JA1 DRAFT Lease EAFB 20220926.pdf

DRAFT

Draft RFP Release

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USAF-PACAF-

DEPARTMENT OF THE AIR FORCE

GROUND LEASE

NUCLEAR MICRO-REACTOR PROJECT

ON

EIELSON AIR FORCE BASE,

IN

EIELSON AIR FORCE BASE, ALASKA

DATED AS OF __________________________

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TABLE OF CONTENTS

Recitals

1. Grant of Lease 6

2. Additional Interests Granted to Lessee 8

3. Lease Term 8

4. Lessee’s Representations and Warranties 8

5. Condition of the Leased Premises 9

6. Rent 9

7. Use of Project 11

8. Lessee’s Construction and Modification of Improvements 12

9. Lessee’s Operation and Maintenance of the Project [See Contract] 12

10. Utilities and Other Services 12

11. Taxes 13

12. Records and Reports 13

13. Lessee’s Obligations upon Lease Expiration/Termination 14

14. [Environmental Matters - See Contract] 16

15. [Compliance with Laws Generally - See Contract] 16

16. General Access and Inspection 16

17. Damage to or Destruction of Government Property 17

18. [Lessee’s Insurance - See Contract] 17

19. Damage to or Destruction of the Energy Production Facility 17

20. Termination Remedies and Elections 18

21. [Notices - See Contract 18

22. Assignment/Transfer 19

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23. Liens and Mortgages. [Intentionally Omitted] 19

24. [Disputes - See Contract] 19

25. Installation and Mission Security and Safety 19

26. Government Representatives 20

27. [Amendments - See Contract] 20

28. Transfer of Leased Premises by Government 20

29. Mandatory Clauses Required by Federal Law 20

30. Index of Definitions and Acronyms 31

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List of Exhibits

Exhibit A – Leased Land

Exhibit B – Existing Improvements

Exhibit C – Third Party Property Interests

Exhibit D – List of Environmental Documents

Exhibit E – Rent Rate Schedule

Exhibit F – [Omitted]

Exhibit G – [Omitted]

Exhibit H – [Omitted]

Exhibit I – Emergency Services Plan

Exhibit J – Form of the Memorandum of Lease

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DEPARTMENT OF THE AIR FORCE

GROUND LEASE

ON

EIELSON AIR FORCE BASE, ALASKA

THIS GROUND LEASE (“Lease”) is made effective as of _________, 20__, (the “Effective Date” hereinafter defined in Section 1.2), by and between THE UNITED STATES OF AMERICA, acting by and through THE SECRETARY OF THE AIR FORCE (the “Secretary” or the “Government”) and ________, incorporated in the State of ____ (the “Lessee”). The Government and Lessee may sometimes be referred to jointly as the “Parties,” and each separately may be referred to as a “Party.”

RECITALS

R-1 The Secretary, under the authority of 10 U.S.C. § 2667 (the “Enabling Statute”), has determined:

(i) that the Leased Premises (hereinafter defined) are under the control of the Secretary;

(ii) that the Leased Premises are not for the time needed for public use;

(iii) that the Leased Premises are not excess property as defined by 40 U.S.C.

§ 102(e) based on the following:

(a) all of the Leased Premises are essential to future mission flexibility, operational changes, equipment changes, and for potential expansion of the current operations/activities or new, as well as relocating, operational unit bed down;

(b) with encroachment problems impacting Air Force facilities nationwide, the Government’s continued ownership of the Leased Premises provides an essential buffer zone against uncontrolled incompatible uses that may otherwise be approved by local community or private interests if the Leased Premises were declared excess and transferred;

(c) the Leased Premises and the point of interconnection are located within the boundaries of the Eielson AFB (the “Installation”).

(d) the Leased Premises will be used solely for the construction and operation of a nuclear micro-reactor facility that will supply electricity directly to the Installation, and therefore, supports the military mission by enhancing energy security and furthering Department of Defense’s (“DoD”) renewable energy production and procurement goals;

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(iv) that the consideration established in Section 6 is not less than the fair market value of the Lessee’s leasehold interest;

(v) that a lease of the Leased Premises is advantageous to the United States; and

(vi) that a lease of the Leased Premises for the term established in Section 3 will promote the national defense or be in the public interest.

R-2 The Secretary has further determined that omitting a provision to permit the Secretary to unilaterally revoke this Lease at any time will promote the national defense or be in the public interest.

R-3 Whereas, the Lease of such Leased Premises is made in furtherance of the execution of a “Resilient Energy Supply Agreement" (the “Contract”), (INSERT RESA CONTRACT NUMBER), whereby the Lessee executes construction, provision, operation, management, maintenance, and eventual removal of a nuclear micro-reactor on the Installation EPF (the “Energy Production Facility” or “EPF”); interconnects the EPF with, or constructs facilities for interconnecting the EPF with, the Installation’s electrical distribution system; sells power and Environmental Attributes of that power to the Government); and removes its improvements and restores the land at the end of the Lease (collectively, the “Project”).

R-4 The term of the Contract will be for a period of __ (__) years; the Government desires to execute this Lease solely to enable the Lessee to construct and operate the EPF for the delivery of electricity to the Installation and thereby satisfy its obligations pursuant to the Contract between the Parties. This Lease supports and is ancillary to the Contract.

LEASE AGREEMENT

1. Grant of Lease.

1.1. Leased Premises. The Government hereby leases to Lessee, and Lessee leases from the Government, the real property described in Exhibit A hereto (the “Leased Land”), consisting of an approximately __ (__) acre parcel of land under the administrative control of Eielson AFB and those existing improvements located on the Leased Land, which is limited to utility infrastructure and roadways, described in Exhibit B hereto (the “Existing Improvements”).

Exhibit A shall be prepared, to the maximum extent practicable, in accordance with the standards of the American Land Title Association (“ALTA”) and the American Congress on Surveying and Mapping (“ACSM”). The term “Leased Premises” means both the Leased Land and Existing Improvements. The term “Lessee Improvements” means any structures, facilities (e.g., EPF, transmission, interconnection), landscaping, infrastructure, or other improvements the Lessee constructs or places on the Leased Premises or in connection with its use of the Leased Premises in accordance with the terms of this Lease, including demolition of, renovation/modification of Existing Improvements, if any.

1.2. Conditions Precedent. This Lease is made as of its Effective Date that is also the effective date for the Contract, which is the date of award; provided that the rights and obligations

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Lease No. USAF-PACAF- Page 7 of 46 Eielson PPA of the Parties under this Lease are conditioned upon the prior occurrence, or Lessee’s waiver, of the following (the date all such conditions are satisfied or waived, the “Commencement of Construction Date”): (a) execution of an agreement whereby the Government agrees to purchase power and Environmental Attributes of that power from the Lessee’s Project (i.e., the Contract);

(b) execution of an Engineering, Procurement, and Construction (“EPC”) Contract, or the equivalent, by the Lessee for the facilities required by the Project; (c) obtaining, or causing to be obtained, all non-Government, third-party “Approvals” deemed necessary by the Lessee to commence construction, generation and delivery of power (e.g., execution of an interconnection agreement), as well as to assume long-term management and operation of the Project. For the purpose of clarification only, and without limitation to the foregoing, execution of an EPC Contract or the equivalent, or the waiver thereof, by the Lessee may occur after the Effective Date.

1.3. Access to Leased Premises. The Leased Premises is not behind a security fence/gate that would restrict or limit access.

1.3.1. Prior to the Effective Date of this Lease and until the Commencement of

Construction Date has been established, the Lessee and its agents, employees, contractors, and invitees shall be permitted to enter upon the Leased Premises via such public right-of-way for the purposes of preliminary planning and due diligence activities not involving substantial ground disturbance pursuant to a license or right-of-entry agreement.

1.3.2. During the Lease Term (hereinafter defined) and after the Commencement of Construction Date has been established, Lessee and its agents, employees, contractors, and invitees shall be permitted to enter upon the Leased Premises via such public right-of-way and shall have the right to enter upon the Leased Premises at any reasonable times for the purposes of planning, designing, constructing, operating, and maintaining the Project.

1.3.3. Access to the Installation through one of the security gates is subject to the controls and restrictions specified in Section 2.1 below. The Government reserves the right to modify, eliminate, or temporarily close any streets, driveways, and walkways on the base;

however, subject to Section 25, the Government agrees that it will attempt to do so in a manner that does not unreasonably interfere with Lessee’s work on the Project.

1.4. Delivery of Possession. The Government shall deliver possession of the Leased Premises to Lessee on the Effective Date of the Lease.

1.5. Third Party Interests.

1.5.1. A list of known Third Party Property Interests maintained in the records of the Installation is attached as Exhibit C hereto. Lessee’s leasehold interest shall be subject to all existing ground or master leases, non-terminable easements, licenses, permits (if to federal entities) and other interests of third parties affecting the Leased Premises while those are in effect, whether of public record or not (collectively, “Third Party Property Interests”). The Government agrees to use reasonable efforts to assist Lessee in obtaining non-disturbance agreements, crossing consents or other consents from holders of Third Party Property Interests to ensure those interests do not unreasonably interfere with Lessee's use of the Lease Land for the Project.

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1.5.2. Nothing in this Lease shall prevent the Government from creating additional third party easements, licenses, permits or other interests affecting the Leased Premises to meet its own or other public requirements. Any such future third party interests shall not unreasonably interfere with Lessee’s use of the Project.

1.5.3. No Lessee Improvements shall permanently block or obstruct free traffic flow along roadways without prior approval from the Government.

2. Additional Interests Granted to Lessee.

2.1. Access to the Installation. During the Lease Term, Lessee and its agents, employees, contractors, and invitees shall be permitted to enter the Installation to conduct Project related business. The base main gate and security checkpoint shall be used by the Lessee’s personnel.

One or more routes and/or restrictions on the use of specified streets during certain hours of the day (e.g., haul routes) may be designated from time to time on a non-exclusive basis by the Government. Lessee acknowledges that the Installation is an active, operating military base and that the Government retains the right to restrict or entirely eliminate access to the Installation by Lessee and its agents, employees, contractors and invitees due to the needs of national defense or because of inclement weather and natural disasters. Lessee further acknowledges that the Government retains the right to promulgate and enforce security regulations that may restrict or impose requirements on access to the Installation by Lessee and its agents, employees, contractors and invitees, including regulations delineating parameters for authorized entry to or exit from the Installation. The Government will not be liable for any damages or losses, direct or consequential, to Lessee or its agents, employees, contractors and invitees resulting from the exercise of its foregoing rights.

2.2. Other Easements, Licenses or Permits. At Lessee’s request, the Government will grant, in accordance with statutory requirements (including, if applicable, the requirement that Government receive at least fair market value for the interest granted) easements, licenses or other interests benefitting the Leased Premises for utilities, interconnection, and/or other purposes (not including vehicular and pedestrian access) reasonably necessary for the Project for a term not to exceed the Lease Term; provided, however, any such easements, licenses or other interests shall not interfere with the Government’s mission and operations on any portion of the base outside of the Leased Premises.

2.3. Omitted.

3. Lease Term. This Lease shall be for a term beginning on the Effective Date and of a duration of ____(__) years ending , ____, ____ (the “Lease Expiration Date”), unless sooner terminated in accordance with the terms of this Lease. The “Lease Term” means period from the Effective Date through the Lease Expiration Date.

3.1. Notwithstanding the Term set forth in Condition 3 above, the Lessor reserves the right to terminate this Lease in conjunction with the Government’s rights to terminate the Contract, with or without cause, in accordance with the Government’s rights under the Contract. Any compensation that may be due to the Lessee for such termination shall be determined pursuant to the Contract.

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4. Lessee’s Representations and Warranties. Lessee represents and warrants to the Government as follows:

4.1. Organizational Matters; Enforceability. Lessee is a corporation, duly organized and validly existing under the laws of the State of ______, and is in good standing and qualified to do business in Alaska and in every other state in which its business requires such qualification. Lessee has full authority to own its properties and to carry on its business as now being conducted and as contemplated for the Project consistent with the Contract, and to enter into and perform this Lease.

4.2. No Other Authorization. No authorization, consent, approval, order, registration, declaration, or withholding of objection on the part of, or filing of or with, any governmental authority not already obtained or made (or to the extent not yet obtained or made, Lessee has no reason to believe that such authorizations, consents, approvals, orders, registrations, or declarations will not be obtained or made in a timely fashion) is required for the execution and delivery or approval, as the case may be, of this Lease, or the performance of this Lease by Lessee.

5. Condition of the Leased Premises.

5.1. No Representations or Warranties by the Government.

5.1.1. Lessee agrees that it has entered into this Lease based on its own full investigation of all facts relating to, and conditions underlying, the Leased Premises and its development and use of the Leased Premises, including environmental conditions, and that it has solely relied on its own investigation.

5.1.2. Lessee agrees that the Leased Premises are leased in “as is, where is” condition, without any representation or warranty by the Government concerning their condition and without any obligation of the Government to make alterations, repairs or additions. Except as expressly set forth in the Contract, section C, subsection VI, the Government shall not be liable to Lessee for any damages or losses, whether direct or consequential, incurred by Lessee because of the discovery of any latent or patent defect in the Leased Premises.

5.2. Environmental Baseline Survey. Lessee acknowledges receipt of the environmental baseline survey (Phase I) for the Leased Premises dated, ____, the “EBS”). The EBS sets forth those environmental conditions affecting the Leased Premises as of its effective date as determined from the records and analyses reflected therein. The EBS is not a representation or warranty by the Government regarding the environmental or physical conditions of the Leased Premises, and the Government shall have no liability in connection with the accuracy or completeness thereof. The Government will prepare a separate EBS for the Leased Premises after the expiration or earlier termination of this Lease (the “Closeout EBS”). The Government will use the Closeout EBS to determine whether Lessee has fulfilled its obligations to maintain and restore the Leased Premises under this Lease, including all obligations set forth in Sections 13 and in the Contract, section C.

subsection VI. Lessee agrees that it has received and reviewed the items provided by the Government identified in Exhibit D (List of Environmental Documents).

6. Rent.

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6.1. Amount. Rent for this Lease shall be paid in the form of in-kind consideration to the Government pursuant to the Contract, section B.2.3 (the “Rent”). Notwithstanding anything to the contrary herein, the obligation to pay Rent will commence on the Effective Date and ends on the Lease Expiration Date. Rent payments are subject to an escalation (i.e., increase) every five

(5) years that will be applied to payments on the appropriate anniversary of the Effective Date.

For the rent rates and escalation see Exhibit E, Rent Rate Schedule. Payment of in-kind consideration under this Section 6.1 shall be satisfied by way of a credit (i.e., direct offset) against monthly invoices presented by Lessee to the Government pursuant to the Contract. Partial invoices for periods of less than a month will have the corresponding pro rata Rent credit applied as a direct offset. In the event that the Rent for any monthly billing period is greater than the total amount owed by the Government under the Contract for that monthly period (which shall include the period after possession of the Leased Premises is delivered to the Lessee during the construction period of the Project), the excess portion of the credit, which cannot be used as an offset in that month, shall be carried forward and accumulated as a credit against future amounts owed by the Government pursuant to the Contract.

6.1.1. The Rent credit that accumulates from the Effective Date until the first monthly bill for delivered power shall be paid by twelve (12) equal credits (i.e., direct offsets) that shall be deducted from each of the first twelve (12) monthly invoices presented to the Government pursuant to the Contract.

6.1.2. The final monthly bill for delivered power shall include a Rent credit for the remaining Lease Term, as set forth in Section 3. The prospective Rent will be calculated using the applicable rates from Exhibit E.

6.2. Conversion to Cash Rent. In the event of the renewal of this Lease after early termination of the Contract, Rent for this Lease shall be paid as rent in the form of cash to the Government in an amount equal to the then current Rent as calculated as in-kind consideration in Section 6.1 (subject to successful renewal, renegotiation, and amendment of this Lease required by Section 20) commencing in the month immediately following the month in which Contract terminates and ending on the last day of the month in which the Lease Expiration Date occurs.

Cash Rent under this Section 6.2 shall be subject to the same escalation as specified in Section

6.1. Cash Rent shall be due and payable on the first day of each month without prior notice or demand from the Government. All cash Rent due from the Lessee shall be paid in lawful money of the United States of America without deduction or offset (except as otherwise provided herein) to the Treasurer of the United States of America and forwarded directly to the Installation’s designated point of contact, or such other official as the Government shall designate from time to time in writing, for deposit into the Special Treasury Account established under the provisions of 10 U.S.C. § 2667(e).

6.3. Supplemental Rent. All sums other than Rent that are payable by the Lessee to the Government, including all items of reimbursement for utilities or emergency services provided by the Government, shall be deemed supplemental rent (the “Supplemental Rent”). Any written request by the Government to the Lessee for reimbursement under this Lease shall identify the expenses included in such reimbursement request. For the purposes of defining the Lessee’s obligations under this Lease, all payments required by Section 6.1, Section 6.2, and all

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Supplemental Rent may sometimes be collectively referred to as “Rent.” Notwithstanding the use of the term “Rent” to include Supplemental Rent, no payment to the Government of a reimbursement constituting Supplemental Rent shall be considered to be the receipt by the Government of money compensation for the occupancy of the Leased Premises for purposes of the Enabling Statute or the Bankruptcy Code or for any other purpose.

6.4. Overdue Rent. If any installment of Rent is not paid within ten (10) business days after its due date, then such arrearage shall, consistent with the Debt Collection Act of 1982 (31 U.S.C. § 3717), (a) bear interest from the due date at the rate prescribed by the Secretary of the Treasury for amounts past due to the Federal government until paid in full; (b) include an administrative charge to cover the costs of processing and handling delinquent debts; and (c) include an assessment of an additional penalty charge on any portion of a debt that is more than ninety (90) Days past due.

6.5. FMV Determination. The Rent amount has been determined by the Government to be not less than the fair market value of the leased interest based on a Government approved appraisal.

7. Use of Project.

7.1. Permitted Uses. The sole purposes for which the Leased Premises may be used, in the absence of prior written approval of the Government for any other use, is to support and advance activities associated with the Project as described in Recital R-3.

7.2. Specific Prohibited Uses. Specifically, but without limitation, Lessee shall not use or permit the use of the Project for any of the following activities:

7.2.1. Any use that is unlawful or inherently dangerous or that constitutes waste, unreasonable annoyance, or a nuisance;

7.2.2. Activities involving the storage, treatment, transportation, disposal, or manufacture of Toxic or Hazardous Materials, except as specifically authorized in the Contract, section C, subsection VI or as approved by the Government in writing;

7.2.3. Activities that the Government determines adversely affect the security of the Installation or the health, safety, morals, welfare, morale, and discipline of the Armed Forces, such as the sale or use of controlled substances and/or drug abuse paraphernalia, as well as illicit gambling or prostitution;

7.2.4. Partisan political activities; or

7.2.5. Activities by any persons advocating the overthrow of the United States.

7.3. Primacy of Air Force Mission. The Lessee recognizes that Eielson AFB is an operating military base and that the Government’s military mission has priority and primacy over all other activities or operations on Eielson AFB, including those conducted on premises out leased to others. The Lessee understands and accepts that the priority of conducting Government operations at Eielson AFB, including but not limited to normal base-related operations, the

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Installation Restoration Program (“IRP”), Government overflight, surges, exercises, contingencies, inspections and other Air Force operations (collectively, the “Government Operations”) may at times require delay in, modification or other interruption of the Lessee’s activities, including its construction activities. The Government shall, whenever possible, provide advance notice of Government Operations that may impact Lessee’s activities and shall coordinate such operations so that any disruption to Lessee’s activities is minimized.

7.3.1. The Lessee hereby agrees that in case of any conflict between Government Operations and Lessee’s activities, as determined by the Commander in the Commander’s sole and absolute discretion, the Lessee will, if the Commander so directs, delay, modify or otherwise interrupt its activities on the Leased Land to accommodate Government Operations.

7.3.2. The Lessee also understands and accepts that its activities on the Leased Land may, from time to time, be hampered by temporary restrictions on access, such as identity checks and auto searches by the Air Force. The Lessee understands that the Air Force strictly enforces Federal laws and Air Force regulations concerning controlled substances (drugs).

7.3.3. Except as set forth in the Contract, the Lessee agrees that the Government shall not be liable or responsible under this Lease for any lost time or any costs incurred by the Lessee due to any disruption of its activities on the Leased Premises, regardless of frequency or duration of any such interruptions, including disruptions of its commercial activities, or for any delays in entry, temporary loss of access, barring of individual employees from the base under Federal laws authorizing such actions, limitation or withdrawal of an employee's on-base driving privileges, or any other security action (collectively, the "Security Actions") that may cause employees to be late to or unavailable at their work stations, or delay arrival of parts and supplies.

The Lessee hereby expressly waives any claims or suits against the Government under this Lease caused by or arising out of the priority of conducting Government Operations, including any Security Actions.

7.4. Operating Agreement. [Intentionally Omitted]

8. Lessee’s Construction and Modification of Improvements.

8.1. Government’s Limited Interest. The Government’s sole and exclusive interest in and liability under this Lease are limited to that of Lessor of the Leased Land. The Lessee shall retain use and possession of the Lessee Improvements pursuant to the Contract, sections C.5 and H.1.

The Lessee Improvements constructed/installed as part of the Project shall be at all times during the Lease Term the property of the Lessee or a tax equity investor, separate and apart from the Leasehold interest and all other real property rights.

8.2. Time to Construct. The Lessee shall complete construction/acceptance testing/ interconnection of the EPF and reach the Commercial Operation Date within the Effective Date expressed in the Contract, section B .

9. Lessee’s Operation and Maintenance of the Project. [See Contract]

10. Utilities and Other Services.

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10.1. Sale of Utility Service by the Government. Government provided utility services may be available to the Lessee at the Leased Premises pursuant to the Contract, section C.37.

Any sale of utility services to Lessee by the Government and associated reimbursement calculations will be in accordance with Air Force Instruction 32-1061, “Providing Utilities to U.S.

Air Force Installations,” as the same may be amended, modified or superseded from time to time.

10.2. Sale of Emergency Services by the Government. The Government will provide first response, fire, and law enforcement services to the Project. Lessee shall pay for any firefighting, fire protection, and police protection services furnished by the Government for the benefit of the Project during the Lease Term. Reimbursement for such services will be calculated as outlined in Exhibit I (Emergency Services Plan).

11. Taxes. Lessee shall pay to the proper taxing authority, when due and payable, all taxes, assessments, and similar charges that may be imposed on Lessee or the Project. Each Party shall have the right, but not the obligation, at its own expense to take such actions as may be necessary and appropriate (a) to contest the validity, applicability or amount thereof; (b) minimize such taxes, assessments or charges; or (c) assert any exemption which may be available with respect to taxes, assessments or charges imposed on the Project. If and to the extent the Leased Premises are made taxable by state or local governments under a subsequent Act of Congress, this Lease shall be renegotiated pursuant to 10 U.S.C. § 2667(f).

12. Records and Reports.

12.1. Lessee’s Books and Records. At all times during the Lease Term and for three (3) years after the expiration or earlier termination of this Lease, Lessee shall maintain at its principal place of business or such other place as agreed to by the Parties, a complete and accurate set of books and records of all business activities and operations, which shall fully/completely reflect the financial condition, production/delivery data, physical condition (maintenance/repair), and operational status of the Project during at least the previous three (3) years, together with all business licenses and permits required to be kept and maintained pursuant to the provisions of any applicable state or local law, regulation, or rule now or hereafter in effect.

12.1.1. All financial statements shall be prepared based on generally accepted accounting principles (“GAAP”) or on the basis used for the Lessee’s federal income tax return.

If the financial statements are prepared on the tax basis, then the footnotes must include all disclosures required by GAAP. All financial statements must be audited or certified as being prepared in accordance with GAAP by the Lessee’s Chief Accounting Officer, who must be a Certified Public Accountant. The auditor must be a certified public accounting firm that participates in the peer review program of the American Institute of Certified Public Accountants.

Compiled or reviewed financial statements shall not meet the requirements of this Section 12.1.

12.2. Government Right to Audit. Consistent with the Contract, section I, the Government, the Comptroller General of the United States, the Auditor General of the U.S. Air Force, or any of its duly authorized representatives, with reasonable advanced notice, shall have access to and the right to examine any directly pertinent books and records maintained by Lessee in connection with performance under this Lease for up to three (3) years after final payment or

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12.3. Default and Deficiency Notices.

12.3.1. Lessee shall provide the Government with copies of default or deficiency notices delivered to Lessee by any government agency, insurance company or other party within fourteen (14) Days following Lessee’s receipt of same.

13. Lessee’s Obligations upon Lease Expiration/Termination.

13.1. Removal and Restoration Obligation and Deadline. Except to the extent not required because of a Government Retention Notice (hereinafter defined) delivered pursuant to Section 13.3 or renewal of the Lease pursuant to Section 20, no later than ninety (90) Days after

(a) the Lease Expiration Date, (b) the effective date of a Termination Notice pursuant to the Contract, section I, (c) a Termination Notice for Extensive Damage or Destruction of Improvements pursuant to Section 19, or (d) a date mutually agreed to by Lessee and the Government (the “Restoration Deadline”), Lessee shall, at no cost to the Government, remove all of the Existing Improvements, if any, and all Lessee Improvements and other property from the Leased Premises and restore the Leased Premises to the reasonable satisfaction of the Government;

provided that in no event shall the Lessee be required to restore the Leased Land to a better condition than on the Effective Date (the “Removal and Restoration Obligation”).

13.2. Improvement Removal Report. Except to the extent not required because of a Government Retention Notice delivered pursuant to Section 13.3 or a renewal of the Lease pursuant to Section 20, no later than three (3) years prior to the Lease Expiration Date or within forty-five (45) Days after Lessee’s receipt of a Termination Notice or a Termination Notice for Extensive Damage or Destruction of Improvements, Lessee shall provide to the Government: (a) a report (an “Improvement Removal Report”) prepared by a construction and demolition expert approved by the Government, which report details and estimates the cost of removing all improvements on the Leased Premises (the “Estimated Restoration Costs”), salvage value if any may be considered; and, (b) a written plan which sets forth how Lessee proposes to discharge its Removal and Restoration Obligations pursuant to this Section 13.

13.3. Purchase Option. The Government has retained a purchase option for all or any portion of the Lessee Improvements including the EPF. So long as the Government is not in default at the time of the Lease expiration, it may exercise this option for the Option Price as calculated in the Contract, section H. If such purchase option is exercised, the Government will deliver a “Government Retention Notice” as specified in this Section 13. The Lessee, its successor or assignee, shall immediately take all actions necessary to enable it to convey clear title to the Lessee Improvements that the Government intends to purchase.

13.4. Re-delivery of Possession. After completion of the Removal and Restoration Obligation, Lessee shall immediately quit, and peacefully surrender possession of, the Leased Land to the Government.

13.5. Restoration Default.

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13.5.1. In addition to other available remedies, if Lessee does not satisfy its Removal and Restoration Obligation on or before the Restoration Deadline (a “Restoration Default”), the Government at its option shall be entitled to (a) take possession of the Lessee Improvements without compensation therefor (and the Lessee, its successor or assignee, shall immediately take all actions necessary to enable it to convey clear title to the Lessee Improvements), or (b) cause such improvements to be removed or destroyed, with the right to retain all salvage value, and the Leased Premises to be restored at the expense of Lessee.

13.5.2. If the Government elects to restore the Leased Premises pursuant to this Section 13.5, the Government shall have the right, upon sixty (60) Days prior written notice to Lessee to direct, without the consent of Lessee or any other Person, the disposition of any form of security provided in accordance with Section 13.7 below, for the purpose of paying the reasonable costs of such demolition, removal and restoration and the Lessee shall not exercise any authority or powers with respect to, or permit the withdrawal of such funds or such other form of security, except to the extent necessary to accomplish any written disposition instructions issued by the Government.

13.5.3. If the funds available to the Government in the form of security provided under Section 13.7 below, together with any salvage value, are insufficient to cover removal and restoration costs, Lessee shall be immediately liable to the Government for any deficiency without any further demand for payment. Lessee shall reimburse the Government for any expenses the Government incurs in removing improvements and restoring the Leased Premises within thirty

(30) Days after the Government provides written notice to Lessee of the reimbursement amount, together with reasonable documentation of such amount.

13.5.4. In no event shall any claim for damages against the Government, its officers, employees, agents, or contractors be created by or made on account of the Government exercising any of its rights pursuant to this Section 13.5.

13.6. Certain Lease Provisions Remain in Effect. Unless otherwise agreed to in writing by the Government, during the period after the Lease Expiration Date, the effective date of a Termination Notice, or the effective date of a Termination Notice for Extensive Damage or Destruction of Improvements, as applicable, until the date on which Lessee satisfies its Removal and Restoration Obligation under this Section 13, or such later date as may be agreed to in writing, all obligations of Lessee set forth in the Contract as surviving expiration or termination and Sections 13 and 17 shall remain in effect.

13.7. Demolition Reserve Account.

13.7.1. At the time Lessee delivers an Improvement Removal Report to the Government pursuant to Section 13.2, Lessee shall establish an escrow account with a commercial escrow holder approved by the Government to fund its Removal and Restoration Obligations (“Demolition Reserve Account”). Funds deposited to the Demolition Reserve Account will be utilized solely to provide for payment for Lessee’s Removal and Restoration Obligation.

13.7.2. If the Improvement Removal Report was submitted due to early termination and in response to a Termination Notice pursuant to the Contract, section I, Lessee shall

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13.7.3. If the Improvement Removal Report was submitted three (3) years prior to the Lease Expiration Date, then commencing upon Lessee’s delivery of the Improvement Removal Report every year thereafter until Lessee satisfies its Removal and Restoration Obligations, Lessee shall make substantially equal cash deposits to the Demolition Reserve Account so that, as of the Lease Expiration Date, the total amount on deposit in the Demolition Reserve Account, together with any investment earnings on such funds, is not less than the Estimated Restoration Costs.

13.7.4. Any funds remaining in the Demolition Reserve Account following Lessee’s satisfaction of its Removal and Restoration Obligations shall be distributed to Lessee.

13.7.5. The Demolition Reserve Account shall be subject to procedures and controls to be set forth in a “Demolition Reserve Escrow Agreement” among Lessee, the Government and the escrow holder. Such agreement shall provide that all disbursements from the Demolition Reserve Account shall be made upon Lessee’s written direction to the escrow holder with the consent of the Government, provided that upon the occurrence of a default under the Removal and Restoration Obligation, all disbursements from the Demolition Reserve Account shall be made solely upon the Government’s written direction to the escrow agent without the consent of Lessee or any other Person.

13.7.6. The Demolition Reserve Escrow Agreement shall provide that Lessee grants to the Government a continuing first lien security interest in and to all of Lessee’s right, title, and interest in the Demolition Reserve Account, as well as all funds held, or designated for deposit in the Demolition Reserve Account, whether then owned, existing, or thereafter acquired, and regardless of where located. Lessee shall not grant or allow any other security interests in, liens to, or encumbrances on the Demolition Reserve Account or the funds in it. However, Lessee may grant to any Person a continuing security interest in Lessee’s right to receive a disbursement of any funds remaining in the Demolition Reserve Account pursuant to Section 13.7.4, second in priority to the continuing first lien security interest granted to the Government.

13.7.7. Lessee shall deliver to the Government for filing one or more financing statements, as necessary, in connection with the Demolition Reserve Account in the form reasonably required by the Government to properly perfect its security interest in the Demolition Reserve Account, and shall keep the lien secured by such statements perfected at all times during the existence of the Demolition Reserve Account in accordance with, and to the extent permitted by, the laws of California. Lessee shall deliver to the Government, within ten (10) days after filing, the original and any amendments to, and continuations of, any financing statement.

13.7.8. Except as otherwise expressly provided in the Demolition Reserve Escrow Agreement, Lessee shall be solely liable to the escrow agent for the fees and expenses related to the Demolition Reserve Account.

14. Environmental Matters. [See Contract]

15. Compliance with Laws Generally. [See Contract]

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16. Government’s Right of Entry. Subject to the terms and upon the conditions set forth in this Section, any agency of the Government, its officers, agents, employees, contractors, or representatives may enter upon the Leased Premises, at all times for any purposes not inconsistent with Lessee’s quiet use and enjoyment of them under this Lease, including, but not limited to, the purpose of inspection and ensuring that the terms and conditions of the Contract and this Lease are being met. The Government shall have the right to enter the Leased Premises at any time during business hours (9:00 am to 5:00 pm, Monday through Friday) upon at least twenty-four (24) hours advance written notice to Lessee, and shall be accompanied by a representative of Lessee which shall be made available by Lessee on the date and time Government has requested in its written notice required hereunder. An email from the Contracting Officer’s Representative to the Contractor’s designated point of contact that is acknowledged by such designee shall constitute written notice for the purposes of this Section. Notwithstanding the foregoing, however, in the event of an emergency, an issue of the Installation’s security or national security (as determined by the Government in its sole and absolute discretion), the Government may enter the Leased Premises at any time, with or without a representative of Lessee, without written notice. The Government acknowledges that equipment and facilities in, on, under and above the Leased Premises will generate and transmit electricity at high voltage and that the possibility always exists for property damage and/or injury to persons and/or death from such electricity. The Government further acknowledges that the conductors are energized, uninsulated, and dangerous. Further, the Government acknowledges and agrees that any entry upon the Leased Premises by the Government, its officers, agents, employees, or contractors or representatives shall be at their sole risk, whether or not they are accompanied by a representative of Lessee, and in no event shall Lessee be liable to Government or any such person for any personal injury, loss of life or property damage resulting from or occasioned by their entry onto the Leased Premises, whether or not accompanied by a representative of Lessee, except and to the extent arising from or caused by the negligent or willful acts or omissions of Lessee, or its officers, agents, employees, contractors or representatives.

17. Damage to or Destruction of Government Property. If Lessee damages or destroys any real or personal property of the Government, except as otherwise permitted in this Lease, Lessee shall promptly repair or replace such real or personal property to the reasonable satisfaction of the Government. At the Government’s election, in lieu of such repair or replacement, Lessee shall pay to the Government an amount sufficient to compensate for the Government’s loss because of damage or destruction of Government property, including natural resources.

18. Lessee’s Insurance. [See Contract]

19. Damage to or Destruction of the Energy Production Facility.

19.1. Notification. If any part of the Project is damaged (except de minimis damage) or destroyed (the “Damaged or Destroyed Property”), Lessee shall promptly give notice thereof to the Government pursuant to the Contract, section C.55.

19.2. Restoration Obligation. Except as provided in Section 19.3, Lessee shall, as soon as reasonably practicable after the casualty, restore the Damaged or Destroyed Property as nearly as possible to the condition that existed immediately prior to such loss or damage.

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19.3. Extensive Damage or Destruction. If the Government in consultation with Lessee, determines that the magnitude of Damaged or Destroyed Property is so extensive that the Project cannot be used by Lessee for its operations and the repairs, rebuilding, or replacement of the Damaged or Destroyed Property cannot reasonably be expected to be substantially completed within nine (9) months after the occurrence of the casualty (an “Extensive Damage or Destruction of Improvements”), either Party may terminate this Lease. If the Government determines that Extensive Damage or Destruction of Improvements has not occurred, then neither Party shall have the right to terminate this Lease. If the Government determines that such an event has occurred, but the Lessee disagrees with that determination, then the matter shall be resolved pursuant to the dispute provisions in the Contract. If the Parties mutually agree to repair, rebuild, and replace less than all Damaged or Destroyed Property, then neither Party shall have the right to terminate this Lease with respect to the Leased Premises on which the Damaged or Destroyed Property that will be repaired, rebuilt, and replaced is situated. Nothing herein shall be construed as limiting the Government’s right to terminate the Contract for convenience or for cause, and the automatic termination of this Lease in conjunction with such termination for convenience or for cause, pursuant to the terms of the Contract.

19.4 Application of Insurance Proceeds. Unless this Lease is terminated pursuant to the Contract, section I, any insurance proceeds actually collected by the Project Company (hereinafter defined) as a result of any casualty loss to the Project shall be applied in the following order of priority: (a) to restoring the damaged area and removing any related debris to the reasonable satisfaction of the Government; (b) to repairing, rebuilding, and/or replacing the Lessee Improvements and the damaged area to the reasonable satisfaction of the Government; and, (c) the excess, if any, shall be paid to Lessee.

20. Termination Remedies and Elections. Subject to the terms and conditions set forth in the Contract, either the Government or the Lessee, respectively, will have a right of election with respect to termination of this Lease after an early termination of the Contract.

20.1. If the Contract is terminated by the Government for cause, this Lease shall be terminated. Subject to successful renegotiation of terms and conditions with a successor to the Lessee, it may be renewed. However, the Lease will require successful amendment to reform it into a standalone ground lease in order to remain in effect.

20.2. If the Contract is terminated by the Government for its convenience, pursuant to its terms, and the Lessee elects to remain on the Leased Land and sell power generated by the EPF to a third party(ies), then the Parties may renew the Lease, in which case the Government shall not have the obligation to pay the full “cancellation charges” set forth in 52.212-4(l) CONTRACT TERMS AND CONDITIONS. However, if the Lease is so renewed, the Parties shall agree to how much the Government will be obligated to pay in regard to the termination. Additionally, the Lease must be successfully amended by mutual agreement of the Parties to reform it into a standalone ground lease in order to be renewed.

20.3. The Party electing to terminate the Lease under this Section 20 shall notify the other

Party of its election within thirty (30) Days of the time the electing Party receives notice of the final decision of the Contracting Officer terminating the Contract.

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21. Notices. [See Contract]

22. Assignment/Transfer. Except as provided in this Section 22, Lessee shall neither assign nor transfer this Lease, without the prior written consent of the Government. The Government may withhold written consent for any proposed assignee or transferee if the Government determines in its sole discretion that such assignee/transferee could pose a threat to or breach of security at the Installation by its interest in this Project. However, such consent will not be unreasonably withheld or delayed. For purposes of this Section 22, a sublease shall not be considered an assignment or transfer and shall not be permitted.

22.1. In the event that the Contract is novated under FAR Subpart 42.12, the Lease may be assigned to the novated party (the “Project Company”) o coincident with the novation with the prior written consent of the Government.

22.2. The EPF may be transferred to a tax equity investor by the Project Company following the novation of the Contract to such tax equity investor under FAR Subpart 42.12 without the prior written consent of the Government. Likewise, the Lease must be beneficially assigned to the same legal entity as the EPF transferee by the Project Company, following a completed novation of the Contract to such legal entity under FAR Subpart 42.12, without the prior written consent of the Government.

22.3. Effect of Assignment. Any assignment by the Lessee shall be consistent with all of the terms and conditions of this Lease and the Contract, and the rights of the assignee shall terminate no later than immediately upon the expiration or any earlier termination of this Lease, without any liability on the part of the Government to the Lessee or any assignee.