CLOVER UNIT 2
EQUIPMENT INTEREST AGREEMENT
Dated as of July 1, 1996
between
OLD DOMINION ELECTRIC COOPERATIVE
and
CLOVER XXXX 0 XXXXXXXXXX XXXXX
XXXXXX XXXX 0 GENERATING FACILITY
AND
COMMON FACILITIES
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS............................................................................. 2
SECTION 2. CONVEYANCE OF THE EQUIPMENT INTEREST.................................................... 3
SECTION 3. TERM AND CONSIDERATION.................................................................. 3
Section 3.1. Basic Term.......................................................... 3
Section 3.2. Renewal Term........................................................ 3
Section 3.3. Head Equipment Agreement Consideration.............................. 4
Section 3.4. Nonterminability.................................................... 4
SECTION 4. DISCLAIMER OF WARRANTIES................................................................ 4
SECTION 5. RIGHT OF QUIET ENJOYMENT................................................................ 5
SECTION 6. SURRENDER AND TRANSFER OF EQUIPMENT INTEREST............................................ 6
Section 6.1. Surrender of Equipment Interest..................................... 6
Section 6.2. Right of First Refusal in Virginia Power............................ 6
Section 6.3. Right of Virginia Power to Exercise Purchase
Option.................................................................................. 7
Section 6.4. Transfer of Equipment Interest...................................... 8
SECTION 7. LIENS................................................................................... 8
SECTION 8. OPERATION AND MAINTENANCE; REPLACEMENT
COMPONENTS.............................................................................. 8
Section 8.1. Operation and Maintenance........................................... 8
Section 8.2. Replacement Components.............................................. 8
SECTION 9. MODIFICATIONS........................................................................... 9
SECTION 10. SURRENDER OR TRANSFER OF EQUIPMENT INTEREST............................................. 9
Section 10.1. Surrender or Transfer during the Operating
Equipment Agreement Term................................................................ 9
Section 10.2. Surrender or Transfer After the Operating
Equipment Agreement Term................................................................ 9
SECTION 11. PURCHASE OPTION OF REMAINDER INTEREST OF OLD
DOMINION................................................................................ 9
SECTION 12. INSPECTION.............................................................................. 10
SECTION 13. SECURITY FOR FACILITY OWNER'S OBLIGATION TO THE
LENDERS................................................................................. 10
SECTION 14. NONMERGER............................................................................... 11
SECTION 15. MISCELLANEOUS........................................................................... 11
Section 15.1. Agreement Regarding Equipment....................................... 11
Section 15.2. Amendments and Waivers.............................................. 11
Section 15.3. Notices............................................................. 11
Section 15.4. Survival............................................................ 12
Section 15.5. Successors and Assigns.............................................. 13
Section 15.6. Business Day........................................................ 13
Section 15.7. Governing Law....................................................... 13
Section 15.8. Severability........................................................ 13
Section 15.9. Counterparts........................................................ 13
Section 15.10. Headings and Table of Contents...................................... 13
Section 15.11. Further Assurances.................................................. 13
Section 15.12. Effectiveness of Head Equipment Agreement........................... 14
Section 15.13. Limitation of Liability............................................. 14
Section 15.14. Measuring Life...................................................... 14
Exhibit A-1 - Description of Xxxx 0 Equipment
Exhibit A-2 - Description of Common Facilities Equipment
ii
CLOVER UNIT 2
EQUIPMENT INTEREST AGREEMENT
This CLOVER UNIT 2 EQUIPMENT INTEREST AGREEMENT, dated as of July 1,
1996 (this "Head Equipment Agreement"), between OLD DOMINION ELECTRIC
COOPERATIVE, a wholesale power supply cooperative organized under the laws of
the Commonwealth of Virginia ("Old Dominion"), and CLOVER UNIT 2 GENERATING
TRUST, a Delaware business trust created pursuant to the Trust Agreement, dated
as of July 1, 1996, between EPC Corporation and Wilmington Trust Company
("Facility Owner").
WHEREAS, the Clover Real Estate is more particularly described in
Schedule 1 to the Ground Lease and Sublease and is comprised of the Unit 1 Site
described in Schedule 2 thereto, the Unit 2 Site described in Schedule 3
thereto, the Common Facilities Site described in Schedule 4 thereto, and certain
other property, each such Schedule 1, Schedule 2, Schedule 3 and Schedule 4
being attached to, and recorded in the Halifax Clerk's Office with, the Ground
Lease and Sublease as part thereof;
WHEREAS, a copy of the Clover Power Station Plat is marked Exhibit A
and attached to, and recorded in the Halifax Clerk's Office with, the Ground
Lease and Sublease as a part thereof;
WHEREAS, Old Dominion and Virginia Power own the Clover Real Estate as
tenants-in-common;
WHEREAS, by the Clover Agreements, Old Dominion and Virginia Power
established their respective rights and obligations as tenants-in-common of the
Clover Real Estate and of all improvements thereafter to be constructed, and all
personal property thereafter to be situated, on the Clover Real Estate. Such
improvements and personal property held by Old Dominion and Virginia Power as
tenants-in-common include (a) the Unit 1 Foundation constructed on the Xxxx 0
Xxxx, (x) the Xxxx 0 Foundation constructed on the Unit 2 Site, (c) the Common
Facilities Foundation constructed on the Common Facilities Site, (d) the Unit 1
Equipment situated on the Unit 1 Site, (e) the Xxxx 0 Equipment situated on the
Unit 2 Site, and (f) the Common Facilities Equipment situated on the Common
Facilities Site;
WHEREAS, as tenants-in-common of such real and personal property, each
of Old Dominion and Virginia Power holds a 50% undivided interest in such real
and personal property, including the right to nonexclusive possession of all
such real and personal property, subject to (a) in the case of all such real and
personal property, the rights of the other to nonexclusive possession and the
terms and conditions of the Clover Agreements, (b) in the case of the Pollution
Control Assets, the rights, terms and conditions described above in clause (a)
and the rights of the Pollution Control Assets Lessor, and (c) in the case of
the Common Facilities, the Unit 1 Site, the Unit 1 Foundation and the Unit 1
Equipment, the
rights, terms and conditions described above in clause (a) and the rights of the
Unit 1 Parties;
WHEREAS, by the Ground Lease and Sublease, Old Dominion has leased the
Ground Interest to the Facility Owner and the Facility Owner simultaneously has
subleased the Ground Interest back to Old Dominion upon the terms and conditions
of the Ground Lease and Sublease;
WHEREAS, by the Head Foundation Agreement, Old Dominion is conveying
the Foundation Interest to the Facility Owner for a term of years;
WHEREAS, by the Operating Foundation Agreement, the Facility Owner will
convey the use and possession of the Foundation Interest back to Old Dominion
for a term of years which shall end prior to the expiration of the term of the
Head Foundation Agreement;
WHEREAS, by the Operating Equipment Agreement, the Facility Owner will
convey the use and possession of the Equipment Interest back to Old Dominion for
a term of years which shall end prior to the expiration of the term of this Head
Equipment Agreement;
WHEREAS, although Old Dominion and the Facility Owner intend that the
Foundation Interest at all times and in all respects be and remain personal
property under Virginia law, they are recording the Head Foundation Agreement,
and will record the Operating Foundation Agreement, in the Halifax Clerk's
Office in order to satisfy the conditions of Section 55-96 of the Code of
Virginia 1950, as amended, in the event that the Foundation Interest is deemed
to be real estate or an interest in real estate for purposes of such Section
55-96; and
WHEREAS, the Unit 1 Parties and the Unit 2 Parties shall share equally
all of those rights, and shall be subject equally to having all of those
responsibilities undertaken, which are granted to or imposed upon Old Dominion
with respect to the Common Facilities Site, the Common Facilities Foundation and
the Common Facilities Equipment, as (a) tenant-in-common with Virginia Power of
such property and (b) a party to the Clover Agreements.
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
2
SECTION 1. DEFINITIONS.
Capitalized terms used in this Head Equipment Agreement and not
otherwise defined herein shall have the respective meanings set forth in
Appendix A to the Participation Agreement, dated as of July 1, 1996, among Old
Dominion, the Facility Owner, Wilmington Trust Company (in the capacities
set forth therein), EPC Corporation and Utrecht-America Finance Co.
Where any provision in this Head Equipment Agreement refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
SECTION 2. CONVEYANCE OF THE EQUIPMENT INTEREST.
Old Dominion hereby conveys the Equipment Interest to the Facility
Owner for the term and renewal terms described below, and the Facility Owner
hereby takes such interest in the Equipment Interest from Old Dominion. Old
Dominion and the Facility Owner understand and agree that (a) this conveyance of
the Equipment Interest is subject to the limitations identified in the
definition of Equipment Interest, (b) legal title to all assets in the Equipment
Interest constituting Retained Assets remains vested in Old Dominion and
Virginia Power as tenants-in-common, (c) all assets in the Equipment Interest
constituting Pollution Control Assets have been conveyed to the Pollution
Control Assets Lessor and leased back to Old Dominion pursuant to the Pollution
Control Assets Lease and that legal title to such Pollution Control Assets
remains vested in the Pollution Control Assets Lessor and Virginia Power as
tenants-in-common, and (d) this conveyance of the Equipment Interest is subject
and subordinate to the lien of the Old Dominion Indenture (including any future
amendments, supplements or issuance of additional advances or indebtedness
thereunder), Permitted Encumbrances and the rights of Virginia Power under the
Clover Agreements.
Descriptions of the Unit 2 Equipment and the Common Facilities
Equipment are set forth on Exhibits A-1 and A-2, respectively, to this Head
Equipment Agreement.
SECTION 3. TERM AND CONSIDERATION.
SECTION 3.1. BASIC TERM. The term of this Head Equipment
Agreement shall commence on the Closing Date and shall terminate at 11:59 p.m.
(New York City time) on January 5, 2060 (the "Head Equipment Agreement Basic
Term").
SECTION 3.2. RENEWAL TERM. At the expiration of the Head Equipment
Agreement Basic Term or any Head Equipment Agreement Renewal Term (as
hereinafter defined), the Facility Owner
3
may renew this Head Equipment Agreement for an additional term or terms of
not less than 1 year each (each a "Head Equipment Agreement Renewal Term"
and, together with the Head Equipment Agreement Basic Term, the "Head
Equipment Agreement Term") by giving Old Dominion 180 days prior written
notice; PROVIDED that the Facility Owner shall only be permitted to renew the
term of this Head Equipment Agreement for a Head Equipment Agreement Renewal
Term if (a) concurrently with such renewal, the Head Foundation Agreement Term
is renewed for a period equal to the Head Equipment Agreement Renewal Term and
(b) on the date that notice of such renewal is given and at the commencement of
such Head Equipment Agreement Renewal Term, (i) the Clover Unit 2 Generating
Facility continues to be used for the production of electric capacity and
energy and (ii) no determination has been made in accordance with Section
11.01(a) of the Clover Operating Agreement to retire the Clover Unit 2
Generating Facility prior to the expiration of such Head Equipment Agreement
Renewal Term for which the Head Equipment Agreement Term is then being renewed.
Notwithstanding the foregoing if the Head Equipment Agreement Term is not
earlier terminated, it shall end on December 31, 2089.
SECTION 3.3. HEAD EQUIPMENT AGREEMENT CONSIDERATION. The Facility Owner
hereby agrees to pay Old Dominion $306,592,000 on the Closing Date as
consideration for the conveyance of the Equipment Interest for the Head
Equipment Agreement Basic Term and all Head Equipment Agreement Renewal Terms
(the "Head Equipment Agreement Consideration"). Old Dominion acknowledges
receipt of such amount in full satisfaction of the Facility Owner's obligation
to pay the consideration for the term of years conveyed by this Head Equipment
Agreement during the Head Equipment Agreement Basic Term and each Head Equipment
Agreement Renewal Term. If the Facility Owner elects to renew the term of the
Head Equipment Agreement for a Head Equipment Agreement Renewal Term or Terms,
pursuant to Section 3.2 hereof, Old Dominion agrees that no additional
consideration shall be payable in respect of any such Head Equipment Agreement
Renewal Term.
SECTION 3.4. NONTERMINABILITY. Subject to Section 10 hereof, this Head
Equipment Agreement shall not terminate, nor shall any of the rights granted and
conveyed hereunder to the Facility Owner be extinguished, lost or otherwise
impaired, in whole or in part, by any circumstances of any character or for any
reason whatsoever, including, without limitation, the following: (a) any damage
to or loss or destruction of all or any part of Clover Unit 2 for any reason
whatsoever and of whatever duration, (b) the condemnation, requisition (by
eminent domain or otherwise), seizure or other taking of title or use of Clover
Unit 2 by any Governmental Entity or otherwise, (c) any prohibition, limitation
or restriction on the use by any Person of all or any part of its property or
the interference with such use by any Person, or any eviction by paramount title
or otherwise, (d) any inadequacy, incorrectness or failure of the description of
Clover Unit 2 or any part thereof or any rights or property in which an interest
is intended to be granted or conveyed by this Head Equipment Agreement, (e) the
insolvency, bankruptcy, reorganization or similar proceedings by or against Old
Dominion, the Facility Owner or any other Person, (f) the failure by the
Facility Owner to comply with Section 6, 7 or 8 hereof or (g) any other reason
whatsoever, whether similar or dissimilar to any of the foregoing.
4
SECTION 4. DISCLAIMER OF WARRANTIES.
WITHOUT WAIVING ANY CLAIM THE FACILITY OWNER MAY HAVE AGAINST ANY
MANUFACTURER, VENDOR OR CONTRACTOR UNDER ANY OF THE CLOVER AGREEMENTS, THE
FACILITY OWNER ACKNOWLEDGES AND AGREES SOLELY FOR THE BENEFIT OF OLD DOMINION
THAT (a) CLOVER UNIT 2 AND EACH COMPONENT THEREOF ARE OF A SIZE, DESIGN,
CAPACITY AND MANUFACTURE ACCEPTABLE TO THE FACILITY OWNER, (b) THE FACILITY
OWNER IS SATISFIED THAT CLOVER UNIT 2 AND EACH COMPONENT THEREOF ARE SUITABLE
FOR THEIR RESPECTIVE PURPOSES, (c) OLD DOMINION IS NOT A MANUFACTURER OR A
DEALER IN PROPERTY OF SUCH KIND, (d) CLOVER UNIT 2 AND EACH COMPONENT THEREOF
ARE CONVEYED HEREUNDER FOR THE TERM AND THE RENEWAL TERM SPECIFIED ABOVE
SUBJECT TO ALL APPLICABLE LAWS NOW IN EFFECT OR HEREAFTER ADOPTED AND IN
THE STATE AND CONDITION OF EVERY PART THEREOF WHEN THE SAME FIRST BECAME
SUBJECT TO THIS HEAD EQUIPMENT AGREEMENT WITHOUT REPRESENTATION OR WARRANTY
OF ANY KIND BY OLD DOMINION AND (e) OLD DOMINION CONVEYS FOR THE TERM AND
THE RENEWAL TERM SPECIFIED ABOVE AND THE FACILITY OWNER TAKES THE EQUIPMENT
INTEREST UNDER THIS HEAD EQUIPMENT AGREEMENT "AS-IS", "WHERE-IS" AND "WITH
ALL FAULTS", AND THE FACILITY OWNER ACKNOWLEDGES THAT OLD DOMINION MAKES NO,
NOR SHALL BE DEEMED TO HAVE MADE, AND 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, OR
MERCHANTABILITY THEREOF OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP
THEREOF 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 Old Dominion represents
and warrants to the Facility Owner that Old Dominion has (1) good and valid
title, as a tenant-in-common with Virginia Power, to the Retained Assets
free and clear of all Liens other than the Lien of Old Dominion Indenture,
Permitted Encumbrances, the rights of Virginia Power under the Clover
Agreements and, in the case of the Common Facilities Equipment which is
part of the Retained Assets, the rights of the Unit 1 Parties, and (2) a
valid leasehold interest, to the extent of a 50% undivided interest, in the
Pollution Control Assets free and clear of all Liens other than the Lien of Old
Dominion Indenture, Permitted Encumbrances, the rights of Virginia Power
under the Clover Agreements and, in the case of the Common Facilities
Equipment which is part of the Pollution Control Assets, the rights of the Unit
1 Parties.
5
SECTION 5. RIGHT OF QUIET ENJOYMENT.
Old Dominion agrees that, notwithstanding any other provision of any of
the Operative Documents, so long as the Head Equipment Agreement Interest has
not been surrendered pursuant to the express provisions of Section 10 hereof,
Old Dominion shall not through its own actions or inactions interfere with or
interrupt the quiet enjoyment of the use, operation and possession by the
Facility Owner of the Head Equipment Agreement Interest subject to the terms
hereof.
SECTION 6. SURRENDER AND TRANSFER OF EQUIPMENT INTEREST.
SECTION 6.1. SURRENDER OF EQUIPMENT INTEREST. Upon surrender of the
Head Equipment Agreement Interest pursuant to Section 10.2 or, subject to
Section 10.1, on the last day of the Head Equipment Agreement Term, the Facility
Owner shall return the Equipment Interest by delivering constructive possession
of the same to Old Dominion at the location of Clover Unit 2 in Clover,
Virginia, and shall execute, acknowledge and deliver a release, surrender or
conveyance of all of its rights, title and interests in the Equipment Interest
to be prepared by and at the expense of Old Dominion in a form reasonably
satisfactory to the Facility Owner, in each case without representation or
warranty other than that the Equipment Interest is free and clear of all
Facility Owner's Liens and Owner Participant's Liens, without any other
liability or cost to the Facility Owner. The obligations of the Facility Owner
under this Section 6.1 shall survive termination of this Head Equipment
Agreement.
SECTION 6.2. RIGHT OF FIRST REFUSAL IN VIRGINIA POWER. If (a) at any
time during the Head Equipment Agreement Term the Facility Owner shall seek to
sell, lease, convey or otherwise transfer its interest in (i) the Head Equipment
Agreement Interest or any part thereof or (ii) the Facility Owner's Percentage
in the Unit 2 Equipment and the Common Facilities Equipment (if such interests
have been obtained by the Facility Owner pursuant to Section 11 hereof), or any
part thereto, to any Person other than Old Dominion pursuant to any provision of
the Operating Equipment Agreement, or (b) on or after the expiration or
termination of the Term of the Operating Equipment Agreement, the Owner
Participant seeks to sell the Beneficial Interest or any part thereof (other
than pursuant to Section 12 of the Participation Agreement), such Head Equipment
Agreement Interest or Beneficial Interest, as the case may be, shall be subject
to Virginia Power's right of first refusal on the terms and conditions set forth
in this Section 6.2. The Facility Owner will give Virginia Power prompt written
notice of all bona fide offers which it wishes to accept received from any other
Person to purchase or acquire its interest in the Head Equipment Agreement
Interest, the Facility Owner's Percentage in the Unit 2 Equipment and the Common
Facilities Equipment (if such interests shall have been obtained by the Facility
Owner pursuant to Section 11 hereof), or Owner Participant's Beneficial Interest
or any part of either,
6
together with a full and complete statement of the price and all of the terms,
conditions and provisions contained in such offers. Virginia Power will
thereafter have the right within a period of forty-five (45) Business Days from
and after the giving of such notice to notify the Facility Owner of its intent
to exercise its rights of first refusal. If Virginia Power elects to exercise
the right provided in the preceding sentence, it will within 180 days of such
notice execute a contract on the same terms and conditions as the offer giving
rise to such right. If Virginia Power does not give such notice to the Facility
Owner within the forty-five (45) Business Day period and execute such a contract
within 180 days of such notice, the Facility Owner will be free to proceed
under the terms and conditions as set forth in its notice to Virginia Power. In
the event that such terms or conditions are revised in any way that materially
changes the agreement for sale, lease, conveyance or transfer (including
any reduction in price or the terms of payment thereof), the Facility Owner must
again comply with the notice and acceptance provisions of this Section 6.2.
Virginia Power shall be deemed a third party beneficiary with respect to
this Section 6.2. The right of first refusal in favor of Virginia Power set
forth in this Section 6.2 shall be exercised only in connection with its
simultaneous exercise of the right of first refusal set forth in Section
6.2 of the Head Foundation Agreement. Notwithstanding any provision to the
contrary, it is agreed and understood that any transfer of the Head Equipment
Agreement Interest by the Owner Trustee to any successor Owner Trustee pursuant
to Section 9 of the Trust Agreement and the assignments between the Facility
Owner and the Qualified Intermediary pursuant to the Exchange Documents shall
not be subject to the provisions of this Section 6.2. In connection with
Virginia Power's exercise of the right of first refusal pursuant to this
Section 6.2 with respect to the Head Equipment Agreement Interest, the
Ground Interest shall be conveyed to Virginia Power. No amendment of this
Section shall be valid unless consented to by Virginia Power.
SECTION 6.3. RIGHT OF VIRGINIA POWER TO EXERCISE PURCHASE OPTION. If
Old Dominion shall not elect the Purchase Option pursuant to Section 15.1 of the
Operating Equipment Agreement, Virginia Power shall have the right to purchase
the Equipment Interest on the Expiration Date on the terms and conditions set
forth in this Section 6.3. Virginia Power shall give Old Dominion and the
Facility Owner written notice of its irrevocable election to exercise the
purchase option provided by this Section 6.3 by the date no later than the
earlier of (i) the date 60 days following the date twenty-four months prior to
the Expiration Date and (ii) the date 60 days following receipt by Virginia
Power from Old Dominion of notice, delivered pursuant to Section 15.1 of the
Operating Equipment Agreement, of its election not to exercise the Purchase
Option. If Virginia Power shall not give the notice contemplated by the
preceding sentence, it will be deemed to have elected not to purchase and it
will have no right to purchase the Equipment Interest pursuant to this Section
6.3. If Virginia Power shall give notice of its election to purchase the
Equipment Interest pursuant to this Section 6.3, it shall become unconditionally
obligated to pay all amounts of the Purchase Option Price at the times and in
the amounts set forth in clause (a)(i) and (b) of Section 15.1 of the Operating
Equipment Agreement and, without duplication of its covenant set forth in the
succeeding sentence and Section 15.5 of the Operating Equipment Agreement, Old
Dominion shall be obligated to pay on the Expiration Date the amounts set forth
in clauses (a)(ii) and (a)(iii) of Section 15.1 of the Operating Equipment
Agreement. If Virginia Power elects to
7
purchase the Equipment Interest in accordance with this Section 6.3, Old
Dominion and the Facility Owner each agree to comply with their respective
covenants set forth in Section 15.1 of the Operating Equipment Agreement
(other than, in the case of Old Dominion, the covenant to pay any amounts of
the Purchase Option Price) in order to permit Virginia Power to purchase
the Equipment Interest in accordance with such Section 15.1 of the Operating
Equipment Agreement. Other than as set forth in the preceding sentence and
Section 15.4 of the Operating Equipment Agreement, Old Dominion shall have no
obligations in connection with Virginia Power's exercise of the election set
forth in this Section 6.3. Virginia Power shall be deemed a third party
beneficiary with respect to this Section 6.3. The election of Virginia Power to
purchase the Equipment Interest set forth in this Section 6.3 shall be
exercised only in connection with its simultaneous exercise of its election to
purchase the Foundation Interest set forth in Section 6.3 of the Head
Foundation Agreement. If it shall exercise the purchase option set forth in this
Section 6.3, Virginia Power shall be permitted to exercise the Facility Owner's
purchase option set forth in Section 11 of this Head Foundation Agreement. In
connection with Virginia Power's exercise of the purchase option provided by
this Section 6.3, the Ground Interest shall be conveyed to Virginia Power.
No amendment of this section shall be valid unless consented to in writing by
Virginia Power.
SECTION 6.4. TRANSFER OF EQUIPMENT INTEREST. Old Dominion acknowledges
that the Facility Owner shall have the right to transfer and convey the Head
Equipment Agreement Interest under and in accordance with Section 14.4 and
Section 17.1(c) of the Operating Equipment Agreement in connection with the
Facility Owner's transfer thereunder of the Facility Owner's Xxxx 0 Xxxxxxxx.
XXXXXXX 7. LIENS.
The Facility Owner agrees that it will not, directly or indirectly,
create, incur, assume or suffer to exist any Facility Owner's Liens or Owner
Participant's Liens on or with respect to the Equipment Interest or its Head
Equipment Agreement Interest, and the Facility Owner shall promptly notify Old
Dominion of the imposition of any such Lien of which the Facility Owner is aware
and shall promptly, at its own expense, take such action as may be necessary to
discharge any such Lien.
8
SECTION 8. OPERATION AND MAINTENANCE; REPLACEMENT COMPONENTS.
SECTION 8.1. OPERATION AND MAINTENANCE. The Facility Owner covenants
and agrees to operate, maintain and insure the Equipment Interest, or cause the
Equipment Interest to be operated, maintained and insured, in accordance with
the Clover Agreements. Simultaneously with the execution and delivery by the
parties of this Head Equipment Agreement, the Facility Owner and Old Dominion
have entered into the Clover Agreements Assignment pursuant to which the
Facility Owner has assumed all of Old Dominion's obligations under the Clover
Agreements, to the extent, but only to the extent, they relate to the Equipment
Interest, the Foundation Interest and the Ground Interest. The Facility Owner
covenants and agrees that it will perform all of its obligations under the
Clover Agreements Assignment. The execution and delivery of the Operating
Equipment Agreement shall be deemed compliance by the Facility Owner with its
covenants set forth in this Section 8.1 during the Term of the Operating
Equipment Agreement without any further action by the Facility Owner, whether or
not Old Dominion shall comply with the corresponding obligations under the
Operating Equipment Agreement. Following the Expiration Date, if the Operating
Agency Agreement shall be in effect and Old Dominion shall be the "Operating
Agent" thereunder, the Facility Owner shall be deemed in compliance with its
covenant set forth in this Section 8.1 without any further action by the
Facility Owner, whether or not Old Dominion shall be in compliance with its
covenants under the Operating Agency Agreement.
SECTION 8.2. REPLACEMENT COMPONENTS. An undivided interest equal
to the Facility Owner's Percentage in all Replacement Components incorporated in
the Unit 2 Equipment and the Common Facilities Equipment included in Clover
Unit 2 during the Head Equipment Agreement Term in accordance with the Operating
Equipment Agreement or the Clover Operating Agreement shall automatically
become subject to this Head Equipment Agreement without any action by any
Person whatsoever and shall be deemed to be a part of Clover Unit 2 and the
Equipment Interest for all purposes of this Head Equipment Agreement.
SECTION 9. MODIFICATIONS.
An undivided interest equal to the Facility Owner's Percentage in all
Modifications to the Unit 2 Equipment and Common Facilities Equipment included
in Clover Unit 2 during the Head Equipment Agreement Term in accordance with the
Operating Equipment Agreement or the Clover Operating Agreement shall
automatically become subject to this Head Equipment Agreement without any action
by any Person whatsoever and shall be deemed to be a part of Clover Unit 2 and
the Equipment Interest for all purposes of this Head Equipment Agreement.
9
SECTION 10. SURRENDER OR TRANSFER OF EQUIPMENT INTEREST.
SECTION 10.1. SURRENDER OR TRANSFER DURING THE OPERATING EQUIPMENT
AGREEMENT TERM. If (a) the Operating Equipment Agreement is terminated pursuant
to Section 10, 13, 17.1(e) (where the Facility Owner is to transfer the Facility
Owner's Unit 2 Interest to Old Dominion) or 18 thereof, (b) the Purchase Option
pursuant to Section 15.1 of the Operating Equipment Agreement is exercised or
(c) the Facility Owner exercises its right to transfer the Facility Owner's Unit
2 Interest pursuant to Section 17.1(c) of the Operating Equipment Agreement,
either (I) in circumstances where the transferor and transferee are the parties
hereto, the Facility Owner shall, upon satisfaction of the requirements of the
relevant sections of the Operating Equipment Agreement, surrender the Equipment
Interest to Old Dominion in accordance with Section 6.1 and Old Dominion and the
Facility Owner agree to comply with the provisions of the applicable section of
the Operating Equipment Agreement in connection with such surrender or (II) in
all other cases, Old Dominion expressly agrees that the Facility Owner may
convey and transfer the Facility Owner's right, title and interest in the
Equipment Interest as part of its transfer of the Facility Owner's Unit 2
Interest under the relevant section of the Operating Equipment Agreement.
SECTION 10.2. SURRENDER OR TRANSFER AFTER THE OPERATING EQUIPMENT
AGREEMENT TERM. At any time following the expiration or termination of the Term
of the Operating Equipment Agreement and the discharge of the Liens of the Loan
Agreement and the Leasehold Mortgage, the Facility Owner shall have the right to
surrender or transfer the Head Equipment Agreement Interest to Old Dominion in
accordance with Section 6.1.
SECTION 11. PURCHASE OPTION OF REMAINDER INTEREST OF OLD DOMINION.
At any time following the Term and the return of the Equipment Interest
to the Facility Owner in accordance with Section 5 of the Operating Equipment
Agreement in connection with Old Dominion's exercise of the Service Contract
Option or the Facility Owner's exercise of the Preemptive Election or following
the termination of the Operating Agreements pursuant to Sections 14 or 17 of
each, the Facility Owner (or Virginia Power in the event it exercises its rights
under Section 6.3 hereof) shall have the right, exercisable at its option, to
purchase the Facility Owner's Percentage in the Unit 2 Equipment and the Common
Facilities Equipment for $1. If the Facility Owner (or Virginia Power in the
event it exercises its rights under Section 6.3 hereof) elects to exercise such
right, Old Dominion shall convey legal title to such Facility Owner's Percentage
of the Unit 2 Equipment and the Common Facilities Equipment by executing and
delivering to the Facility Owner (or Virginia Power in the event it exercises
its rights under Section 6.3 hereof) a xxxx of sale reasonably satisfactory to
the Facility Owner (or Virginia Power in the event it exercises its rights under
Section 6.3 hereof) warranting that such Facility Owner's
10
Percentage in the Unit 2 Equipment and the Common Facilities Equipment is free
of all Liens other than Permitted Post-Term Encumbrances. After giving effect
to such conveyance, the provisions of Section 15.03 of the Clover Operating
Agreement and Section 17.03 of the Clover Ownership Agreement (and Section 6.2
hereof) shall apply. At any time following the Term in the circumstances
contemplated by the first sentence of this Section 11, if requested by the
Facility Owner (or Virginia Power in the event it exercises its rights under
Section 6.3 hereof), Old Dominion shall, at Old Dominion's expense, deliver
in favor of the Facility Owner (or Virginia Power in the event it exercises
its rights under Section 6.3 hereof) a security agreement creating a Lien on
Old Dominion's right, title and interest in the Unit 2 Equipment and the
Common Facilities Equipment in form and substance satisfactory to the
Facility Owner (or Virginia Power in the event it exercises its rights under
Section 6.3 hereof) securing the purchase option provided by this Section 11.
SECTION 12. INSPECTION.
During the Term of the Operating Equipment Agreement, the rights of the
Facility Owner, the Owner Participant, the Agent and their representatives to
inspect Clover Unit 2 shall be governed by Section 12 of the Operating Equipment
Agreement.
SECTION 13. SECURITY FOR FACILITY OWNER'S OBLIGATION TO THE
LENDERS.
In order to secure the Secured Indebtedness, the Facility Owner will
assign in the Loan Agreement to the Agent for its benefit and the ratable
benefit of the Lenders its rights under this Head Equipment Agreement and grant
security interests in favor of the Agent in, inter alia, all of the Facility
Owner's right, title and interest in and to the Equipment Interest, and its
interest in this Head Equipment Agreement (other than Excepted Payments and
Excepted Rights). Old Dominion hereby consents to such grant and assignment and
to the creation of such security interests and acknowledges receipt of copies of
the Loan Agreement, it being understood that such consent shall not
affect any requirement or the absence of any requirement for any consent
under any other circumstances. Old Dominion hereby acknowledges receipt of due
notice that the Facility Owner's interest in this Head Equipment Agreement
will be assigned to the Agent as security pursuant to the Loan Agreement to the
extent provided in the Loan Agreement. Unless and until Old Dominion shall
have received written notice from the Agent that the Facility Owner has the
right to have the Liens of the Loan Agreement and the Leasehold Mortgage
discharged, the Agent shall have the right to exercise the rights of the
Facility Owner under this Head Equipment Agreement to the extent set forth in
and subject in each case to the exceptions set forth in the Loan Agreement.
11
SECTION 14. NONMERGER.
The remainder in the Equipment Interest conveyed by this Head Equipment
Interest shall not merge into any interest in the Equipment Interest conveyed by
this Head Equipment Agreement even if such remainder and such interest are at
any time vested in or held directly or indirectly by the same Person, but this
Head Equipment Agreement, and the Operating Equipment Agreement (if sooner
terminated) shall nonetheless each remain in full force and effect in accordance
with its respective terms notwithstanding such vesting or holding.
SECTION 15. MISCELLANEOUS.
SECTION 15.1. AGREEMENT REGARDING EQUIPMENT. The parties hereto
understand and acknowledge that the Unit 2 Equipment and the Common Facilities
Equipment have been constructively severed from the Real Property by the
Severance Agreements and intend that all of the foregoing be treated as personal
property. However, should it be determined by a court of competent jurisdiction
that (notwithstanding the foregoing) any of the equipment constituting Unit 2
Equipment or Common Facilities Equipment is an interest in real property for
purposes of Virginia Code Section 55-96, the parties hereto agree that such
equipment shall not be part of the Unit 2 Equipment or the Common Facilities
Equipment and shall not be subject to this Head Equipment Agreement, but shall
constitute a part of the Unit 2 Foundation or the Common Facilities Foundation,
as the case may be, and shall be subject to and conveyed for the Head Foundation
Agreement Term by the Head Foundation Agreement.
SECTION 15.2. AMENDMENTS AND WAIVERS. No term, covenant, agreement or
condition of this Head Equipment Agreement may be terminated, amended or
compliance therewith waived (either generally or in a particular instance,
retroactively or prospectively) except by an instrument or instruments in
writing executed by each party hereto and, also, in connection with any
termination of or amendment to those provisions for which Virginia Power is an
intended beneficiary, approved by Virginia Power.
SECTION 15.3. NOTICES. Unless otherwise expressly specified or
permitted by the terms of this Head Equipment Agreement, all communications and
notices provided for herein to a party hereto shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including,
without limitation, 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 device, upon transmission thereof, provided such
transmission is promptly confirmed by either of the methods set forth in
clauses (a) or (b) above, in each case addressed to such party at its address
set forth below or at such other address as such party may from time to time
designate by written notice to the other party hereto:
If to Old Dominion:
Old Dominion Electric Cooperative
0000 Xxxxxxxx Xxxxxxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Vice President of Accounting and Finance
If to the Facility Owner:
Clover Unit 2 Generating Trust
c/o Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Corporate Trust Administration
A copy of all communications and notices provided for herein shall be sent by
the party giving such communication or notice to Virginia Power at:
Virginia Electric and Power Company
X.X. Xxx 00000
Xxxxxxxx, Xxxxxxxx 00000
Attention: President
SECTION 15.4. SURVIVAL. All warranties, representations, indemnities
and covenants made by either party hereto, herein or in any certificate or other
instrument delivered by either such party or on the behalf of either such party
under this Head Equipment Agreement, shall be considered to have been relied
upon by the other party hereto and shall survive the consummation of the
transactions contemplated hereby on the Closing Date regardless of any
investigation made by either party or on behalf of either party.
SECTION 15.5. SUCCESSORS AND ASSIGNS.
13
(a) This Head Equipment Agreement shall be binding upon and
shall inure to the benefit of, and shall be enforceable by, the parties hereto
and their respective successors and assigns as permitted by and in accordance
with the terms hereof.
(b) Except as expressly provided herein or in any other
Operative Document, Old Dominion may not assign its interests herein without the
consent of the Facility Owner. Except as expressly provided in the Operative
Documents, the Facility Owner may not assign its interests herein prior to the
expiration or early termination of the Term of the Operating Equipment Agreement
without the consent of Old Dominion.
SECTION 15.6. BUSINESS DAY. Notwithstanding anything herein to the
contrary, if the date on which any payment is to be made pursuant to this Head
Equipment Agreement is not a Business Day, the payment otherwise payable on such
date shall be payable on the next succeeding Business Day with the same force
and effect as if made on such scheduled date and (PROVIDED such payment is made
on such succeeding Business Day) no interest shall accrue on the amount of such
payment from and after such scheduled date to the time of such payment on such
next succeeding Business Day.
SECTION 15.7. GOVERNING LAW. THIS HEAD EQUIPMENT AGREEMENT SHALL
BE IN ALL RESPECTS GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE.
SECTION 15.8. SEVERABILITY. Whenever possible, each provision of this
Head Equipment Agreement shall be interpreted in such manner as to be effective
and valid under Applicable Law, but if any provision of this Head Equipment
Agreement shall be prohibited by or invalid under Applicable Law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Head Equipment Agreement.
SECTION 15.9. COUNTERPARTS. This Head Equipment Agreement may be
executed in any number of counterparts, each executed counterpart constituting
an original but all together only one agreement.
SECTION 15.10. HEADINGS AND TABLE OF CONTENTS. The headings of the
sections of this Head Equipment Agreement and the Table of Contents are inserted
for purposes of convenience only and shall not be construed to affect the
meaning or construction of any of the provisions hereof.
SECTION 15.11. FURTHER ASSURANCES. Each party hereto will promptly
and duly execute and deliver such further documents to make such further
assurances for and take such further action reasonably requested by the other
party hereto, all as may be reasonably necessary to carry out more effectively
the intent and purpose of this Head Equipment Agreement.
14
SECTION 15.12. EFFECTIVENESS OF HEAD EQUIPMENT AGREEMENT. This Head
Equipment Agreement has been dated as of the date first above written for
convenience only. This Head Equipment Agreement shall be effective on the date
of execution and delivery by each of Old Dominion and the Facility Owner.
SECTION 15.13. LIMITATION OF LIABILITY. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Wilmington Trust Company, not individually or personally but solely as
trustee of Clover Unit 2 Generating Trust (the "Trust") under the Trust
Agreement, in the exercise of the powers and authority conferred and vested in
it, (b) each of the representations, undertakings and agreements herein made on
the part of the Trust is made and intended not as personal representations,
undertakings and agreements by Wilmington Trust Company but is made and intended
for the purpose for binding only the Trust, (c) nothing herein contained shall
be construed as creating any liability on Wilmington Trust Company, individually
or personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties hereto
or by any Person claiming by, through or under the parties hereto and (d) under
no circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Trust or be liable for the breach
or failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Agreement or any other Operative Documents.
SECTION 15.14. MEASURING LIFE. If and to the extent that any of the
rights and privileges granted under this Agreement, including Section 11 hereof,
would, in the absence of the limitation imposed by this sentence, be invalid or
unenforceable as being in violation of the rule against perpetuities or any
other rule or law relating to the vesting of interests in property or the
suspension of the power of alienation of property, then it is agreed that
notwithstanding any other provision of this Head Equipment Agreement, such
options, rights and privileges, subject to the respective conditions governing
the exercise of such options, rights and privileges, will be exercisable only
during (a) a period which will end twenty-one (21) years after the death of the
last survivor of the members of the Board of Directors of Old Dominion named in
Exhibit A-5 hereto, together with all such persons' children and grandchildren
who are living on the date of the execution of this Head Equipment Agreement or
(b) the specific applicable period of time expressed in this Head Equipment
Agreement, whichever is shorter.
15
IN WITNESS WHEREOF, Old Dominion and the Facility Owner have caused
this Head Equipment Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized.
OLD DOMINION ELECTRIC COOPERATIVE
By:/s/ XXXXXX X. XXXXXX
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Date: July 31, 1996
CLOVER UNIT 2 GENERATING TRUST
By: Wilmington Trust Company, not
in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By:/s/ XXXXXX X. XXXXXX
--------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Date: July 31, 1996
EXHIBIT A-1
TO
HEAD EQUIPMENT
AGREEMENT
DESCRIPTION OF UNIT 2 EQUIPMENT
All those certain assets at or on the Unit 2 Site (excluding
the Xxxx 0 Foundation) and all replacements or substitutions thereto, including
the generation building, baghouse, scrubber building, and all those certain
parts and items of equipment identified on Schedule 1 (which is not intended to
limit the generality of the foregoing definition to the assets identified
therein) attached hereto, together with all auxiliary and support items,
including all valves, backflow preventers, breakdown orifices, exhaust heads,
expansion joints, flexible hoses, gage glasses, relief valves, sight flow
indicators, strainers, traps, local switch stations, transducers, circuit
breakers, transfer switches, disconnect switches, junction boxes, motors,
transformers (other), panel boards (other), local control devices, miscellaneous
panels and instruments, solenoid valves, control drives, signal converters and
monitors, conductivity instrumentation, pH instrumentations, recorders,
subpanels and switches/lights, and recorders/pen description.
X-0
XXXXXXX X-0
TO
HEAD EQUIPMENT
AGREEMENT
DESCRIPTION OF COMMON FACILITIES EQUIPMENT
All those certain assets used in connection with the operation
or maintenance of both the Clover Unit 1 Generating Facility and the Clover Unit
2 Generating Facility (excluding, the Xxxx 0 Xxxxxxxxx, xxx Xxxx 0 Equipment,
the Xxxx 0 Foundation, the Unit 2 Foundation and the Common Facilities
Foundation) and all replacements or substitutions thereto, including the crusher
building, coal car thaw shed, administration building, warehouse, coal yard
control building, machine shop, welding shop, coal yard maintenance building,
line unloading building, service water/five pump building, water treatment
building, plant services building, various electrical equipment buildings and
all those certain parts and items of equipment identified on Schedule 2 (which
is not intended to limit the generality of the foregoing definition to the
assets identified therein) attached hereto, together with all auxiliary and
support items, including all valves, backflow preventers, breakdown orifices,
exhaust heads, expansion joints, flexible hoses, gage glasses, relief valves,
sight flow indicators, strainers, traps, local switch stations, transducers,
circuit breakers, transfer switches, disconnect switches, junction boxes,
motors, transformers (other), panel boards (other), local control devices,
miscellaneous panels and instruments, solenoid valves, control drives, signal
converters and monitors, conductivity instrumentation, pH instrumentations,
recorders, subpanels and switches/lights, and recorders/pen description.
A-2-1
