CGI CAPITAL, INC.
Barley Mill Plaza
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
August 18, 1986
Public Service Company of New Mexico
Xxxxxxxx Square
Albuquerque, New Mexico 87158
Attention of X. X. Xxxxx
Chairman and President
Sale and Leaseback of an Undivided Interest
in Palo Verde Nuclear Generating Station Unit 2
waiver of Deemed loss Event
Dear Xx. Xxxxx:
We refer to the Participation Agreement, dated as of August 12,
1986, among Public Service Company of New Mexico, CCI Capital, Inc., Chemical
flank, in its individual capacity and as Indenture Trustee, The First National
Bank of Boston, in its individual capacity and as owner Trustee, and First PV
Funding Corporation (the Participation Agent) the Facility Lease dated as of the
same date and the other Transaction Documents referred to in the Participation
Agreement. Capitalized terms used herein without definition shall have the
respective meanings set forth in Appendix A to the Participation Agreement.
6091.CGI. 106.99A: 1
Such Appendix A includes a definition of the term "Deemed Loss
Event". With respect to any change enacted after the date hereof in the
Xxxxx-Xxxxxxxx Act, the Atomic Energy Act or any other Applicable Law, or the
regulations of the NRC (or other Governmental Authority having jurisdiction)
implementing any such change, which would otherwise constitute a Deemed Loss
Event by virtue of clause (2) of such definition, we hereby waive such Deemed
Loss Event for all purposes of the Facility Lease and the other Transaction
Documents if, but only if, after giving effect to such change or interpretation:
(a) the aggregate liability for a single Nuclear Incident of "persons
indemnified" (within the meaning of section 170(e) of the Atomic Energy Act;
such Act, together with the regulations of the NRC or other Governmental
Authority having jurisdiction implementing such Act, all as in effect on the
Closing Date, being herein referred to as Existing Law) shall not exceed $6.563
billion (assuming 101 operating nuclear facilities participating in the deferred
premium or similar plan referred to in clause (d) below and subject to
adjustment in an amount not exceeding $63 million for each increase or decrease
in said number of operating nuclear facilities): (b) the amount of primary
insurance coverage available from commercial insurance underwriters on terms
substantially equivalent (in the reasonable opinion of the Owner Participant) to
the terms in effect on the Closing Date under Existing Law and required to be
maintained by licensees with respect to any single nuclear facility shall be at
least equal to $160 million; (c) the amount of primary financial protection
(excluding the primary insurance coverage referred to in clause (b) above)
required of all licensees with respect to any single nuclear facility under
Applicable Law shall not exceed $40 million; (d) the aggregate amount payable by
all licensees of any single nuclear facility under any deferred premium or
similar plan required under Applicable Law shall not exceed $63 million per
Nuclear Incident; (e) the aggregate amount payable by all licensees in any one
year with respect to any one Nuclear Incident under any deferred premium or
similar plan required under Applicable Law shall not exceed $12 million; (f)
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6091.CGI .1106.99A: 1
insurance or other financial protection shall be in effect under which the
providers of such insurance or other financial protection shall agree to pay any
amount payable by any licensee under any deferred premium or similar plan upon a
default in such payment by such licensee up to a maximum aggregate amount for
all such defaults in payment of not less than $30 million; (9) a mechanism in
form and substance reasonably satisfactory to the Owner Participant shall be in
effect under which the maximum potential liability of all Persons during any
calendar year as a result of a Nuclear Incident shall not exceed the amount of
insurance or other financial protection required to be available during such
calendar year to pay all amounts which may become payable by any such Person,
when and as they become payable, in respect of such liability; (h) the form and
source (other than commercial insurance under-writers in respect of $160 million
of primary insurance coverage and licensees of nuclear facilities in respect of
deferred premiums) of insurance and other financial protection required under
Applicable Law to be maintained in respect of liability arising from a Nuclear
Incident shall be reasonably satisfactory to the Owner Participant; (i) as a
result of such change or interpretation, there shall be no claim, liability or
expense excluded from the limitation of liability established by Existing Law
(through modification of the meaning of the phrases of "aggregate liability",
"persons indemnified", "nuclear incident" or otherwise) or excluded (or the
funding or payment thereof deferred) under commercially available insurance or
other financial protection provisions provided for by Existing raw except, for
purposes of this clause (i), to the extent and in the amount excluded pursuant
to Existing Law; and (j) neither the Owner Trustee nor the Owner Participant
shall be (in the opinion of independent counsel to the Owner Participant)
exposed to any other increase in its real or potential liability with respect to
a Nuclear Incident, either during or subsequent to the Lease Term; provided,
however, that this waiver shall not continue beyond the date of enactment of the
first change in the Price Xxxxxxxx Act, the Atomic Energy Act or any other
Applicable Law relating to any of the issues set forth above and affecting
6091.CGI. 1106.99A: 1
-3-
licensees of nuclear facilities, but shall continue with respect to any
regulations of the NRC adopted thereafter implementing such change. For purposes
hereof, "nuclear facility" shall mean and refer to a facility designed for
producing substantial amounts of electricity and having a rated capacity of
100,000 electrical kilowatts or more.
This letter shall constitute a Transaction Document for all
purposes of the Participation Agreement and the other Transaction Documents. The
waiver contained herein shall be governed by, and construed in accordance with,
the laws of the State of New York.
CGI CAPITAL, INC.
by
----------------------
Vice President
Acknowledged and agreed
this 18th day of August, 1986.
