EXHIBIT 10.43
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AMENDMENT NO. 2
dated as of October 13, 1994
to
TAX INDEMNIFICATION AGREEMENT
dated as of September 15, 1987
between
BEAVER VALLEY LEASING CORPORATION,
as Owner Participant
and
DUQUESNE LIGHT COMPANY,
as Lessee
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Sale and Leaseback of an Undivided Interest in
Beaver Valley Power Station Unit No. 2
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AMENDMENT NO. 2 dated as of October 13, 1994, to the Tax
Indemnification Agreement dated as of September 15, 1987, between Beaver Valley
Leasing Corporation (the "Owner Participant") and Duquesne Light Company (the
"Lessee"), as amended.
WITNESSETH:
WHEREAS, the Owner Participant and the Lessee have entered into the
Participation Agreement (such term and other capitalized terms used herein
without definition being defined as provided in Section 1);
WHEREAS, the Lessor and the Lessee have entered into the Facility
Lease providing for the lease by the Lessor to the Lessee of the Undivided
Interest;
WHEREAS, the Owner Participant and the Lessee have heretofore entered
into a Tax Indemnification Agreement dated as of September 15, 1987 (the "Tax
Indemnification Agreement"), as amended by Amendment No. 1 thereto dated as of
November 15, 1992, setting forth the rights and obligations of the Owner
Participant and the Lessee with respect to those items of income, gain, loss,
deduction and credit with respect to the Undivided Interest as are provided to
an owner of property;
WHEREAS, pursuant to Section 3(d) of the Facility Lease, the Schedules
of Basic Rent, Casualty Values, Special Casualty Values, Special Modified
Casualty Values, and Special Termination Values are being modified as a result
of the increase in the marginal Federal income tax rate applicable to
corporations to 35 percent from 34 percent by reason of the enactment of the
Omnibus Budget Reconciliation Act of 1993 (Pub. L. No. 103-66) and, in
connection with such modifications, the Lessee and the Owner Participant desire
to amend the Tax Indemnification Agreement in certain respects.
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. Definitions.
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Except as otherwise defined herein, capitalized terms used herein
shall have the respective meanings set forth in Appendix A to the Participation
Agreement, as amended.
SECTION 2. Amendments.
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(a) Section 1(a)(8) of the Tax Indemnification Agreement is amended by
deleting such paragraph in its entirety and replacing it with the following new
paragraph (8):
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The Owner Participant will be allowed current deductions for
amortization of all of the following amounts (the "Amortization
Deductions"): (i) an amount equal to the Transaction Expenses
(other than any Transaction Expenses payable to the Owner
Participant or an Affiliate that are not includible in the
recipient's gross income) to the extent payable by the Owner
Participant pursuant to Section 14 of the Participation Agreement
computed on a straight-line basis over the Basic Lease Term, (ii)
an amount equal to the Refinancing Transaction Expenses (as
defined in the Refinancing Agreement) to the extent payable by
the Owner Trustee (other than any Refinancing Transaction
Expenses that are not includible in the Owner Participant's gross
income) pursuant to Section 8 of the Refinancing Agreement
computed on a straight-line basis over the period commencing on
the Redemption Date and ending on the last day of the Basic Lease
Term and (iii) an amount equal to $35,200 of Adjustment
Transaction Expenses (as defined in Section 6(a) of Amendment No.
4 to Participation Agreement dated the date hereof) payable on
behalf of the Owner Trustee (other than any Adjustment
Transaction Expenses that are not includible in the Owner
Participant's gross income) pursuant to Section 6(a) of Amendment
No. 4 to Participation Agreement dated the date hereof, computed
on a straight-line basis over the period commencing on the
Adjustment Closing Date (as defined in Amendment No. 4 to
Participation Agreement dated the date hereof) and ending on the
last day of the Basic Lease Term; and the Owner Participant will
be entitled to take the Amortization Deductions into account in
computing the consolidated income tax liability of the Group
under the Tax Law.
(b) Section 1(a)(12) of the Tax Indemnification Agreement is amended
by adding the following after clause (h), and before the period:
"and (i) Supplemental Rent in the amount of $35,200 payable under
Section 6(a) of Amendment No. 4 to Participation Agreement dated
the date hereof".
(c) Effective on and as of January 1, 1993, Section 1(a)(13) of the
Tax Indemnification Agreement is amended by deleting such paragraph in its
entirety and replacing it with the following new paragraph:
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"The Owner Participant's marginal federal rate of income tax is
39.950685% for its taxable year ending December 31, 1987, 34% for
each taxable year thereafter up to and including its taxable year
ending December 31, 1992, and 35% for each taxable year
thereafter, in each case without giving effect to any credits
against tax, and such marginal rates will be applicable to each
item of income and deduction contemplated by this Section 1(a)."
(d) Sections 1(b)(8) and 2(b)(1) of the Tax Indemnification Agreement
are amended by replacing "Sections 1(a)(12)(a)-(h)" with "Sections 1(a)(12)(a)-
(i)" in each place it appears.
(e) Section 2(b)(1) of the Tax Indemnification Agreement is amended
by deleting the word "and" as it appears at the end of clause (xiv) thereof and
adding the following clause (xv) at the end of said Section 2(b)(1):
"or (xv) any adjustment to Basic Rent or any schedule pursuant to
Section 3(d) of the Facility Lease, and"
(f) Section 20 is amended by adding after "otherwise" and before the
period, the following:
"and any adjustment to Basic Rent or any schedule pursuant to
Section 3(d) of the Facility Lease."
SECTION 3. Miscellaneous.
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(a) EXECUTION. This Amendment No. 2 may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute but one and the same instrument.
Although this Amendment No. 2 is dated as of the date first above written for
convenience, the actual dates of execution hereof by the parties hereto are
respectively the dates set forth under the signatures hereto, and this Amendment
No. 2 shall be effective on the latest of such dates.
(b) GOVERNING LAW. This Amendment No. 2 has been negotiated and
delivered in the State of New York and shall be governed by, and be construed in
accordance with, the law of the State of New York.
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IN WITNESS WHEREOF, intending to be legally bound, each of the parties
hereto has caused this Amendment No. 2 to Tax Indemnification Agreement to be
duly executed by an officer thereunto duly authorized.
DUQUESNE LIGHT COMPANY
By: /s/ James D. Mitchell
___________________________
Name: James D. Mitchell
Title: Treasurer
Date: October 13, 1994
BEAVER VALLEY LEASING
CORPORATION
By:____________________________
Name:
Title:
Date:
IN WITNESS WHEREOF, intending to be legally bound, each of the parties
hereto has caused this Amendment No. 2 to Tax Indemnification Agreement to be
duly executed by an officer thereunto duly authorized.
DUQUESNE LIGHT COMPANY
By:____________________________
Name:
Title:
Date:
BEAVER VALLEY LEASING
CORPORATION
By: /s/ Arthur Folsom, Jr.
___________________________
Name: Arthur Folsom, Jr.
Title: Senior Vice President
Date: October 13, 1994