same shall have become due and such failure shall have continued for a period of thirty (30) days after receipt by the Facility Lessee of written notice of such default from the Lessor Manager, the Owner Lessor, or the Lease Indenture Trustee; or

(c)    the Facility Lessee shall fail to perform or observe in any material respect any covenant, obligation or agreement to be performed or observed by it under this Facility Lease, the Participation Agreement, the Head Lease, the Ground Lease or the Ground Sublease (other than any covenant, obligation or agreement referred to in clauses (a) or (b) of this Section 17), which shall continue unremedied for sixty (60) days after receipt by the Facility Lessee of written notice thereof from the Lessor Manager (acting at the direction of the Equity Investor) or the Lease Indenture Trustee; provided, however, that if such condition cannot be remedied within such sixty (60)-day period, then the period within which to remedy such condition shall be extended up to an additional two-hundred and seventy (270) days, so long as the Facility Lessee diligently pursues such remedy and such condition is capable of being remedied within such additional two-hundred and seventy (270)-day period; provided, further, that, in the case of the Facility Lessee’s obligation set forth in clause (a) of Section 7.1, if, to the extent and for so long as a test, challenge, appeal or proceeding shall be prosecuted in good faith by the Facility Lessee, the failure by the Facility Lessee to comply with such requirement shall not constitute a Lease Event of Default if such test, challenge, appeal or proceeding shall not involve any material risk of (i) foreclosure, sale, forfeiture or loss of, or imposition of a lien on, the Undivided Interest, (ii) the impairment of the use, operation or maintenance of the Facility in any material respect, or (iii) any criminal liability being incurred by, or any material adverse effect on the interests of, the Lessor Manager, the Equity Investor, any Southaven Holdco Note Purchaser, the Equity Manager, the Owner 

Lessor, any Noteholder or the Lease Indenture Trustee, including subjecting the Equity Investor, any Southaven Holdco Note Purchaser or the Owner Lessor to regulation as a public utility or similar entity under Applicable Law; and provided, further, that in the case of the Facility Lessee’s obligation set forth in clause (a) of Section 7.1, if the noncompliance is not a type that can be immediately remedied, the failure to comply shall not be a Lease Event of Default if the Facility Lessee is taking all reasonable action to remedy such noncompliance and if, but only if, such noncompliance shall not involve any material risk described in clause (i), (ii) or (iii) of the preceding proviso; or

(d)    any representation or warranty made by the Facility Lessee in the Operative Documents shall prove to have been incorrect in any material respect when made and continues to be material and unremedied for a period of sixty (60) days after receipt by the Facility Lessee of written notice thereof from the Equity Investor or the Lease Indenture Trustee; provided, however, that if such condition cannot be remedied within such sixty (60)-day period, then the period within which to remedy such condition shall be extended up to an additional two-hundred and seventy (270) days, so long as the Facility Lessee diligently pursues such remedy and such condition is reasonably capable of being remedied within such additional two-hundred and seventy (270)-day period; or

(e)    the Facility Lessee shall (i) commence a voluntary case or other proceeding seeking relief under Title 11 of the Bankruptcy Code or liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect, or apply for or consent to the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or (ii) consent to, or fail to controvert in a timely manner, any such relief or the appointment of or taking possession by any such official in any voluntary case or other insolvency proceeding commenced against it, or (iii) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (iv) make a general assignment for the benefit of creditors; or

(f)    an involuntary case or other proceeding shall be commenced against the Facility Lessee seeking (i) liquidation, reorganization or other relief with respect to it or its debts under Title 11 of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now or hereafter in effect, or (ii) the appointment of a trustee, receiver, liquidator, custodian or other similar official with respect to it or any substantial part of its property, or (iii) the winding-up or liquidation of the Facility Lessee; and such involuntary case or other insolvency proceeding shall remain undismissed and unstayed for a period of ninety (90) days (unless, in lieu of dismissal or stay of such proceeding, the Facility Lessee shall deliver to the Owner Lessor and the Lease Indenture Trustee an opinion of counsel reasonably satisfactory to each of them to the effect that the Facility Lessee is not an entity which can become a “debtor” under Section 101 of Title 11 of the Bankruptcy Code); or

(g)    the Facility Lessee shall repudiate or disaffirm the validity or enforceability of this Facility Lease, the Head Lease or the Ground Lease.

SECTION 18.    REMEDIES

Section 18.1.    Remedies for Lease Event of Default.  Upon the occurrence of any Lease Event of Default and at any time thereafter so long as the same shall be continuing, the Owner Lessor may, at its 

option, declare this Facility Lease to be in default by written notice to the Facility Lessee; provided, that upon the occurrence of a Lease Event of Default described in Sections 17(e) or (f), this Facility Lease shall automatically be deemed to be in default without the need for giving any notice; and at any time thereafter, so long as the Facility Lessee shall not have remedied all outstanding Lease Events of Default, the Owner Lessor may proceed by appropriate court action or actions, either at law or in equity, to enforce performance by the Facility Lessee, at the Facility Lessee’s sole cost and expense, of the applicable covenants and terms of this Facility Lease or to recover damages for breach thereof, including recovery of any payment of Rent then due and unpaid, provided, further, that in connection with such action or actions, the Owner Lessor may not, except as permitted under Section 18.2, seek (i) termination of this Facility Lease or any other Transaction Document, (ii) dispossession of the Facility Lessee, or (iii) acceleration or early payment of amounts not yet due and payable under this Facility Lease or any other Transaction Document.

Section 18.2.    Additional Remedies for Specified Lease Events of Default.  On a date no earlier than one-hundred and eighty (180) days after the occurrence of a Lease Event of Default specified in Sections 17(a) or (b), or immediately upon the occurrence of a Lease Event of Default specified in Sections 17(e), (f) or (g), but, in each case, only to the extent the applicable Lease Event of Default is then continuing, and at any time thereafter so long as the same shall be continuing, the Owner Lessor, in its sole discretion, may elect, and to the extent permitted by, and subject to compliance with any mandatory requirements of, Applicable Law then in effect:

(a)    by notice in writing to the Facility Lessee, to terminate this Facility Lease whereupon all right of the Facility Lessee to the possession and use under this Facility Lease of the Undivided Interest shall absolutely cease and terminate but the Facility Lessee shall remain liable as hereinafter provided; and thereupon, the Owner Lessor may demand that the Facility Lessee, and the Facility Lessee shall, upon written demand of the Owner Lessor and at the Facility Lessee’s expense, forthwith deliver possession of the Undivided Interest to the Owner Lessor in the manner and condition required by, and otherwise in accordance with all of the provisions of, Section 5, except those provisions relating to periods of notice; and the Owner Lessor may thenceforth hold, possess and enjoy the same, free from any right of the Facility Lessee under this Facility Lease, or its successor or assigns, to use the Undivided Interest for any purpose whatever;

(b)    to sell the Owner Lessor’s Interest at public or private sale, as the Owner Lessor may determine, free and clear of any rights of the Facility Lessee under this Facility Lease and without any duty to account to the Facility Lessee with respect to such sale or for the proceeds thereof (except to the extent required (i) by paragraph (e) below if the Owner Lessor elects to exercise its rights under such paragraph, and (ii) by Applicable Law), in which event the Facility Lessee’s obligation to pay Basic Lease Rent hereunder due for any periods subsequent to the date of such sale shall terminate (except to the extent that Basic Lease Rent is to be included in computations under paragraph (d) or (e) below if the Owner Lessor elects to exercise its rights under said paragraphs);

(c)    to hold, keep idle or lease to others the Undivided Interest as the Owner Lessor in its sole discretion may determine, free and clear of any rights of the Facility Lessee under this Facility Lease and without any duty to account to the Facility Lessee with respect to such action or inaction or for any 

proceeds with respect thereto, except that the Facility Lessee’s obligation to pay Basic Lease Rent due for any periods subsequent to the date upon which the Facility Lessee shall have been deprived of possession and use of the Undivided Interest pursuant to this Section 18.2 shall be reduced by the net proceeds, if any, received by the Owner Lessor from subleasing the Undivided Interest to any Person other than the Facility Lessee;

(d)    whether or not the Owner Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under paragraph (a) above with respect to the Undivided Interest, to specify, by written notice to the Facility Lessee, a Termination Date that shall not be earlier than thirty (30) days after the date of such notice, and to demand that the Facility Lessee pay to the Owner Lessor, and the Facility Lessee shall pay to the Owner Lessor, on the Termination Date specified in such notice, any unpaid Basic Lease Rent due on or before such Termination Date, any Supplemental Lease Rent due and payable as of the Termination Date specified in such notice, plus, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Lease Rent due after the Termination Date specified in such notice), an amount equal to the excess, if any, of the Termination Value computed as of the Termination Date specified in such notice over the Fair Market Sales Value of the Owner Lessor’s Interest as of the Termination Date specified in such notice (such amount, the “FMV Net Termination Value”), and upon payment of such excess amount, this Facility Lease and the Facility Lessee’s obligation to pay Basic Lease Rent hereunder due for any periods subsequent to the date of such payments shall terminate; or

(e)    if the Owner Lessor shall have sold the Owner Lessor’s Interest pursuant to paragraph (b) above, to demand that the Facility Lessee pay to the Owner Lessor, and the Facility Lessee shall pay to the Owner Lessor, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Lease Rent due after the date of such sale), an amount equal to (i) any unpaid Basic Lease Rent and Supplemental Lease Rent due on or before the date of such sale, (ii) if that date is not a Termination Date, the daily equivalent of Basic Lease Rent for the period from the preceding Termination Date to the date of such sale, and (iii) the amount, if any, by which the Termination Value for the Undivided Interest computed as of the Termination Date next preceding the date of such sale or, if such sale occurs on a Rent Payment Date or a Termination Date then computed as of such date, exceeds the proceeds of such sale net of all costs and expenses incurred by or on behalf of the Owner Lessor or the Lease Indenture Trustee in connection with or otherwise attributable to such sale (such amount set forth in subclause (iii), the “Sale Net Termination Value”), and, upon payment of such amount, this Facility Lease and the Facility Lessee’s obligation to pay Basic Lease Rent for any periods subsequent to the date of such payment shall terminate.

Section 18.3.    Application of Funds Held as Security; Liability for Basic Lease Rent, Costs and Expenses.  In connection with the exercise of remedies under Sections 18.1 or 18.2, the Owner Lessor may apply any amounts which are held by the Owner Lessor or the Lease Indenture Trustee under Section 10.2 or 11.2 as security for the Facility Lessee’s obligations hereunder and under any other Transaction Documents against any amounts owed by the Facility Lessee hereunder or under any other Transaction Document.  In addition, the Facility Lessee shall be liable, except as otherwise provided in Sections 18.2(d) and (e), for (i) any and all unpaid Basic Lease Rent due hereunder before or during the exercise of any of the foregoing remedies, and (ii) on an After-Tax Basis for all legal fees and other documented costs and expenses incurred 

by the Owner Lessor, the Equity Investor and the Lease Indenture Trustee by reason of the occurrence of any Lease Event of Default or the exercise of the Owner Lessor’s remedies with respect thereto (whether those remedies are exercised by the Owner Lessor, the Lease Indenture Trustee or a designee of either), including the repayment in full of any documented costs and expenses necessary to be expended in connection with the return of the Undivided Interest in accordance with Section 5, and any costs and expenses incurred by the Owner Lessor, the Equity Investor and the Lease Indenture Trustee in connection with retaking constructive possession of, or in repairing, such Undivided Interest in accordance with Section 18.2, in order to cause it to be in compliance with the maintenance standards imposed by Section 7.1.

Section 18.4.    Payment of FMV Net Termination Value or Sale Net Termination Value.  If the Owner Lessor elects to exercise its rights set forth in Sections 18.2(d) or (e) and the Facility Lessee is obligated to pay FMV Net Termination Value or Sale Net Termination Value, as applicable, subject to payment of all other amounts due and owing by the Facility Lessee pursuant to Sections 18.2(d) or (e), as applicable, the Facility Lessee may, subject to the conditions set forth in this Section 18.4 below, elect to pay the Owner Lessor such FMV Net Termination Value or such Sale Net Termination Value, as applicable, in three equal installments payable on the first, second and third anniversaries of the Term-Out Notice Date (the “Term-Out Payment Dates”), together with interest (a) on the Net TV Amount (Debt Portion) of such FMV Net Termination Value or such Sale Net Termination Value, as applicable, at the Net TV Amount (Debt Portion) Rate, and (b) on the Net TV Amount (Equity Portion) of such FMV Net Termination Value or such Sale Net Termination Value, as applicable, at the Net TV Amount (Equity Portion) Rate.  The Facility Lessee shall only be permitted to make such election by written notice given to the Owner Lessor, the Lessor Manager, and the Lease Indenture Trustee within thirty (30) days of delivery of the written notice from the Owner Lessor pursuant to Section 18.2 with respect to the Owner Lessor’s election to exercise remedies set forth in Sections 18.2(d) or (e), as applicable, certifying that the issuance of Evidences of Indebtedness under the Bond Resolution is legally impossible or commercially unreasonable at such time in an amount sufficient to pay FMV Net Termination Value or Sale Net Termination Value when due under Sections 18.2(d) or (e), as applicable (the date of such notice pursuant to this Section 18.4, the “Term-Out Notice Date”).  Upon the Facility Lessee’s delivery of the notice described in the previous sentence, the Facility Lessee shall become obligated to pay FMV Net Termination Value or Sale Net Termination Value, as applicable, as provided above, and this Facility Lease and the Facility Lessee’s obligation to pay Basic Lease Rent for any periods subsequent to the date of the delivery of such notice shall terminate.  If the Facility Lessee (i) fails to deliver the notice described in the second preceding sentence with respect to any unpaid Net TV Amount, (ii) fails to certify by written notice given the Owner Lessor, the Lessor Manager and the Lease Indenture Trustee concurrently with its payment of an installment then due and payable on any Term-Out Payment Date that the issuance of Evidences of Indebtedness under the Bond Resolution is still legally impossible or commercially unreasonable, or (iii) fails to pay any installment of the Net TV Amount then due and payable within ten (10) Business Days of the applicable Term-Out Payment Date, then in each case any unpaid Net TV Amount shall immediately become due and payable and the Owner Lessor may exercise any remedies available to it in accordance with Applicable Law.  The Facility Lessee’s obligation to make payment of FMV Net Termination Value or Sale Net Termination Value, as applicable, shall survive the termination of this Facility Lease.

Section 18.5.    Cumulative Remedies.  Except as otherwise provided in this Section 18, the remedies in this Facility Lease provided in favor of the Owner Lessor shall not be deemed exclusive, but shall be cumulative and shall be in addition to all other remedies in its favor existing at law or in equity; and the exercise or beginning of exercise by the Owner Lessor of any one or more of such remedies shall not, except as otherwise provided in this Section 18, preclude the simultaneous or later exercise by the Owner Lessor of any or all of such other remedies.

Section 18.6.    No Delay or Omission to Be Construed as Waiver.  No delay or omission to exercise any right, power or remedy accruing to the Owner Lessor upon any breach or default by the Facility Lessee under this Facility Lease shall impair any such right, power or remedy of the Owner Lessor, nor shall any such delay or omission be construed as a waiver of any breach or default, or of any similar breach or default hereafter occurring; nor shall any waiver of a single breach or default be deemed a waiver of any subsequent breach or default.  To the extent permitted by Applicable Law, but subject to Section 18.2, the Facility Lessee hereby waives any rights now or hereafter conferred by statute or otherwise which may require the Owner Lessor to sell, lease or otherwise use the Undivided Interest in mitigation of the Owner Lessor’s damages as set forth in this Section 18 or which otherwise may limit or modify any of the Owner Lessor’s rights and remedies under this Section 18.

SECTION 19.    SECURITY INTEREST AND INVESTMENT OF SECURITY FUNDS.

Any moneys received by the Owner Lessor or the Lease Indenture Trustee pursuant to Sections 10.2 or 11.2, until paid to the Facility Lessee in accordance with such Section, shall be held by the Owner Lessor or the Lease Indenture Trustee, as the case may be, as security for the Facility Lessee’s obligations under this Facility Lease and be invested in Permitted Instruments by the Owner Lessor or the Lease Indenture Trustee, as the case may be, at the sole risk of the Facility Lessee, from time to time as directed in writing by the Facility Lessee if such instruments are reasonably available for purchase.  So long as no Significant Lease Default has occurred and is continuing, any gain (including interest received) realized as the result of any such Permitted Instrument (net of any fees, commissions, Taxes and other expenses, if any, incurred in connection with such Permitted Instrument) shall be applied or remitted to the Facility Lessee in the same manner as the principal invested.
SECTION 20.    FACILITY LESSEE’S RIGHT TO SUBLEASE; ASSIGNMENT

Section 20.1.    Assignment and Sublease.  Except as provided in Section 20.2, the Facility Lessee shall not have the right to assign or sublease the Facility Lessee’s Interest and shall not be released from its obligations under this Facility Lease and the Transaction Documents without the consent of the Owner Lessor, and, so long as the Lien of the Lease Indenture shall not have been terminated or discharged, the Lease Indenture Trustee.

Section 20.2    Right to Sublease.  The Facility Lessee may sublease the Undivided Interest without the consent of the Owner Lessor, the Lessor Manager, the Equity Investor, the Equity Manager, Southaven Holdco Note Purchasers and the Lease Indenture Trustee under the following conditions:

(a)    the sublessee is a solvent corporation, partnership, business trust, limited liability company or other person or entity not then involved in a bankruptcy proceeding and that is, or has engaged a third party that is, experienced in the operation of similar facilities;
(b)    the sublease is expressly subject and subordinated to the Head Lease, this Facility Lease, the Ground Lease and the Ground Sublease;
(c)    all terms and conditions of this Facility Lease and the other Transaction Documents remain in effect and the Facility Lessee remains fully and primarily liable for its obligations under this Facility Lease and the other Transaction Documents;
(d)    no Significant Lease Default or Lease Event of Default shall have occurred and be continuing at the time of the entering into of such sublease; 
(e)    the sublease prohibits further assignment or subletting; and 
(f)    the Lien of the Lease Indenture is not impaired by the sublease.
The Facility Lessee shall pay all reasonable, documented out-of-pocket expenses of the Owner Lessor, the Equity Investor, the Equity Manager, the Lessor Manager and the Lease Indenture Trustee in connection with such sublease.
SECTION 21.    OWNER LESSOR’S RIGHT TO PERFORM

If the Facility Lessee fails to make any payment required to be made by it hereunder or fails to perform or comply with any of its other agreements contained herein after notice to the Facility Lessee and failure of the Facility Lessee to so perform or comply within ten (10) days thereafter, the Owner Lessor or the Equity Investor may make such payment or perform or comply with such agreement in a reasonable manner, but shall not be obligated hereunder to do so, and the amount of such payment and of the reasonable documented expenses of the Owner Lessor or the Equity Investor incurred in connection with such payment or the performance of or compliance with such agreement, as the case may be, together with interest thereon at the Overdue Rate, to the extent permitted by Applicable Law, shall be deemed to be Supplemental Lease Rent, payable by the Facility Lessee to the Owner Lessor on demand.
SECTION 22.    SECURITY FOR OWNER LESSOR’S OBLIGATION TO THE LEASE INDENTURE TRUSTEE

In order to secure the Lessor Notes, the Owner Lessor will assign and grant a Lien to the Lease Indenture Trustee in and to all of the Owner Lessor’s right, title and interest in, to and under this Facility Lease, and grant a security interest in favor of the Lease Indenture Trustee in all of the Owner Lessor’s right, title and interest in and to the Owner Lessor’s Interest (other than Excepted Payments and subject to Excepted Rights) pursuant to the Lease Indenture.  The Facility Lessee hereby consents to such assignment and to the creation of such Lien and security interest and acknowledges receipt of copies of the Lease Indenture, it being understood that such consent shall not affect any requirement or the absence of any requirement for any consent of the Facility Lessee under any other circumstances.  Unless and until the Facility Lessee shall 

have received written notice from the Lease Indenture Trustee that the Lien of the Lease Indenture has been fully terminated, the Lease Indenture Trustee shall have the right to exercise the rights of the Owner Lessor under this Facility Lease to the extent set forth in and subject in each case to the exceptions set forth in the Lease Indenture.  TO THE EXTENT, IF ANY, THAT THIS FACILITY 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 FACILITY 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 23.    MISCELLANEOUS

Section 23.1.    Amendments and Waivers.  No term, covenant, agreement or condition of this Facility 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 23.2.    Notices.  Unless otherwise expressly specified or permitted by the terms hereof, all communications and notices provided for herein to a party hereto shall be in writing or by a telecommunications or electronic device capable of creating a written record, and any such notice shall become effective (a) upon personal delivery thereof, including by overnight mail or courier service, (b) in the case of notice by United States mail, certified or registered, postage prepaid, return receipt requested, upon receipt thereof, or (c) in the case of notice by such a telecommunications or electronic device, upon transmission thereof, provided such transmission is promptly confirmed by either of the methods set forth in clauses (a) and (b) above, in each case addressed to such party and copy party at its address set forth below or at such other address as such party or copy party may from time to time designate by written notice to the other party:

If to the Owner Lessor:
Southaven Combined Cycle Generation LLC
c/o 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

with a copy to the Equity Investor:
Southaven Holdco LLC
c/o Global Securitization Services, LLC
68 South Service Road, Suite 120

Melville, NY 11747
Telephone No.:  (631) 930-7202
Facsimile No.:  (212) 302-8767
E-Mail:  jrangelo@gssnyc.com
Attention:  Bernard J. Angelo

and to the Lease Indenture Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Telephone No.:  (302) 636-6191
Facsimile No.:  (302) 636-4140
E-mail:  jparedes@wilmingtontrust.com
Attention:  Corporate Trust Administration

If to the Facility Lessee:

Tennessee Valley Authority
400 West Summit Hill Drive
Knoxville, Tennessee 37902
Telephone No.: (865) 632-3366
Facsimile No.:  (865) 632-6673
E-mail: leasenotices@tva.gov
Attention:    Treasurer

Section 23.3.    Survival.  Except for the provisions of Sections 3.3, 3.5, 5, 9, 18 and 23, which shall survive, the warranties and covenants made by each party hereto shall not survive the expiration or termination of this Facility Lease in accordance with its terms.

Section 23.4.    Successors and Assigns.

(a)    This Facility 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 assigns as permitted by and in accordance with the terms hereof.

(b)    Except as expressly provided herein or in the other Transaction Documents, neither party hereto may assign its interests or transfer its obligations herein without the consent of the other party hereto.

(c)    This Facility Lease is a registered instrument.  A manually signed copy of this Facility Lease shall be evidence only of the Owner Lessor’s rights and is not a bearer instrument.  The Owner Lessor and the Facility Lessee hereby agree that the Facility Lessee shall keep books of registry in which it will register by book entry any transfer of all or a portion of the Owner Lessor’s interest in the leasehold interest in the Undivided Interest, in this Facility Lease and in the rights to receive any payment hereunder.  No 

transfer by the Owner Lessor of any interest in this Facility Lease or in the right to receive any payments hereunder shall be permitted unless a book entry of such transfer is made upon such registry and such transfer is effected in compliance with this Section 23.4(c).  Prior to the registration of any transfer by the Owner Lessor (or any successor of the Owner Lessor) as provided in this paragraph, the Facility Lessee may deem and treat the registered owner of this Facility Lease as the owner hereof for all purposes.

Section 23.5.    Intended Tax Treatment.  The Facility Lessee and the Owner Lessor hereby agree that for United States federal, state and local income tax purposes, the Facility Lessee will be the tax owner of the Undivided Interest and the issuer of a debt obligation in the form of this Facility Lease (providing for the payment or accrual of principal and interest as set forth on Schedule 1), and neither party will take any inconsistent position in any U.S. federal, state or local income tax filing, unless otherwise required by a change of law after the date hereof or a non-appealable judgment of a court of competent jurisdiction.

Section 23.6.    Business Day.  Notwithstanding anything herein to the contrary, if the date on which any payment or performance is to be made pursuant to this Facility 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 that such payment is made on such succeeding Business Day) no interest shall accrue on the amount of such payment from and after such scheduled date to the time of such payment on such next succeeding Business Day.

Section 23.7.    Governing Law.  This Facility 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 23.8.    Severability.  Any provision of this Facility Lease that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 23.9.    Counterparts.  This Facility Lease may be executed by the parties hereto in separate counterparts, each of which, subject to Section 22, when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

Section 23.10.    Headings and Table of Contents.  The headings of the sections of this Facility 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 23.11.    Further Assurances.  Each party hereto will promptly and duly execute and deliver such further documents and assurances for and take such further action reasonably requested by the other party, all as may be reasonably necessary to carry out more effectively the intent and purpose of this Facility Lease.

Section 23.12.    Effectiveness.  This Facility Lease has been dated as of the date first above written for convenience only.  This Facility Lease shall become effective on the Effective Date.

Section 23.13.    Measuring Life.  If and to the extent that any of the rights and privileges granted under this Facility 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 Facility Lease, such options, rights and privileges, subject to the respective conditions hereof governing the exercise of such options, rights and privileges, will be exercisable only during (a) the longer of (i) a period which will end twenty-one (21) years after the death of the last survivor of the descendants living on the date of the execution of this Facility 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, 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 Facility Lease, whichever of (a) and (b) is shorter.

Section 23.14.    Owner Lessor Covenant.  So long as this Facility Lease shall remain in effect, the Owner Lessor (or any successor thereto) hereby agrees and covenants to comply with the applicable provisions of 41 C.F.R. section 60-1.4, 41 C.F.R. section 60-250.4 and 41 C.F.R. section 60-741.4.

Section 23.15.    Limitation on Liability.  It is expressly understood and agreed by the parties hereto that (a) this Facility Lease is executed and delivered by Wilmington Trust, National Association (“Wilmington”), not individually or personally but solely as in its capacity as Lessor Manager of the Owner Lessor 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 Owner Lessor 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 Owner Lessor, (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 Owner Lessor or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Owner Lessor under this Facility Lease.

Section 23.16.    Separate Tax Parcels.  Neither the Owner Lessor nor the Facility 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 Owner Lessor and the Facility Lessee agree to cooperate in opposing such separate assessment of the Undivided Interest.

Section 23.17.    Waiver of Abatement.  The Facility Lessee hereby 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 23.18    Co-tenancy.  The Owner Lessor and the Facility 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 Facility Lease.  Without limiting the foregoing, to the extent inconsistent with this Facility Lease, and to the extent permitted by law, the Owner Lessor and the Facility 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.

Section 23.19    Waiver of Partition.  Each of the Owner Lessor and the Facility 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 Facility Lease in accordance with its terms.  Until termination of this Facility Lease, each of the Owner Lessor and the Facility Lessee agrees not to commence any action of any kind seeking any form of partition with respect thereto.

Section 23.20.    Nonmerger.  The Owner Lessor and the Facility Lessee agree that the sublease of the Undivided Interest created hereby shall not merge into the Facility Lessee’s ownership of the Facility.

[Signature page follows.]

IN WITNESS WHEREOF, the Owner Lessor and the Facility Lessee have caused this Facility Lease to be duly executed and delivered by their respective officers thereunto duly authorized on the date of their respective acknowledgments and effective as of the Effective Date.
	
	
	 

	SOUTHAVEN COMBINED CYCLE GENERATION LLC

	By:  Wilmington Trust, National Association, not in its individual capacity, but solely as Lessor Manager under the Owner Lessor LLC Agreement

	 

	 

	By:  /s/ 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

	
	
	TENNESSEE VALLEY AUTHORITY

	 

	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 and 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

The name and address of the Owner Lessor are:
		
	OWNER LESSOR:
	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
The name and address of the Facility Lessee are:
		
	FACILITY LESSEE:
	Tennessee Valley Authority

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

*Receipt of the original counterpart of the foregoing Facility 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 under the Lease Indenture

	 

	 

	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/ Patrick A. Kanar                   

	Notary Public

	 

My Commission expires:
March 8, 2014

APPENDIX A
to
Facility Lease

Definitions

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), 

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.

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 

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 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.

“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.

“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 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.

“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.

“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.

“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.
“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 

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 

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% 

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.

“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 

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 

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.

“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.

“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.

“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 

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.

“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.

“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 Date” 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.

“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.

“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.

“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. 

“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 Holdco Note Purchaser” on Schedule 4 to the Participation Agreement.
“Southaven 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.

“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.

“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;

(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

(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.

“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, 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.

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 Lessee..................................................................
	16
	

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

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

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

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

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

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

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

	
							
	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 Purchasers..............................
	29
	

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

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

	Rating Agencies............................................................
	25
	

	 
	Southaven Holdco Note Purchaser's Percentage
	 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

	 
	 
	 
	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
	

SCHEDULE 1
to
Facility Lease

BASIC LEASE RENT

	
							
	Rent Payment Date
	 
	Basic Lease Rent 
(Debt Portion)
	 
	Basic Lease Rent 
(Equity Portion)
	 
	Basic Lease Rent 
Interest Portion*

	February 15, 2014
	 
	$15,405,730
	 
	$2,222,840
	 
	$8,576,893

	August 15, 2014
	 
	15,405,730
	 
	2,222,840
	 
	8,136,128

	February 15, 2015
	 
	15,405,730
	 
	2,222,840
	 
	7,940,171

	August 15, 2015
	 
	15,405,730
	 
	2,222,840
	 
	7,739,976

	February 15, 2016
	 
	15,405,730
	 
	2,222,840
	 
	7,535,445

	August 15, 2016
	 
	15,405,730
	 
	2,222,840
	 
	7,326,478

	February 15, 2017
	 
	15,405,730
	 
	2,222,840
	 
	7,112,972

	August 15, 2017
	 
	15,405,730
	 
	2,222,840
	 
	6,894,821

	February 15, 2018
	 
	15,405,730
	 
	2,222,840
	 
	6,671,918

	August 15, 2018
	 
	15,405,730
	 
	2,222,840
	 
	6,444,151

	February 15, 2019
	 
	15,405,730
	 
	2,222,840
	 
	6,211,406

	August 15, 2019
	 
	15,405,730
	 
	2,222,840
	 
	5,973,568

	February 15, 2020
	 
	15,405,730
	 
	2,222,840
	 
	5,730,515

	August 15, 2020
	 
	15,405,730
	 
	2,222,840
	 
	5,482,127

	February 15, 2021
	 
	15,405,730
	 
	2,222,840
	 
	5,228,276

	August 15, 2021
	 
	15,405,730
	 
	2,222,840
	 
	4,968,834

	February 15, 2022
	 
	15,405,730
	 
	2,222,840
	 
	4,703,668

______________________________
* For the avoidance of doubt, the amounts set forth under the column entitled "Basic Lease Rent Interest Portion" are provided for informational purposes only and reflect the amount included within the payment of Basic Lease Rent (Debt Portion) and Basic Lease Rent (Equity Portion) that constitutes, and shall be treated by the parties as, interest for U.S. federal income tax purposes and the listing of such amount does not create a payment obligation in addition to Basic Lease Rent.

	
							
	Rent Payment Date
	 
	Basic Lease Rent 
(Debt Portion)
	 
	Basic Lease Rent 
(Equity Portion)
	 
	Basic Lease Rent 
Interest Portion*

	August 15, 2022
	 
	15,405,730
	 
	2,222,840
	 
	4,432,643

	February 15, 2023
	 
	15,405,730
	 
	2,222,840
	 
	4,155,620

	August 15, 2023
	 
	9,797,483
	 
	1,150,076
	 
	3,872,455

	February 15, 2024
	 
	9,797,483
	 
	1,150,076
	 
	3,728,396

	August 15, 2024
	 
	9,797,483
	 
	1,150,076
	 
	3,581,286

	February 15, 2025
	 
	9,797,483
	 
	1,150,076
	 
	3,431,057

	August 15, 2025
	 
	9,797,483
	 
	1,150,076
	 
	3,277,639

	February 15, 2026
	 
	9,797,483
	 
	1,150,076
	 
	3,120,960

	August 15, 2026
	 
	9,797,483
	 
	1,150,076
	 
	2,960,947

	February 15, 2027
	 
	9,797,483
	 
	1,150,076
	 
	2,797,524

	August 15, 2027
	 
	9,797,483
	 
	1,150,076
	 
	2,630,613

	February 15, 2028
	 
	9,797,483
	 
	1,150,076
	 
	2,460,137

	August 15, 2028
	 
	9,797,483
	 
	1,150,076
	 
	2,286,013

	February 15, 2029
	 
	9,797,483
	 
	1,150,076
	 
	2,108,160

	August 15, 2029
	 
	9,797,483
	 
	1,150,076
	 
	1,926,490

	February 15, 2030
	 
	9,797,483
	 
	1,150,076
	 
	1,740,919

	August 15, 2030
	 
	9,797,483
	 
	1,150,076
	 
	1,551,355

	February 15, 2031
	 
	9,797,483
	 
	1,150,076
	 
	1,357,708

	August 15, 2031
	 
	9,797,483
	 
	1,150,076
	 
	1,159,883

	February 15, 2032
	 
	9,797,483
	 
	1,150,076
	 
	957,785

	August 15, 2032
	 
	9,797,483
	 
	1,150,076
	 
	751,315

	February 15, 2033
	 
	9,797,483
	 
	1,150,076
	 
	540,371

	August 15, 2033
	 
	9,797,483
	 
	4,140,000
	 
	324,851

SCHEDULE 2
to
Facility Lease

TERMINATION VALUES

	
					
	Termination Date
(Monthly)
	 
	Termination Value
(Debt Portion)
	 
	Termination Value
(Equity Portion)

	August 9, 2013
	 
	$360,000,000
	 
	$40,000,000

	September 15, 2013
	 
	361,382,400
	 
	40,280,000

	October 15, 2013
	 
	362,534,400
	 
	40,513,333

	November 15, 2013
	 
	363,686,400
	 
	40,746,667

	December 15, 2013
	 
	364,838,400
	 
	40,980,000

	January 15, 2014
	 
	365,990,400
	 
	41,213,333

	February 15, 2014
	 
	351,747,830
	 
	39,200,494

	March 15, 2014
	 
	352,873,423
	 
	39,429,163

	April 15, 2014
	 
	353,999,016
	 
	39,657,833

	May 15, 2014
	 
	355,124,610
	 
	39,886,502

	June 15, 2014
	 
	356,250,203
	 
	40,115,172

	July 15, 2014
	 
	357,375,796
	 
	40,343,841

	August 15, 2014
	 
	343,106,211
	 
	38,349,671

	September 15, 2013
	 
	344,204,151
	 
	38,573,378

	October 15, 2013
	 
	345,302,091
	 
	38,797,084

	November 15, 2013
	 
	346,400,031
	 
	39,020,791

	December 15, 2013
	 
	347,497,971
	 
	39,244,497

	January 15, 2014
	 
	348,595,911
	 
	39,468,203

	February 15, 2014
	 
	334,298,414
	 
	37,469,070

	March 15, 2014
	 
	335,368,169
	 
	37,687,640

	
					
	Termination Date
(Monthly)
	 
	Termination Value
(Debt Portion)
	 
	Termination Value
(Equity Portion)

	April 15, 2015
	 
	336,437,924
	 
	37,906,209

	May 15, 2015
	 
	337,507,679
	 
	38,124,779

	June 15, 2015
	 
	338,577,434
	 
	38,343,348

	July 15, 2015
	 
	339,647,189
	 
	38,561,918

	August 15, 2015
	 
	325,321,243
	 
	36,557,648

	September 15, 2015
	 
	326,362,271
	 
	36,770,901

	October 15, 2015
	 
	327,403,299
	 
	36,984,154

	November 15, 2015
	 
	328,444,327
	 
	37,197,407

	December 15, 2015
	 
	329,485,355
	 
	37,410,660

	January 15, 2016
	 
	330,526,383
	 
	37,623,913

	February 15, 2016
	 
	316,171,441
	 
	35,614,326

	March 15, 2016
	 
	317,183,190
	 
	35,822,076

	April 15, 2016
	 
	318,194,938
	 
	36,029,827

	May 15, 2016
	 
	319,206,687
	 
	36,237,577

	June 15, 2016
	 
	320,218,435
	 
	36,445,327

	July 15, 2016
	 
	321,230,184
	 
	36,653,077

	August 15, 2016
	 
	306,845,688
	 
	34,637,988

	September 15, 2016
	 
	307,827,594
	 
	34,840,043

	October 15, 2016
	 
	308,809,501
	 
	35,042,098

	November 15, 2016
	 
	309,791,407
	 
	35,244,153

	December 15, 2016
	 
	310,773,313
	 
	35,446,208

	January 15, 2017
	 
	311,755,219
	 
	35,648,262

	February 15, 2017
	 
	297,340,601
	 
	33,627,478

	March 15, 2017
	 
	298,292,091
	 
	33,823,638

	April 15, 2017
	 
	299,243,581
	 
	34,019,798

	
					
	Termination Date
(Monthly)
	 
	Termination Value
(Debt Portion)
	 
	Termination Value
(Equity Portion)

	May 15, 2017
	 
	300,195,071
	 
	34,215,959

	June 15, 2017
	 
	301,146,561
	 
	34,412,119

	July 15, 2017
	 
	302,098,051
	 
	34,608,279

	August 15, 2017
	 
	287,652,731
	 
	32,581,600

	September 15, 2017
	 
	288,573,220
	 
	32,771,659

	October 15, 2017
	 
	289,493,709
	 
	32,961,718

	November 15, 2017
	 
	290,414,197
	 
	33,151,778

	December 15, 2017
	 
	291,334,686
	 
	33,341,837

	January 15, 2018
	 
	292,255,175
	 
	33,531,896

	February 15, 2018
	 
	277,778,564
	 
	31,499,116

	March 15, 2018
	 
	278,667,455
	 
	31,682,861

	April 15, 2018
	 
	279,556,346
	 
	31,866,606

	May 15, 2018
	 
	280,445,238
	 
	32,050,351

	June 15, 2018
	 
	281,334,129
	 
	32,234,096

	July 15, 2018
	 
	282,223,021
	 
	32,417,840

	August 15, 2018
	 
	267,714,516
	 
	30,378,746

	September 15, 2018
	 
	268,571,202
	 
	30,555,955

	October 15, 2018
	 
	269,427,889
	 
	30,733,164

	November 15, 2018
	 
	270,284,575
	 
	30,910,374

	December 15, 2018
	 
	271,141,261
	 
	31,087,583

	January 15, 2019
	 
	271,997,948
	 
	31,264,792

	February 15, 2019
	 
	257,456,936
	 
	29,219,162

	March 15, 2019
	 
	258,280,798
	 
	29,389,607

	April 15, 2019
	 
	259,104,661
	 
	29,560,052

	May 15, 2019
	 
	259,928,523
	 
	29,730,497

	
					
	Termination Date
(Monthly)
	 
	Termination Value
(Debt Portion)
	 
	Termination Value
(Equity Portion)

	June 15, 2019
	 
	260,752,385
	 
	29,900,943

	July 15, 2019
	 
	261,576,247
	 
	30,071,388

	August 15, 2019
	 
	247,002,103
	 
	28,018,993

	September 15, 2019
	 
	247,792,510
	 
	28,182,437

	October 15, 2019
	 
	248,582,917
	 
	28,345,881

	November 15, 2019
	 
	249,373,324
	 
	28,509,325

	December 15, 2019
	 
	250,163,730
	 
	28,672,770

	January 15, 2020
	 
	250,954,137
	 
	28,836,214

	February 15, 2020
	 
	236,346,224
	 
	26,776,818

	March 15, 2020
	 
	237,102,532
	 
	26,933,016

	April 15, 2020
	 
	237,858,840
	 
	27,089,214

	May 15, 2020
	 
	238,615,148
	 
	27,245,413

	June 15, 2020
	 
	239,371,456
	 
	27,401,611

	July 15, 2020
	 
	240,127,764
	 
	27,557,809

	August 15, 2020
	 
	225,485,432
	 
	25,491,167

	September 15, 2020
	 
	226,206,986
	 
	25,639,866

	October 15, 2020
	 
	226,928,539
	 
	25,788,564

	November 15, 2020
	 
	227,650,093
	 
	25,937,263

	December 15, 2020
	 
	228,371,646
	 
	26,085,961

	January 15, 2021
	 
	229,093,199
	 
	26,234,660

	February 15, 2021
	 
	214,415,788
	 
	24,160,518

	March 15, 2021
	 
	215,101,918
	 
	24,301,455

	April 15, 2021
	 
	215,788,049
	 
	24,442,391

	May 15, 2021
	 
	216,474,179
	 
	24,583,328

	June 15, 2021
	 
	217,160,310
	 
	24,724,264

	
					
	Termination Date
(Monthly)
	 
	Termination Value
(Debt Portion)
	 
	Termination Value
(Equity Portion)

	July 15, 2021
	 
	217,846,440
	 
	24,865,200

	August 15, 2021
	 
	203,133,274
	 
	22,783,297

	September 15, 2021
	 
	203,783,300
	 
	22,916,200

	October 15, 2021
	 
	204,433,327
	 
	23,049,102

	November 15, 2021
	 
	205,083,353
	 
	23,182,005

	December 15, 2021
	 
	205,733,380
	 
	23,314,907

	January 15, 2022
	 
	206,383,406
	 
	23,447,810

	February 15, 2022
	 
	191,633,797
	 
	21,357,873

	March 15, 2022
	 
	192,247,025
	 
	21,482,460

	April 15, 2022
	 
	192,860,253
	 
	21,607,048

	May 15, 2022
	 
	193,473,481
	 
	21,731,635

	June 15, 2022
	 
	194,086,709
	 
	21,856,223

	July 15, 2022
	 
	194,699,938
	 
	21,980,811

	August 15, 2022
	 
	179,913,185
	 
	19,882,559

	September 15, 2022
	 
	180,488,907
	 
	19,998,540

	October 15, 2022
	 
	181,064,629
	 
	20,114,522

	November 15, 2022
	 
	181,640,352
	 
	20,230,503

	December 15, 2022
	 
	182,216,074
	 
	20,346,485

	January 15, 2023
	 
	182,791,796
	 
	20,462,467

	February 15, 2023
	 
	167,967,186
	 
	18,355,609

	March 15, 2023
	 
	168,504,681
	 
	18,462,683

	April 15, 2023
	 
	169,042,176
	 
	18,569,757

	May 15, 2023
	 
	169,579,671
	 
	18,676,832

	June 15, 2023
	 
	170,117,166
	 
	18,783,906

	July 15, 2023
	 
	170,654,661
	 
	18,890,980

	
					
	Termination Date
(Monthly)
	 
	Termination Value
(Debt Portion)
	 
	Termination Value
(Equity Portion)

	August 15, 2023
	 
	161,399,712
	 
	17,847,979

	September 15, 2023
	 
	161,916,191
	 
	17,952,092

	October 15, 2023
	 
	162,432,670
	 
	18,056,205

	November 15, 2023
	 
	162,949,149
	 
	18,160,318

	December 15, 2023
	 
	163,465,629
	 
	18,264,432

	January 15, 2024
	 
	163,982,108
	 
	18,368,545

	February 15, 2024
	 
	154,705,946
	 
	17,322,582

	March 15, 2024
	 
	155,201,005
	 
	17,423,630

	April 15, 2024
	 
	155,696,064
	 
	17,524,679

	May 15, 2024
	 
	156,191,123
	 
	17,625,727

	June 15, 2024
	 
	156,686,182
	 
	17,726,775

	July 15, 2024
	 
	157,181,241
	 
	17,827,824

	August 15, 2024
	 
	147,883,459
	 
	16,778,796

	September 15, 2024
	 
	148,356,686
	 
	16,876,673

	October 15, 2024
	 
	148,829,913
	 
	16,974,549

	November 15, 2024
	 
	149,303,140
	 
	17,072,425

	December 15, 2024
	 
	149,776,367
	 
	17,170,301

	January 15, 2025
	 
	150,249,594
	 
	17,268,178

	February 15, 2025
	 
	140,929,775
	 
	16,215,978

	March 15, 2025
	 
	141,380,750
	 
	16,310,571

	April 15, 2025
	 
	141,831,725
	 
	16,405,164

	May 15, 2025
	 
	142,282,701
	 
	16,499,758

	June 15, 2025
	 
	142,733,676
	 
	16,594,351

	July 15, 2025
	 
	143,184,651
	 
	16,688,944

	August 15, 2025
	 
	133,842,372
	 
	15,633,461

	
					
	Termination Date
(Monthly)
	 
	Termination Value
(Debt Portion)
	 
	Termination Value
(Equity Portion)

	September 15, 2025
	 
	134,270,667
	 
	15,724,656

	October 15, 2025
	 
	134,698,963
	 
	15,815,852

	November 15, 2025
	 
	135,127,259
	 
	15,907,047

	December 15, 2025
	 
	135,555,554
	 
	15,998,242

	January 15, 2026
	 
	135,983,850
	 
	16,089,437

	February 15, 2026
	 
	126,618,678
	 
	15,030,556

	March 15, 2026
	 
	127,023,858
	 
	15,118,234

	April 15, 2026
	 
	127,429,037
	 
	15,205,913

	May 15, 2026
	 
	127,834,217
	 
	15,293,591

	June 15, 2026
	 
	128,239,397
	 
	15,381,269

	July 15, 2026
	 
	128,644,577
	 
	15,468,947

	August 15, 2026
	 
	119,256,072
	 
	14,406,550

	September 15, 2026
	 
	119,637,692
	 
	14,490,588

	October 15, 2026
	 
	120,019,311
	 
	14,574,626

	November 15, 2026
	 
	120,400,931
	 
	14,658,664

	December 15, 2026
	 
	120,782,550
	 
	14,742,702

	January 15, 2027
	 
	121,164,169
	 
	14,826,741

	February 15, 2027
	 
	111,751,884
	 
	13,760,703

	March 15, 2027
	 
	112,109,490
	 
	13,840,974

	April 15, 2027
	 
	112,467,096
	 
	13,921,244

	May 15, 2027
	 
	112,824,702
	 
	14,001,515

	June 15, 2027
	 
	113,182,308
	 
	14,081,786

	July 15, 2027
	 
	113,539,914
	 
	14,162,057

	August 15, 2027
	 
	104,103,390
	 
	13,092,251

	September 15, 2027
	 
	104,436,521
	 
	13,168,623

	
					
	Termination Date
(Monthly)
	 
	Termination Value
(Debt Portion)
	 
	Termination Value
(Equity Portion)

	October 15, 2027
	 
	104,769,652
	 
	13,244,994

	November 15, 2027
	 
	105,102,782
	 
	13,321,366

	December 15, 2027
	 
	105,435,913
	 
	13,397,737

	January 15, 2028
	 
	105,769,044
	 
	13,474,109

	February 15, 2028
	 
	96,307,815
	 
	12,400,404

	March 15, 2028
	 
	96,616,000
	 
	12,472,740

	April 15, 2028
	 
	96,924,185
	 
	12,545,075

	May 15, 2028
	 
	97,232,370
	 
	12,617,411

	June 15, 2028
	 
	97,540,555
	 
	12,689,747

	July 15, 2028
	 
	97,848,740
	 
	12,762,083

	August 15, 2028
	 
	88,362,332
	 
	11,684,342

	September 15, 2028
	 
	88,645,091
	 
	11,752,501

	October 15, 2028
	 
	88,927,851
	 
	11,820,659

	November 15, 2028
	 
	89,210,610
	 
	11,888,818

	December 15, 2028
	 
	89,493,370
	 
	11,956,977

	January 15, 2029
	 
	89,776,129
	 
	12,025,135

	February 15, 2029
	 
	80,264,057
	 
	10,943,218

	March 15, 2029
	 
	80,520,902
	 
	11,007,053

	April 15, 2029
	 
	80,777,747
	 
	11,070,889

	May 15, 2029
	 
	81,034,592
	 
	11,134,724

	June 15, 2029
	 
	81,291,437
	 
	11,198,560

	July 15, 2029
	 
	81,548,282
	 
	11,262,395

	August 15, 2029
	 
	72,010,052
	 
	10,176,155

	September 15, 2029
	 
	72,240,484
	 
	10,235,516

	October 15, 2029
	 
	72,470,916
	 
	10,294,876

	
					
	Termination Date
(Monthly)
	 
	Termination Value
(Debt Portion)
	 
	Termination Value
(Equity Portion)

	November 15, 2029
	 
	72,701,349
	 
	10,354,237

	December 15, 2029
	 
	72,931,781
	 
	10,413,598

	January 15, 2030
	 
	73,162,213
	 
	10,472,959

	February 15, 2030
	 
	63,597,323
	 
	9,382,244

	March 15, 2030
	 
	63,800,834
	 
	9,436,974

	April 15, 2030
	 
	64,004,346
	 
	9,491,703

	May 15, 2030
	 
	64,207,857
	 
	9,546,433

	June 15, 2030
	 
	64,411,368
	 
	9,601,163

	July 15, 2030
	 
	64,614,880
	 
	9,655,893

	August 15, 2030
	 
	55,022,816
	 
	8,560,546

	September 15, 2030
	 
	55,198,889
	 
	8,610,483

	October 15, 2030
	 
	55,374,963
	 
	8,660,419

	November 15, 2030
	 
	55,551,036
	 
	8,710,356

	December 15, 2030
	 
	55,727,109
	 
	8,760,292

	January 15, 2031
	 
	55,903,182
	 
	8,810,229

	February 15, 2031
	 
	46,283,423
	 
	7,710,089

	March 15, 2031
	 
	46,431,529
	 
	7,755,065

	April 15, 2031
	 
	46,579,636
	 
	7,800,041

	May 15, 2031
	 
	46,727,743
	 
	7,845,016

	June 15, 2031
	 
	46,875,850
	 
	7,889,992

	July 15, 2031
	 
	47,023,957
	 
	7,934,967

	August 15, 2031
	 
	37,375,970
	 
	6,829,867

	September 15, 2031
	 
	37,495,573
	 
	6,869,707

	October 15, 2031
	 
	37,615,176
	 
	6,909,548

	November 15, 2031
	 
	37,734,779
	 
	6,949,389

	
					
	Termination Date
(Monthly)
	 
	Termination Value
(Debt Portion)
	 
	Termination Value
(Equity Portion)

	December 15, 2031
	 
	37,854,382
	 
	6,989,230

	January 15, 2032
	 
	37,973,986
	 
	7,029,071

	February 15, 2032
	 
	28,297,227
	 
	5,918,836

	March 15, 2032
	 
	28,387,778
	 
	5,953,362

	April 15, 2032
	 
	28,478,330
	 
	5,987,889

	May 15, 2032
	 
	28,568,881
	 
	6,022,415

	June 15, 2032
	 
	28,659,432
	 
	6,056,942

	July 15, 2032
	 
	28,749,983
	 
	6,091,468

	August 15, 2032
	 
	19,043,900
	 
	4,975,919

	September 15, 2032
	 
	19,104,841
	 
	5,004,945

	October 15, 2032
	 
	19,165,781
	 
	5,033,971

	November 15, 2032
	 
	19,226,722
	 
	5,062,998

	December 15, 2032
	 
	19,287,662
	 
	5,092,024

	January 15, 2033
	 
	19,348,603
	 
	5,121,050

	February 15, 2033
	 
	9,612,632
	 
	4,000,000

	March 15, 2033
	 
	9,643,392
	 
	4,023,333

	April 15, 2033
	 
	9,674,153
	 
	4,046,667

	May 15, 2033
	 
	9,704,913
	 
	4,070,000

	June 15, 2033
	 
	9,735,673
	 
	4,093,333

	July 15, 2033
	 
	9,766,434
	 
	4,116,667

	August 15, 2033
	 
	$0
	 
	$0

EXHIBIT A
to
Facility 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 Exhibit 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
Emissions Monitoring System

Exh. A-1

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

Exh. A-2

    
EXHIBIT B
to
Facility 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.

Exh. B-1

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