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EXECUTION COPY
Exhibit 4.6(a)
PARTICIPATION AGREEMENT
(BA3)
Dated as of July 13, 2000
among
PPL MONTANA, LLC,
MONTANA OL4 LLC,
WILMINGTON TRUST COMPANY,
not in its individual capacity, except
as expressly provided herein, but solely
as Lessor Manager,
MONTANA OP4 LLC,
THE CHASE MANHATTAN BANK,
not in its individual capacity, but solely
as Lease Indenture Trustee
and
THE CHASE MANHATTAN BANK,
not in its individual capacity, but solely
as Pass Through Trustee
COLSTRIP GENERATING UNIT 3
AND RELATED COMMON FACILITIES
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TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT................................... 3
SECTION 2. PARTICIPATION; CLOSING DATE; TRANSACTION COSTS................................................ 3
Section 2.1. Agreements to Participate......................................................... 3
Section 2.2. Closing Date; Procedure for Participation......................................... 4
Section 2.3. Postponement of Closing; Investment of Funds...................................... 4
Section 2.4. Transaction Costs................................................................. 5
SECTION 3. REPRESENTATIONS AND WARRANTIES................................................................ 6
Section 3.1. Representations and Warranties of PPL Montana..................................... 6
Section 3.2. Representations and Warranties of the Owner Lessor................................ 13
Section 3.3. Representations and Warranties of the Lessor Manager and the Trust Company........ 15
Section 3.4. Representations and Warranties of the Owner Participant........................... 17
SECTION 4. CLOSING CONDITIONS; CONDITIONS TO PURCHASE OF LESSOR NOTE..................................... 18
SECTION 5. COVENANTS OF PPL MONTANA...................................................................... 23
Section 5.1. Maintenance of Existence.......................................................... 23
Section 5.2. Merger, Consolidation, Sale of Substantially All Assets........................... 23
Section 5.3. Delivery of Financial Statements; No Default Certificate.......................... 24
Section 5.4. Information Concerning the Facility............................................... 25
Section 5.5. Certain Contracts and Agreements.................................................. 26
Section 5.6. Nondiscrimination Among Leases.................................................... 26
Section 5.7. Notice of Change in Address or Name............................................... 26
Section 5.8. Use of Proceeds................................................................... 26
Section 5.9. Public Utility Regulation......................................................... 26
Section 5.10. Further Assurances................................................................ 26
Section 5.11. Support Agreements................................................................ 27
SECTION 6. CERTAIN COVENANTS OF PPL MONTANA WHILE CERTIFICATES ARE OUTSTANDING........................... 28
Section 6.1. Incurrence of Indebtedness........................................................ 28
Section 6.2. Restricted Payments............................................................... 30
Section 6.3. Sale of Assets.................................................................... 31
Section 6.4. Negative Pledge................................................................... 32
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(CONTINUED)
PAGE
Section 6.5. Qualifying Letter of Credit....................................................... 33
Section 6.6. Limitation on Activities.......................................................... 34
Section 6.7. Limitation on Transactions with Affiliates........................................ 34
Section 6.8. Designation of Core Subsidiaries and Additional Subsidiaries...................... 34
Section 6.9. Restrictions on Guarantees........................................................ 35
Section 6.10. Maintenance of Tax Status......................................................... 36
Section 6.11. Insurance......................................................................... 36
Section 6.12. Notice of Payment of Supplemental Lease Rent...................................... 36
SECTION 7. POST LEASE DEBT FINANCIAL COVENANTS OF PPL MONTANA............................................ 36
Section 7.1. Incurrence of Indebtedness After Payment of Lease Debt............................ 37
Section 7.2. Restricted Payments............................................................... 38
SECTION 8. COVENANTS OF THE TRUST COMPANY, THE LESSOR MANAGER AND THE OWNER LESSOR....................... 38
Section 8.1. Compliance with the LLC Agreement................................................. 38
Section 8.2. Owner Lessor's Liens.............................................................. 38
Section 8.3. Amendments to Operative Documents................................................. 39
Section 8.4. Transfer of the Owner Lessor's Interest........................................... 39
Section 8.5. Owner Lessor; Lessor Estate....................................................... 39
Section 8.6. Limitation on Indebtedness and Actions............................................ 39
Section 8.7. Change of Location................................................................ 39
Section 8.8. Pollution Control Facilities...................................................... 39
SECTION 9. COVENANTS OF THE OWNER PARTICIPANT............................................................ 40
Section 9.1. Restrictions on Transfer of Member Interest....................................... 40
Section 9.2. Owner Participant's Liens......................................................... 42
Section 9.3. Amendments or Revocation of LLC Agreement......................................... 43
Section 9.4. Bankruptcy Filings................................................................ 43
Section 9.5. Instructions...................................................................... 43
Section 9.6. Appointment of Successor Lessor Manager........................................... 43
SECTION 10. COVENANTS OF THE LEASE INDENTURE TRUSTEE...................................................... 43
SECTION 11. PPL MONTANA'S INDEMNIFICATIONS................................................................ 44
Section 11.1. General Indemnity................................................................. 44
Section 11.2. General Tax Indemnity............................................................. 49
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TABLE OF CONTENTS
(continued)
PAGE
SECTION 12. PPL MONTANA'S RIGHT OF QUIET ENJOYMENT........................................................ 58
SECTION 13. SUPPLEMENTAL FINANCING OF MODIFICATIONS; OPTIONAL REFINANCINGS................................ 58
Section 13.1. Financing Modifications........................................................... 58
Section 13.2. Optional Refinancing of Lease Debt................................................ 59
Section 13.3. Cooperation....................................................................... 60
SECTION 14. PRE-CLOSING ADJUSTMENTS TO LEASE SCHEDULES.................................................... 61
Section 14.1. Lease Schedules................................................................... 61
Section 14.2. Pre-closing Adjustments........................................................... 61
SECTION 15. SPECIAL LESSEE TRANSFERS; ASSIGNMENT OF FACILITY LEASE........................................ 62
Section 15.1. Special Lessee Transfers.......................................................... 62
Section 15.2. Assignment of Facility Lease...................................................... 63
SECTION 16. RIGHT OF FIRST REFUSAL; RIGHT OF FIRST OFFER.................................................. 65
Section 16.1. Right of First Offer.............................................................. 65
Section 16.2. Right of First Refusal............................................................ 65
SECTION 17. [INTENTIONALLY OMITTED]....................................................................... 66
SECTION 18. MISCELLANEOUS................................................................................. 66
Section 18.1. Consents.......................................................................... 66
Section 18.2. Successor Owner Lessor............................................................ 66
Section 18.3. Bankruptcy of Lessor Estate....................................................... 66
Section 18.4. Amendments and Waivers............................................................ 66
Section 18.5. Notices........................................................................... 67
Section 18.6. Survival.......................................................................... 68
Section 18.7. Successors and Assigns............................................................ 69
Section 18.8. Business Day...................................................................... 69
Section 18.9. Governing Law..................................................................... 69
Section 18.10. Severability...................................................................... 69
Section 18.11. Counterparts...................................................................... 69
Section 18.12. Headings and Table of Contents.................................................... 69
Section 18.13. Limitation of Liability........................................................... 69
Section 18.14. Consent to Jurisdiction; Waiver of Trial by Jury; Process Agent................... 70
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TABLE OF CONTENTS
(continued)
PAGE
Section 18.15. Further Assurances................................................................ 71
Section 18.16. Effectiveness..................................................................... 71
Section 18.17. Measuring Life.................................................................... 71
Section 18.18. No Partnership, Etc............................................................... 72
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TABLE OF CONTENTS
(CONTINUED)
APPENDICES:
Appendix A Definitions
SCHEDULES:
Schedule 1 Recording and Filings
Schedule 2 Pricing Assumptions
Schedule 3 Periodic Lease Rent, Termination Values,
Lessor Note Amortization
Schedule 4 Initial List of Competitors
Schedule 5 Transmission Facilities
Schedule 6 Affiliate Transactions
Schedule 7 Environmental Conditions
Schedule 8 Guarantees of Indebtedness or Performance
Schedule 9 Litigation
Schedule 10 Liens
Schedule 11 Indenture Trustee's Account
EXHIBITS
Exhibit A Form of ▇▇▇▇ of Sale
Exhibit B-1 Form of Facility Lease
Exhibit B-2 Form of Abstract of Facility Lease
Exhibit C Form of Site Lease and Sublease
Exhibit D Form of Assignment and Reassignment of Project Agreements
Exhibit E Form of Lease Indenture
Exhibit F Form of Assignment and Assumption Agreement
Exhibit G Form of Guaranty
Exhibit H Form of Omnibus Voting Rights Agreement
Exhibit I Form of Qualifying Letter of Credit
Exhibit J-1 Form of Opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP -
Corporate Opinion
Exhibit J-2 Form of Opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP - Regulatory
Opinion
Exhibit K-1 Form of Opinion of ▇▇▇▇▇▇▇, Bellingham, ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP -
Corporate Opinion
Exhibit K-2 Form of Opinion of ▇▇▇▇▇▇▇, Bellingham, ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP -
Regulatory Opinion
Exhibit L Form of Opinion of Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Exhibit M Form of Opinion of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
Exhibit N Form of Opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.,
(Counsel to the Owner Participant, the OP Member, and the Guarantor)
Exhibit O Form of Opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
Exhibit P Form of Opinion of Morris, James, Hitchens & ▇▇▇▇▇▇▇▇ LLP
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TABLE OF CONTENTS
(CONTINUED)
Exhibit Q Form of Opinion of ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP
(as Counsel to the Lease Indenture Trustee and the Pass Through Trustee)
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PARTICIPATION AGREEMENT
(BA3)
This PARTICIPATION AGREEMENT (BA3), dated as of July 13, 2000 (this
"Participation Agreement" or this "Agreement"), among (i) PPL MONTANA, LLC, a
Delaware limited liability company ("PPL Montana"), (ii) MONTANA OL4 LLC, a
Delaware limited liability company (the "Owner Lessor"), (iii) WILMINGTON TRUST
COMPANY, a banking corporation organized and existing under the laws of the
State of Delaware, not in its individual capacity, except as expressly provided
herein, but solely as manager under the LLC Agreement (herein in its capacity as
manager under the LLC Agreement, the "Lessor Manager," and herein in its
individual capacity, the "Trust Company"), (iv) MONTANA OP4 LLC, a Delaware
limited liability company (the "Owner Participant"), (v) THE CHASE MANHATTAN
BANK, a banking corporation organized and existing under the laws of the State
of New York, not in its individual capacity, but solely as trustee under the
Lease Indenture (herein in its capacity as trustee under the Lease Indenture,
the "Lease Indenture Trustee"), and (vi) THE CHASE MANHATTAN BANK, a banking
corporation organized and existing under the laws of the State of New York, not
in its individual capacity, but solely as trustee under the Pass Through Trust
Agreement (herein in its capacity as trustee under the Pass Through Trust
Agreement, the "Pass Through Trustee").
W I T N E S S E T H:
WHEREAS, the Colstrip Project is, a four unit coal-fired steam electric
generating facility located in the Town of Colstrip, Rosebud County, Montana
consisting of Units 1 and 2, each having a capacity of 333 MW (gross), Units 3
and 4, each having a capacity of 805 MW (gross), and the Common Facilities which
are shared by some or all such units;
WHEREAS, PPL Montana has acquired a 50% undivided interest in Colstrip
Units 1 and 2 and a 30% undivided interest in Colstrip Unit 3;
WHEREAS, Colstrip Unit 3 is comprised of Unit 3 and the Related Common
Facilities;
WHEREAS, the rights and obligations as tenants-in-common of the
co-owners of Units 3 and 4 and the Common Facilities 3-4 are governed by the
Ownership Agreement 3-4, and the rights and obligations as tenants-in-common of
the co-owners of the Common Facilities 1-2-3-4 are governed by the Common
Facilities Agreement;
WHEREAS, PPL Montana desires to sell to the Owner Lessor a portion of
the undivided interest it acquired in the Facility pursuant to the ▇▇▇▇ of Sale,
and lease to the Owner Lessor a corresponding interest in the Colstrip Site
pursuant to the Site Lease and Sublease, and to lease such undivided interest
and sublease such ground interest from the Owner Lessor pursuant to the Facility
Lease and the Site Lease and Sublease, respectively;
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WHEREAS, the Owner Lessor desires to purchase such undivided interest
from PPL Montana pursuant to the ▇▇▇▇ of Sale, and lease such ground interest
from PPL Montana pursuant to the Site Lease and Sublease, and to lease such
undivided interest and to sublease such ground interest to PPL Montana pursuant
to the Facility Lease and the Site Lease and Sublease, respectively;
WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the Owner Participant has entered into the LLC
Agreement, pursuant to which the Owner Participant has authorized the Owner
Lessor to, among other things and subject to the terms and conditions thereof
and hereof, purchase such undivided interest from PPL Montana pursuant to the
▇▇▇▇ of Sale, and lease such ground interest from PPL Montana pursuant to the
Site Lease and Sublease, and to lease such undivided interest and sublease such
ground interest to PPL Montana pursuant to the Facility Lease and the Site Lease
and Sublease, respectively;
WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, PPL Montana has entered into the Certificate Purchase
Agreement with the Initial Purchasers pursuant to which the Initial Purchasers
will purchase the Certificates on the Closing Date from the Pass Through Trust;
WHEREAS, on the Closing Date, the Owner Lessor intends to sell to the
Pass Through Trust the Lessor Note and to grant to the Lease Indenture Trustee
liens and security interests in the Undivided Interest and certain of the
Operative Documents executed in connection therewith to secure its obligations
thereunder;
WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the Pass Through Trustee has entered into the Pass
Through Trust Agreement, pursuant to which the Pass Through Trustee has been
directed to use the Proceeds to purchase the Lessor Note from the Owner Lessor
on the Closing Date;
WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the Guarantor has executed and delivered the OP Parent
Guaranty pursuant to which the Guarantor guarantees the payment and performance
obligations of the Owner Participant under the Operative Documents; and
WHEREAS, the parties hereto desire to consummate the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT
The capitalized terms used in this Participation Agreement, including
the foregoing recitals, and not otherwise defined herein shall have the
respective meanings specified in Appendix A hereto. The general provisions of
Appendix A shall apply to terms used in this Participation Agreement and
specifically defined herein.
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SECTION 2. PARTICIPATION; CLOSING DATE; TRANSACTION COSTS
Section 2.1. Agreements to Participate.
Subject to the terms and conditions of this Agreement, and in reliance
on the agreements, representations and warranties made herein, the parties agree
to participate in the Transaction as described in this Section 2.1 on the
Closing Date as follows:
(a) the Owner Participant agrees to provide funds in an amount
sufficient to (i) fund the Equity Investment, and (ii) pay the Transaction Costs
that the Owner Lessor is responsible to pay pursuant to Section 2.4(a) hereof
(collectively, the "Owner Participant's Commitment");
(b) PPL Montana agrees to sell its the Undivided Interest to
the Owner Lessor on the terms and conditions set forth in the ▇▇▇▇ of Sale
attached as Exhibit A hereto and lease the Related Ground Interest to the Owner
Lessor on the terms and conditions set forth in the Site Lease and Sublease
attached as Exhibit C; the Owner Lessor agrees to buy the Undivided Interest
from PPL Montana and lease such Related Ground Interest from PPL Montana; and
each agrees to execute and deliver a ▇▇▇▇ of Sale and a Site Lease and Sublease
substantially in such form;
(c) the Owner Lessor agrees to lease such the Undivided
Interest to PPL Montana, and sublease the Related Ground Interest to PPL
Montana, on the terms and conditions set forth in the form of Facility Lease
attached as Exhibit B-1 hereto and the Site Lease and Sublease referred to in
clause (b) of this Section 2.1; PPL Montana agrees to lease the Undivided
Interest and sublease the Related Ground Interest from the Owner Lessor; and
each agrees to execute and deliver a Facility Lease and a Site Lease and
Sublease substantially in such form;
(d) the Lease Indenture Trustee agrees to enter into and act
as the trustee under a Lease Indenture substantially in the form of Exhibit E
hereto pursuant to which the Lessor Note will be issued;
(e) the Owner Lessor agrees to sell to the Pass Through Trust
the Lessor Note and to grant to the Lease Indenture Trustee liens and security
interests in the Undivided Interest and certain of the Operative Documents
executed in connection therewith to secure its obligations thereunder, and to
enter into the Lease Indenture referred to in clause (d) of this Section 2.1;
(f) the Pass Through Trustee agrees to use the Proceeds to
purchase the Lessor Note from the Owner Lessor;
(g) the Owner Lessor agrees to use the funds received from the
Owner Participant and the Pass Through Trust pursuant to clauses (a)(i) and (f),
respectively, of this Section 2.1 to pay the Purchase Price;
(h) the Owner Participant and PPL Montana agree to enter into
the Tax Indemnity Agreement in the form to be agreed to between the Owner
Participant and PPL Montana;
(i) the Owner Participant agrees to pay all Transaction Costs
payable by it pursuant to Section 2.4(a) hereof;
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(j) the parties agree to enter into the other Operative
Documents substantially in the respective form attached hereto; and
(k) PPL Montana shall enter into the Equity Contribution
Agreement with PPL Corporation.
Section 2.2. Closing Date; Procedure for Participation.
(a) Closing Date. The closing of the Transaction (the
"Closing") shall take place after 10:00 a.m., New York City time, on the
Scheduled Closing Date, or such other date as the parties hereto shall mutually
agree (the "Closing Date"). The Closing shall take place at the offices of
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
(b) Procedures for Funding. Unless the Closing Date shall have
been postponed pursuant to Section 2.3(a), subject to the terms and conditions
of this Participation Agreement, the Owner Participant shall make the Owner
Participant's Commitment available not later than 10:00 a.m., New York City
time, on the Scheduled Closing Date, by transferring or delivering such amount,
in funds immediately available on such Closing Date to the Trust Company.
(c) Expiration of Commitments. The obligation of the Owner
Participant to make its Equity Investment shall expire at 11:59 p.m., New York
City time, on September 30, 2000. If the Closing Date has not occurred on or
before September 30, 2000, the Transaction Parties shall have no obligation to
consummate the Transaction and, except as provided in Sections 2.4, 11.1 and
11.2, all obligations of the Transaction Parties shall cease and terminate.
Section 2.3. Postponement of Closing; Investment of Funds.
(a) Postponement of the Closing. The Closing may be postponed
from time to time for any reason if PPL Montana gives the Owner Participant, the
Owner Lessor, the Lessor Manager, the Lease Indenture Trustee and the Pass
Through Trustee a facsimile or telephonic (confirmed in writing) notice of such
postponement and notice of the date to which the Closing has been postponed,
such notice of postponement to be received by each such party no later than
10:00 a.m., New York City time, on the date the Closing was scheduled to occur.
If, prior to receipt of a postponement notice under this Section 2.3(a), the
Owner Participant shall have provided funds in accordance with Section 2.2(b),
such funds shall be returned to the Owner Participant, as soon as reasonably
practicable but in no event later than the Business Day following the date of
such notice, unless the Owner Participant shall have otherwise directed. All
funds made available pursuant to Section 2.2(b) will be held by the Trust
Company in trust for the Owner Participant and shall not be part of the
Indenture Estate or the Lessor Estate, shall be invested by the Trust Company in
accordance with clause (b) below and such funds shall remain the sole property
of the Owner Participant unless and until (i) released by the Owner Participant
and made available to the Owner Lessor and applied by the Owner Lessor to pay
the Purchase Price or the Transaction Costs related to the Closing, or (ii)
returned to the Owner Participant, as provided in this Section 2.3(a).
(b) Investment of Funds. If the Owner Participant has made the
Owner Participant's Commitment available to the Trust Company in accordance with
Section 2.2(b), the Closing does not occur on the date such funds were required
to be deposited, and the Trust Company is
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unable to return such funds to the Owner Participant on such date, the Trust
Company shall, subject to Section 2.3(a) above, use reasonable efforts to invest
such funds from time to time at the written direction of PPL Montana and at PPL
Montana's sole expense and risk, in Permitted Instruments until such funds can
be returned to the Owner Participant. If on the date the Owner Participant's
Commitment was required to be deposited, the Owner Participant has made the
Owner Participant's Commitment available to the Trust Company in accordance with
Section 2.2(b), the Closing does not occur on such date, and the Trust Company
has not returned such funds to the Owner Participant on or before 1:00 p.m., New
York City time, on such date, then PPL Montana shall reimburse the Owner
Participant for loss of the use of such funds at the Applicable Rate for each
day, from and including the day that such funds were made available to the Trust
Company by the Owner Participant to, but excluding the earlier of (i) the day
that such funds have been returned to the Owner Participant pursuant to Section
2.3(a) (funds received by the Owner Participant after 1:00 p.m., New York City
time, of any day shall be deemed to be returned on the next succeeding Business
Day) and (ii) the Closing Date. Subject to payment for the account of the Owner
Participant of any reimbursement for loss of use of funds due to it at the
Applicable Rate, any net gain realized on the investment of such funds
(including interest) shall be paid to PPL Montana by the Trust Company on the
earlier of (i) the date such funds are returned to the Owner Participant
pursuant to Section 2.3(a) and (ii) the Closing Date. The Trust Company shall
not be liable for any interest on or loss resulting from such investments and,
if such funds are made available to the Lessor Manager and utilized to pay the
Purchase Price or Transaction Costs on the Closing Date, PPL Montana shall
reimburse the Trust Company for any net loss realized on the investment of such
funds. If such funds are not so utilized, PPL Montana shall, in addition to its
obligation to reimburse the Owner Participant for loss of use as provided above,
reimburse the Owner Participant on the date such funds are returned to the Owner
Participant for any net loss realized on the investment of such funds. In order
to obtain funds for payment of the Purchase Price or Transaction Costs or to
return funds made available to the Lessor Manager by the Owner Participant, the
Trust Company is authorized to sell any investments or obligations purchased as
aforesaid.
Section 2.4. Transaction Costs.
(a) If the Transaction is consummated, Transaction Costs
incurred on or prior to the Closing Date and substantiated or otherwise
supported in reasonable detail shall be paid on the Closing Date by the Owner
Lessor (with funds provided by the Owner Participant); provided that, unless
appropriate adjustments are made to Periodic Lease Rent and Termination Values
in accordance with Section 14.2(a), the Owner Lessor shall only be required to
pay Transaction Costs at the Closing Date up to the amount of $5,270,000.00 in
the aggregate, and PPL Montana shall be responsible for Transaction Costs in
excess of such amount. All other fees, costs and expenses incurred by PPL
Montana, the Owner Lessor and the Owner Participant shall be for such party's
respective account whether or not the transaction is consummated. If the
transaction is not consummated for any reason (including as a result of PPL
Montana's terminating this Agreement pursuant to Section 14.2(a)), PPL Montana
shall bear all Transaction Costs; provided, however, that PPL Montana shall not
be obligated to pay Transaction Costs incurred by any Transaction Party if such
party failed to consummate the Transaction on the basis of the provisions of
this Agreement.
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(b) Following the Closing, PPL Montana will be responsible
for, and will pay as Supplemental Lease Rent on an After-Tax Basis the annual
administration fees, if any, and related expenses (including reasonable fees and
expenses of its outside counsel) of the Lessor Manager, the Lease Indenture
Trustee and the Pass Through Trustee.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of PPL Montana.
PPL Montana represents and warrants that, as of the Effective Date:
(a) Due Incorporation, Etc. It is a limited liability company
duly organized, validly existing, and in good standing under the laws of the
State of Delaware, is duly licensed or qualified to transact business and in
good standing in each jurisdiction in which the failure so to qualify would have
a Material Adverse Effect, and has the corporate power and authority to enter
into and perform its obligations under this Agreement and each of the other
Operative Documents to which it is or will be a party.
(b) Due Authorization; Enforceability, Etc. This Agreement and
each of the other Operative Documents to which PPL Montana is or will be a party
have been or when executed and delivered will be duly authorized, executed and
delivered by all necessary corporate action by PPL Montana and, assuming the due
authorization, execution and delivery by each other party thereto, this
Agreement constitutes and when executed and delivered, the other Operative
Documents to which PPL Montana is or will be a party will constitute the legal,
valid and binding obligations of PPL Montana, enforceable against it in
accordance with their respective terms, except as the same may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, arrangement,
moratorium or other laws relating to or affecting the rights of creditors
generally and by general principles of equity.
(c) Non-Contravention. (i) The execution, delivery and
performance by PPL Montana of this Agreement and each of the other Operative
Documents to which it is or will be a party, the consummation by PPL Montana of
the transactions contemplated hereby and thereby, and compliance by PPL Montana
with the terms and provisions hereof and thereof, do not and will not (A)
contravene any Applicable Law binding on PPL Montana or its property, or its
organizational documents, or (B) constitute a default by PPL Montana under, or
result in the creation of any Lien upon the property of PPL Montana (other than
as permitted pursuant to any Operative Document) under, the Credit Agreement or
any indenture, mortgage or other material contract, agreement or instrument to
which PPL Montana is a party or by which PPL Montana or any of its property is
bound;
(ii) Neither the sale of the Undivided Interest by
PPL Montana to the Owner Lessor, nor the grant by the Owner Lessor to the Lease
Indenture Trustee of the liens and security interests in the Undivided Interest
and the applicable Operative Documents executed in connection therewith to
secure its obligations thereunder does or will constitute a default by PPL
Montana or the Owner Lessors under the Project Agreements.
(d) Government Actions. No authorization, determination or
approval or other action by, and no notice to or filing or registration with,
any Governmental Entity or under any
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Applicable Law is required (x) for the due execution, delivery or performance by
PPL Montana of this Agreement, the other Operative Documents, and the Project
Agreements to which PPL Montana is or will be a party or (y) without regard to
any other transactions of the Owner Participant, the Owner Lessor or the Lessor
Manager or any Affiliate of any of them and assuming that none of the Owner
Participant, the Owner Lessor or the Lessor Manager or any Affiliate of any of
them is an "electric utility" or a "public utility" or a "public utility holding
company" or any similar entity subject to public utility regulation under any
Applicable Law immediately prior to the Closing, with respect to the
participation by the Owner Participant, the Owner Lessor or the Lessor Manager
in the Transaction other than (i) the FERC Orders, (ii) as may be required under
Applicable Law providing for the supervision or regulation of the Owner
Participant, the Owner Lessor or the Lessor Manager or any Affiliate of any of
them as a result of investing, lending or other commercial activity in which the
Owner Participant, the Owner Lessor or the Lessor Manager or any Affiliate of
any of them is or may be engaged other than the transactions contemplated hereby
or by any of the other Operative Documents and the Project Agreements, (iii) as
may be required under existing Applicable Laws to be obtained, given,
accomplished or renewed at any time, or from time to time, in each case, after
the Closing Date in connection with the maintenance or operation of the Colstrip
Project and which are routine in nature and which cannot be obtained or are not
normally applied for, prior to the time they are required, and which PPL Montana
has no reason to believe will not be timely obtained, (iv) in connection with
any modification to or rebuilding or replacement of the Facility or any portion
thereof that may occur in the future, (v) as may be required in connection with
any refinancing of the Lessor Note or the Certificates or the issuance of
Additional Lessor Notes or Additional Certificates, (vi) as may be required in
consequence of any transfer of the Member Interest or any transfer of ownership
of the Undivided Interest or the Owner Lessor's Interest, or any part thereof by
the Owner Lessor or the exercise by any such party of dispossessory remedies
under the Operative Documents or any relinquishment of the use or operation of
the Undivided Interest by PPL Montana, (vii) appropriate filing and recording to
perfect the Lien of the Lease Indenture, if required, and the ownership and
leasehold interests conveyed pursuant to this Agreement, (viii) as may be
required in connection with the registration of the Certificates under the
Securities Act or (ix) as may be required under any Applicable Law enacted or
adopted after the date hereof.
(e) Litigation. Except as described on Schedule 9, there is no
pending or, to the Actual Knowledge of PPL Montana, threatened, action, suit,
investigation or proceeding against PPL Montana before any Governmental Entity
that would, if determined adversely to it, have a Material Adverse Effect or
otherwise materially adversely affect the Colstrip Project.
(f) No Defaults. PPL Montana is not in default, and no
condition exists that with notice or lapse of time or both would constitute a
default, under the Credit Agreement or any mortgage, indenture or other
contract, agreement or instrument to which it is a party or by which it or its
property is bound in any such case where any such default, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
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(g) Location of Chief Executive Office and Principal Place of
Business, Etc.
(i) The chief executive office and principal place of
business of PPL Montana and the office where it keeps its corporate records
concerning the Undivided Interest, the Colstrip Project, the Colstrip Site and
the Operative Documents is located at Billings, Montana.
(ii) The Facility is located on and surrounded by the
Colstrip Site.
(iii) The condition of the Colstrip Project is
substantially identical to the condition it was in when inspected by the
Appraiser in connection with the Closing Appraisal.
(h) Title; Liens.
(i) PPL Montana has (A) good, clear, record and
marketable title to the Undivided Interest, free and clear of all Liens other
than Permitted Liens, and (B) good, clear, record and marketable title and a fee
simple interest in the Ground Interest, free and clear of all Liens other than
Permitted Encumbrances.
(ii) Upon execution and delivery of the Operative
Documents and recording or filing (as appropriate) of the documents and
instruments referred to in Schedule 1 in accordance with Section 4(t), (A) good,
clear, record and marketable title to PPL Montana's Undivided Interest will be
duly, validly and effectively conveyed and transferred to the Owner Lessor, free
and clear of all Liens other than Permitted Liens, and (B) good, clear, record
and valid leasehold interest in the Ground Interest will be duly, validly and
effectively conveyed to the Owner Lessor upon the terms and conditions in the
Site Lease and Sublease, free and clear of all Liens other than Permitted Liens.
(iii) When duly authorized, executed and delivered by
each of the parties thereto, the Lease Indenture will create a valid Lien in
favor of the Lease Indenture Trustee in the Indenture Estate and no filing,
recording, registration or notice with any federal or state Governmental Entity
will be necessary to establish or, except for such filings and recordings as
will be made pursuant to Section 4(t), to perfect, or give record notice of, the
Lien in favor of the Lease Indenture Trustee in the Indenture Estate to the
extent such Lien may be perfected by filings or recordings.
(iv) None of the Permitted Encumbrances will, on and
after the Closing, materially interfere with the use, operation or possession of
the Units (as contemplated by the Operative Documents and the Project
Agreements) or the use of or the exercise by the Owner Lessor to the extent not
in violation of the Project Agreements of its rights under the ▇▇▇▇ of Sale or
the Site Lease and Sublease.
(i) Regulation. The use by PPL Montana of the proceeds of the
Lessor Note and the Equity Investment will not violate or result in a violation
of Section 7 of the Exchange Act, or any regulations issued pursuant thereto,
including Regulations T, U and X of the regulations of the Federal Reserve
System.
(j) Holding Company Act. PPL Montana is not an "electric
utility company," or a "holding company" as defined in the Holding Company Act;
however, it is a "subsidiary
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company" and an "affiliate" of a "holding company" that is exempt from all
provisions, except Section 9(a)(2), of the Holding Company Act. The execution,
delivery and performance of the Operative Documents to which PPL Montana is or
will be a party do not violate any provision of the Holding Company Act or any
rule or regulation thereunder.
(k) Investment Company Act. PPL Montana is not an "investment
company" or an "affiliated person" of an "investment company" within the meaning
of the Investment Company Act of 1940.
(l) Securities Act. Neither PPL Montana nor anyone authorized
by PPL Montana has directly or indirectly offered or sold any interest in the
Member Interest, the Lessor Note or the Certificates or any part thereof, or in
any similar security or lease, or in any security or lease the offering of which
for the purposes of the Securities Act would be deemed to be part of the same
offering as the offering of the Member Interest, the Lessor Note or the
Certificates or any part thereof or solicited any offer to acquire any of the
same in violation of the registration requirements of Section 5 of the
Securities Act.
(m) Environmental Matters.
(i) Except as described on Schedule 7, PPL Montana
has not received from any Governmental Entity any written notice, letter,
citation, order, warning, complaint, inquiry, claim or demand that: (A) there
has been a release, or there is a threat of release, of any Hazardous Substance
in, on, under or from the Facility or the Colstrip Site which would be in
violation of any Environmental Law; (B) PPL Montana may be or is liable, in
whole or in part, for the costs of cleaning up, remedying or responding to a
release of any Hazardous Substance pertaining to the Facility or the Colstrip
Site, including any release of any Hazardous Substance at any location in
violation of any Environmental Law that may be attributable to a Hazardous
Substance used or generated at the Facility or the Colstrip Site; or (C) either
the Facility or the Colstrip Site is subject to a Lien in favor of any
Governmental Entity or other Person in response to a release of Hazardous
Substances.
(ii) Since the closing of the acquisition of the
Montana Assets, PPL Montana has complied with, and the Facility and the Colstrip
Site have been in compliance with, all Environmental Laws, except to the extent
that failure to so comply individually and in the aggregate is not reasonably
likely to result in a Material Adverse Effect.
(iii) Except as described in the Environmental Report
or Schedule 7 hereto, to PPL Montana's Actual Knowledge, there is not and has
not been any Environmental Condition (A) at, on, under or from the Facility or
the Colstrip Site or (B) resulting from or arising in connection with the
operation of the Facility, that is reasonably likely to result in a Material
Adverse Effect or involve any danger of (1) foreclosure, sale, forfeiture or
loss of, or imposition of a lien on, the Facility or the Colstrip Site or the
impairment of the use, operation or maintenance of the Facility or the Colstrip
Site in any material respect, or (2) any criminal or material civil liability
being incurred by, or that could reasonably be expected to have a material
adverse effect on, the interests of the Owner Participant, the Owner Lessor, the
Lessor Manager, the Lease Indenture Trustee or the Pass Through Trustee.
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(iv) All permits required under Environmental Laws to
own, operate, lease or maintain the Facility in accordance with the Operative
Documents and the Project Agreements have been obtained and they are in proper
form, and in full force and effect, and PPL Montana is in compliance with the
provisions of all such permits, except where the failure to obtain, maintain the
effectiveness of, or comply with such permits is not reasonably likely to result
in a Material Adverse Effect or involve any danger of (A) foreclosure, sale,
forfeiture or loss of, or imposition of a lien on, the Undivided Interest or the
Ground Interest or the impairment of the use, operation or maintenance of the
Facility or the Colstrip Site in any material respect, or (B) any criminal or
material civil liability being incurred by, or that could have an adverse effect
on, the interests of the Owner Participant, the Owner Lessor, the Lessor
Manager, the Lease Indenture Trustee or the Pass Through Trustee.
(n) Unit Sales Agreement. There are no contracts or agreements
to which PPL Montana is a party providing for unit sales of PPL Montana's share
of the energy produced by the Facility that have a term which extends beyond the
scheduled Expiration Date.
(o) Operation and Use. Based upon PPL Montana's reasonable
expectations, and subject to Applicable Law, the rights and interests made
available to the Owner Lessor pursuant to the Operative Documents and the
Project Agreements, together with the rights of the Owner Lessor as owner of an
interest in a wholesale generating facility under the Federal Power Act and the
rules and regulations promulgated by the FERC thereunder, as currently in
effect, and the rights to be made available under the Operative Documents and
the Project Agreements, permit, or will permit at such time, on a commercially
practicable basis during the period commencing on the expiration or termination
of the Facility Lease Term and ending on the expiration of the Site Lease Term,
(i) the location, occupation, interconnection, maintenance and repair of the
Facility, (ii) the use, operation and possession of the Facility, (iii) the
construction, use, operation, possession, maintenance, replacement, renewal and
repair of all Modifications to the Facility, (iv) appropriate ingress to and
egress from the Facility and the Colstrip Site for any reasonable purpose in
connection with the exercise of rights under the Operative Documents and the
Project Agreements and such Person's interest in the Undivided Interest, and (v)
the procurement of transmission services from the Colstrip Site to enable such
Person to deliver the portion of the net electrical output of the Units to the
extent of the Undivided Interest in a commercially efficient manner and on
commercially reasonable terms.
(p) Tax Returns. PPL Montana has filed all material federal,
state and local income tax returns that to its knowledge are required to be
filed by it and has paid all material Taxes shown to be due and payable on such
returns or pursuant to any assessment received by it (other than Taxes and
assessments the payment of which is being contested in good faith by PPL Montana
or an Affiliate thereof and with respect to which appropriate accounting
reserves have to the extent required by GAAP been set aside) and none of PPL
Montana or its Affiliates has any Actual Knowledge of any actual or proposed
deficiency or additional assessment in connection therewith that, either in any
case or in the aggregate, could reasonably be expected to have a Material
Adverse Effect.
(q) Qualification To Do Business. The qualification of the
Owner Participant, the Lessor Manager, the Lease Indenture Trustee or the Pass
Through Trustee to do business under the laws of the State of Montana or any
political subdivision thereof is not required solely as a
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consequence of the execution and delivery of the Operative Documents, the making
of the Equity Investment or the Loans or, prior to expiration or termination of
the Facility Lease, the performance by the Owner Participant, the Lessor
Manager, the Lease Indenture Trustee or the Pass Through Trustee of this
Agreement or any other Operative Document to which it is or will be a party or,
prior to the exercise of dispossessing remedies under the Facility Lease or the
Lease Indenture.
(r) Jurisdiction. In accordance with Section 18.14 hereof, PPL
Montana has validly submitted to the jurisdiction of the Supreme Court of the
State of New York, New York County and the United States District Court for the
Southern District of New York.
(s) Applicable Law. PPL Montana is in compliance with all
Applicable Laws relating to the operations, maintenance, use or ownership of the
Facility except where noncompliance is not reasonably likely to have a Material
Adverse Effect or involve any danger of (i) foreclosure, sale, forfeiture or
loss of, or imposition of a Lien on, the Undivided Interest or the impairment of
the use, operation or maintenance of the Facility in any material respect, or
(ii) any criminal or material civil liability being incurred by, or any material
adverse effect on, the interests of the Owner Participant, the Owner Lessor,
Lessor Manager, the Lease Indenture Trustee or the Pass Through Trustee,
including subjecting the Owner Participant or the Owner Lessor to public utility
regulation under Applicable Law.
(t) ERISA. Assuming the correctness of the representations of
the other parties hereto and the Certificateholders in the Certificates, the
Transaction will not constitute a "prohibited transaction" under ERISA.
(u) Disclosure; No Material Omission. The Offering Memorandum
does not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that no representation is given or made with regard to (i) any
forecasts or projections included therein or omitted therefrom, (ii) any
information, assumptions or conclusion contained in the Market Report, the
Engineering Report, the Fuel Report or the summaries thereof, or (iii) the
descriptions of the Operative Documents or the tax consequences to beneficial
owners of Certificates.
(v) No Default; No Event of Loss. No Event of Default, or
event that with the passage of time or giving of notice or both would constitute
an Event of Default has occurred or will occur upon or as a consequence of the
execution and delivery of the Operative Documents. No Event of Loss (other than
a Regulatory Event of Loss) has occurred or will occur upon the execution and
delivery of the Operative Documents, and PPL Montana does not have Actual
Knowledge of any event that could reasonably be expected to result in a
Regulatory Event of Loss.
(w) Special Assessments. There is no action pending or, to PPL
Montana's Actual Knowledge, threatened by a Governmental Entity or other Person
to specially assess the Colstrip Site or the Facility for any public
improvements constructed or to be constructed that is reasonably likely to have
a Material Adverse Effect or an adverse effect on the value, utility or useful
life of the Facility.
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(x) Utility Services. The Colstrip Site and the Facility have
available all services of public utilities necessary for use and operation of
the Facility as currently being used and as contemplated by the Operative
Documents.
(y) Eminent Domain. There is no action pending or, to PPL
Montana's Actual Knowledge, threatened by a Governmental Entity or other Person
to initiate a taking or use of the Facility or the Colstrip Site through
condemnation, seizure, requisition of title, power of eminent domain or
otherwise, which is reasonably likely to have an adverse effect on the value,
utility or useful life of the Facility or would prevent or materially interfere
with the use or operation of the Facility.
(z) Permitted Liens. There are no violations or proceedings or
actions pending or, to PPL Montana's Actual Knowledge, threatened, with respect
to any easements, reciprocal easement agreements, declarations, development
agreements or recorded restrictions or covenants which could materially
adversely affect the Facility or enjoin or prevent the use, occupancy or
operation of the Colstrip Site or the Facility for the purposes contemplated by
the Operative Documents and Project Agreements or the performance by PPL Montana
of its obligations under this Agreement, any other Operative Document or the
Project Agreements.
(aa) Access; Egress. Access to and egress from the Facility
and the Colstrip Site are available and provided by public streets. To PPL
Montana's Actual Knowledge, there are no plans of any Governmental Entity to
change the highway or road system in the vicinity of the Facility or the
Colstrip Site, or to restrict or change access from any such highway or road to
the Facility or the Colstrip Site, in either case, in any manner which would
reasonably be expected to materially interfere with or prevent the use,
occupancy or operation of the Colstrip Site or the Facility as contemplated by
the Operative Documents.
(bb) Notices. To PPL Montana's Actual Knowledge, (i) there are
no outstanding written notices from any Governmental Entity of any violation of,
or that the Facility or the Colstrip Site is not in compliance with, any and all
Applicable Laws relating to the Facility and the Colstrip Site or the ownership,
use, occupancy and operation thereof and (ii) there are no outstanding written
notices that any repairs or work or capital improvements are required to be done
at or with respect to the Facility or the Colstrip Site by any Governmental
Entity or by any insurance company which currently issues any insurance to PPL
Montana or by any board of fire underwriters or other body exercising similar
functions, except, in either case with respect to (i) or (ii) above, where such
violation, noncompliance or repairs, individually or in the aggregate, are not
likely to have a Material Adverse Effect.
(cc) Financial Statements. The audited balance sheet of PPL
Montana as of December 31, 1999, together with the footnotes thereto, included
in the Offering Memorandum were prepared in accordance with GAAP, and fairly
presents the financial position of PPL Montana as of such date.
(dd) Contracts with Affiliates. Other than as set forth on
Schedule 6 hereto or as contemplated by the Operative Documents, there are no
material contracts or agreements in effect on the Effective Date between PPL
Montana and any Affiliate of PPL Montana. PPL
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Montana has delivered to the Owner Participant copies of each of the contracts
and agreements set forth on Schedule 6 hereto as in effect on the Effective
Date.
(ee) [Intentionally Omitted]
(ff) Status Under Certain Statutes. Based upon the Applicable
Laws in effect on the date hereof, neither the Owner Participant, the Owner
Lessor, the Lessor Manager, the Pass Through Trustee nor the Lease Indenture
Trustee solely as a result of the execution, delivery and performance of, and
the consummation of the Transaction shall be or become (i) subject to regulation
as a "public utility company," a "holding company," or an "affiliate" of a
"holding company" or a "subsidiary company" of a "holding company" within the
meaning of the Holding Company Act, (ii) a "public utility," a "transmitting
utility," or an "electric utility" within the meaning of the Federal Power Act
or (iii) subject to regulation of rates or to financial or organizational
requirements for utilities under the laws of the State of Montana, except that
in the event PPL Montana were to relinquish the use or operation of the
Undivided Interest, or any of the above-mentioned parties were to exercise their
rights or remedies under any of the Operative Documents to foreclose upon or
participate in the operation of the Undivided Interest, such parties may become
subject to regulation under the Federal Power Act, the Holding Company Act or
the laws of the State of Montana.
(gg) Exempt Wholesale Generator. Each of PPL Montana and,
assuming the statements regarding the Owner Lessor contained in the Owner
Lessor's application filed with the FERC to obtain the FERC EWG (Owner Lessor)
Order are true and correct, the Owner Lessor, is an "exempt wholesale generator"
as such term is defined in Section 32 of the Holding Company Act.
Section 3.2. Representations and Warranties of the Owner
Lessor. The Owner Lessor represents and warrants that as of the Effective Date:
(a) Due Organization. The Owner Lessor is a duly organized and
validly existing limited liability company under the laws of the State of
Delaware of which the Owner Participant is the sole member, and has the power
and authority to enter into and perform its obligations under this Agreement and
each of the other Operative Documents to which it is a party.
(b) Due Authorization; Enforceability; Etc.
(i) (A) This Agreement and each of the other
Operative Documents (other than the Lessor Note) to which the Owner Lessor is or
will be a party has been or when executed and delivered will be duly authorized,
executed and delivered by the Owner Lessor, and (B) assuming the due
authorization, execution and delivery of this Agreement by each party hereto
other than the Owner Lessor, this Agreement constitutes and when executed and
delivered each of the other Operative Documents (other than the Lessor Note) to
which it is or will be a party will be the legal, valid and binding obligations
of the Owner Lessor, enforceable against the Owner Lessor in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, arrangement, moratorium or other laws relating to or
affecting the rights of creditors generally and by general principles of equity.
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(ii) Upon the execution of the Lessor Note by the
Owner Lessor in accordance with the Lease Indenture and delivery of such Lessor
Note against payment therefor, the Lessor Note will constitute a legal, valid
and binding obligation of the Owner Lessor, enforceable against the Owner Lessor
in accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, arrangement, moratorium or
other laws relating to or affecting the rights of creditors generally and by
general principles of equity.
(c) Non-Contravention. The execution and delivery by the Owner
Lessor of this Agreement and the other Operative Documents to which it is or
will be a party, the consummation by the Owner Lessor of the transactions
contemplated hereby and thereby, and the compliance by the Owner Lessor with the
terms and provisions hereof and thereof, do not and will not contravene any
Applicable Law of the United States of America or the State of Delaware, or the
LLC Agreement or the Owner Lessor's other organizational documents or contravene
the provisions of, or constitute a default by the Owner Lessor under any
indenture, mortgage or other material contract, agreement or instrument to which
the Owner Lessor is a party or by which the Owner Lessor or its property is
bound, or in the creation of any Owner Lessor's Lien upon the Lessor Estate;
provided, however, that no representation is made with respect to the right,
power or authority of the Owner Lessor to act as operator of the Facility
following a Lease Event of Default.
(d) Governmental Actions. Assuming the representation and
warranties of PPL Montana contained in paragraphs (d), (i), (j), (k), (l), (m),
(q), (s), (bb), (ff) and (gg) of Section 3.1 are true, no authorization or
approval or other action by, and no notice to or filing or registration with,
any Governmental Entity is required for the due execution, delivery or
performance by the Owner Lessor, as the case may be, of the LLC Agreement, the
Lease Indenture, the Lessor Note, this Agreement or the other Operative
Documents to which the Owner Lessor is or will be a party, other than any such
authorization or approval or other action or notice or filing as has been duly
obtained, taken or given.
(e) Litigation. There is no pending or, to the Actual
Knowledge of the Owner Lessor, threatened, action, suit, investigation or
proceeding against the Owner Lessor before any Governmental Entity that (i)
questions the validity of the Operative Documents or (ii) would, if determined
adversely to it, materially adversely affect the ability of the Owner Lessor to
perform its obligations under the LLC Agreement, the Lessor Note, the Lease
Indenture, this Agreement or the other Operative Documents to which it is or
will be a party or would materially adversely affect the Facility, the Colstrip
Site or any interest therein or part thereof or the Lien of the Lease Indenture
on the Indenture Estate.
(f) Liens. The Owner Lessor's right, title and interest in and
to the Lessor Estate is free of any Owner Lessor's Liens.
(g) Location of Chief Executive Office and Principal Place of
Business. The chief executive office and principal place of business of the
Owner Lessor where the Owner Lessor will keep its corporate records concerning
the Facility, the Colstrip Site and the Operative Documents is located in
Wilmington, Delaware.
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(h) Exempt Wholesale Generator. Each of the statements
regarding the Owner Lessor contained in the Owner Lessor's application filed
with the FERC to obtain the FERC EWG (Owner Lessor) Order was true and correct
as of the date such statement was made by the Owner Lessor.
(i) Investment Company Act. The Owner Lessor is not an
"investment company" as defined in or subject to regulation under the Investment
Company Act of 1940.
Section 3.3. Representations and Warranties of the Lessor
Manager and the Trust Company. The Trust Company (only with respect to
representations and warranties expressly relating to the Trust Company) and the
Lessor Manager hereby severally represent and warrant that, as of the Effective
Date:
(a) Due Incorporation; Etc. The Trust Company is a banking
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, has the corporate power and authority, as Lessor
Manager and/or in its individual capacity to the extent expressly provided
herein or in the LLC Agreement, to enter into and perform its obligations under
the LLC Agreement, this Agreement and each of the other Operative Documents to
which it is or will be a party.
(b) Due Authorization; Enforceability; Etc.
(i) (A) The LLC Agreement has been duly authorized,
executed and delivered by the Trust Company, and (B) assuming the due
authorization, execution and delivery of the LLC Agreement by the Owner
Participant, the LLC Agreement constitutes the legal, valid and binding
obligation of the Trust Company, enforceable against it in its individual
capacity or as Lessor Manager, as the case may be, in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, arrangement, moratorium or other laws relating to or
affecting the rights of creditors generally and by general principles of equity.
(ii) (A) This Agreement has been duly authorized,
executed and delivered by the Lessor Manager and, to the extent expressly
provided herein, the Trust Company, and (B) assuming the due authorization,
execution and delivery of this Agreement by each party hereto other than the
Lessor Manager and, to the extent expressly provided herein, the Trust Company,
this Agreement constitutes a legal, valid and binding obligation of the Lessor
Manager and, to the extent expressly provided herein, the Trust Company,
enforceable against the Lessor Manager and, to the extent expressly provided
herein, the Trust Company, as the case may be, in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, arrangement, moratorium or other laws relating to or
affecting the rights of creditors generally and by general principles of equity.
(c) Execution. (i) Each of the other Operative Documents to
which the Trust Company or the Lessor Manager is or will be a party has been or
when executed and delivered will be duly authorized, executed and delivered by
the Trust Company or the Lessor Manager and (ii) assuming the due authorization,
execution and delivery of each of the other Operative Documents by each party
thereto other than the Trust Company or the Lessor Manager, each of
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the other Operative Documents to which the Lessor Manager or, to the extent
expressly provided therein, the Trust Company, is or will be a party constitutes
or when executed and delivered will constitute a legal, valid and binding
obligation of the Lessor Manager and, to the extent expressly provided herein
the Trust Company, as the case may be, enforceable against the Lessor Manager
and, to the extent expressly provided herein, the Trust Company, in accordance
with its terms, except as the same may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, arrangement, moratorium or other laws
relating to or affecting the rights of creditors generally and by general
principles of equity.
(d) Non-Contravention. The execution and delivery by the Trust
Company, in its individual capacity or as Lessor Manager, as the case may be, of
the LLC Agreement, this Agreement and the other Operative Documents to which it
is or will be a party, the consummation by the Trust Company, in its individual
capacity or as Lessor Manager, as the case may be, of the transactions
contemplated hereby and thereby, and the compliance by the Trust Company, in its
individual capacity or as Lessor Manager, as the case may be, with the terms and
provisions hereof and thereof, do not and will not (i) contravene any Applicable
Law of the State of Delaware governing the Trust Company or any United States
federal law governing the banking or trust powers of the Trust Company, or the
LLC Agreement, or its organizational documents or bylaws, or (ii) contravene the
provisions of, or constitute a default by the Trust Company under, or result in
the creation of any Owner Lessor's Lien attributable to it upon the Lessor
Estate under any indenture, mortgage or other material contract, agreement or
instrument to which the Trust Company is a party or by which the Trust Company
or its property is bound; provided, however, that no representation is made with
respect to the right, power or authority of the Trust Company or the Lessor
Manager to act as operator of the Facility following a Lease Event of Default.
(e) Governmental Actions. Assuming the representations and
warranties of PPL Montana contained in paragraphs (d), (i), (j), (k), (l), (m),
(q), (s), (bb) and (ff) of Section 3.1 are true, no authorization or approval or
other action by, and no notice to or filing or registration with, any
Governmental Entity of the State of Delaware or the United States of America
governing the banking or trust powers of the Trust Company is required for the
due execution, delivery or performance by the Trust Company or the Lessor
Manager, as the case may be, of the LLC Agreement, this Agreement or the other
Operative Documents to which the Trust Company or the Lessor Manager is or will
be a party, other than any such authorization or approval or other action or
notice or filing as has been duly obtained, taken or given.
(f) Litigation. There is no pending or, to the Actual
Knowledge of the Trust Company, threatened action, suit, investigation or
proceeding against the Trust Company either in its individual capacity or as
Lessor Manager, as the case may be, before any Governmental Entity that (i)
questions the validity of the Operative Documents, or (ii) would, if determined
adversely to it, materially adversely affect the ability of the Trust Company,
in its individual capacity or as Lessor Manager, as the case may be, to perform
its obligations under the LLC Agreement, this Agreement or the other Operative
Documents to which it is or will be a party or would materially adversely affect
the Facility, the Colstrip Site or any interest therein or part thereof or the
security interest of the Lease Indenture Trustee in the Indenture Estate.
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(g) Liens. The Lessor Estate is free of any Owner Lessor's
Liens attributable to the Trust Company or the Lessor Manager.
Section 3.4. Representations and Warranties of the Owner
Participant. The Owner Participant represents and warrants that, as of the
Effective Date:
(a) Due Organization. The Owner Participant is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the corporate power and authority to
enter into and perform its obligations under this Agreement, the LLC Agreement,
and the Tax Indemnity Agreement.
(b) Due Authorization; Enforceability; Etc. This Agreement,
the Original LLC Agreement, the LLC Agreement, and the Tax Indemnity Agreement
have been or when executed and delivered will be duly authorized, executed and
delivered by the Owner Participant and assuming the due authorization, execution
and delivery by each other party thereto, this Agreement, the LLC Agreement, and
the Tax Indemnity Agreement constitute or when executed and delivered will
constitute the legal, valid and binding obligations of the Owner Participant,
enforceable against the Owner Participant in accordance with their respective
terms, except as the same may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, arrangement, moratorium or other laws relating to or
affecting the rights of creditors generally and by general principles of equity.
(c) Non-Contravention. The execution and delivery by the Owner
Participant of this Agreement, the Original LLC Agreement, the LLC Agreement,
and the Tax Indemnity Agreement, the consummation by the Owner Participant of
the transactions contemplated hereby and thereby, and the compliance by the
Owner Participant with the terms and provisions hereof and thereof, do not and
will not contravene any Applicable Law binding on the Owner Participant, or its
organizational documents, or contravene the provisions of, or constitute a
default under, or result in the creation of any Owner Participant's Lien (other
than any Lien created under any Operative Document) upon the Lessor Estate under
any indenture, mortgage or other material contract, agreement or instrument to
which the Owner Participant is a party or by which the Owner Participant or its
property is bound (it being understood that no representation or warranty is
being made as to any Applicable Laws relating to (i) the Facility, (ii) the
Colstrip Site or (iii) other than its representations set forth in Section
3.4(g), ERISA or Section 4975 of the Code).
(d) Governmental Action. Assuming the representations and
warranties of PPL Montana contained in paragraphs (d), (i), (j), (k), (l), (m),
(q), (s), (bb), (ff) and (gg) of Section 3.1 are true, no authorization or
approval or other action by, and no notice to or filing or registration with,
any Governmental Entity is required for the due execution, delivery or
performance by the Owner Participant of this Agreement, the Original LLC
Agreement, the LLC Agreement, or the Tax Indemnity Agreement, other than any
authorization or approval or other action or notice or filing as has been duly
obtained, taken or given (it being understood that no representation or warranty
is being made as to any Applicable Laws relating to the Facility or the Colstrip
Site).
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(e) Litigation. There is no pending or, to the Actual
Knowledge of the Owner Participant, threatened action, suit, investigation or
proceeding against the Owner Participant before any Governmental Entity that (i)
questions the validity of the Operative Documents, or (ii) would, if determined
adversely to it, materially adversely affect the Owner Participant's ability to
perform its obligations under this Agreement, the LLC Agreement, or the Tax
Indemnity Agreement, or would materially adversely affect Colstrip ▇▇▇▇ ▇, the
Colstrip Site or any interest therein or part thereof or the Lien of the Lease
Indenture Trustee in the Indenture Estate.
(f) Liens. The Lessor Estate is free of any Owner
Participant's Liens.
(g) ERISA. No part of the funds to be used by the Owner
Participant to make its investment pursuant to this Agreement, directly or
indirectly, constitutes or is deemed to constitute assets (within the meaning of
ERISA and any applicable rules, regulations and court decisions thereunder) of
any Plan.
(h) Acquisition for Investment. The Owner Participant is
purchasing the Member Interest to be acquired by it for its own account with no
present intention of distributing such Member Interest or any part thereof in
any manner that would require registration under the Securities Act, but without
prejudice, however, to the right of the Owner Participant at all times to sell
or otherwise dispose of all or any part of such Member Interest under an
exemption from registration available under such Act.
(i) Regulatory Event of Loss. The Owner Participant is not
aware of any fact or circumstance that would cause a Regulatory Event of Loss.
(j) Securities Act. Neither the Owner Participant nor anyone
authorized by it has directly or indirectly offered or sold any interest in the
Member Interest the Lessor Note or the Certificates or any part thereof, or in
any similar security or lease, or in any security or lease the offering of which
for the purposes of the Securities Act would be deemed to be part of the same
offering as the offering of the Member Interest, the Lessor Note or the
Certificates or any part thereof or solicited any offer to acquire any of the
same in violation of the registration requirements of Section 5 of the
Securities Act.
(k) Holding Company Act and Federal Power Act. Immediately
prior to executing this Agreement, the Owner Participant is not an "electric
utility" or a "public utility" as such terms are used in the Federal Power Act,
and is not an "electric utility company," a "public-utility company," a "holding
company" or a "subsidiary company" or an "affiliate" of an "electric utility
company," a "public utility company" or a "holding company" as such terms are
used in the Holding Company Act.
SECTION 4. CLOSING CONDITIONS; CONDITIONS TO PURCHASE OF LESSOR NOTE
The obligations of the Owner Participant, the Owner Lessor, the Lessor
Manager, the Lease Indenture Trustee, the Pass Through Trustee, and PPL Montana
to consummate the Transaction on the Closing Date shall be subject to the
following conditions (except that the obligations of any Person shall not be
subject to such Person's own performance or compliance):
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(a) [Intentionally Omitted.]
(b) Operative Documents. On or before the Closing Date, each
of the Operative Documents to be delivered at the Closing shall have been duly
authorized by the parties thereto, and each of the Operative Documents to be
delivered at the Closing shall have been duly executed and delivered by the
parties thereto substantially in the form attached as an Exhibit hereto, shall
each be in full force and effect, and executed counterparts of each shall have
been delivered to each of the parties hereto (other than the Tax Indemnity
Agreement, which shall only be delivered to the parties thereto).
(c) Equity Investment. The Owner Participant shall have made
the Equity Investment to the Owner Lessor at the place and in the manner
contemplated by Section 2.
(d) Certificates and Lessor Note. Each of the conditions
precedent contained in the Certificate Purchase Agreement shall have been
satisfied or waived by the Initial Purchasers, Initial Purchasers shall have
purchased the Certificates pursuant to, and in accordance with the terms of, the
Certificate Purchase Agreement, and the Proceeds shall have been provided to the
Owner Lessor through the purchase by the Pass Through Trust of the Lessor Note.
(e) Ratings. The Certificates shall have been rated at least
investment grade by the Rating Agencies.
(f) Corporate Documents. Each of the Transaction Parties shall
have received certified copies of the organizational documents of each of the
other parties hereto (except for the Trust Company who shall not be required to
provide such documents) and resolutions of the board of directors of each such
other corporate party duly authorizing the transaction and such documents and
such evidence as each party may reasonably request in order to establish the
authority of each such other party to consummate the Transaction, the taking of
all corporate and other proceedings in connection therewith and compliance with
the conditions herein or therein set forth and the incumbency of all officers
signing any of the Operative Documents. Each of the foregoing documents shall be
reasonably satisfactory to the recipient.
(g) Representations and Warranties. The representations and
warranties set forth in Section 3 and in the OP Parent Guaranty shall be true
and correct on and as of the Closing Date with the same effect as though made on
and as of the Closing Date and each of the Transaction Parties shall have
received a certificate of each of the other parties hereto (other than the
Trustees) to such effect.
(h) Events of Loss, Defaults, Events of Default. No Event of
Loss, Lease Event of Default, or Lease Indenture Event of Default or event that
with the passage of time or giving of notice or both would constitute an Event
of Loss, a Lease Event of Default, or Lease Indenture Event of Default shall
have occurred and be continuing.
(i) No Threatened Proceedings. No action, suit, investigation
or proceeding shall have been instituted nor shall governmental action be
threatened before any Governmental Entity, nor shall any order, judgment or
decree have been issued or proposed to be issued by any Governmental Entity at
the time of the Closing Date, to set aside, restrain, enjoin or prevent the
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consummation of the Operative Documents or any of the transactions contemplated
by any of the Operative Documents.
(j) Consents. All permits, licenses, approvals and consents
necessary to consummate the Transaction shall have been duly obtained and shall
be in full force and effect, satisfactory to each of the Transaction Parties in
form and substance, and each such party shall have received a copy of such
approval or consent.
(k) Governmental Actions. All actions, if any, required to
have been taken by any Governmental Entity on or prior to the Closing Date in
connection with the Transaction on the Closing Date, including the FERC Orders,
shall have been taken and all orders, permits, waivers, exemptions,
authorizations, determinations and approvals of and registrations with such
Governmental Entities required to be in effect on the Closing Date in connection
with the transactions contemplated by the Operative Documents and the Project
Agreements on the Closing Date, including the FERC Orders, shall have been
issued and shall be final and non-appealable; and all such orders, permits,
waivers, exemptions, authorizations, determinations and approvals shall be in
full force and effect on the Closing Date; and each of the Transaction Parties
shall have received a copy of any such order, permit, waiver, exemption,
authorization, determinations or approval.
(l) Insurance. Insurance (including all related endorsements)
complying with the requirements of Section 11 of the Facility Lease and Section
6.11 hereof shall be in full force and effect and all premiums thereon shall be
current. The Owner Participant, the Lessor Manager, the Owner Lessor, the Lease
Indenture Trustee, and the Pass Through Trustee shall have received a
certificate or certificates dated the Closing Date of Aon Risk Services, Inc. or
an independent insurance broker or carrier reasonably satisfactory to such
Persons stating that such insurance is in full force and effect.
(m) Engineering Report. The Owner Participant shall have
received the Engineering Report addressed to the Owner Participant in the form
delivered to the Owner Participant on or before the Effective Date or in such
form with only such changes as are reasonably acceptable to the Owner
Participant.
(n) Environmental Report. The Owner Participant shall have
received a copy of those portions of (i) the phase I report, dated May 1998,
prepared by MPC in connection with the acquisition of the Montana Assets, (ii)
the phase II report, dated August 1998, prepared by the Environmental Consultant
that relate to the Colstrip Project, the Colstrip Site, the Undivided Interest,
or the Related Ground Interest, and (iii) the update letter, dated October 1999,
prepared by the Environmental Consultant in connection with the closing of the
Credit Agreement (collectively, the "Environmental Report").
(o) Appraisal; Condition of the Facility. The Owner
Participant shall have received the Closing Appraisal prepared by the Appraiser
addressed and delivered only to the Owner Participant in form and substance
satisfactory to the Owner Participant on the Closing Date or in such form with
only such changes as are acceptable to the Owner Participant. The Owner
Participant shall be satisfied that the Facility shall be in the condition
described in the Closing
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Appraisal. PPL Montana shall have received a letter from the Appraiser with
regard to the fair market value, depreciation class, and remaining useful life
of the Undivided Interest.
(p) Market Report. The Owner Participant shall have received
the Market Report addressed to the Owner Participant in the form delivered to
the Owner Participant on or before the Effective Date or in such form with only
such changes as are reasonably acceptable to the Owner Participant.
(q) Fuel Report. The Owner Participant shall have received the
Fuel Report addressed to the Owner Participant in the form delivered to the
Owner Participant on or before the Effective Date or in such form with only such
changes as are reasonably acceptable to the Owner Participant.
(r) Opinion with Respect to Certain Tax Aspects. The Owner
Participant shall have received the opinion, dated the Closing Date, of ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ LLP addressed and delivered only to the Owner Participant as to
certain tax matters in form and substance satisfactory to the Owner Participant.
(s) Opinions of Counsel. Each of the relevant Transaction
Parties shall have received an opinion or opinions, dated the Closing Date, of
(a) ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, special counsel to PPL Montana,
substantially in the form of Exhibits J-1 and J-2, (b) ▇▇▇▇▇▇▇, Bellingham,
▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., Montana counsel to PPL Montana, substantially in the form
of Exhibits K-1 and K-2, (c) Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, transaction
counsel to PPL Montana, substantially in the form of Exhibit L, (d) ▇▇▇▇▇, Day,
▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, special FERC counsel to PPL Montana, substantially in the
form of Exhibit M, (e) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., counsel to the Owner Participant,
the OP Member, and the Guarantor, substantially in the form of Exhibit N, (f)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel to the Owner Participant, substantially in the
form of Exhibit O, (g) Morris, James, Hitchens & ▇▇▇▇▇▇▇▇ LLP, counsel to the
Owner Lessor, the Trust Company, and the Lessor Manager, substantially in the
form of Exhibit P, and (h) ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the Lease
Indenture Trustee and the Pass Through Trustee, substantially in the form of
Exhibit Q, in each case addressed to such Person. Each such Person expressly
consents to the rendering by its counsel of the opinion referred to in this
Section 4(s) and acknowledges that such opinion shall be deemed to be rendered
at the request and upon the instructions of such Person, each of whom has
consulted with and has been advised by its counsel as to the consequences of
such request, instructions and consent. Furthermore, each such counsel shall, to
the extent requested, (i) include as addressees the Rating Agencies and the
Initial Purchasers or (ii) permit the Rating Agencies and the Initial Purchasers
to rely on its opinion as if such opinion were addressed to such parties. In
addition, Standard & Poor's shall have received a nonconsolidation opinion of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel to the Owner Participant.
(t) Recordings and Filings. All filings and recordings listed
in Paragraph No. 1 of Schedule 1 hereto and all financing statements under the
Uniform Commercial Codes of Montana and Delaware listed in Paragraph No. 2 of
Schedule 1 hereto shall have been duly made (or presented for filing with the
applicable office), and all filing, recordation, transfer and other fees payable
in connection therewith shall have been paid.
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(u) Actions of Governmental Entity. No action or proceeding
shall be pending nor shall any action be threatened before any court or
Governmental Entity, nor shall any order, judgment or decree have been issued by
any court or Governmental Entity at the time of the Closing Date, to set aside,
restrain, enjoin or prevent the completion and consummation of the Operative
Documents or any of the transactions contemplated by any of the Operative
Documents.
(v) Taxes. All Taxes, if any, due and payable on or before the
Closing Date in connection with the execution, delivery, recording and filing of
this Agreement or any other Operative Document, or any document or instrument
contemplated thereby shall have been duly paid in full.
(w) No Changes in Applicable Law. No change shall have
occurred in Applicable Law or the interpretation thereof by any competent court
or other Governmental Entity that would make it illegal for the Owner
Participant, the Owner Lessor, the Lessor Manager, the Lease Indenture Trustee,
the Pass Through Trustee or PPL Montana, to participate in the Transaction or
would materially adversely affect the Colstrip Project, the Colstrip Site, the
Undivided Interest or the Related Ground Interest.
(x) Registered Agent for PPL Montana. CT Corporation System
shall have been appointed by PPL Montana as registered agent for service of
process in the State of New York as provided in the Operative Documents and CT
Corporation System shall have accepted such appointment.
(y) SFAS 13. The present value of the aggregate Periodic Lease
Rent payable during the Fixed Lease Term under the Facility Lease (taking into
account any rent adjustment through or contemplated on the Closing Date),
together with all rent payable under the Site Lease and Sublease and all
Transaction Costs financed through the Facility Lease, discounted at the
Discount Rate, shall satisfy the 90 percent test for off-balance sheet treatment
under SFAS 13.
(z) Rent Adjustments. No rent adjustment made or contemplated
on the Closing Date (other than adjustments to reflect a change in Transaction
Costs, the Closing Date or the actual interest rate on the Lease Debt) shall
cause either (i) the after-tax net present value of Periodic Lease Rent
discounted at 6% to increase by more than 100 basis points or (ii) the total
Periodic Lease Rent to increase by more than 2%.
(aa) Title Insurance. The Title Policies shall have been
delivered to the Owner Participant, the Owner Lessor, and the Lease Indenture
Trustee, as the case may be, with copies to the Pass Through Trustee.
(bb) Qualifying Letter of Credit. PPL Montana shall have
caused a Qualifying Letter of Credit to have been issued in favor of the Owner
Lessor and the Owner Lessor shall have assigned such Qualifying Letter of Credit
to the Lease Indenture Trustee.
(cc) Registration as a Tax Shelter. The Tax Shelter
Designation Agreement shall have been executed by all the parties thereto.
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(dd) Post-Closing FERC Filings. PPL Montana shall have
executed and authorized for filing (but to be released for filing immediately
after the Closing) with the FERC (i) a notification relating to the consummation
of the Transaction as is required pursuant to the FERC Section 203 Order and
(ii) the FERC (Owner Lessor) EWG Notice.
SECTION 5. COVENANTS OF PPL MONTANA
Section 5.1. Maintenance of Existence. Except as permitted by Section
5.2, PPL Montana, at its own cost and expense, will at all times do or cause to
be done all things necessary to preserve and keep in full force and effect both
(a) its legal existence, and (b) qualification to do business in any state in
which the conduct of its business or the ownership or leasing of assets used in
its business requires such qualification and where the failure to be so
qualified would reasonably be expected to have a Material Adverse Effect.
Section 5.2. Merger, Consolidation, Sale of Substantially All Assets.
PPL Montana covenants and agrees as follows:
(a) PPL Montana will not consolidate or merge with or into any other
Person, or sell, assign, convey, lease, transfer or otherwise dispose of, all or
substantially all of its properties or assets (including equity interests of its
Core Subsidiaries) to any Person or Persons in one or a series of transactions,
unless immediately after giving effect to such transaction each of the following
are satisfied:
(i) no Significant Lease Default or Lease Event of Default
shall have occurred and be continuing;
(ii) the entity resulting from such consolidation, surviving
in such merger or succeeding to such assets, if other than PPL Montana,
shall be organized under the laws of the United States, any state
thereof, or the District of Columbia;
(iii) such resulting, surviving or succeeding entity, if other
than PPL Montana, shall execute and deliver to the Owner Participant,
the Owner Lessor, the Lessor Manager and, so long as the Lien of the
Lease Indenture shall not have been terminated or discharged, the Lease
Indenture Trustee and the Pass Through Trustee an assumption agreement
in form and substance reasonably satisfactory to each of such parties,
by which such entity shall assume all of PPL Montana's obligations
under this Participation Agreement and each other Operative Document to
which PPL Montana is then a party;
(iv) if the entity with whom PPL Montana has consolidated or
merged or to whom its properties or assets have been sold has any
Indebtedness, PPL Montana would have been permitted to incur such
Indebtedness under Section 6.1(a) hereof at the time of such
consolidation or merger after giving effect to such consolidation or
merger; and
(v) each of the Owner Participant, the Owner Lessor, the
Lessor Manager and, so long as the Lien of the Lease Indenture shall
not have been terminated or discharged, the Lease Indenture Trustee and
the Pass Through Trustee shall have received an Officer's Certificate
of PPL Montana reasonably acceptable to each of such parties stating
that the proposed merger, consolidation or sale complies with this
Section 5.2 and
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a satisfactory opinion of counsel reasonably acceptable to each of such
parties relating to the items specified in this Section 5.2.
In addition to the conditions set forth in clauses (i) through (v) above, PPL
Montana will not consummate any such consolidation, merger or sale of all or
substantially all of its properties or assets unless (A) the senior unsecured
debt of PPL Montana (or the Certificates) or the resulting, surviving or
succeeding entity's rating shall be at least investment grade (which condition
may be waived by the Owner Participant in its sole discretion), and (B) so long
as the Lien of the Lease Indenture shall not have been terminated or discharged,
after giving effect to such consolidation, merger or sale of all or
substantially all of its properties or assets, ▇▇▇▇▇'▇ and S&P confirm the then
current rating of the Certificates; provided, however that the foregoing
requirement set forth in clause (B) to obtain rating reconfirmations shall not
apply in the context of a consolidation or merger in which PPL Montana is the
surviving entity.
(b) Upon the consummation of such transaction described in
Section 5.2(a), the surviving entity, if other than PPL Montana, shall succeed
to, and be substituted for, and may exercise every right and power and shall
perform every obligation of, PPL Montana under this Participation Agreement and
each other Operative Document to which PPL Montana was a party immediately prior
to such transaction, with the same effect as if such entity had been named
herein and therein. PPL Montana will pay the costs and expenses (including
reasonable attorneys' fees and expenses) of the Owner Participant, the Owner
Lessor, the Lessor Manager, the Lease Indenture Trustee and the Pass Through
Trustee in connection with any transaction contemplated by this Section 5.2.
Section 5.3. Delivery of Financial Statements; No Default Certificate.
(a) PPL Montana shall deliver to the Owner Participant, the
Owner Lessor, the Lessor Manager and, so long as the Lien of the Lease Indenture
has not been terminated or discharged, the Lease Indenture Trustee and the Pass
Through Trustee, (i) as soon as practicable after the end of each fiscal year
but in no event later than 120 days after the end of such year, (A) a
consolidated balance sheet of PPL Montana and its Consolidated Subsidiaries as
of the end of such fiscal year and the related consolidated statements of
income, retained earnings and cash flows for such fiscal year, and (B) a
consolidated balance sheet of PPL Montana and the Core Subsidiaries (excluding
Additional Subsidiaries) for the most recently completed fiscal year and the
related consolidated statements of income, retained earnings and cash flows for
such fiscal year, each together with footnotes thereto, setting forth in each
case in comparative form the figures for the previous fiscal year, to the extent
available, all prepared in accordance with GAAP and reported on by
PricewaterhouseCoopers LLP or another firm of independent public accountants of
nationally recognized standing, and (ii) an Officer's Certificate stating that
(1) the signer has made, or caused to be made under its supervision, a review of
this Agreement and the other Operative Documents to which it is a party, and (2)
such review has not disclosed the existence during such fiscal year (and the
signer does not have knowledge of the existence as of the date of such
certificate) of any condition or event constituting a Significant Lease Default
or a Lease Event of Default or an Event of Loss or, if any such condition or
event existed or exists, specifying the nature thereof, the period of existence
thereof and what action PPL Montana has taken or proposes to take with respect
thereto.
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(b) PPL Montana shall deliver to the Owner Participant, the Owner
Lessor, the Lessor Manager, and so long as the Lien of the Lease Indenture shall
not have been terminated or discharged, the Lease Indenture Trustee and the Pass
Through Trustee, (i) as soon as reasonably practicable after the end of the
first three fiscal quarters but in no event later than 60 days after the end of
such quarter, (A) a consolidated balance sheet of PPL Montana and its
Consolidated Subsidiaries as of the end of such quarter and the related
consolidated statements of income for such quarter and for the portion of PPL
Montana's fiscal year ended at the end of such quarter, and the related
consolidated statement of cash flows for such quarter and for the portion of the
fiscal year ended at the end of such quarter, and (B) a consolidated balance
sheet of PPL Montana and its Core Subsidiaries (excluding Additional
Subsidiaries) as of the end of such quarter and the related consolidated
statements of income for such quarter and for the portion of PPL Montana's
fiscal year ended at the end of such quarter, and the related consolidated
statement of cash flows for such quarter and for the portion of the fiscal year
ended at the end of such quarter, each together with footnotes thereto, in each
case setting forth comparative figures for previous dates and periods, to the
extent available, and prepared in accordance with GAAP (subject to normal
year-end adjustments).
Section 5.4. Information Concerning the Facility. (i) PPL Montana shall
furnish, or shall cause to be furnished to, the Lessor Manager, the Owner
Lessor, the Owner Participant and, so long as the Lien of the Lease Indenture
has not been terminated or discharged, the Lease Indenture Trustee and the Pass
Through Trustee, and their respective authorized representatives from time to
time such information as such party shall reasonably request concerning the
Facility and the Colstrip Site, including information concerning the condition,
operation, maintenance and use of the Facility and the Colstrip Site and such
other financial or operating information as it shall reasonably request and
which is routinely made available to creditors of PPL Montana, to the extent it
possesses such information or can reasonably obtain such information; provided
that, except as provided in Section 5.3, PPL Montana reserves the right not to
provide any information that is not otherwise publicly available to any
transferee Owner Participant (or its Owner Lessor and Lessor Manager) if it
reasonably believes in its good faith judgment that such transferee Owner
Participant is a competitor or is an Affiliate of a competitor of PPL Montana or
its Affiliates in the competitive power market, unless, before receiving any
such information, such transferee Owner Participant shall have put in place (to
the reasonable satisfaction of PPL Montana) appropriate confidentiality
arrangements. To the extent such information consists of information contained
in records kept by PPL Montana or any Affiliate, such information shall be
furnished without cost to the recipient.
(ii) Within 30 days of receiving written notification
thereof by any Governmental Entity, PPL Montana shall furnish, or shall cause to
be furnished to, the Lessor Manager, the Owner Lessor, the Owner Participant
and, so long as the Lien of the Lease Indenture has not been terminated or
discharged, the Lease Indenture Trustee and the Pass Through Trustee, and their
respective authorized representatives from time to time, written notice of, and
copies of all written communications relating to any fact, circumstance,
condition, occurrence, release, discharge or emission at, on, under, from or
otherwise relating to the Facility or the Colstrip Site that has resulted or is
reasonably likely to result in material noncompliance with any applicable
Environmental Law, which noncompliance could reasonably be expected to cause a
Material Adverse Effect.
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Section 5.5. Certain Contracts and Agreements. Without the consent of
the Owner Participant, PPL Montana agrees that, except as required by the
Project Agreements or Operative Documents, it will not enter into or become
bound by any contract or agreement providing for the sale of energy produced
from the Undivided Interest, or the purchase of services to be performed at, for
or in connection with, the Facility or any other contract or agreement relating
to the Facility that has a term that extends beyond the scheduled Expiration
Date or the scheduled expiration of any Renewal Lease Term then in effect or
elected by it, unless such contract or agreement may be terminated by PPL
Montana without material costs or obligation prior to the Expiration Date or the
scheduled expiration of such Renewal Lease Term, as the case may be; provided
that nothing in this Section 5.5 shall prevent the Operator from entering
agreements to operate the Colstrip Project in accordance with the Project
Agreements, or prevent PPL Montana or any other Person from entering into any
contract or agreement that relates exclusively to Colstrip Unit 4 or to any
other undivided interest in the Units that could not reasonably be expected to
result in any costs or expense to the Owner Lessor, as owner of the Undivided
Interest, or otherwise adversely affect the value, utility or remaining useful
life of the Facility.
Section 5.6. Nondiscrimination Among Leases. PPL Montana shall, to the
extent Periodic Lease Rent or Termination Value is due under more than one of
the Colstrip Facility Leases, make, or cause to be made, payments pro rata to
amounts then due under all such Colstrip Facility Leases without preference to
any particular Colstrip Facility Lease.
Section 5.7. Notice of Change in Address or Name. PPL Montana shall
provide the Owner Participant, the Owner Lessor, the Lessor Manager and, so long
as the Lien of the Lease Indenture has not been terminated or discharged, the
Lease Indenture Trustee and the Pass Through Trustee, prompt written notice of
any anticipated change in its chief executive office, principal place of
business, or name, or the place where it maintains its business records
concerning the Colstrip Project, the Transaction and the Other Colstrip Lease
Transactions, which notice shall, in any event, be provided no later than 30
days prior to such change.
Section 5.8. Use of Proceeds. PPL Montana agrees that it will apply the
net cash proceeds from the sale of the Undivided Interest to the Owner Lessor to
(A) repay all borrowings under the bridge loan tranche of the Credit Agreement,
and (B) as to any remaining net cash proceeds not required for such repayment,
for any general corporate purpose of PPL Montana, including distribution to its
member.
Section 5.9. Public Utility Regulation. PPL Montana agrees to cooperate
with the Owner Participant and the Lessor Manager and to take reasonable
measures to alleviate the source or consequence of any regulation constituting a
Regulatory Event of Loss, at the cost and expense of PPL Montana.
Section 5.10. Further Assurances. PPL Montana, at its own cost, expense
and liability, will cause to be promptly and duly taken, executed, acknowledged
and delivered all such further acts, documents and assurances as may be
necessary in order to carry out the intent and purposes of this Participation
Agreement and the other Operative Documents to which it is a party, and the
transactions contemplated hereby and thereby. PPL Montana, at its own cost,
expense and liability, will cause such financing statements and fixture filings
(and continuation statements with respect thereto) as may be necessary and such
other documents as the Owner Participant,
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the Owner Lessor, the Lessor Manager and, so long as the Lien of the Lease
Indenture shall not have been terminated or discharged, the Lease Indenture
Trustee and the Pass Through Trustee, shall reasonably request to be recorded or
filed at such places and times in such manner, and will take all such other
actions or cause such actions to be taken, as may be necessary in order to
establish, preserve, protect and perfect the right, title and interest of the
Owner Lessor in and to the Undivided Interest, the Ground Interest under the
Site Lease and Sublease, or any portion of any thereof or any interest therein
and the first priority Lien intended to be created by the Lease Indenture
therein. PPL Montana shall promptly from time to time furnish to the Owner
Participant, the Owner Lessor, the Lessor Manager or, so long as the Lien of the
Lease Indenture shall not have been terminated or discharged, the Lease
Indenture Trustee or the Pass Through Trustee, such information with respect to
the Facility, the Colstrip Site or the transactions contemplated by the
Operative Documents to which it is a party as may be required to enable the
Owner Participant, the Owner Lessor, the Lessor Manager or, so long as the Lien
of the Lease Indenture shall not have been terminated or discharged, the Lease
Indenture Trustee or the Pass Through Trustee, as the case may be, to timely
file with any Governmental Entity any reports and obtain any licenses or permits
required to be filed or obtained by the Lessor Manager or the Owner Lessor under
any Operative Document or the Owner Participant as the owner of the Member
Interest.
Section 5.11. Support Agreements. PPL Montana agrees that, to the
extent that the rights described in Section 3.1(o) hereof that have already been
made available to the Owner Lessor or any assignee thereof prior to the
expiration or termination of the Facility Lease Term are insufficient to permit
on a commercially practicable basis during the period following the expiration
or termination of the Facility Lease Term, (i) the location, occupation,
interconnection, maintenance and repair of the Facility, (ii) the use, operation
and possession of the Facility, (iii) the construction, use, operation,
possession, maintenance, replacement, renewal and repair of all Modifications to
the Facility, (iv) appropriate ingress to and egress from the Facility and the
Colstrip Site for any reasonable purpose in connection with the exercise of
rights under the Operative Documents and such Person's interest in the Undivided
Interest, (v) the procurement of transmission services from the Colstrip Site to
enable such Person to deliver the portion of the net electrical output of the
Facility to the extent of the Undivided Interest in a commercially efficient
manner and on commercially reasonable terms, or (vi) the procurement of coal
from the Rosebud Mine or elsewhere to the extent of the Undivided Interest in a
commercially efficient manner and on commercially reasonable terms, PPL Montana
will provide or will arrange to provide the Owner Lessor or any assignee thereof
with any services relating to the ownership and operation of the Facility (to
the extent PPL Montana is capable of and remains in the business of providing
such services and such services cannot reasonably and timely be obtained from
third parties) necessary to permit the Owner Lessor or any assignee thereof to
use the Facility as described in (i) through (vi) above. Such arrangements will
provide for fair market value compensation to PPL Montana (payable periodically
in advance on no less than an annual basis) and will terminate upon the
expiration or termination of the Site Lease and Sublease, or earlier at the
option of the Owner Lessor or any assignee thereof.
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SECTION 6. CERTAIN COVENANTS OF PPL MONTANA WHILE CERTIFICATES ARE OUTSTANDING
As long as any of the Certificates are outstanding, PPL Montana, shall,
for the benefit of all of the other parties hereto, comply with the covenants
set forth in this Section 6. Once the Certificates shall have been paid in full,
the covenants set forth in this Section 6 shall, subject to the immediately
following sentence, immediately and without any further action terminate and be
of no further force or effect. Notwithstanding the foregoing or anything herein
or in any of the Operative Documents to the contrary, if the Owner Lessor shall
have issued additional Lease Debt at the request of PPL Montana in accordance
with Section 13 of this Participation Agreement prior to, simultaneously with,
or after payment in full of the Certificates and such new Lease Debt is
outstanding on or after the date the Certificates are paid in full, the
covenants in this Section 6 shall, to the extent required by the terms of such
new Lease Debt, remain in effect or thereafter become effective if not then in
effect. Upon repayment of such new Lease Debt, or compliance with the terms
thereof, the covenants in this Section 6 shall immediately and without further
action terminate and be of no further force and effect. The date the covenants
in this Section 6 shall terminate is referred to herein as the "Debt Covenant
Termination Date".
For avoidance of doubt, the Section 467 Loan Balance and the Section
467 Interest shall not be deemed to be Indebtedness, an Investment or a
Restricted Payment or otherwise be taken into account in calculating coverage
ratios or fixed charges or determining compliance with any other financial
covenant or financial test in this Agreement.
Section 6.1. Incurrence of Indebtedness.
(a) PPL Montana shall not, and shall not permit any of its Subsidiaries
to, create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable, with respect to (collectively, "incur") any Indebtedness
unless, at the time of the incurrence of such Indebtedness each of the following
conditions is satisfied:
(i) for the most recently ended four full fiscal quarters,
taken as a whole, or shorter period (of not less than one full fiscal
quarter) commencing on the Closing Date, each ending on the last day of
the most recent fiscal quarter for which internal financial statements
are available,
(A) if the most recently ended four full fiscal
quarters (or shorter period of not less than one full fiscal
quarter) was a PPA Period, the Cash Flow to Fixed Charges
Ratio shall equal at least 2.0 to 1.0, or
(B) if the most recently ended four full fiscal
quarters is not a PPA Period, the Cash Flow to Fixed Charges
Ratio shall equal at least 2.5 to 1.0; and
(ii) for each calendar year, commencing with and including the
year in which such Indebtedness is to be incurred during the term in
which such new Indebtedness is outstanding,
(A) if such calendar year is a PPA Period, the
projected Cash Flow to Fixed Charges Ratio shall equal at
least 2.0 to 1.0, and
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(B) if such calendar year is not a PPA Period, the
projected Cash Flow to Fixed Charges Ratio shall equal at
least 2.5 to 1.0,
in each case, determined on a basis consistent with
projections prepared by PPL Montana in good faith based upon
assumptions consistent in all material respects with the
relevant contracts and agreements, historical operations, and
PPL Montana's good faith projections of future revenues and
projections of operating and maintenance expenses for PPL
Montana and the Core Subsidiaries in light of the then
existing or reasonably expected regulatory and market
environments in the markets in which the Facility or other
assets owned by such Person is or will be operated and upon
the assumption that there will be no early redemption or
prepayment of Indebtedness (other than early redemptions or
prepayments of Indebtedness that are to occur concurrently
with the incurrence of such new Indebtedness under this
Section 6.1); and
(iii) in the case of Indebtedness incurred by any Core
Subsidiary, each Rating Agency then rating the Lease Debt shall have
confirmed the then current rating of the Lease Debt;
provided that, if a Significant Lease Default or a Lease Event of Default shall
have occurred and be continuing, no incurrence of Indebtedness shall be
permitted, unless such incurrence of Indebtedness would otherwise satisfy the
requirements set forth in clauses (i) and (ii) of this Section 6.1(a) and the
application of the proceeds therefrom will cure such Significant Lease Default
or Lease Event of Default. Each calculation made pursuant to clause (ii) above,
shall be made, as applicable, after giving pro forma effect to any Indebtedness
to be incurred in connection therewith, the application of the proceeds
resulting therefrom, any Restricted Payments to be made in connection therewith,
any assets or businesses to be acquired in connection therewith and the
consummation of any related transactions.
(b) Notwithstanding the provisions of Section 6.1(a), the incurrence by
PPL Montana or its Subsidiaries, in the aggregate, of the following types of
Indebtedness shall be permitted at any time:
(i) Indebtedness in respect of letters of credit, surety bonds
or performance bonds issued in the ordinary course of business;
(ii) Indebtedness in an aggregate amount up to $45 million
incurred in connection with the issuance of any Qualifying Letter of
Credit;
(iii) Indebtedness of up to $50 million in the aggregate for
general corporate purposes incurred under the Working Capital Facility
or any replacement, successor, or additional working capital facility
on customary terms and conditions;
(iv) Indebtedness of up to $25 million incurred for the
purpose of financing all or any part of the cost of the construction,
installation, lease, development or improvement of any assets used or
useful in a Permitted Business or for general corporate purposes;
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(v) Indebtedness expressly subordinated to PPL Montana's
payment obligations under the Operative Documents;
(vi) Non-Recourse Indebtedness incurred by Additional
Subsidiaries; provided, however, that if any such Indebtedness ceases
to be a Non-Recourse Indebtedness of an Additional Subsidiary, such
event shall be deemed to constitute an incurrence of Indebtedness by a
Core Subsidiary that is not permitted under this clause (vi); and
(vii) Indebtedness ("New Indebtedness") incurred in exchange
for, or the net proceeds of which are used to refund, refinance or
replace Indebtedness that was permitted to be incurred under Section
6.1(a) ("Old Indebtedness"), provided that (A) the principal amount of
the New Indebtedness shall not exceed the principal amount of the Old
Indebtedness plus a reasonable premium in connection with the
redemption or repurchase of the Old Indebtedness, and (B) for each
calendar year during the period in which the Old Indebtedness would
have been outstanding, the projected Cash Flow to Fixed Charges Ratio
(determined on a pro forma basis after giving effect to the incurrence
of such New Indebtedness and the retirement of the Old Indebtedness) is
at least equal to the then existing projected Cash Flow to Fixed
Charges Ratio, and (C) for each calendar year during the period in
which the New Indebtedness will be outstanding and the Old Indebtedness
would not have been outstanding,
(1) if such calendar year is a PPA Period,
the projected Cash Flow to Fixed Charges Ratio shall
equal at least 2.0 to 1.0, and
(2) if such calendar year is not a PPA
Period, the projected Cash Flow to Fixed Charges
Ratio shall equal at least 2.5 to 1.0,
in each case, determined on a basis consistent with
projections prepared by PPL Montana in good faith
based upon assumptions consistent in all material
respects with the relevant contracts and agreements,
historical operations, and PPL Montana's good faith
projections of future revenues and projections of
operating and maintenance expenses for PPL Montana
and the Core Subsidiaries in light of the then
existing or reasonably expected regulatory and market
environments in the markets in which the Facility or
other assets owned by such Person is or will be
operated and upon the assumption that there will be
no early redemption or prepayment of Indebtedness
(other than Old Indebtedness).
Section 6.2. Restricted Payments. PPL Montana, shall not, and shall not
permit any of its Core Subsidiaries to make any Restricted Payment unless at the
time such Restricted Payment is to be made, each of the following conditions is
satisfied:
(a) for the most recently ended four full fiscal quarters, or such
shorter period (of not less than one full fiscal quarter) commencing on the
Closing Date and ending on the last day of the most recent fiscal quarter for
which internal financial statements are available,
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(1) if the four full fiscal quarters commencing with the
quarter in which the Restricted Payment is proposed to be made is a PPA Period,
the Cash Flow to Fixed Charges Ratio shall equal at least 1.5 to 1.0, or
(2) if the four full fiscal quarters commencing with the
quarter in which the Restricted Payment is proposed to be made is not a PPA
Period, the Cash Flow to Fixed Charges Ratio shall equal at least 1.7 to 1.0;
(b) for each of the two periods of four fiscal quarters commencing with
the fiscal quarter in which the Restricted Payment is proposed to be made,
(1) if the four full fiscal quarters commencing with the
quarter in which the Restricted Payment is proposed to be made is a PPA Period,
the projected Cash Flow to Fixed Charges Ratio shall equal at least 1.5 to 1.0,
or
(2) if the four full fiscal quarters commencing with the
quarter in which the Restricted Payment is proposed to be made is not a PPA
Period, the projected Cash Flow to Fixed Charges Ratio shall equal at least 1.7
to 1.0,
in each case determined on a pro forma basis after giving effect to such
Restricted Payment and on a basis consistent with projections prepared by PPL
Montana in good faith based upon assumptions consistent in all material respects
with the relevant contracts and agreements, historical operations, and PPL
Montana's good faith projections of future revenues and projections of operating
and maintenance expenses for PPL Montana and the Core Subsidiaries in light of
the then existing or reasonably expected regulatory and market environments in
the markets in which the Facility or other assets owned by such Person is or
will be operated and upon the assumption that there will be no early redemption
or prepayment of Indebtedness;
(c) the Qualifying Letter of Credit then maintained by PPL Montana is
fully undrawn (or, if previously drawn in whole or in part, reinstated up to the
then required amount described in Section 6.5(a) hereof);
(d) PPL Montana shall have provided an Officer's Certificate to the
Lease Indenture Trustee and the Pass Through Trustee to the effect that the
making of the Restricted Payment then contemplated will not cause a Material
Adverse Effect; and
(e) no Significant Lease Default or Lease Event of Default shall have
occurred and be continuing;
provided that, so long as no Significant Lease Default or Lease Event of Default
has occurred and is continuing or would be caused thereby, this Section 6.2 will
not prohibit the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of PPL Montana or of any equity
interests of PPL Montana in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of PPL Montana) of,
equity interests of PPL Montana.
Section 6.3. Sale of Assets. Except as provided in Section 5.2, PPL
Montana shall not, and shall not permit any of its Core Subsidiaries, to
consummate any Asset Sale, if the aggregate
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net book value of all such Asset Sales consummated since the Closing Date would
exceed 15% of PPL Montana's Consolidated Tangible Net Assets as of the beginning
of PPL Montana's most recently ended full fiscal quarter; provided, however,
that any such Asset Sale will be disregarded for purposes of the 15% limitation
specified above if the proceeds thereof are invested by PPL Montana or any Core
Subsidiary in a Permitted Business, or are used by PPL Montana or a Core
Subsidiary to repay existing Indebtedness of PPL Montana or such Core
Subsidiary, or if the consideration received is retained by PPL Montana or any
Core Subsidiary, provided, further, that if after giving effect to any Asset
Sale that would cause the 15% limitation specified above to be exceeded each
Rating Agency then rating the Lease Debt confirms the then current rating of the
Lease Debt, such Asset Sale shall also be disregarded for purposes of this
Section 6.3.
Section 6.4. Negative Pledge. PPL Montana shall not, nor shall it
permit any Core Subsidiary to, create, incur, assume or otherwise cause or
suffer to exist or become effective any Lien of any kind on its or its Core
Subsidiaries' property or assets, now owned or hereafter acquired, except for:
(a) Liens existing on the Closing Date (which Liens, other than
Permitted Liens and Liens of less than $1 million individually or in the
aggregate, are set forth on Schedule 10 hereto);
(b) Liens by PPL Montana to any wholly-owned Core Subsidiary thereof or
by a wholly-owned Core Subsidiary of PPL Montana to PPL Montana or any other
wholly-owned Core Subsidiary of PPL Montana;
(c) any Lien arising by reason of any judgment, decree or order of any
court, so long as such Lien is being contested in good faith and is
appropriately bonded or reserved against, and any appropriate legal proceedings
that may have been duly initiated for the review of such judgment, decree or
order have not been finally terminated or the period within which such
proceedings may be initiated has not expired;
(d) Liens arising by reason of taxes, duties, assessments, imposts or
other governmental charges that are not yet delinquent or are being contested in
good faith;
(e) Liens arising by reason of security for payment of worker's
compensation or other insurance;
(f) Liens arising by operation of law in favor of carriers,
warehousemen, landlords, mechanics, materialmen, laborers or employees, incurred
in the ordinary course of business for sums that are not yet delinquent or are
being contested in good faith by negotiations or by appropriate proceedings that
suspend the collection thereof;
(g) Liens in favor of suppliers, incurred in the ordinary course of
business for sums that are not yet delinquent or are being contested in good
faith by negotiations or by appropriate proceedings that suspend the collection
thereof;
(h) Liens arising by reason of easements, rights-of-way, zoning and
similar covenants and restrictions and other similar encumbrances or title
defects that do not in the aggregate
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materially interfere with the ordinary course of business of PPL Montana or its
Core Subsidiaries;
(i) Liens arising by operation of law pursuant to any license issued by
the FERC required for PPL Montana's operation of hydroelectric generation
facilities;
(j) Liens to secure the refinancing of previously secured Indebtedness,
the incurrence of which is not prohibited by this Agreement; provided that such
Liens do not cover assets that are, as a whole, more valuable than the assets
covered by Liens that secured the refinanced Indebtedness;
(k) Liens against earned receivables pledged to secure Indebtedness
permitted to be incurred pursuant to Section 6.1;
(l) Permitted Liens;
(m) Liens to secure Indebtedness permitted to be incurred pursuant to
Section 6.1(b), other than under clause (v) thereof, provided that such Liens
shall not secure Indebtedness in an amount in excess of $25 million;
(n) Liens on assets of an Additional Subsidiary that secure
Non-Recourse Indebtedness of such Additional Subsidiary; and
(o) operating agreements or such other similar arrangements with
respect to the Facility and the Common Facilities used or useful to PPL Montana
or its Core Subsidiaries which could not reasonably be expected to result in a
Material Adverse Effect.
Section 6.5. Qualifying Letter of Credit.
(a) So long as the Certificates are outstanding, PPL Montana shall
maintain for the benefit of the Owner Lessor a Qualifying Letter of Credit. Each
Qualifying Letter of Credit shall (i) be issued in favor of the Owner Lessor by
a Qualifying Letter of Credit Bank, (ii) have a drawing amount, as of the date
of original issuance and as of each Rent Payment Date thereafter (after giving
effect to the payment of Rent on such Rent Payment Date), equal to the greater
of (x) the Rent scheduled to be paid on the next Rent Payment Date and (y) 50%
of the Rent scheduled to be paid on the next two Rent Payment Dates, and (iii)
have a stated expiration date not earlier than one year after the date of
issuance of such Qualifying Letter of Credit.
(b) If a Qualifying Letter of Credit shall have an expiration date
prior to the maturity date of the Certificates, PPL Montana shall extend or
replace such Qualifying Letter of Credit on or before the date that is 60 days
prior to such expiration date.
(c) If PPL Montana or the issuer of any Qualifying Letter of Credit
elects to terminate any Qualifying Letter of Credit prior to the maturity date
of the Certificates, PPL Montana shall or such issuer, as the case may be, shall
notify the Lease Indenture Trustee of its intent to terminate the Qualifying
Letter of Credit 120 days prior to the proposed termination date and PPL Montana
shall replace such Qualifying Letter of Credit on or before a date that is 60
days prior to the proposed termination date.
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(d) If at any time subsequent to the issuance of a Qualifying Letter of
Credit, the issuer of such Qualifying Letter of Credit ceases to be a Qualifying
Letter of Credit Bank, PPL Montana shall, within 60 days of receiving Actual
Knowledge of such issuer failing to be a Qualifying Letter of Credit Bank,
replace such Qualifying Letter of Credit with a replacement Qualifying Letter of
Credit issued by a bank or other financial institution that is a Qualifying
Letter of Credit Bank.
(e) If at any time a Qualifying Letter of Credit is drawn upon pursuant
to Section 17.1(h) or Section 17.4 of the Facility Lease, Section 4.3(g) of the
Lease Indenture or otherwise, PPL Montana shall have 90 days to reinstate the
availability under the drawn Qualifying Letter of Credit (or provide a new
Qualifying Letter of Credit) in an amount equal to the amount then required by
Section 6.5(a)(ii) hereof.
(f) PPL Montana shall be permitted, from time to time, to replace any
Qualifying Letter of Credit issued with a replacement Qualifying Letter of
Credit as long as there shall be no interruption in the coverage provided by the
Qualifying Letter of Credit in consequence of such optional replacement.
Section 6.6. Limitation on Activities. PPL Montana shall not directly,
and shall not permit any of its Core Subsidiaries to, engage in any business
other than a Permitted Business.
Section 6.7. Limitation on Transactions with Affiliates. PPL Montana
shall not, and shall not permit any of its Core Subsidiaries to, sell, lease,
transfer or otherwise dispose of any of its or their properties or assets to, or
purchase any property or assets from, or enter into or make or amend any
contract, agreement, understanding, loan, advance or guarantee with, to or for
the benefit of, any Affiliate (other than transactions contemplated by any
agreement entered into between PPL Montana or any of its Core Subsidiaries and
any of their respective Affiliates as the same are in effect on the Effective
Date) unless such transaction or series of transactions is on terms that are no
less favorable to PPL Montana or such Core Subsidiary than would be available in
a comparable transaction with an unrelated third party.
Section 6.8. Designation of Core Subsidiaries and Additional
Subsidiaries. (a) As of the Closing Date, all Subsidiaries involved in a
Permitted Business will be Core Subsidiaries; provided, however, that the board
of managers of PPL Montana may, subject to Section 6.8(b) and (d), designate any
Core Subsidiary to be an Additional Subsidiary if that designation would not
cause a Significant Lease Default or Lease Event of Default. The designation of
a Core Subsidiary as an Additional Subsidiary shall constitute an Asset Sale and
shall be subject to the provisions of Section 6.3. If a Core Subsidiary is
designated as an Additional Subsidiary, the aggregate fair market value of all
outstanding Investments owned by PPL Montana and its Core Subsidiaries in the
Subsidiary so designated will be deemed to be an Investment made as of the time
of such designation. That designation will only be permitted if such Investment
would be permitted under Section 6.2 at that time and if such Core Subsidiary
otherwise meets the definition of an Additional Subsidiary. The board of
managers of PPL Montana may redesignate any Additional Subsidiary to be a Core
Subsidiary if the redesignation would not cause a Significant Lease Default or
Lease Event of Default.
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(b) No Subsidiary shall be designated an Additional Subsidiary, unless
such Subsidiary:
(i) has no Indebtedness other than Non-Recourse
Indebtedness;
(ii) is not party to any agreement, contract, understanding,
loan, advance or guarantee with, to or for the benefit of PPL Montana
or any Core Subsidiary unless the terms of any such agreement,
contract, understanding, loan, advance or guarantee are no less
favorable to PPL Montana or such Core Subsidiary than those that might
be obtained at the time from Persons who are not Affiliates of PPL
Montana;
(iii) is a Person with respect to which neither PPL Montana
nor any of its Core Subsidiaries has any direct or indirect obligation
(A) to subscribe for additional equity interests (unless the amount of
such subscription could be made as a Restricted Payment under Section
6.2) or (B) to maintain or preserve such Person's financial condition
or to cause such Person to achieve any specified levels of operating
results; and
(iv) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of PPL Montana or any of
its Core Subsidiaries.
Any designation of a Subsidiary of PPL Montana as an Additional Subsidiary shall
be evidenced to the Lease Indenture Trustee by filing with the Lease Indenture
Trustee a certified copy of the board resolution giving effect to such
designation and an Officer's Certificate of PPL Montana certifying that such
designation complied with the preceding conditions and was permitted by Section
6.2. If, at any time, any Additional Subsidiary fails to meet the requirements
as an Additional Subsidiary, it shall thereafter cease to be an Additional
Subsidiary for purposes of the Lease Indenture, and any Indebtedness of such
Subsidiary shall be deemed for purposes of Section 6.1 to be incurred by a Core
Subsidiary of PPL Montana as of such date.
(c) The board of managers of PPL Montana may at any time designate any
Additional Subsidiary to be a Core Subsidiary, provided that such designation
shall be deemed to be an incurrence of Indebtedness by a Core Subsidiary of PPL
Montana of any outstanding Indebtedness of such Additional Subsidiary, and such
designation shall only be permitted if (i) such Indebtedness is permitted
pursuant to Section 6.1, and (ii) no Significant Lease Default or Lease Event of
Default would exist following such designation.
(d) Notwithstanding the provisions of this Section 6.8, no Additional
Subsidiary or Person other than PPL Montana and its Core Subsidiaries shall be
permitted to hold, individually or in the aggregate, 50% or more of all voting
and economic interests in any Core Subsidiary.
Section 6.9. Restrictions on Guarantees. PPL Montana will not,
contingently or otherwise, be or become liable, directly or indirectly, for any
obligation guaranteeing in any manner any Indebtedness or performance obligation
of any other person, except for:
(i) endorsements and similar obligations in the ordinary
course of business;
(ii) guarantees existing on the Closing Date (which guarantees
are set forth on Schedule 8 hereto), and renewals thereof in the ordinary course
of business;
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(iii) guarantees constituting Indebtedness that is incurred in
compliance with Section 6.1;
(iv) performance guarantees not otherwise constituting
Indebtedness in a principal or notional amount which would be permitted to be
incurred by Section 6.1 if such performance guarantees did constitute
Indebtedness;
(v) guarantees of Indebtedness that is incurred in compliance
with Section 6.1;
(vi) guarantees of the performance of PPL Energy Plus Co.,
LLC, or any other Affiliate of PPL Montana that has entered into an agreement
with PPL Montana or any Core Subsidiary, entered into by PPL Montana in the
ordinary course of business in connection with sales or purchases of energy or
capacity, sales or purchases of emissions credits, fuel procurement or ash waste
disposal, in each case related to a Permitted Business of PPL Montana or any
Core Subsidiary, so long as such activities are not for speculative purposes;
(vii) guarantees of the performance of any Affiliate of PPL
Montana that owns, leases or operates the Rosebud Coal Mine or other coal assets
in North America for the supply of fuel to any Permitted Business, but only to
the extent of PPL Montana's ownership, leasehold or operating interest in such
Affiliate; and
(viii) any other performance guarantee, provided that S&P and
▇▇▇▇▇'▇ confirm that such guarantee will not result in a downgrade of the then
current ratings of the Certificates.
Section 6.10. Maintenance of Tax Status. PPL Montana shall not and
shall not permit any of its Core Subsidiaries to, voluntarily take any action
which would cause PPL Montana or its Core Subsidiaries to be treated as an
association taxable as a corporation for federal income tax purposes.
Section 6.11. Insurance. PPL Montana will and will cause each of its
Core Subsidiaries to, maintain, with financially sound and reputable insurance
companies insurance in such amounts (with no greater risk retention) and against
such risks as are customarily maintained by companies of established repute
engaged in the same or similar businesses operating in the same or similar
locations.
Section 6.12. Notice of Payment of Supplemental Lease Rent. PPL Montana
agrees that if and when it shall be required to make any payment in respect of
Supplemental Lease Rent pursuant to the Operative Documents, it shall provide
along with such payment a notice setting forth the reason for and amount of such
payment.
SECTION 7. POST LEASE DEBT FINANCIAL COVENANTS OF PPL MONTANA
From the Debt Covenant Termination Date until the Equity Covenant
Termination Date, PPL Montana shall comply with the covenants set forth in this
Section 7. On the Equity Covenant Termination Date, the covenants in this
Section 7 shall immediately and without further action terminate and be of no
further force and effect. The "Equity Covenant
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Termination Date" shall be the later of July 20, 2027, or if the Owner Lessor
has issued additional Lease Debt at the request of PPL Montana in accordance
with Section 13 and such new Lease Debt is outstanding on July 20, 2027, the
date when the aggregate amount of Periodic Lease Rent payable under all Colstrip
Facility Leases for the balance of the Facility Lease Term shall be less than or
equal to $40,000,000.00. Notwithstanding the foregoing, PPL Montana shall not be
required to comply with the covenants set forth in this Section 7 during any
period when the covenants set forth in Section 6 shall be in effect.
For avoidance of doubt, the Section 467 Loan Balance and the Section
467 Interest shall not be deemed to be Indebtedness, an Investment or a
Restricted Payment or otherwise be taken into account in calculating coverage
ratios or fixed charges or determining compliance with any other financial
covenant or financial test in this Agreement.
Section 7.1. Incurrence of Indebtedness After Payment of Lease Debt.
(a) PPL Montana shall not, and shall not permit any of its Subsidiaries
to, incur any Indebtedness unless, at the time of the incurrence of such
Indebtedness, (i) the Debt to Capital Ratio of PPL Montana shall not exceed 0.65
to 1.0 and (ii) PPL Montana shall be rated at least investment grade by S&P and
▇▇▇▇▇'▇; provided, that PPL Montana and its Subsidiaries may issue up to $125
million of Indebtedness without satisfying the rating requirement. If a
Significant Lease Default or a Lease Event of Default shall have occurred and be
continuing, no incurrence of Indebtedness shall be permitted, unless such
incurrence of Indebtedness would otherwise satisfy the requirements set forth in
this Section 7.1(a) and the application of the proceeds therefrom will cure such
Significant Lease Default or Lease Event of Default. Each calculation made
pursuant to this Section 7.1 shall be made, as applicable, after giving pro
forma effect to any Indebtedness to be incurred in connection therewith, the
application of the proceeds resulting therefrom, any Restricted Payments to be
made in connection therewith, any assets to be acquired in connection therewith
and the consummation of any related transactions.
(b) Notwithstanding the provisions of Section 7.1(a), the incurrence by
PPL Montana and its Subsidiaries, in the aggregate, of the following types of
Indebtedness shall be permitted at any time:
(i) Indebtedness of up to $100 million in the aggregate for
general corporate purposes incurred under the Working Capital Facility
or any replacement, successor, or additional working capital facility
on customary terms and conditions;
(ii) Indebtedness up to an amount equal to, at any time
outstanding, (A) $125 million less (B) the then outstanding
Indebtedness and commitments under clause 7.1(b)(i), incurred for the
purpose of financing all or any part of the cost of the construction,
installation, lease, development or improvement of any assets used or
useful in a Permitted Business or for general corporate purposes,
provided that no Significant Lease Default or Lease Event of Default
shall have occurred and be continuing (or would be caused thereby);
(iii) Non-Recourse Indebtedness incurred by Additional
Subsidiaries; provided, however, that if any such Indebtedness ceases
to be Non-Recourse
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Indebtedness of an Additional Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Core Subsidiary that is
not permitted under this clause (iii);
(iv) Indebtedness expressly subordinated to PPL Montana's
payment obligations under the Operative Documents;
(v) Indebtedness of PPL Montana in respect of letters of
credit, surety bonds or performance bonds issued in the ordinary course
of business of PPL Montana; and
(vi) Any Indebtedness incurred in exchange for, or the net
proceeds of which are used to refund, refinance or replace,
Indebtedness that was permitted to be incurred under Section 7.1(a);
provided that the principal amount of the refinancing Indebtedness
shall not exceed the principal amount of the Indebtedness so refinanced
plus a reasonable premium in connection with the redemption of or
repurchase of such refinanced Indebtedness.
Section 7.2. Restricted Payments. PPL Montana, shall not, and shall not
permit any of its Core Subsidiaries to, make any Restricted Payment unless at
the time such Restricted Payment is to be made, the Cash Flow to Fixed Charges
Ratio shall equal at least 1.5 to 1.0 for the most recently ended four full
fiscal quarters; provided that, if a Significant Lease Default or a Lease Event
of Default shall have occurred and be continuing, no Restricted Payments shall
be permitted; provided further that so long as no Significant Lease Default or
Lease Event of Default has occurred and is continuing or would be caused
thereby, this Section 7.2 shall not prohibit the redemption, repurchase,
retirement, defeasance or other acquisition of any subordinated Indebtedness of
PPL Montana or of any equity interests of PPL Montana in exchange for, or out of
the net cash proceeds of the substantially concurrent sale (other than to a
subsidiary of PPL Montana) of, equity interests of PPL Montana.
SECTION 8. COVENANTS OF THE TRUST COMPANY, THE Lessor Manager AND THE OWNER
LESSOR
Section 8.1. Compliance with the LLC Agreement. The Owner Lessor, the
Trust Company and the Lessor Manager each hereby severally covenants and agrees
that it will:
(a) comply with all of the terms of the LLC Agreement applicable to it;
and
(b) not amend, supplement, or otherwise modify Section 9.1 or Section
9.3 of the LLC Agreement without the prior written consent of (i) so long as no
Lease Event of Default has occurred and is continuing, PPL Montana, and (ii) so
long as the Lien of the Lease Indenture has not been terminated or discharged,
the Lease Indenture Trustee.
Section 8.2. Owner Lessor's Liens. The Trust Company, the Lessor
Manager and the Owner Lessor each covenants that it will not directly or
indirectly create, incur, assume or suffer to exist any Owner Lessor's Lien
attributable to it and will promptly notify PPL Montana, the Owner Participant
and the Lease Indenture Trustee of the imposition of any such Lien of which it
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has Actual Knowledge and shall promptly, at its own expense, take such action as
may be necessary to duly discharge such Owner Lessor's Lien attributable to it.
Section 8.3. Amendments to Operative Documents. The Lessor Manager, the
Trust Company and the Owner Lessor each covenants that it will not unless such
action is expressly contemplated by the Operative Documents (a) through its own
action terminate any Operative Document to which it is a party, (b) amend,
supplement, waive or modify (or consent to any such amendment, supplement,
waiver or modification) such Operative Documents in any manner or (c) except as
provided in Section 13 hereof or Section 2.10 of the Lease Indenture, take any
action to prepay or refund the Lessor Note or amend any of the payment terms of
the Lessor Note without, in each case, the prior written consent of (i) so long
as no Lease Event of Default shall have occurred and be continuing, PPL Montana,
or, (ii) in the case of clause (a) or (b), so long as the Lien of the Lease
Indenture has not been terminated or discharged, the Lease Indenture Trustee.
Notwithstanding the foregoing, the Owner Lessor will not exercise its option to
repay the Lessor Note pursuant to Section 2.10(d)(ii) of the Lease Indenture
prior to maturity without the consent of PPL Montana.
Section 8.4. Transfer of the Owner Lessor's Interest. Other than as
contemplated by the Operative Documents, each of the Owner Lessor and the Lessor
Manager covenants that it will not assign, pledge, sell, lease, convey or
otherwise transfer any of its then existing right, title or interest in and to
the Owner Lessor's Interest, the Lessor Estate or the other Operative Documents.
Nothing in this Section 8.4 shall limit the ability of the Lessor Manager or the
Owner Participant to appoint a successor Lessor Manager pursuant to Section 9 of
the LLC Agreement.
Section 8.5. Owner Lessor; Lessor Estate. Each of the Lessor Manager
and the Owner Lessor covenants that it will not voluntarily take any action to
subject the Owner Lessor or the Lessor Estate to the provisions of any
applicable bankruptcy or insolvency law (as now or hereafter in effect).
Section 8.6. Limitation on Indebtedness and Actions. Each of the Lessor
Manager and the Owner Lessor covenants that it will not incur any indebtedness
nor enter into any business or activity except as required or expressly
permitted or contemplated by any Operative Document.
Section 8.7. Change of Location. The Lessor Manager shall use all
reasonable efforts to give the Owner Participant, the Lease Indenture Trustee
and PPL Montana 30 days' written notice of any relocation of the Lessor
Manager's chief executive office or the place where documents and records
relating to the Lessor Manager or the Lessor Estate are kept from the location
set forth in Section 3.2(g) and of any change in its name, but in any event the
Lessor Manager and the Owner Lessor shall give such notice within 30 days after
such relocation or name change.
Section 8.8. Pollution Control Facilities. The Owner Lessor covenants
and agrees that it will not materially change (and will exercise all rights,
powers, elections and options available to it and any Affiliate under the
Project Agreements to prevent any such change to) the character or nature of the
use of Pollution Control Facilities from the manner in which such facilities had
been used prior to the Closing Date, unless such changed use would constitute a
permissible use
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or purpose for which tax-exempt bonds could be issued pursuant to the Tax Reform
Act of 1986; provided, however, that the Owner Lessor makes no covenant with
respect to any change in character or use by PPL Montana or any sublessee of PPL
Montana or any other operator of the Pollution Control Facilities pursuant to
the Project Agreements. In addition, the Owner Lessor covenants and agrees that
it will not sell or otherwise transfer (other than to PPL Montana) any interest
in such Pollution Control Facilities unless (i) the transferee covenants to
satisfy the conditions set forth in this Section 8.8 or (ii) the transfer
relates to personal property and is exclusively for cash, and the proceeds of
which will be expended within six months of the date of receipt on facilities
for which tax-exempt bonds could be issued pursuant to the Tax Reform Act of
1986. This Section 8.8 shall not, however, prevent the Owner Lessor or
transferee from ceasing to use any Pollution Control Facilities that, in such
Person's reasonable judgment, have become obsolete or otherwise uneconomical to
continue to use.
SECTION 9. COVENANTS OF THE OWNER PARTICIPANT
Section 9.1. Restrictions on Transfer of Member Interest.
(a) The Owner Participant covenants and agrees that it shall not during
the Facility Lease Term assign, convey or transfer any of its right, title or
interest in the Member Interest without the prior written consent of PPL Montana
and, so long as the Lien of the Lease Indenture has not been terminated or
discharged, without the prior written consent of the Lease Indenture Trustee;
provided, however, that the Owner Participant may assign, convey or transfer all
of its interest in the Member Interest without such consent to a Person (the
"Transferee") which shall assume the duties and obligations of the Owner
Participant under the Operative Documents pursuant to an Assignment and
Assumption Agreement substantially in the form of Exhibit F hereto, if each of
the following conditions shall have been satisfied:
(i) PPL Montana, and, so long as the Lease Debt is
outstanding, the Lease Indenture Trustee and the Pass Through Trustee, shall
have received an opinion of counsel, which opinion and counsel are reasonably
satisfactory to PPL Montana, and, so long as the Lease Debt is outstanding, the
Lease Indenture Trustee and the Pass Through Trustee, to the effect that all
regulatory approvals required in connection with such transfer or necessary to
assume the Owner Participant's obligations under the Operative Documents shall
have been obtained;
(ii) the Transferee shall be a "United States person" within
the meaning of Section 7701(a)(30) of the Code;
(iii) the Transferee shall be either (A) an Affiliate of the
Guarantor which does not otherwise qualify under clause (B) below, provided that
all of the payment and performance obligations of the Transferee with respect to
the interest being transferred under the Operative Documents shall be guaranteed
by the Guarantor pursuant to a guaranty substantially in the form of Exhibit G
hereto, or (B) a Person that has, or the payment and performance obligations of
which with respect to the interest being transferred under the Operative
Documents are guaranteed (pursuant to a guaranty substantially in the form of
Exhibit G hereto) by a Person (the Guarantor or such other guarantor, the "OP
Guarantor") that has a tangible net worth of at least $75 million calculated in
accordance with GAAP; and
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(iv) unless waived by PPL Montana, and so long as no
Significant Lease Default or Lease Event of Default shall have occurred and be
continuing, neither the Transferee nor the OP Guarantor is a Competitor of, or
in material litigation with, PPL Montana or any Affiliate thereof;
(v) unless the senior unsecured debt of the Transferee or the
OP Guarantor shall have a rating from S&P at least as high as the rating of the
Certificates on the Closing Date, S&P shall have received an opinion of counsel
with respect to the Transferee substantially to the effect of the
nonconsolidation opinion delivered to S&P on the Closing Date pursuant to the
last sentence of Section 4(s) and otherwise reasonably satisfactory to S&P, or
if as a consequence of a change in bankruptcy law such opinion cannot be given:
(a) a legal opinion to the effect that the risk of
bankruptcy consolidation of either the Transferee or if its
parent is a special purpose bankruptcy remote entity, its
parent, with the Transferee's parent or its parent's parent,
as the case may be, immediately after giving effect to the
transfer of such member interest is not materially different
from the risk of bankruptcy consolidation of the Owner
Participant or if its parent is a special purpose bankruptcy
remote entity, its parent with the its parent or its parent's
parent, as the case may be, immediately prior to giving effect
to such transfer; and
(b) an Officer's Certificate of the Transferee
certifying that the organizational documents of the Transferee
and if its parent is a special purpose bankruptcy remote
entity, its parent contain, and will continue to contain after
the transfer, provisions substantially equivalent to those
contained in the Owner Participant's and its parent's
organizational documents on the Closing Date with respect to
the following provisions: separateness, independent managers,
no bankruptcy petition, no dissolution and amendment of such
organizational document(s).
(b) For purposes of the preceding clause (a), a "Competitor" of PPL
Montana shall be an entity, or an Affiliate thereof, that is significantly
involved as a seller or trader of capacity or energy in the electric market,
provided that, the foregoing restriction shall not apply in the case of a
Transferee that is an Affiliate of such a seller or trader so long as (i) such
Transferee is an entity involved in making passive investments such as the Owner
Participant's contemplated investment in the Overall Transaction, (ii) such
Transferee has in place procedures which shall be reasonably acceptable to PPL
Montana to prevent such Affiliate that is a seller or trader of capacity or
energy from acquiring confidential information relating to such passive
investments and agrees in writing with PPL Montana to maintain such procedures,
and (iii) neither such Transferee nor any Affiliate thereof is an entity that is
(A) actively involved in the selling, trading or generation of electricity in
the Western System Coordinating Council or any successor thereto, or (B) on the
List of Competitors, which may, from time to time, but no more often than once
per year, be modified by PPL Montana, and shall contain a list of entities that
PPL Montana reasonably believes in its good faith judgment are Competitors of
PPL Montana; provided that such List of Competitors shall not contain more than
6 entities at any one time. None of Pacificorp, Avista, Portland, Puget or any
of their Affiliates shall be deemed to be Competitors of PPL Montana.
Notwithstanding the foregoing, the restrictions set forth in clauses (i), (iv)
and
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(v) of Section 9.1(a) and the tangible net worth requirement in clause (iii) of
Section 9.1(a) shall not inure to the benefit of PPL Montana if such transfer is
in connection with the exercise of remedies during a Lease Event of Default.
(c) PPL Montana shall not be responsible for any Taxes arising out of
or caused by any transfer pursuant to this Section 9.1 and the Pricing
Assumptions shall not be changed as a result of any such transfer.
(d) The Owner Participant shall give the Owner Lessor, the Lessor
Manager, the Lease Indenture Trustee, and PPL Montana 30 days' prior written
notice of such transfer, or 10 days' in the case of a transfer to an Affiliate
of the Guarantor. Such written notice shall be in the form of a certificate and
stating the name and address of any proposed Transferee and that the proposed
transfer satisfies the requirements of this Section 9.1. If requested by the
Owner Participant or the Lease Indenture Trustee, PPL Montana will acknowledge
qualifying transfers. All reasonable fees, expenses and charges of the Lease
Indenture Trustee, Pass Through Trustee, and PPL Montana (including reasonable
attorneys' fees and expenses in connection with any such transfer or proposed
transfer), including any of the foregoing relating to any amendments to the
Operative Documents required in connection therewith, shall be paid by the Owner
Participant, without any right of indemnification from PPL Montana or any other
Person; provided, however, that the Owner Participant shall have no obligation
to pay fees, expenses or charges of PPL Montana as a result of any transfer
while a Significant Lease Default or a Lease Event of Default is continuing, in
which case PPL Montana shall be obligated to pay such costs.
(e) Upon any such transfer in compliance with this Section 9.1, (i)
such Transferee shall (x) be deemed the "Owner Participant" for all purposes,
and (y) enjoy the rights and privileges and perform the obligations of the Owner
Participant hereunder and under the Assignment and Assumption Agreement, the
Guaranty and each other Operative Document to which such Owner Participant is a
party, and each reference in this Agreement, the Assignment and Assumption
Agreement, the Guaranty and each other Operative Document to the "Owner
Participant" shall thereafter be deemed to include such Transferee, to the
extent of the undivided interest conveyed to the Transferee, for all purposes
and (ii) the transferor Owner Participant and the OP Guarantor, if any, of such
transferor Owner Participant's obligations shall be released from all
obligations hereunder and under each other Operative Document to which such
transferor or OP Guarantor is a party or by which such transferor Owner
Participant or OP Guarantor is bound to the extent such obligations are
expressly assumed by a Transferee; provided, however, that in no event shall any
such transfer waive or release the transferor or its OP Guarantor from any
liability existing immediately prior to or occurring simultaneously with such
transfer.
Section 9.2. Owner Participant's Liens. The Owner Participant covenants
that it will not directly or indirectly create, incur, assume or suffer to exist
any Owner Participant's Lien and the Owner Participant shall promptly notify PPL
Montana and the Lease Indenture Trustee of the imposition of any such Lien of
which the Owner Participant has Actual Knowledge and shall promptly, at its own
expense, take such action as may be necessary to duly discharge such Owner
Participant's Lien.
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Section 9.3. Amendments or Revocation of LLC Agreement. The Owner
Participant covenants that it will not (a) amend, supplement, or otherwise
modify Section 9.1 or Section 9.3 of the LLC Agreement without the prior written
consent of (X) so long as no Significant Lease Default or Lease Event of Default
has occurred and is continuing, PPL Montana, or (Y) so long as the Lien of the
Lease Indenture has not been terminated or discharged, the Lease Indenture
Trustee, or (b) waive compliance with or terminate the LLC Agreement without the
prior written consent of (X) so long as no Significant Lease Default or Lease
Event of Default has occurred and is continuing, PPL Montana, or (Y) so long as
the Lien of the Lease Indenture has not been terminated or discharged, the Lease
Indenture Trustee.
Section 9.4. Bankruptcy Filings. The Owner Participant agrees that it
will not file a petition, or join in the filing of a petition, seeking
reorganization, arrangement, adjustment or composition of, or in respect of, the
Owner Lessor under the Bankruptcy Code, or any other applicable Federal or state
law or the law of the District of Columbia.
Section 9.5. Instructions. The Owner Participant agrees that it will
not instruct the Owner Lessor to take any action prohibited by this Agreement or
any other Operative Document.
Section 9.6. Appointment of Successor Lessor Manager. Notwithstanding
any other provision of this Agreement, a successor Lessor Manager shall not be
appointed by the Owner Participant without the consent of PPL Montana and, so
long as the Lien of the Lease Indenture has not been terminated or discharged,
the Lease Indenture Trustee, unless such successor Lessor Manager (a) meets the
requirements of the LLC Agreement, (b) has a combined capital and surplus of at
least $150 million, and (c) PPL Montana, and so long as the Lien of the Lease
Indenture shall not have been terminated or discharged, the Lease Indenture
Trustee shall have received at the expense of the Owner Participant (i) an
opinion or opinions of counsel, such counsel and such opinion to be reasonably
acceptable to such parties, to the effect that no regulatory consents or
approvals are required, or (ii) such other evidence thereof reasonably
satisfactory to PPL Montana; provided, however, that if Wilmington Trust Company
resigns as Lessor Manager, is terminated for cause, or shall become incapable of
acting or shall be adjudged a bankrupt or insolvent or a receiver of the Lessor
Manager or its properties shall be appointed or any public officer shall take
charge or control of the Lessor Manager or its property or affairs for the
purpose of rehabilitation, conservation or liquidation, the opinion required by
clause (c) shall be at the expense of PPL Montana.
SECTION 10. COVENANTS OF THE LEASE INDENTURE TRUSTEE
The Lease Indenture Trustee will not directly or indirectly create,
incur, assume or suffer to exist any Indenture Trustee's Lien attributable to it
and arising out of events or conditions not related to its rights in the
Indenture Estate or the administration thereof, and will promptly notify the
Owner Participant, the Lessor Manager and PPL Montana of the imposition of any
such Lien of which it has Actual Knowledge and shall promptly, at its own
expense, take such action as may be necessary to duly discharge such Indenture
Trustee's Lien.
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SECTION 11. PPL MONTANA'S INDEMNIFICATIONS
Section 11.1. General Indemnity.
(a) Claims Indemnified. Subject to the exclusions stated in paragraph
(b) below, PPL Montana agrees to indemnify, protect, defend and hold harmless,
and does hereby indemnify the Owner Participant, the Owner Lessor, the Trust
Company, the Lessor Manager, the Lease Indenture Trustee and the Pass Through
Trustee, and their respective Affiliates, successors, assigns, agents,
directors, officers or employees (each an "Indemnitee") against any and all
Claims (including Claims under Environmental Laws) (whether or not any of the
transactions contemplated by the Operative Documents are consummated) imposed
on, incurred or suffered by or asserted against any Indemnitee in any way
relating to or resulting from or arising out of or attributable to:
(i) the construction, financing, refinancing, acquisition,
operation, rebuilding, warranty, ownership, possession, maintenance, repair,
lease, condition, alteration, modification, restoration, refurbishing, return,
purchase, sale or other disposition, insuring, sublease, or other use or non-use
of the Facility, the Undivided Interest, the Ground Interest or any Component or
any portion of any thereof or any interest therein;
(ii) the conduct of the business or affairs of PPL Montana;
(iii) the manufacture, design, purchase, acceptance,
rejection, delivery or condition of, or improvement to, the Facility, the
Colstrip Site, the Undivided Interest, the Ground Interest, or any Component, or
any portion of any thereof or any interest therein;
(iv) the Project Agreements, the Facility Lease, the Site
Lease and Sublease, or any other Operative Document, the execution or delivery
thereof or the performance, enforcement, or amendment of any terms thereof, or
the transactions contemplated thereby or resulting therefrom;
(v) any Environmental Condition at, related in any way to or
directly or indirectly caused by the Facility, and the Colstrip Site or any
Component, or any loss of or damage to any property, natural resources or the
environment, or death of or injury to any Person, resulting from or relating to
any Hazardous Substance that is or was present, used, generated, treated,
stored, recycled, reclaimed, managed, transported, manufactured, released,
emitted or discharged at, on, in under, to or from the Facility, the Colstrip
Site or any Component;
(vi) the offer, issuance, sale, acquisition or delivery of the
Lessor Note, the Certificates, any Additional Lessor Notes, any Additional
Certificates or any refinancing thereof;
(vii) the reasonable costs and expenses of the Transaction
Parties in connection with amendments or supplements to the Operative Documents
requested by PPL Montana;
(viii) the imposition of any Lien other than, with respect to
a particular Indemnitee (or a Related Party), an Owner Lessor's Lien, an Owner
Participant's Lien, or an Indenture Trustee Lien attributable to such
Indemnitee;
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(ix) any violation by, or liability relating to, PPL Montana
of, or under, any Applicable Law, whether now or hereafter in effect (including
Environmental Laws), or any action of any Governmental Entity or other Person
taken with respect to the Facility or the Colstrip Site, the Operative Documents
or the interests of the Owner Participant, the Owner Lessor, the Lessor Manager,
the Lease Indenture Trustee or the Pass Through Trustee, or under the Operative
Documents or the presence, use, storage, generation, recycling, reclamation,
release, emission, discharge, management, transportation, treatment or
manufacture of any Hazardous Substance in, at, under or from the Facility, the
Colstrip Site or any Component at any time and by any Person;
(x) the non-performance or breach by PPL Montana of any
obligation contained in this Agreement or any other Operative Document or the
falsity or inaccuracy of any representation or warranty of PPL Montana contained
in this Agreement or any other Operative Document;
(xi) the continuing fees (if any) and expenses of the Owner
Lessor and the Lessor Manager (including the reasonable compensation and
expenses of their counsel, accountants and other professional persons) arising
out of the Owner Lessor's or the Lessor Manager's discharge of their respective
duties under or in connection with the Operative Documents (other than the
Facility Lease and the Site Lease and Sublease);
(xii) the continuing fees (if any) and expenses of the Lease
Indenture Trustee and the Pass Through Trustee (including the reasonable
compensation and expenses of their respective counsel, accountants and other
professional persons) arising out of the discharge of their respective duties
under or in connection with the Operative Documents, including the
administration and acceptance thereof;
(xiii) in any other way relating to the transactions
contemplated by the Operative Documents.
(b) Claims Excluded. Any Claim, to the extent relating to or resulting
from or arising out of or attributable to any of the following, is excluded from
PPL Montana's agreement to indemnify any Indemnitee under this Section 11.1:
(i) (A) with respect to any of the Units, acts, omissions or
events occurring after expiration or early termination of the Facility Lease
with respect to any such Unit and, where required by the Facility Lease,
surrender to the Owner Lessor (or its successor or assigns) of PPL Montana's
interest in such Unit in compliance with the provisions of the Facility Lease,
(B) acts, omissions or events occurring after expiration or early termination of
the Facility Lease and, where required by the Facility Lease, surrender to the
Owner Lessor or its successor of PPL Montana's interest in the Undivided
Interest in compliance with the provisions of the Facility Lease, or (C) if the
Closing Date does not occur by the date set forth in 2.2(c) (or such later date
as may be agreed in writing between the Owner Lessor and PPL Montana), acts,
omissions or events occurring after such date;
(ii) with respect to a particular Indemnitee and Related
Parties, any offer, sale, assignment, transfer or other disposition (voluntary
or involuntary) by or on behalf of (A) in the
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case of the Owner Participant, the Owner Participant of any of its interest in
the Member Interest, (B) in the case of the Owner Lessor, and if such action is
taken at the written direction of the Owner Participant, the Owner Participant
and Related Parties, the Owner Lessor of all or any of its interest in the Owner
Lessor's Interest, or (C) the Lease Indenture Trustee of any of its interest in
the Lessor Note, unless such transfer is required by the terms of the Operative
Documents or occurs in connection with the exercise of remedies during a Lease
Event of Default;
(iii) with respect to any Indemnitee (other than the Lease
Indenture Trustee and the Pass Through Trustee), any Claim attributable to the
gross negligence or willful misconduct of such Indemnitee or a Related Party
unless such gross negligence or willful misconduct is attributable to any breach
by PPL Montana or its Affiliates of any covenant, representation or warranty
contained in any Operative Document;
(iv) as to any Indemnitee (other than the Lease Indenture
Trustee and the Pass Through Trustee), any Claim attributable to the
noncompliance of such Indemnitee or a Related Party, with any of the terms of,
or any misrepresentation or breach of warranty by such Indemnitee contained in
any Operative Document made by such Indemnitee or any breach by such Indemnitee
or a Related Party of any covenant contained in any Operative Document made by
such Indemnitee or Related Party unless attributable to any breach by PPL
Montana or its Affiliates of any covenant, representation or warranty contained
in any Operative Document;
(v) with respect to the Lessor Manager, the Trust Company, any
Claim constituting or arising from an Owner Lessor's Lien attributable to it;
(vi) with respect to the Lease Indenture Trustee, any Claim
arising from or attributable to its negligence or willful misconduct;
(vii) with respect to the Pass Through Trustee, any Claim
arising from or attributable to its negligence or willful misconduct;
(viii) with respect to the Owner Participant, any claim
constituting or arising from an Owner Participant's Lien;
(ix) any amount which constitutes Transaction Costs which the
Owner Participant is obligated to pay pursuant to Section 2.4(a) hereof or any
other amount to the extent such Indemnitee or a Related Party has expressly
agreed in any Operative Document to pay such amount without express right of
reimbursement;
(x) any Claim that is a Tax, or is a cost of contesting a Tax
whether or not PPL Montana is required to indemnify therefor pursuant to Section
11.2 or under the Tax Indemnity Agreement;
(xi) any failure on the part of the Trust Company or the
Lessor Manager to distribute in accordance with the LLC Agreement any amounts
received by it under the Operative Documents and distributable by it thereunder;
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(xii) with respect to a particular Indemnitee and Related
Party, any obligation or liability expressly assumed in any Operative Document
by the Indemnitee seeking indemnification;
(xiii) with respect to any Indemnitee (other than the Lease
Indenture Trustee, the Pass Through Trustee, the Lessor Manager and the Trust
Company) any amendment not requested by PPL Montana other than amendments
executed pursuant to Section 5.10; and
(xiv) any Claim that constitutes principal, premium and/or
interest on the Lessor Note, any Additional Lessor Notes, or the corresponding
payments under the Certificates or any Additional Certificates;
provided that the terms "omission," "negligence," "gross negligence" and
"willful misconduct," when applied with respect to the Lessor Manager, the Trust
Company, the Owner Participant, the Lease Indenture Trustee, the Pass Through
Trustee or any Affiliate of any thereof, shall not include any liability imputed
as a matter of law to such Indemnitee solely by reason of any such entity's
interest in the Facility or the Colstrip Site or any such Indemnitee's failure
to act in respect of matters which are or were the obligation of PPL Montana
under this Agreement or any other Operative Document.
(c) Insured Claims. Subject to the provisions of paragraph (e) of this
Section 11.1, in the case of any Claim indemnified by PPL Montana hereunder
which is covered by a policy of insurance maintained by PPL Montana, each
Indemnitee agrees, unless it and each other Indemnitee shall waive its rights to
indemnification (for itself and each Related Party thereto) in a manner
reasonably acceptable to PPL Montana, to cooperate, at the sole cost and expense
of PPL Montana, with insurers in exercise of their rights to investigate, defend
or compromise such Claim.
(d) After-Tax Basis. PPL Montana agrees that any payment or indemnity
pursuant to this Section 11.1 in respect of any Claim shall be made on an
After-Tax Basis to the Indemnitees.
(e) Claims Procedure. Each Indemnitee shall promptly after such
Indemnitee shall have Actual Knowledge thereof notify PPL Montana of any Claim
as to which indemnification is sought; provided, that the failure so to notify
PPL Montana shall not reduce or affect PPL Montana's liability which it may have
to such Indemnitee under this Section 11.1, and no payment hereunder by PPL
Montana to an Indemnitee shall be deemed to constitute a waiver or release of
any right or remedy that PPL Montana may have against any such Indemnitee for
actual damages resulting directly from such failure or delay of such Indemnitee
to give PPL Montana such notice. Any amount payable to any Indemnitee pursuant
to this Section 11.1 shall be paid within fifteen (15) days after receipt of
such written demand therefor from such Indemnitee, accompanied by a certificate
of such Indemnitee stating in reasonable detail the basis for the
indemnification thereby sought and (if such Indemnitee is not a party hereto) an
agreement to be bound by the terms hereof as if such Indemnitee were such a
party. The foregoing shall not, however, constitute an obligation to disclose
confidential information of any kind without the execution of an appropriate
confidentiality agreement. Promptly after PPL Montana receives notification of
such Claim accompanied by a written statement describing in
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reasonable detail the Claims which are the subject of and basis for such
indemnity and the computation of the amount so payable, PPL Montana shall,
without affecting its obligations hereunder, notify such Indemnitee whether it
intends to pay, object to, compromise or defend any matter involving the
asserted liability of such Indemnitee. PPL Montana shall have the right to
investigate and so long as no Significant Lease Default or Lease Event of
Default shall have occurred and be continuing, PPL Montana shall have the right
in its sole discretion, to defend or compromise any Claim for which
indemnification is sought under this Section 11.1 which PPL Montana acknowledges
is subject to indemnification hereunder; provided that no such defense or
compromise shall involve any danger of (i) foreclosure, sale, forfeiture or loss
of, or imposition of a Lien on any part of the Undivided Interest, the Ground
Interest, the Lessor Estate or the other Indenture Estate or the impairment of
the Facility in any material respect or (ii) any criminal liability being
incurred or any material adverse effect on such Indemnitee, provided further,
that no Claim shall be compromised by PPL Montana on a basis that admits any
criminal violation or gross negligence or willful misconduct on the part of such
Indemnitee without the express written consent of such Indemnitee; and provided,
further, that to the extent that other Claims unrelated to the transactions
contemplated by the Operative Documents are part of the same proceeding
involving such Claim, PPL Montana may assume responsibility for the contest or
compromise of such Claim only if the same may be and is severed from such other
Claims (and each Indemnitee agrees to use reasonable efforts to obtain such a
severance). If PPL Montana elects, subject to the foregoing, to compromise or
defend any such asserted liability, it may do so at its own expense and by
counsel selected by it. Upon PPL Montana's election to compromise or defend such
asserted liability and prompt notification to such Indemnitee of its intent to
do so, such Indemnitee shall cooperate at PPL Montana's expense with all
reasonable requests of PPL Montana in connection therewith and will provide PPL
Montana with all information not within the control of PPL Montana as is
reasonably available to such Indemnitee which PPL Montana may reasonably
request; provided, however, that such Indemnitee shall not, unless otherwise
required by Applicable Law, be obligated to disclose to PPL Montana or any other
Person, or permit PPL Montana or any other Person to examine (i) any income tax
returns of the Owner Participant or (ii) any confidential information or pricing
information not generally accessible by the public possessed by the Owner
Participant (and, in the event that any such information is made available, PPL
Montana shall treat such information as confidential and shall take all actions
reasonably requested by such Indemnitee for purposes of obtaining a stipulation
from all parties to the related proceeding providing for the confidential
treatment of such information from all such parties). Where PPL Montana, or the
insurers under a policy of insurance maintained by PPL Montana, undertake the
defense of such Indemnitee with respect to a Claim (with counsel reasonably
satisfactory to such Indemnitee and without reservation of rights against such
Indemnitee), no additional legal fees or expenses of such Indemnitee in
connection with the defense of such Claim shall be indemnified hereunder unless
such fees or expenses were incurred at the request of PPL Montana or such
insurers. Notwithstanding the foregoing, an Indemnitee may participate at its
own expense in any judicial proceeding controlled by PPL Montana pursuant to the
preceding provisions, but only to the extent that such party's participation
does not in the reasonable opinion of counsel to PPL Montana interfere with such
control; provided, however, that such party's participation does not constitute
a waiver of the indemnification provided in this Section 11.1; provided,
further, that if and to the extent that (i) such Indemnitee is advised by
counsel that an actual or potential conflict of interest exists where it is
advisable for such Indemnitee to be represented by separate counsel or (ii)
there is a
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risk that such Indemnitee may be indicted or otherwise charged in a criminal
complaint and such Indemnitee informs PPL Montana that such Indemnitee desires
to be represented by separate counsel, such Indemnitee shall have the right to
control its own defense of such Claim and the reasonable fees and expenses of
such defense (including the reasonable fees and expenses of such separate
counsel) shall be borne by PPL Montana. So long as no Lease Event of Default
shall have occurred and be continuing, no Indemnitee shall enter into any
settlement or other compromise with respect to any Claim without the prior
written consent of PPL Montana unless (i) the Indemnitee waives its rights to
indemnification hereunder or (ii) PPL Montana has not acknowledged its indemnity
obligation with respect thereto and there is a significant risk that a default
judgment will be entered against such Indemnitee. Nothing contained in this
Section 11.1(e) shall be deemed to require an Indemnitee to contest any Claim or
to assume responsibility for or control of any judicial proceeding with respect
thereto.
(f) Subrogation. To the extent that a Claim indemnified by PPL Montana
under this Section 11.1 is in fact paid in full by PPL Montana or an insurer
under an insurance policy maintained by PPL Montana, PPL Montana (so long as no
Lease Event of Default shall have occurred and be continuing) or such insurer
shall be subrogated to the rights and remedies of the Indemnitee on whose behalf
such Claim was paid to the extent of such payment (other than rights of such
Indemnitee under insurance policies maintained at its own expense) with respect
to the transaction or event giving rise to such Claim. Should an Indemnitee
receive any refund, in whole or in part, with respect to any Claim paid by PPL
Montana hereunder, it shall promptly pay over to PPL Montana the lesser of (i)
the amount refunded reduced by the amount of any Tax incurred by reason of the
receipt or accrual of such refund and increased by the amount of any Tax (but
not in excess of the amount of such reduction) saved as a result of such payment
or (ii) the amount PPL Montana or any of its insurers has paid in respect of
such Claim; provided that, so long as a Significant Lease Default or Lease Event
of Default shall have occurred and is continuing such amount may be held by the
Owner Lessor as security for PPL Montana's obligations under the Facility Lease
and the other Operative Documents.
(g) Minimize Claims. The Owner Participant, the Owner Lessor, the
Lessor Manager, and each of the other Transaction Parties will use their
respective reasonable efforts to minimize Claims indemnifiable by PPL Montana
under this Section 11.1, including by complying with reasonable requests by PPL
Montana to do or to refrain from doing any act if such compliance is, in the
good faith opinion of the Owner Participant, the Owner Lessor, the Lessor
Manager, or such other Transaction Party, as the case may be, of a purely
ministerial nature or otherwise has no unindemnified adverse impact on the Owner
Participant, the Owner Lessor, the Lessor Manager, or such Transaction Party, as
the case may be, or any Affiliate of any thereof or on the business or
operations of any of the foregoing.
Section 11.2. General Tax Indemnity.
(a) Indemnity. Except as provided in paragraph (b) PPL Montana agrees
(but, in all events, without duplication of indemnities) to indemnify on an
After-Tax Basis each of the Owner Participant, the Owner Lessor, the Trust
Company, the Lessor Manager, the Lease Indenture Trustee and the Pass Through
Trustee, their respective successors and assigns, the past and present partners
or members of or holders of the ownership interests in the Owner Participant, as
the case may be, and the Affiliates of each and all of the foregoing (each a
"Tax
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Indemnitee"), and to hold each Tax Indemnitee harmless from and to defend each
Tax Indemnitee against all Taxes that are imposed upon or with respect to or
borne by or asserted against any Tax Indemnitee, the Facility, the Colstrip
Site, the Undivided Interest, the Ground Interest, the Common Facilities or any
portion or Component thereof or any interest therein, or upon any Project
Agreement, Operative Document or interest therein, or otherwise arising out of,
in connection with or relating to, any of the following:
(i) the construction, financing, refinancing, acquisition,
operation, warranty, ownership, possession, maintenance, repair, lease,
condition, alteration, modification, restoration, refurbishing, rebuilding,
return, purchase, sale or other disposition, insuring, sublease, or other use or
non-use of the Facility, the Common Facilities, the Undivided Interest, the
Ground Interest or the Colstrip Site, or any portion or component thereof or any
interest therein;
(ii) the conduct of the business or affairs of PPL Montana or
any other operator at or in connection with the Facility, the Common Facilities
or the Colstrip Site;
(iii) the manufacture, design, purchase, acceptance,
rejection, delivery, redelivery or condition of, or improvement to, the
Facility, the Common Facilities, the Undivided Interest, the Ground Interest,
the Colstrip Site, or any portion or Component thereof, or any interest therein;
(iv) the Facility Lease, the Site Lease and Sublease or any
other Operative Document or Project Agreement, the execution or delivery
thereof, or the performance, enforcement or amendment of any terms thereof;
(v) the payment or receipt of Basic Lease Rent, Renewal Lease
Rent, Supplemental Lease Rent or any other payment, receipt or earning under the
Facility Lease or arising from the Facility, the Common Facilities, the Colstrip
Site, the Undivided Interest, the Ground Interest or any portion or Component
thereof or any interest therein; or
(vi) otherwise relating to the transactions contemplated by
the Operative Documents or Project Agreements.
(b) Excluded Taxes. The indemnity provided for in paragraph (a) above
shall not extend to any of the following Taxes (the "Excluded Taxes"):
(i) Taxes imposed on, based on or measured by gross or net
income or receipts or capital or net worth (other than Taxes that are in the
nature of sales, use, rental, license (other than the Montana corporate license
tax), value added or property taxes and other than Taxes that would not have
been imposed had PPL Montana not transferred its interest in the Facility Lease
to a person other than a "United States person" within the meaning of Section
7701(a)(30) of the Code);
(ii) Taxes attributable to any period after expiration or
other termination of the Facility Lease Term and surrender of the Facility to
the Owner Lessor in accordance with the Facility Lease (or, in the case of the
Lease Indenture Trustee or Pass Through Trustee, after the repayment of the
Lessor Note);
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(iii) Other than in the case of the Lease Indenture Trustee or
Pass-Through Transfers, taxes imposed on a Tax Indemnitee attributable to the
gross negligence or willful misconduct of such Tax Indemnitee or any Related
Party;
(iv) Taxes in the nature of capital gain, accumulated
earnings, personal holding company, excess profits, succession or estate,
minimum, alternative minimum, preference, franchise, conduct of business and
other similar taxes (other than Taxes that are in the nature of sales, use,
rental, license (other than the Montana corporate license tax), value added or
property taxes);
(v) Taxes imposed on a Tax Indemnitee that arise out of, or
are caused by, any act or omission of such Tax Indemnitee (or any Related Party)
that is expressly prohibited by the Operative Documents or by a breach by such
Tax Indemnitee (or any Related Party) of any of its representations, warranties
or covenants under any Operative Document (other than the Lease Indenture
Trustee or the Pass Through Trustee, unless the act, omission or breach is the
result of such Person's negligence or their willful misconduct);
(vi) Taxes arising out of, or caused by, any voluntary
assignment, sale, transfer or other voluntary disposition or any involuntary
transfer or other disposition resulting from a bankruptcy or similar proceeding
for relief of debtors in which such Tax Indemnitee is a debtor or a foreclosure
by a creditor of (A) a partner, member or Affiliate of the Owner Participant of
all or any of its direct or indirect interest in the Owner Participant, (B) the
Owner Participant of any of its Member Interest, (C) the Owner Lessor of all or
any of its interest in the Facility or the Colstrip Site, or (D) the Lease
Indenture Trustee of any interest in the Lessor Note or the Indenture Estate,
unless such transfer or disposition occurs pursuant to the exercise of remedies
during the continuance of a Lease Event of Default;
(vii) Taxes arising in connection with Owner Participant's
Liens or Owner Lessor's Liens;
(viii) Taxes imposed on any assignee or successor-in-interest
to a Tax Indemnitee to the extent any such Taxes exceed the Taxes that would
have been imposed had no assignment or transfer taken place determined under the
law as in effect on the date of transfer; provided that this exclusion shall not
apply to the computation of the gross-up amounts necessary to make a payment on
an After-Tax Basis, and shall not apply to a transferee, assignee or successor
in interest that acquires the interest of a Tax Indemnitee pursuant to a
transfer or disposition in connection with the exercise of remedies during the
continuance of a Lease Event of Default;
(ix) Taxes that are included as a part of Transaction Costs or
the Purchase Price;
(x) Taxes imposed on, based on, or measured by any
compensation that any Lessor Manager, Pass Through Trustee or Lease Indenture
Trustee receives for its services;
(xi) With respect to the Owner Participant, Taxes for which
PPL Montana is obligated to indemnify the Owner Participant under the Tax
Indemnity Agreement (or which are expressly excluded from indemnification
thereunder);
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(xii) Incremental Taxes resulting from the Owner Lessor or the
Owner Participant not being treated as a partnership or as a disregarded
nonentity for income tax purposes;
(xiii) Taxes attributable to the failure of the Tax Indemnitee
to comply with certification, information, documentation, reporting or other
similar requirements concerning the nationality, residence, identity, connection
with the jurisdiction imposing such Taxes or other similar matters; provided
that the foregoing exclusion shall only apply if (A) such Tax Indemnitee is
eligible to comply with such requirement and shall have been given timely
written notice of such requirement by PPL Montana and (B) in instances where
such certification, information, documentation, reporting or similar requirement
is not otherwise required to be made by the Tax Indemnitee under Applicable Law,
the Tax Indemnitee shall have determined in good faith that compliance with any
such requirement shall not result in any material adverse effect to its
interests or to those of its Related Parties;
(xiv) Taxes imposed on a Tax Indemnitee where the Tax
Indemnitee's breach of its contest obligations under Section 11.2(g) effectively
precludes PPL Montana's ability to contest the Taxes (other than the Lease
Indenture Trustee or the Pass Through Trustee, unless the breach is the result
of such Person's negligence or willful misconduct);
(xv) Taxes imposed on any Tax Indemnitee resulting from an
amendment, modification, supplement or waiver to any Operative Document or
Project Agreement which was not requested by PPL Montana and as to which PPL
Montana is not a party and the Tax Indemnitee (or any Related Party) is a party
unless such amendment, modification, supplement or waiver (A) was required by
Applicable Law, the Operative Documents or the Project Agreements, (B) may be
necessary or appropriate to, and is in conformity with, any amendment to any
Operative Document requested by PPL Montana in writing, or (C) is made while a
Lease Event of Default shall have occurred and be continuing;
(xvi) Taxes imposed under Section 4975 of the Code or under
subtitle B of Title I of ERISA which, in the case of the Owner Participant,
arise out of or are caused by a breach of the Owner Participant's representation
under Section 3.4(g) hereof;
(xvii) Taxes imposed or collected under Section 1441 through
1446 of the Code (except to the extent such Taxes are imposed as a result of a
transfer described in clause (i) of this Section 11.2(b);
(xviii) Penalties, additions to tax or interest imposed on a
Tax Indemnitee attributable to such Tax Indemnitee's failure to comply with the
requirements imposed on it under Section 6011 (but only as to returns or
statements relating to Federal income taxes), 6111 or 6112 of the Code or the
Regulations promulgated thereunder; and
(xix) In the case of the Lease Indenture Trustee and the Pass
Through Trustee, Taxes imposed on such Tax Indemnitee attributable to or arising
out of the negligence or willful misconduct of such Tax Indemnitee.
Notwithstanding anything herein to the contrary, PPL Montana (but without
duplication of indemnities) will indemnify the Owner Participant, any Owner
Participant Member, the Lessor
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Manager, the Guarantor and the Owner Lessor on an After Tax Basis for any
failure to withhold on the Certificates or the Notes, provided, however, that
upon payment of such indemnity, PPL Montana shall be subrogated to any rights
which the indemnified party may have against the party responsible for the
failure to withhold.
(c) Payment. Each payment required to be made by PPL Montana to a Tax
Indemnitee pursuant to this Section 11.2 shall be paid either (i) when due
directly to the applicable taxing authority, by PPL Montana if it is permitted
to do so, or (ii) where direct payment is not permitted and with respect to
gross up amounts, in immediately available funds to such Tax Indemnitee by the
later of (A) 30 days following PPL Montana's receipt of the Tax Indemnitee's
written demand for the payment (which demand shall be accompanied by a statement
of the Tax Indemnitee describing in reasonable detail the Taxes for which the
Tax Indemnitee is demanding indemnity and the computation of such Taxes), (B)
subject to paragraph (g) below, in the case of amounts which are being contested
pursuant to such paragraph (g), at the time and in accordance with a final
determination of such contest or (C) in the case of any indemnity demand for
which PPL Montana has requested review and determination pursuant to paragraph
(d) below, the completion of such review and determination; provided, however,
in no event later than the date which is five Business Days prior to the date on
which such Taxes are required to be paid to the applicable taxing authority. Any
amount payable to PPL Montana pursuant to paragraph (e) or (f) below shall be
paid promptly after the Tax Indemnitee realizes a Tax Benefit giving rise to a
payment under paragraph (e) or receives a refund or credit giving rise to a
payment under paragraph (f), as the case may be, and shall be accompanied by a
statement of the Tax Indemnitee computing in reasonable detail the amount of
such payment. Any amount that would be payable to PPL Montana pursuant to
paragraph (e) or (f) below but for the fact that such amount would be in excess
of the amount of indemnity(ies) previously paid to the Tax Indemnitee by PPL
Montana may be used as an offset against any future general tax indemnity
payments owed by PPL Montana to such Tax Indemnitee. Upon the final
determination of any contest pursuant to paragraph (g) below in respect of any
Taxes for which PPL Montana has made a Tax Advance, the amount of PPL Montana's
obligation under paragraph (a) above shall be determined as if such Tax Advance
had not been made. Any obligation of PPL Montana under this Section 11.2 and the
Tax Indemnitee's obligation to repay the Tax Advance will be satisfied first by
set off against each other, and any difference owing by either party will be
paid within 10 days of such final determination.
(d) Independent Examination. Within 15 days after PPL Montana receives
any computation from a Tax Indemnitee, PPL Montana may request in writing that
an independent public accounting firm selected by the Tax Indemnitee and
reasonably acceptable to PPL Montana review and determine on a confidential
basis the amount of any indemnity payment by PPL Montana to the Tax Indemnitee
pursuant to this Section 11.2 or any payment by a Tax Indemnitee to PPL Montana
pursuant to paragraph (e) or (f) below. The Tax Indemnitee shall cooperate with
such accounting firm and supply it with all information reasonably necessary for
the accounting firm to conduct such review and determination provided, that such
accounting firm shall agree in writing in a manner satisfactory to the Tax
Indemnitee to maintain the confidentiality of such information. The parties
hereto agree that the independent public accounting firm's sole responsibility
shall be to verify the computation of any payment pursuant to this Section 11.2
and that matters of interpretation of this Participation Agreement or any other
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Operative Document are not within the scope of the independent accountant's
responsibility. The fees and disbursements of such accounting firm will be paid
by PPL Montana; provided that such fees and disbursements will be paid by the
Tax Indemnitee (other than the Lease Indenture Trustee or the Pass Through
Trustee, unless the inaccuracy of such Person's computation is the result of
negligence or willful misconduct) if the verification results in an adjustment
in PPL Montana's favor of five percent or more of the indemnity payment or
payments computed by the Tax Indemnitee.
(e) Tax Benefit. If, as the result of any Taxes paid or indemnified
against by PPL Montana under this Section 11.2, the aggregate Taxes actually
paid by the Tax Indemnitee in connection with such payment for any taxable year
are less (whether by reason of a deduction, credit, allocation or apportionment
of income or otherwise) than the amount of such Taxes that otherwise would have
been payable by such Tax Indemnitee (a "Tax Benefit"); then to the extent such
Tax Benefit was not taken into account in determining the amount of
indemnification payable under paragraph (a) above and provided no Significant
Lease Default or Lease Event of Default shall have occurred and be continuing
(in which event the payment provided under this Section 11.2(e) shall be
deferred until the Significant Lease Default or Lease Event of Default has been
cured), such Tax Indemnitee shall pay to PPL Montana the lesser of (A) (y) the
amount of such Tax Benefit, plus (z) an amount equal to any United States
federal, state or local income tax benefit realized by such Tax Indemnitee as a
result of the payment under clause (y) above and this clause (z) (such benefit
to be determined using the same assumptions as set forth in the second sentence
under the definition of After-Tax Basis) and (B) the amount of the
indemnity(ies) paid pursuant to this Section 11.2 giving rise to such Tax
Benefit. If it is subsequently determined that the Tax Indemnitee was not
entitled to such Tax Benefit, the portion of such Tax Benefit that is required
to be repaid or recaptured will be treated as Taxes for which PPL Montana must
indemnify the Tax Indemnitee pursuant to this Section 11.2 without regard to
paragraph (b) hereof.
(f) Refund. If a Tax Indemnitee obtains a refund or credit of all or
part of any Taxes paid, reimbursed or advanced by PPL Montana pursuant to this
Section 11.2, the Tax Indemnitee promptly shall pay to PPL Montana (x) the
amount of such refund or credit (net of any Tax payable by the Tax Indemnitee as
a result of the receipt or accrual of such refund or credit if the payment of
such refund or credit by the Tax Indemnitee to PPL Montana is not deductible
against such Tax) plus (y) an amount equal to any United States federal, state
or local income tax benefit realized by such Tax Indemnitee as a result of the
payments to PPL Montana under clause (x) above and this clause (y) (such benefit
to be determined using the same assumptions as set forth in the second sentence
under the definition of After-Tax Basis), provided that (A) if at the time such
payment is due to PPL Montana a Significant Lease Default or Lease Event of
Default shall have occurred and be continuing, such amount shall not be payable
until such Significant Lease Default or Lease Event of Default has been cured,
and (B) the amount payable to PPL Montana pursuant to this sentence shall not
exceed the amount of the indemnity(ies) paid pursuant to Section 11.2 in respect
of such refunded or credited Taxes. If it is subsequently determined that the
Tax Indemnitee was not entitled to such refund or credit, the portion of such
refund or credit that is required to be repaid or recaptured will be treated as
Taxes for which PPL Montana must indemnify the Tax Indemnitee pursuant to this
Section 11.2 without regard to paragraph (b) hereof. If, in connection with a
refund or credit of all or part of any Taxes paid, reimbursed or advanced by PPL
Montana pursuant to this Section 11.2, a Tax Indemnitee
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receives an amount representing interest on such refund or credit, the Tax
Indemnitee promptly shall pay to PPL Montana (1) the amount of such interest
that shall be fairly attributable to such Taxes paid, reimbursed or advanced by
PPL Montana prior to the receipt of such refund or credit (net of Taxes payable
in respect of the receipt or accrual of such interest if the payment of such
interest by the Tax Indemnitee to PPL Montana is not deductible against such
Tax) and (2) any Tax savings realized by such Tax Indemnitee as a result of the
payments made by the Tax Indemnitee under (1) and (2) (such Tax savings to be
determined using the same assumptions as set forth in the second sentence under
the definition of After-Tax Basis).
(g) Contest.
(i) Notice of Contest. If a written claim for payment is made
by any taxing authority against a Tax Indemnitee for any Taxes with respect to
which PPL Montana may be liable for indemnity hereunder (a "Tax Claim"), such
Tax Indemnitee shall give PPL Montana written notice of such Tax Claim promptly
after its receipt, and shall furnish PPL Montana with copies of such Tax Claim
and all other writings received from the taxing authority to the extent relating
to such claim, provided that failure so to notify PPL Montana shall not relieve
PPL Montana of any obligation to indemnify the Tax Indemnitee hereunder except
as provided in clause (xiv) of Section 11.2(b). The Tax Indemnitee shall not pay
such Tax Claim until at least 30 days after providing PPL Montana with such
written notice, unless required to do so by law or regulation.
(ii) Control of Contest. Subject to subsection (g)(iii) below,
PPL Montana will be entitled to contest (acting through counsel selected by PPL
Montana and reasonably satisfactory to the Tax Indemnitee), and control the
contest of, any Tax Claim if (i) the contest of the Tax Claim may be pursued in
the name of the Tax Indemnitee; (ii) such Tax Claim may be segregated
procedurally from tax claims for which PPL Montana is not obligated to indemnify
the Tax Indemnitee or (iii) the Tax Indemnitee requests that PPL Montana control
such contest; provided that in the case of any such contest, PPL Montana shall
use all reasonable efforts to contest such Tax Claim in its own name. In the
case of all other Tax Claims, subject to subsection (g)(iii) below, the Tax
Indemnitee will contest the Tax Claim if PPL Montana shall request that the Tax
be contested, and the following rules shall apply with respect to such contest:
(1) the Tax Indemnitee will control the contest of such Tax Claim in
good faith (acting through counsel selected by the Tax Indemnitee and reasonably
satisfactory to PPL Montana),
(2) at PPL Montana's written request, if payment is made to the
applicable taxing authority, the Tax Indemnitee shall use all reasonable efforts
to obtain a refund thereof in appropriate administrative or judicial
proceedings, and
(3) the Tax Indemnitee shall not otherwise settle, compromise or
abandon such contest without PPL Montana's prior written consent except as
provided in paragraph (g)(iv) below.
In either case, the party conducting such contest shall consult with and keep
reasonably informed
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the other party and its designated counsel with respect to such Tax Claim and
shall consider and consult in good faith with the other party regarding any
request (a) to resist payment of Taxes if practical and (b) not to pay such
Taxes except under protest if protest is necessary and proper.
(iii) Conditions of Contest. Notwithstanding the foregoing, no
contest with respect to a Tax Claim will be required or permitted pursuant to
this Section 11.2, and PPL Montana shall be required to pay the applicable Taxes
without contest, unless:
(1) within 30 days after notice by the Tax Indemnitee to PPL Montana of
such Tax Claim, PPL Montana shall request in writing to the Tax Indemnitee that
such Tax Claim be contested provided that if a shorter period is required for
taking action with respect to such Tax Claim and the Tax Indemnitee notifies PPL
Montana of such requirement, PPL Montana shall use reasonable best efforts to
request such contest within such shorter period,
(2) no Lease Event of Default has occurred and is continuing,
(3) there is no risk of sale, forfeiture or loss of, or the creation of
a Lien on the Owner Lessor's or Owner Participant's interest in the Facility,
the Colstrip Site, the Undivided Interest, the Ground Interest or any portion or
Component thereof or any interest therein as a result of such Tax Claim (other
than a Permitted Lien); provided that this clause (3) shall not apply if PPL
Montana posts security satisfactory to the Tax Indemnitee in its sole
discretion, or the Tax is fully paid in either manner specified in clause (5)
below,
(4) there is no risk of imposition of any criminal penalties,
(5) if such contest involves payment of such Tax, PPL Montana will
either advance to the Tax Indemnitee on an interest-free basis and with no
after-tax cost to such Tax Indemnitee (a "Tax Advance") or pay such Tax
Indemnitee the amount payable by PPL Montana pursuant to Section 11.2(a) above
with respect to such Tax,
(6) PPL Montana agrees to pay (and pay on demand) and with no after-tax
cost to such Tax Indemnitee all reasonable costs, losses and expenses incurred
by the Tax Indemnitee in connection with the contest of such claim (including
all reasonable legal, accounting and investigatory fees and disbursements),
(7) the Tax Indemnitee has been provided at PPL Montana's sole expense
with an opinion, reasonably acceptable to such Tax Indemnitee, of independent
tax counsel of recognized standing selected by PPL Montana and reasonably
acceptable to the Tax Indemnitee to the effect that there is a Reasonable Basis
for contesting such Tax Claim, and
(8) in the case of a judicial appeal, no appeal to the U.S. Supreme
Court shall be required of the Tax Indemnitee or shall be permitted by PPL
Montana.
(iv) Waiver of Indemnification. Notwithstanding anything to
the contrary contained in this Section 11.2, the Tax Indemnitee at any time may
elect to decline to take any action or any further action with respect to a Tax
Claim and may in its sole discretion settle or compromise any contest with
respect to such Tax Claim without PPL Montana's consent if the Tax Indemnitee:
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(1) waives its right to any indemnity payment by PPL Montana pursuant
to this Section 11.2 in respect of such Tax Claim (and any other claim for Taxes
with respect to any other taxable year the contest of which is effectively
precluded by the Tax Indemnitee's declination to take action with respect to the
Tax Claim), and
(2) promptly repays to PPL Montana any Tax Advance and any amount paid
to such Tax Indemnitee under Section 11.2(a) above in respect of such Taxes, but
not any costs or expenses with respect to any such contest.
Except as provided in the preceding sentence, any such waiver shall be
without prejudice to the rights of the Tax Indemnitee with respect to any other
Tax Claim.
(h) Reports.
(i) If any report, statement or return is required to be filed
by a Tax Indemnitee with respect to any Tax that is subject to indemnification
under this Section 11.2 (or is required to be filed by the Pass Through Trustee
on behalf of the Pass Through Trust pursuant to Treasury Regulation 1.671-4, or
any successor provision thereto), PPL Montana will (1) notify the Tax Indemnitee
in writing of such requirement not later than 30 days prior to the date such
report, statement or return is required to be filed (determined without regard
to extensions) and (2) if so directed by the Tax Indemnitee and if the return to
be filed reflects only information in respect of the transactions contemplated
by the Operative Documents, prepare and furnish to such Tax Indemnitee not later
than 30 days prior to the date such report, statement or return is required to
be filed (determined without regard to extensions) a proposed form of such
report, statement or return for filing by the Tax Indemnitee.
(ii) Each Tax Indemnitee and PPL Montana will timely provide
the other, at PPL Montana's expense, with all information in its possession that
the other party may reasonably require and request to satisfy its obligations
under this paragraph (h). PPL Montana (1) shall hold each Tax Indemnitee
harmless on an After-Tax Basis from and against all liabilities arising out of
any insufficiency or inaccuracy of any report, statement or return if such
insufficiency or inaccuracy results from the insufficiency or inaccuracy of any
information to be supplied by PPL Montana pursuant to this paragraph (h) in
preparing and filing such report, statement or return and (2) shall indemnify
each Tax Indemnitee for all liabilities, costs and expenses (including the
attorneys', accountants' and other professional fees for tax related filings or
reviews) of such Tax Indemnitee with respect to all returns, reports or
statements to which this Section 11.2(h) applies.
(i) Non-Parties. If a Tax Indemnitee is not a party to this Agreement,
PPL Montana may require such Tax Indemnitee to agree in writing, in a form
reasonably acceptable to PPL Montana, to the terms of this Section 11 prior to
making any payment to such Tax Indemnitee under this Section. Subject to the
preceding sentence, PPL Montana's obligations under this Section 11 shall inure
to the benefit of each and every Tax Indemnitee without regard to whether such
Tax Indemnitee is a party to this Agreement.
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SECTION 12. PPL MONTANA'S RIGHT OF QUIET ENJOYMENT
Each party to this Agreement acknowledges notice of the Facility Lease
and the Site Lease and Sublease and expressly, severally and as to its own
actions only, agrees that, so long as no Lease Event of Default has occurred and
is continuing, it shall not take or cause to be taken any action contrary to PPL
Montana's rights under the Facility Lease and Site Lease and Sublease, including
the right to possession, use and quiet enjoyment of the Undivided Interest and
the Ground Interest.
SECTION 13. SUPPLEMENTAL FINANCING OF MODIFICATIONS; OPTIONAL REFINANCINGS
Section 13.1. Financing Modifications.
Upon the request of PPL Montana delivered at least 90 days prior to
financing a portion of the Unit Percentage of the cost of any Modification, the
Owner Lessor, the Lease Indenture Trustee and the Pass Through Trustee agree to
cooperate with PPL Montana to (a) issue Additional Lessor Notes under the Lease
Indenture to finance such Modification that will rank pari passu with the Lessor
Note and/or any Additional Lessor Notes then outstanding as to the Indenture
Estate; (b) execute and deliver one or more supplements to the Lease Indenture
for the purpose of subjecting any such Modifications to the Liens thereof; and
(c) execute and deliver an amendment to the Facility Lease to reflect the
adjustments required by clause (iii) below; provided, however, that (x) the
Owner Participant shall have been given the opportunity, but shall have no
obligation, to provide all or part of the funds required to finance the Unit
Percentage of the cost of any such Modification by making an Additional Equity
Investment in such amount, if any, as it may determine in its sole and absolute
discretion, but PPL Montana shall have no obligation to accept such Additional
Equity Investment; and (y) the conditions set forth below and in Section 2.12 of
the Lease Indenture shall have been satisfied. The obligation to finance such
Modifications through the issuance of Additional Lessor Notes under Section 2.12
of the Lease Indenture (any financing of Modifications through the issuance of
such Additional Lessor Notes under the Lease Indenture being called a
"Supplemental Financing") is subject to the following additional conditions:
(i) there shall be no more than one such financing in any
calendar year; provided, however that there shall be no limit with respect to
Required Modifications;
(ii) the Additional Lessor Notes shall have a final maturity
no later than the date that is two years prior to the last day of the Basic
Lease Term and will be fully repaid out of additional Basic Lease Rent, as
adjusted, during the Facility Lease Term;
(iii) appropriate adjustments to Basic Lease Rent and
Termination Value (determined without regard to any tax benefits associated with
such Modifications, unless the Owner Participant is making an Additional Equity
Investment) shall be made to protect the Owner Participant's Net Economic
Return;
(iv) no Significant Lease Default or Lease Event of Default
shall have occurred and be continuing unless the Modifications to be constructed
with the proceeds of the
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Additional Lessor Notes shall cure such default, and such Modifications shall be
made in compliance with the Operative Documents;
(v) such Additional Lessor Notes represent an aggregate amount
of not less than $20 million, nor greater than 100% of the Unit Percentage of
the costs of the Modifications being financed; provided that (a) the aggregate
balance of the relevant Unit Principal Portion (after taking into account the
Additional Lessor Notes) shall not exceed 87% of the fair market value as
projected at any point in time that such Additional Lessor Notes are scheduled
to be outstanding of the Undivided Interest taking into account such
Modifications, and (b) the total amount of Lease Debt issued under this Section
13.1 shall not exceed 25% of the fair market value of the Undivided Interest
after taking into account such Modifications at the time such Lease Debt is
issued, and (c) the scheduled outstanding principal balances of such Lease Debt
issued under this Section 13.1 shall not exceed 25% of the projected fair market
value at any time during the remainder of the Basic Lease Term and any Renewal
Lease Term, then elected, of the Undivided Interest after taking into account
such Modification (such fair market value and projected fair market value to be
determined by an appraiser selected by the Owner Participant and reasonably
acceptable to PPL Montana);
(vi) the Owner Participant shall have received either (A) a
favorable opinion of its tax counsel satisfactory to such Owner Participant to
the effect that such financing creates no unindemnified tax risk to the Owner
Participant, (B) an indemnity against such risks in form and substance
satisfactory to the Owner Participant from an entity that meets the Minimum
Credit Standard, or (C) any other indemnity arrangement satisfactory to such
Owner Participant;
(vii) the Owner Participant shall suffer no adverse accounting
effects under GAAP; and
(viii) PPL Montana shall have made or delivered such
representations, warranties, covenants, opinions or certificates as the Owner
Participant may reasonably request.
PPL Montana shall pay, on an After-Tax Basis, all reasonable costs and
expenses of the Transaction Parties, including the reasonable fees and expenses
of counsel to the Owner Participant, the Owner Lessor, the Lessor Manager, the
Lease Indenture Trustee and the Pass Through Trustee, in each case to the extent
incurred in connection with any financing pursuant to this Section 13.1 whether
or not the financing is consummated. In addition, for each financing pursuant to
this Section 13.1 other than the first such financing, PPL Montana shall pay to
the Owner Participant a fee in an amount equal to the product of the Owner
Lessor's Percentage and $150,000. Notwithstanding the prior provision dealing
with the financing of Modifications through the Facility Lease, PPL Montana
shall, subject, to the extent then applicable, to the limitations in Section
6.1, 6.4 or 7.1 hereof, or Section 6 of the Facility Lease, at all times have
the right to fund Modifications to the Facility other than through the Facility
Lease.
Section 13.2. Optional Refinancing of Lease Debt. PPL Montana will have
the right, exercisable on three occasions at any time, to request the Owner
Lessor, and the Owner Lessor shall reasonably consider, to refund or refinance
the Lessor Note (and all Certificates then outstanding), in whole but not in
part, through the issuance of Additional Lessor Notes directly to the public, to
the Pass Through Trust or to such other funding vehicle as may be used at that
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time; provided that all conditions to the issuance of Additional Lessor Notes
contained in Section 2.12 of the Lease Indenture shall have been satisfied,
including payment of the Make Whole Premium. Any refinancing under this Section
13.2 shall also be subject to satisfaction of the following additional
conditions:
(i) the Owner Lessor shall be able to issue and sell such debt
in an amount adequate to accomplish such refunding or refinancing;
(ii) the Additional Lessor Notes shall have a final maturity
no later than the Expiration Date and will be fully repaid out of Basic Lease
Rent during the Facility Lease Term; provided, however, that absent a change in
law that clarifies that any such refunding or refinancing will not give rise to
"contingent rent" under Section 467 of the Code and the regulations promulgated
thereunder, the Additional Lessor Notes shall have the same final maturity date
as the original Lessor Note.
(iii) appropriate adjustments to Basic Lease Rent and
Termination Value shall be made to protect the Owner Participant's Net Economic
Return;
(iv) no Significant Lease Default or Lease Event of Default
shall have occurred and be continuing;
(v) the Owner Participant shall receive (x) an opinion
satisfactory to it that the refinancing, including any payments to be made in
connection therewith (as opposed to the right to request such refinancing),
shall not result in any unindemnified incremental tax risk not indemnified to
the Owner Participant, or (y) an indemnification against such risk in form and
substance satisfactory to the Owner Participant from an entity that meets the
Minimum Credit Standard, or (z) any other indemnity arrangement satisfactory to
the Owner Participant;
(vi) the Owner Participant shall suffer no adverse accounting
effects under GAAP;
(vii) PPL Montana shall have made or delivered such
representations, warranties, covenants, opinions or certificates as the Owner
Participant may reasonably request; and
(viii) all documentation in connection with such refinancing
shall be reasonably satisfactory to the Owner Lessor and the Owner Participant.
The Owner Participant shall be entitled to a consent fee in an amount equal to
the product of the Owner Lessor's Percentage and $150,000 for each refinancing
other than the first such refinancing. Notwithstanding the foregoing, no such
refinancing shall occur prior to the fifth anniversary of the Closing Date,
without the consent of the Owner Participant.
Section 13.3. Cooperation. The Owner Participant and PPL Montana will
cooperate in connection with any refinancing or assumption of the Lease Debt, so
long as such refinancing or assumption is in accordance with the terms of the
Operative Documents. The Owner Participant will execute such agreements and
documents as may be necessary with respect to any such refinancing or assumption
and will instruct the Owner Lessor to act accordingly.
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SECTION 14. PRE-CLOSING ADJUSTMENTS TO LEASE SCHEDULES
Section 14.1. Lease Schedules. The Periodic Lease Rent, Allocated Rent,
Proportional Rent, Section 467 Loan Balance, Section 467 Interest and
Termination Value schedules for the Facility Lease are set forth in Schedule 3.
Section 14.2. Pre-closing Adjustments.
(a) On or before the Closing Date, Periodic Lease Rent, Allocated Rent,
Proportional Rent, Section 467 Loan Balance, Section 467 Interest and
Termination Values shall be adjusted, either upward or downward, in accordance
with the Facility Lease:
(i) at PPL Montana's option, to re-optimize the Lease Debt;
and
(ii) to reflect any changes in the Pricing Assumptions,
including (x) an initial interest rate on the Lessor Note which is
different from the applicable Lease Debt Rate set forth in the Pricing
Assumptions, (y) an increase in the Transaction Costs from the amount
assumed in the Pricing Assumptions, unless PPL Montana has elected to
pay such increase, provided that, in connection with any such election,
the Owner Participant shall have the right to allocate which expenses
will be paid by PPL Montana, and (z) a scheduled Closing Date other
than the Closing Date in the Pricing Assumptions; and
(iii) at the request of PPL Montana or the Owner Participant
to reflect any enactment, promulgation, release or adoption of,
amendment to or change in the Code, Treasury Regulations, Revenue
Rulings or Revenue Procedures ("Tax Law Change") enacted prior to the
Closing;
provided that if any adjustment required by this paragraph would cause (x) on an
After-Tax Basis the net present value of Basic Lease Rent on a percentage basis
discounted at 6% to increase by more than 100 basis points or (y) the total
Periodic Lease Rent to increase by more than 2%, PPL Montana shall not be
obligated to close the Transaction.
(b) Any adjustment pursuant to this Section 14.2 shall be made in a
manner that is consistent with any "uneven rent" safe harbor then existing under
Section 467 of the Code or the regulations promulgated thereunder and shall be
calculated (A) to preserve the Owner Participant's Net Economic Return through
the Fixed Lease Term and (B) to maintain operating lease treatment for PPL
Montana; provided, however, that to the extent it is not possible as the
Transaction is then structured to achieve both (A) and (B), the Owner Lessor,
the Owner Participant and PPL Montana shall work in good faith to restructure
the Transaction in a manner that would achieve both results; and provided,
further, that to the extent consistent with preserving both such objectives, all
adjustments shall at the option of PPL Montana be calculated to minimize (x) the
average annual Periodic Lease Rent over the Fixed Lease Term for PPL Montana's
GAAP accounting purposes and/or (y) the present value to PPL Montana of the
Periodic Lease Rent; and provided, further, that to the extent that any
adjustment pursuant to this Section 14 fails to maintain operating lease
treatment for PPL Montana, PPL Montana shall not be obligated to close the
Transaction. Adjustments will be made using the same method of computation and
assumptions originally used (other than those that have changed as the result of
the event giving rise to the adjustment) in the calculation of the Periodic
Lease Rent and
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corresponding adjustments to Termination Values will be made. Adjustments made
pursuant to this Section 14 shall be subject to verification as provided in
Section 3.5 of the Facility Lease.
SECTION 15. SPECIAL LESSEE TRANSFERS; ASSIGNMENT OF FACILITY LEASE
Section 15.1. Special Lessee Transfers. Upon the occurrence and during
the continuance of a Special Lessee Transfer Event, PPL Montana (or its designee
as provided below) may (a) terminate the Facility Lease in accordance with its
terms, or (b) upon not less than 30 days' written notice to the Owner
Participant and the Lease Indenture Trustee, purchase, subject to the
limitations set forth in Section 9.1, all of the Owner Participant's Member
Interest (any purchase under clause (b) being referred to as the "Special Lessee
Transfer") on the applicable Termination Date at a price equal to the Special
Lessee Transfer Amount determined as of the date of such transfer and keep the
Facility Lease in effect. On the applicable Termination Date, PPL Montana (or
its designee) shall pay to the Owner Participant or the OP Guarantor the Special
Lessee Transfer Amount determined as of such date, plus all amounts due and
payable to the Owner Participant on such date (including all costs and expenses
of the Owner Participant or the OP Guarantor and all sales, use, value added and
other Taxes covered by Section 11.2 hereof associated with the Special Lessee
Transfer pursuant to this Section 15.1, to the extent such amounts have not
otherwise been reimbursed by PPL Montana pursuant to this Section 15.1, it being
understood that any transfer pursuant to this Section 15.1 shall not be
considered a voluntary transfer for purposes of Section 11.2). Concurrently with
the payment of all sums required to be paid pursuant to this Section 15.1 (or on
such later date of transfer of the Owner Participant's Member Interest in
accordance with clause (ii) below) (i) PPL Montana shall cease to have any
liability to the Owner Participant or the OP Guarantor with respect to the
Operative Documents, except for obligations (including Sections 11.1 and 11.2
hereof and the Tax Indemnity Agreement) surviving pursuant to the express terms
of any Operative Document or which have otherwise accrued but not been paid as
of such date and (ii) the Owner Participant or the OP Guarantor will transfer
(by an appropriate instrument of transfer) the Owner Participant's Member
Interest to PPL Montana (or their designee); provided, however, that if the Lien
of the Lease Indenture has not been terminated or discharged, such transfer
shall not be made to PPL Montana, but shall be made to PPL Montana's designee
promptly upon PPL Montana's designation of such designee and such designee will
agree not to transfer the Owner Participant's Member Interest to PPL Montana
until such Lien is terminated or discharged. At the time of any transfer under
this Section 15.1 the Owner Participant or the OP Guarantor shall represent and
warrant as to the absence of Liens attributable to the Owner Participant on the
Owner Participant's Member Interest. It is understood and agreed among the
parties hereto that the transaction contemplated by this Section 15.1 shall not
effect a merger of PPL Montana's interest in the Facility and the Colstrip Site
with the Owner Lessor's Interest. PPL Montana will pay all reasonable costs and
expenses of the parties (including reasonable attorneys' fees and disbursements)
in connection with any transfer pursuant to this Section 15.1. Subsequent to
such transfer, PPL Montana and the Owner Lessor may, without the consent of the
Lease Indenture Trustee or the Pass Through Trustee, waive the Regulatory Event
of Loss or the Burdensome Termination Event that gave rise to the Special Lessee
Transfer Event and the Facility Lease shall continue in full force and effect in
accordance with its terms.
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Section 15.2. Assignment of Facility Lease.
(a) PPL Montana covenants and agrees that, except as otherwise provided
in Section 5.2 hereof or Section 19 of the Facility Lease, it shall not during
the Facility Lease Term assign the Facility Lease or any other Operative
Document, or any interest therein without the prior written consent of the Owner
Lessor, the Owner Participant and, so long as the Lien of the Lease Indenture
has not been terminated or discharged, the Lease Indenture Trustee and the Pass
Through Trustee; provided, however, that PPL Montana may, upon satisfaction of
the conditions in paragraph (b) of this Section 15.2, assign its right, title
and interest in, to and under the Facility Lease and each of the other Operative
Documents, in whole but not in part, without the consent of the Owner Lessor,
the Owner Participant, the Lease Indenture Trustee, the Pass Through Trustee or
any other Transaction Party, under the following circumstances:
(i) to any Person which has a prospective credit rating (after
due consideration of all lease rental obligations under the Facility
Lease) from both S&P and ▇▇▇▇▇'▇ equal to or higher than BBB+ and Baa1,
respectively; in addition, unless the Owner Participant shall have
consented to such assignment, such transferee or a party which
guarantees such transferee's obligation under the Operative Documents
assigned to such transferee (i) shall have a net worth of at least $1
billion after giving effect to such transfer, and (ii) shall have
significant experience owning or operating coal-fired electric
generating Facility in the United States; or
(ii) to any other Person, so long as PPL Montana shall remain
secondarily liable to the Owner Lessor or any other Person under the
Operative Documents (and without limiting the foregoing, shall promptly
pay any amounts due thereunder upon receipt of notice of the payment
default thereunder by the transferee and expiration of the applicable
cure periods under the Operative Documents).
In the case of clause (i) above, PPL Montana shall, upon the transferee's
assumption of PPL Montana's obligations under the Facility Lease and the other
Operative Documents in accordance with the terms of this Section 15.2, have no
further liability or obligation thereunder and, in the case of clause (ii)
above, PPL Montana shall remain secondarily liable under the Facility Lease and
the other Operative Documents (and without limiting the foregoing, shall
promptly pay any amounts due thereunder upon receipt of notice of the payment
default thereunder by the transferee and expiration of the applicable cure
periods under the Operative Documents). Notwithstanding the foregoing, (i) no
assignment under clause (i) above shall occur on or before the fifth anniversary
of the Closing Date without the prior consent of the Owner Participant, and (ii)
so long as the Certificates are outstanding, no assignment under this Section
15.2 shall be permitted without the consent of the Lease Indenture Trustee
unless (A) the Certificates are rated investment grade by ▇▇▇▇▇'▇ and S&P, (B)
▇▇▇▇▇'▇ and S&P shall have confirmed that such assignment shall not result in a
downgrade of the then existing credit rating of the Certificates, after ▇▇▇▇▇'▇
and S&P shall have received such documentation or information reasonably
necessary for such entities to review the proposed assignment, including
evidence of the credit rating of such proposed assignee, and (C) PPL Montana
shall simultaneously assign its interest under all of the Other Operative
Documents.
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(b) Any assignment under this Section 15.2 shall also be subject to
satisfaction of the following additional conditions:
(i) the Owner Lessor, the Owner Participant and, so long as
the Lien of the Lease Indenture shall not have been terminated or
discharged, the Lease Indenture Trustee and the Pass Through Trustee
shall have received an opinion of counsel, which opinion and counsel
shall be reasonably satisfactory to each such recipient, to the effect
that all regulatory approvals required in connection with such transfer
or necessary to assume PPL Montana's obligations under any Operative
Document have been obtained;
(ii) such transfer shall be pursuant to an assignment and
assumption agreement in form and substance satisfactory to the Owner
Participant, the Owner Lessor and, so long as the Lien of the Lease
Indenture shall not have been terminated or discharged, the Lease
Indenture Trustee and the Pass Through Trustee;
(iii) the Owner Participant, the Owner Lessor and, so long as
the Lien of the Lease Indenture shall not have been terminated or
discharged, the Lease Indenture Trustee and the Pass Through Trustee
shall have received an opinion of counsel, which opinion and counsel
shall be reasonably satisfactory to such recipients, as to such
assignment and assumption agreement;
(iv) the Owner Participant shall have received (x) an opinion
of counsel, satisfactory to such Owner Participant, to the effect that
such assignment is not a substantial modification of the Facility Lease
under Code Section 467 and the treasury regulations thereunder, (y) an
indemnification against such risk iN form and substance satisfactory to
Owner Participant from an entity that meets the Minimum Credit
Standard, or (z) any other indemnity arrangement satisfactory to the
Owner Participant;
(v) no Significant Lease Default or Lease Event of Default
shall have occurred and be continuing after giving effect to such
transfer;
(vi) neither the Owner Participant nor the Owner Lessor shall
become subject to regulation as a "holding company", or an "affiliate"
or "subsidiary company" of a "holding company" under the Holding
Company Act or as a "public utility", an "electric utility" or a
"transmitting utility" under the FPA as a result of such transfer;
(vii) the transfer shall not result in a Regulatory Event of
Loss;
(viii) unless the Owner Participant shall have consented to
such transfer, the transferee shall not be involved in material
litigation with the Owner Participant; and
(ix) PPL Montana shall have simultaneously assigned its
interest under all of the Operative Documents for any of the Other
Lease Transactions to which the Owner Participant or any of its
Affiliates is a party.
(c) PPL Montana shall pay, on an After-Tax Basis, all reasonable
documented out-of-pocket expenses of the Owner Lessor, the Owner Participant,
the Lease Indenture Trustee and the Pass Through Trustee in connection with such
assignment.
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SECTION 16. RIGHT OF FIRST REFUSAL; RIGHT OF FIRST OFFER.
Section 16.1. Right of First Offer. In the event the Owner Participant
desires to, directly or indirectly, sell, lease, convey or otherwise transfer
its Member Interest (other than to an Affiliate of the Owner Participant or in
connection with the exercise of remedies following a Lease Event of Default)
prior to the expiration of the Facility Lease Term, the Owner Participant must
first offer to sell such Member Interest to PPL Montana on the terms and
conditions set forth in this Section 16.1. Such offer shall be made to PPL
Montana in the form of a proposed term sheet, which proposed term sheet shall
include a full and complete statement of the price and all of the terms,
conditions and provisions upon which the Owner Participant would be willing to
transfer its interest in the Owner Participant's Member Interest or any part
thereof. PPL Montana will thereafter have the right within a period of
forty-five (45) days from and after the receipt by PPL Montana of such proposed
term sheet to notify the Owner Participant of its irrevocable intent to exercise
its right to purchase hereunder. If PPL Montana elects to exercise the right
provided in the preceding sentence, it will within sixty (60) days of such
notice execute a contract on the same terms and conditions as the offer giving
rise to such right. If PPL Montana does not give such notice to the Owner
Participant within the forty-five (45) day period or does not execute such a
contract within sixty (60) days of such notice, the Owner Participant will,
subject to the provisions of the Project Agreements, be free to proceed under
the terms and conditions as set forth in the proposed term sheet delivered to
PPL Montana, unless the failure to execute the contract within sixty (60) days
is attributable to acts or omissions of the Owner Participant. In the event that
such terms or conditions are revised in any way that materially changes the
agreement for sale, lease, conveyance or transfer such that the terms of sale
are materially less favorable to the Owner Participant (including any reduction
in the price or a change in the terms of payment thereof in a manner that is
beneficial to the potential purchaser), the Owner Participant must again comply
with the notice and acceptance provisions of this Section 16.1.
Section 16.2. Right of First Refusal. In the event the Owner
Participant desires to, directly or indirectly, sell, lease, convey or otherwise
transfer its Member Interest or cause the Owner Lessor to sell its Owner
Lessor's Interest on or within five years after the expiration or termination of
the Facility Lease to any Person other than PPL Montana, such Owner Lessor's
Interest or Owner Participant's Member Interest, as the case may be, shall,
unless such sale, lease, conveyance or transfer is in connection with the
exercise of remedies upon a Lease Event of Default, be subject to PPL Montana's
right of first refusal on the terms and conditions set forth in this Section
16.2. The Owner Participant will give PPL Montana prompt written notice of all
bona fide offers that have been received from any other Person to purchase or
acquire its interest in the Owner Lessor's Interest or Owner Participant's
Member Interest or any part of either, and which offers it wishes to accept,
together with a full and complete statement of the price and all of the terms,
conditions and provisions contained in such offers. PPL Montana will thereafter
have the right within a period of forty-five (45) days from and after the
receipt by PPL Montana of such notice to notify the Owner Participant of its
irrevocable intent to exercise its rights of first refusal. If PPL Montana
elects to exercise the right provided in the preceding sentence, it will within
sixty (60) days of such notice execute a contract on the same terms and
conditions as the offer giving rise to such right. If PPL Montana does not give
such notice to the Owner Participant within the forty-five (45) day period or
does not execute such a contract within sixty (60) days of such notice, the
Owner Participant, subject to the provisions of the
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Project Agreements will be free to proceed under the terms and conditions as set
forth in its notice to PPL Montana, unless the failure to execute the contract
within sixty (60) days is attributable to acts or omissions of the Owner
Participant. In the event that such terms or conditions are revised in any way
that materially changes the agreement for sale, lease, conveyance or transfer
such that the terms of the sale are less favorable to the Owner Participant
(including any reduction in price or a change in the terms of payment thereof in
a manner that is beneficial to the potential purchaser), the Owner Participant
must again comply with the notice and a change in acceptance provisions of this
Section 16.2. In connection with PPL Montana's exercise of the right of first
refusal pursuant to this Section 16.2 with respect to the Owner Lessor's
Interest, the Ground Interest shall be conveyed to PPL Montana.
SECTION 17. [INTENTIONALLY OMITTED].
SECTION 18. MISCELLANEOUS
Section 18.1. Consents. The Owner Participant covenants and agrees that
it shall not unreasonably withhold its consent to any consent requested of the
Owner Lessor under the terms of the Operative Documents that by its terms is not
to be unreasonably withheld by the Owner Lessor.
Section 18.2. Successor Owner Lessor. The parties hereto agree that the
transfer or assignment pursuant to the terms of the LLC Agreement by the Owner
Lessor to a successor Owner Lessor will not violate the terms of any Operative
Document.
Section 18.3. Bankruptcy of Lessor Estate. If (i) all or any part of
the Lessor Estate becomes the property of a debtor subject to the reorganization
provisions of Title 11 of the United States Code, as amended from time to time,
(ii) pursuant to such reorganization provisions the Owner Participant is
required, by reason of the Owner Participant being held to have recourse
liability to the debtor or the trustee of the debtor directly or indirectly, to
make payment on account of any amount payable as principal or interest on the
Lessor Note, and (iii) the Lease Indenture Trustee actually receives any Excess
Amount, as defined below, which reflects any payment by the Owner Participant on
account of clause (ii) above, the Lease Indenture Trustee shall, upon obtaining
Actual Knowledge thereof or upon written request of the Owner Participant,
promptly refund to the Owner Participant such Excess Amount. For purposes of
this Section 18.3, "Excess Amount" means the amount by which such payment
exceeds the amount which would have been received by the Lease Indenture Trustee
if the Owner Participant had not become subject to the recourse liability
referred to in clause (ii) above. Nothing contained in this Section 18.3 shall
prevent the Lease Indenture Trustee from enforcing any personal recourse
obligations (and retaining the proceeds thereof) of the Owner Participant as
contemplated by this Participation Agreement (in addition to those referred to
in clause (ii)).
Section 18.4. Amendments and Waivers. No term, covenant, agreement or
condition of this 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.
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Section 18.5. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all communications and notices provided for
herein 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 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 each party hereto at its address set
forth below or, in the case of any such party hereto, at such other address as
such party may from time to time designate by written notice to the other
parties hereto:
If to PPL Montana:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
If to the Owner Lessor, the Lessor Manager or the Trust Company:
Montana OL4 LLC
c/o Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
If to the Owner Participant:
Montana OP4 LLC
c/▇ ▇▇▇▇ Atlantic Credit Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Asset Administrator
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If to the Lease Indenture Trustee:
The Chase Manhattan Bank
Capital Markets Fiduciary Services
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇/8
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to the Pass Through Trustee:
The Chase Manhattan Bank
Capital Markets Fiduciary Services
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇/8
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
A copy of all notices provided for herein shall be sent by the party giving such
notice to each of the other parties hereto. In addition, PPL Montana shall
(unless otherwise directed by the applicable Rating Agency) provide to each
Rating Agency a copy of any information, report or notice it gives to the Lease
Indenture Trustee hereunder or any other Operative Documents.
Section 18.6. Survival. All warranties, representations, indemnities
and covenants made by any party hereto, herein or in any certificate or other
instrument delivered by any such party or on the behalf of any such party under
this Agreement shall be considered to have been relied upon by each other party
hereto and shall survive the consummation of the transactions contemplated
hereby and in the other Operative Documents regardless of any investigation made
by any such party or on behalf of any such party. In addition, the
indemnifications by PPL Montana under Sections 11.1 and 11.2 of this Agreement
shall, subject to Sections 11.1(b) and 11.2(b), respectively, expressly survive
the expiration or early termination (in either case, for whatever reason) of the
Facility Lease or the transfer or other disposition of the respective interests
of the Owner Participant, the Owner Lessor, the Trust Company, the Lessor
Manager and the Lease Indenture Trustee and the Pass Through Trustee in, to and
under this Agreement, the ▇▇▇▇ of Sale, and the other Operative Documents.
Section 18.7. Successors and Assigns. This 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, including each successive holder of the Owner
Participant's Member Interest permitted under Section 9.1. Except as expressly
provided herein or in the other Operative Documents, no party hereto may assign
its interests herein without the consent of the other parties hereto.
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Section 18.8. Business Day. Notwithstanding anything herein or in any
other Operative Document to the contrary, if the date on which any payment is to
be made pursuant to this Agreement or any other Operative Document 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 18.9. Governing Law. This Agreement has been delivered in the
State of New York and 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 without giving effect to the conflicts of
laws provisions thereof except New York General Obligations Law Section 5-1401.
Section 18.10. Severability. If any provision hereof shall be invalid,
illegal or unenforceable under Applicable Law, the validity, legality and
enforceability of the remaining provisions hereof shall not be affected or
impaired thereby.
Section 18.11. Counterparts. This Agreement may be executed in any
number of counterparts, each executed counterpart constituting an original but
all together only one agreement.
Section 18.12. Headings and Table of Contents. The headings of the
sections of this 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 18.13. Limitation of Liability.
(a) None of the Owner Participant, the Owner Lessor, the Lessor
Manager, the Trust Company, the Lease Indenture Trustee or the Pass Through
Trustee shall have any obligation or duty to PPL Montana or to others with
respect to the transactions contemplated hereby, except those obligations or
duties expressly set forth in this Agreement and the other Operative Documents,
and neither the Owner Lessor, the Lessor Manager, the Trust Company, the Lease
Indenture Trustee or the Pass Through Trustee shall be liable for performance by
any other party hereto of such other party's obligations or duties hereunder.
Without limitation of the generality of the foregoing, under no circumstances
whatsoever shall the Owner Participant be liable to PPL Montana for any action
or inaction on the part of the Owner Lessor or the Lessor Manager in connection
with the transactions contemplated herein, whether or not such action or
inaction is caused by willful misconduct or gross negligence of the Owner
Lessor, unless such action or inaction is at the written direction of the Owner
Participant.
(b) The Trust Company is entering into the Operative Documents to which
it is a party solely as manager under the LLC Agreement and not in its
individual capacity, except as expressly provided herein or therein, and in no
case whatsoever shall the Trust Company be personally liable for, or for any
loss in respect of, any of the statements, representations, warranties,
agreements or obligations of the Owner Lessor hereunder or under any other
Operative Document, as to all of which the other parties hereto agree to look
solely to the Lessor
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Estate; provided, however, that the Trust Company shall be liable hereunder for
its own gross negligence or willful misconduct or for a breach of its
representations, warranties and covenants made in its individual capacity.
(c) The Lease Indenture Trustee and the Pass Through Trustee are each
entering into the Operative Documents to which they are parties solely as
trustees under the Lease Indenture and the Pass Through Trust Agreement,
respectively, and not in their individual capacities and in no case whatsoever
shall the Lease Indenture Trustee and the Pass Through Trustee be personally
liable for, or for any loss in respect of, any of the statements,
representations, warranties, agreements or obligations of the Owner Lessor
hereunder or under any other Operative Document, as to all of which the other
parties hereto agree to look solely to the Indenture Estate and the Lessor
Estate, respectively; provided, however, that each such party shall be liable
hereunder for its own negligence or willful misconduct.
(d) The right of the Lease Indenture Trustee or the Pass Through
Trustee to perform any discretionary act enumerated herein or in any other
Operative Document (including the right to consent to any action which requires
their consent and the right to waive any provision of, or consent to any change
or amendment to, any of the Operative Documents) shall not be construed as
giving rise to any expressed or implied duty owed by such trustee; the Lease
Indenture Trustee and the Pass Through Trustee shall not be answerable for other
than its negligence or willful misconduct in the performance of such acts. In
connection with any such discretionary acts, the Lease Indenture Trustee may in
its sole discretion (but shall not, except as otherwise provided in the Lease
Indenture or as otherwise required by Applicable Law, have any obligation to)
request the approval of the Pass Through Trustee as holder of the Lessor Note,
and the Pass Through Trustee may in its sole discretion (but shall not, except
as otherwise provided in the Operative Documents or as otherwise required by
Applicable Law, have any obligation to) request the approval of the
Certificateholders.
(e) The Owner Participant will give PPL Montana at least 15 days' prior
notice of any proposed amendment or supplement to the LLC Agreement (other than
an amendment solely effecting a transfer of Owner Participant's interest in the
Lessor Estate) and deliver true, complete and fully executed copies to PPL
Montana of any amendment or supplement to the LLC Agreement. No amendment or
supplement to the LLC Agreement that could materially adversely affect the
interests of the Lease Indenture Trustee shall become effective without the
written consent of the Lease Indenture Trustee.
Section 18.14. Consent to Jurisdiction; Waiver of Trial by Jury;
Process Agent.
(a) Each of the parties hereto (i) hereby irrevocably submits to the
nonexclusive jurisdiction of the Supreme Court of the State of New York, New
York County (without prejudice to the right of any party to remove to the United
States District Court for the Southern District of New York) and to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York for the purposes of any suit, action or other proceeding
arising out of this Agreement, the other Operative Documents, or the subject
matter hereof or thereof or any of the transactions contemplated hereby or
thereby brought by any of the parties hereto or their successors or assigns;
(ii) hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York State court, or in such
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federal court; and (iii) to the extent permitted by Applicable Law, hereby
irrevocably waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding any claim that it is not
personally subject to the jurisdiction of the above-named courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that this Agreement, the other
Operative Documents, or the subject matter hereof or thereof may not be enforced
in or by such court.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY
SUCH SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, THE OTHER
OPERATIVE DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE PARTIES HERETO
OR THEIR SUCCESSORS OR ASSIGNS.
(c) By the execution and delivery of this Agreement, PPL Montana
designates, appoints and empowers CT Corporation System located at ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, as its authorized agent to receive for and on its
behalf service of any summons, complaint or other legal process in any such
action, suit or proceeding in the State of New York for so long as any
obligation of PPL Montana shall remain outstanding hereunder or under any of the
other Operative Documents. PPL Montana shall grant an irrevocable power of
attorney to CT Corporation in respect of such appointment and shall maintain
such power of attorney in full force and effect for so long as any obligation of
PPL Montana shall remain outstanding hereunder or under any of the Operative
Documents.
Section 18.15. 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 any party to whom such
first party is obligated, all as may be reasonably necessary to carry out more
effectively the intent and purpose of this Participation Agreement and the other
Operative Documents.
Section 18.16. Effectiveness. The Participation Agreement has been
dated as of the date first above written for convenience only. This
Participation Agreement shall become effective on July 20, 2000, the date of
execution and delivery by each of the parties hereto.
Section 18.17. Measuring Life. If and to the extent that any of the
options, rights and privileges granted under this Agreement, 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 Agreement, such options, rights and privileges, subject to the
respective conditions hereof governing the exercise of such options, rights and
privileges, will be exercisable only during (a) the longer of (i) a period which
will end twenty-one (21) years after the death of the last survivor of the
descendants living on the date of the execution of this Agreement of the
following Presidents of the United States: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or (ii) the period provided
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under the Uniform Statutory Rule Against Perpetuities or (b) the specific
applicable period of time expressed in this Agreement, whichever of (a) and (b)
is shorter.
Section 18.18. No Partnership, Etc. The parties hereto intend that
nothing contained in this Participation Agreement or any other Operative
Document shall be deemed or construed to create a partnership, joint venture or
other co-ownership arrangement by and among any of them.
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IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed and delivered by their respective officers thereunto
duly authorized.
PPL MONTANA, LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
MONTANA OL4 LLC
By: Wilmington Trust Company, not in its
individual capacity but solely as Lessor
Manager
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
WILMINGTON TRUST COMPANY,
not in its individual capacity, except to the
extent expressly provided herein, but as Lessor
Manager
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
MONTANA OP4 LLC
By: Wilmington Trust Company, not in its
individual capacity but solely as its
Independent Manager
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
81
THE CHASE MANHATTAN BANK
not in its individual capacity, but as Lease
Indenture Trustee under the Lease Indenture
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
THE CHASE MANHATTAN BANK,
not in its individual capacity, but as Pass
Through Trustee under the Pass Through Trust
Agreement
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
82
APPENDIX A
TO
PARTICIPATION
AGREEMENT
DEFINITIONS
83
APPENDIX A
DEFINITIONS
(BA3)
COLSTRIP GENERATING UNIT 3
AND RELATED COMMON FACILITIES
84
APPENDIX A - DEFINITIONS
(BA3)
GENERAL PROVISIONS
In this Appendix A and each Operative Document (as hereinafter
defined), unless otherwise provided herein or therein:
(A) the terms set forth in this Appendix A or in any such Operative
Document shall have the meanings herein provided for and any term used
in an Operative Document and not defined therein or in this Appendix A
but in another Operative Document shall have the meaning herein or
therein provided for in such other Operative Document;
(B) any term defined in this Appendix A by reference to another document,
instrument or agreement shall continue to have the meaning ascribed
thereto whether or not such other document, instrument or agreement
remains in effect;
(C) words importing the singular include the plural and vice versa;
(D) words importing a gender include any gender;
(E) a reference to a part, clause, section, paragraph, article, party,
annex, appendix, exhibit, schedule or other attachment to or in respect
of an Operative Document is a reference to a part, clause, section,
paragraph, or article of, or a party, annex, appendix, exhibit,
schedule or other attachment to, such Operative Document unless, in any
such case, otherwise expressly provided in any such Operative Document;
(F) a reference to any statute, regulation, proclamation, ordinance or law
includes all statutes, regulations, proclamations, ordinances or laws
varying, consolidating or replacing the same from time to time, and a
reference to a statute includes all regulations, policies, protocols,
codes, proclamations and ordinances issued or otherwise applicable
under that statute unless, in any such case, otherwise expressly
provided in any such statute or in such Operative Document;
(G) a definition of or reference to any document, instrument or agreement
includes an amendment or supplement to, or restatement, replacement,
modification or renovation of, any such document, instrument or
agreement unless otherwise specified in such definition or in the
context in which such reference is used;
(H) a reference to a particular section, paragraph or other part of a
particular statute shall be deemed to be a reference to any other
section, paragraph or other part substituted therefor from time to
time;
(I) if a capitalized term describes, or shall be defined by reference to, a
document, instrument or agreement that has not as of any particular
date been executed and delivered and such document, instrument or
agreement is attached as an exhibit to the
85
Participation Agreement (as hereinafter defined), such reference shall
be deemed to be to such form and, following such execution and delivery
and subject to paragraph (h) above, to the document, instrument or
agreement as so executed and delivered;
(J) a reference to any Person (as hereinafter defined) includes such
Person's successors and permitted assigns;
(K) any reference to "days" shall mean calendar days unless "Business Days"
(as hereinafter defined) are expressly specified;
(L) if the date as of which any right, option or election is exercisable,
or the date upon which any amount is due and payable, is stated to be
on a date or day that is not a Business Day, such right, option or
election may be exercised, and such amount shall be deemed due and
payable, on the next succeeding Business Day with the same effect as if
the same was exercised or made on such date or day (without, in the
case of any such payment, the payment or accrual of any interest or
other late payment or charge, provided such payment is made on such
next succeeding Business Day);
(M) words such as "hereunder", "hereto", "hereof" and "herein" and other
words of similar import shall, unless the context requires otherwise,
refer to the whole of the applicable document and not to any particular
article, section, subsection, paragraph or clause thereof;
(N) a reference to "including" shall mean including without limiting the
generality of any description preceding such term, and for purposes
hereof and of each Operative Document the rule of ejusdem generis shall
not be applicable to limit a general statement, followed by or
referable to an enumeration of specific matters, to matters similar to
those specifically mentioned;
(O) all accounting terms not specifically defined herein or in any
Operative Document shall be construed in accordance with GAAP;
(P) unless the context or the specific provision otherwise requires,
whenever in the Operative Documents a provision requires that a Person
have a particular rating, such provision shall be deemed to mean that
the senior long term unsecured debt of such Person (or, in the case of
PPL Montana, the senior long term unsecured debt of PPL Montana or if
no such debt is rated and the Certificates are outstanding, the
Certificates) shall have been rated the specified rating by both Rating
Agencies if such debt is then rated by both Rating Agencies, or by one
such Rating Agency if only rated by one of them; and
(Q) unless the context or the specific provision otherwise requires,
whenever in the Operative Documents a provision requires that the
rating of a Person or the Lease Debt be confirmed, such provisions
shall be deemed to mean that both Rating Agencies shall have confirmed
the rating of the senior long term unsecured debt of such Person or the
Lease Debt, if then rated by both Rating Agencies, or by one such
Rating Agency if only rated by one of them, a copy of which
confirmation shall be delivered by PPL Montana to the Owner
Participant, the Owner Lessor and, so long as the Lien of the Lease
Indenture shall not have been terminated or discharged, to the Lease
Indenture Trustee and shall be
86
without indication that such Person or the Lease Debt, as the case may
be, has been placed on credit watch, credit review, or any similar
status with negative implications or which does not indicate the
direction of the potential ratings change.
This Appendix A (which is being attached to the Participation Agreement), is
identical in all respects to each of (i) Appendix A attached to the ▇▇▇▇ of
Sale, (ii) Appendix A attached to the Site Lease and Sublease, and (iii)
Appendix A attached to the Lease Indenture, in each case, as filed of record on
the Closing Date with the County Clerk of Rosebud County, Montana, except that:
(A) the definitions of "Related Lease Indenture Trustee," "Related Owner Lessor"
and "Related Transaction" have been deleted from this Appendix A, it having been
determined after the filing of the above-mentioned documents that such terms
were not used in any of the Operative Documents; and
(B) the definition of "Rent Payment Period" has been slightly modified to make
certain clarifications thereto.
It has been determined that it is unnecessary to make corrective
filings with the County Clerk of Rosebud County, Montana, with respect to any of
(i) Appendix A attached to the ▇▇▇▇ of Sale, (ii) Appendix A attached to the
Site Lease and Sublease, and (iii) Appendix A attached to the Lease Indenture
since such defined terms are not used in any of such documents.
DEFINED TERMS
"ABSTRACT OF LEASE" shall mean the Abstract of Facility Lease (BA3), dated as of
the Closing Date, between the Owner Lessor and PPL Montana, substantially in the
form of Exhibit B-2 to the Participation Agreement duly completed, executed and
delivered on the Closing Date.
"ACQUIRED INDEBTEDNESS" shall mean, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person,
and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"ACTUAL KNOWLEDGE" shall mean, with respect to any Transaction Party, actual
knowledge of, or receipt of written notice by, an officer (or other employee
whose responsibilities include the administration of the Overall Transaction) of
such Transaction Party; provided, that neither the Lessor Manager nor the Trust
Company shall be deemed to have Actual Knowledge of any fact solely by virtue of
an officer of the Trust Company having actual knowledge of such fact unless such
officer is an officer in the Corporate Trust Administration Department of the
Trust Company.
"ADDITIONAL CERTIFICATES" shall mean any additional certificates issued by the
Pass Through Trust in connection with the issuance of Additional Lessor Notes
relating thereto.
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"ADDITIONAL EQUITY INVESTMENT" shall mean the amount, if any, the Owner
Participant shall provide (in its sole and absolute discretion) to finance all
or a portion of the Owner Lessor's Percentage of the cost of any Modification
financed pursuant to Section 13.1 of the Participation Agreement.
"ADDITIONAL LESSOR NOTES" shall have the meaning specified in Section 2.12 of
the Lease Indenture.
"ADDITIONAL SUBSIDIARY" shall mean a Subsidiary of PPL Montana designated as an
"Additional Subsidiary" in accordance with Section 6.8 of the Participation
Agreement.
"ADVISORS TO THE FACILITY LESSEE" shall mean ▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇ and Group
▇▇▇▇▇▇▇▇.
"AFFILIATE" of a particular Person shall mean any Person directly or indirectly
controlling, controlled by or under common control with such particular Person.
For purposes of this definition, "control" when used with respect to any
particular Person shall mean the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing; provided, however, that
under no circumstances shall the Trust Company be considered to be an Affiliate
of any of the Owner Lessor, the Lessor Manager, or the Owner Participant, nor
shall any of the Owner Lessor, the Lessor Manager, or the Owner Participant be
considered to be an Affiliate of the Trust Company.
"AFTER-TAX BASIS" shall mean, with respect to any payment to be received by any
Person, the amount of such payment (the base payment) supplemented by a further
payment (the additional payment) to that Person so that the sum of the base
payment plus the additional payment shall, after deduction of the amount of all
Federal, State and local income Taxes required to be paid by such Person in
respect of the receipt or accrual of the base payment and the additional payment
(taking into account any reduction in such income Taxes resulting from Tax
benefits realized or to be realized by the recipient as a result of the payment
or the event giving rise to the payment), be equal to the amount required to be
received. Such calculations shall be made on the basis of the highest applicable
Federal income tax statutory rate applicable to corporations for all relevant
periods and the highest applicable statutory income tax rates applicable to
corporations in the state and local taxing jurisdiction of the Facility for all
relevant periods and shall take into account the deductibility of State and
local income taxes for Federal income tax purposes.
"ALLOCATED RENT" shall have the meaning specified in Section 3.3(c) of the
Facility Lease.
"APPLICABLE LAW" shall mean, without limitation, all applicable laws, including
all Environmental Laws, and treaties, judgments, decrees, injunctions, writs and
orders of any court, arbitration board or Governmental Entity and rules,
regulations, orders, ordinances, licenses and permits of any Governmental
Entity.
"APPLICABLE RATE" shall mean the Prime Rate (as published in the Wall Street
Journal from time to time) plus 1% per annum.
"APPRAISAL PROCEDURE" shall mean (except with respect to the Closing Appraisal
and any appraisal to determine Fair Market Sales Value after a Lease Event of
Default shall have
88
occurred and be continuing), an appraisal conducted by an appraiser or
appraisers in accordance with the procedures set forth in this definition of
"Appraisal Procedures." The Owner Participant and PPL Montana will consult with
the intent of selecting a mutually acceptable Independent Appraiser. If a
mutually acceptable Independent Appraiser is selected, the Fair Market Rental
Value or Fair Market Sales Value shall be determined by such Independent
Appraiser. If the Owner Participant and PPL Montana are unable to agree upon a
single Independent Appraiser within a 15-day period, one shall be appointed by
the Owner Participant, and one shall be appointed by PPL Montana (or its
designee), which Independent Appraisers shall attempt to agree upon the value,
period, amount or other determination that is the subject of the appraisal. If
either the Owner Participant or PPL Montana does not appoint its appraiser, the
determination of the other appraiser shall be conclusive and binding on the
Owner Participant and PPL Montana. If the appraisers appointed by the Owner
Participant and PPL Montana are unable to agree upon the value, period, amount
or other determination in question, such appraisers shall jointly appoint a
third Independent Appraiser or, if such appraisers do not appoint a third
Independent Appraiser, the Owner Participant and PPL Montana shall jointly
appoint the third Independent Appraiser. In such case, the average of the
determinations of the three appraisers shall be conclusive and binding on the
Owner Participant and PPL Montana, unless the determination of one appraiser is
disparate from the middle determination by more than twice the amount by which
the third determination is disparate from the middle determination, in which
case the determination of the most disparate appraiser shall be excluded, and
the average of the remaining two determinations shall be conclusive and binding
on the Owner Participant and PPL Montana.
"APPRAISER" shall mean Deloitte & Touche LLP Valuation Group.
"ASSET PURCHASE AGREEMENT" shall mean that certain asset purchase agreement
dated as of October 31, 1998, by and between PPL Global, Inc. and MPC.
"ASSET SALE" shall mean the sale, lease, transfer, conveyance or other
disposition of any assets, including by way of the issue or sale by PPL Montana
or any of its Core Subsidiaries of equity interests in such Core Subsidiaries or
the designation of any Core Subsidiary as an Additional Subsidiary.
Notwithstanding the foregoing, the following items shall not be deemed to be
Asset Sales: (a) transfers of assets among PPL Montana and any of its
wholly-owned Core Subsidiaries, (b) sales of inventory (including fuel and
coal), products or obsolete items and other similar dispositions and sales of
power in the ordinary course of business, (c) a transfer of ownership of the
▇▇▇▇ hydroelectric generating facility by PPL Montana or any Core Subsidiary to
the Confederated Salish and Kootenai Tribes or any successor in interest, (d)
sales of assets required to be made pursuant to any change in law, regulation or
any imposition of any conditions or requirements by the FERC or any other
Governmental Entity having or claiming jurisdiction over PPL Montana, its
Subsidiaries, or the Montana Assets, (e) an issuance of equity interests by a
wholly-owned Core Subsidiary to PPL Montana or to another wholly-owned Core
Subsidiary, (f) sale or liquidation of cash equivalents in the ordinary course
of business, (g) a Restricted Payment that is made in cash or cash equivalents
permitted by Section 6.2 of the Participation Agreement, and (h) Permitted
Investments other than those made in Additional Subsidiaries (unless made with
proceeds described in clause (7) of the definition of such term).
89
"ASSIGNED DOCUMENTS" shall have the meaning specified in clause (2) of the
Granting Clause of the Lease Indenture.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and assumption
agreement in form and substance substantially in the form of Exhibit F to the
Participation Agreement.
"ASSIGNMENT AND REASSIGNMENT OF PROJECT AGREEMENTS" shall mean the Assignment
and Reassignment of Project Agreements (BA3), dated as of the Closing Date,
between PPL Montana and the Owner Lessor, substantially in the form of Exhibit D
to the Participation Agreement duly completed, executed and delivered pursuant
to which PPL Montana will assign to the Owner Lessor and the Owner Lessor will
reassign to PPL Montana, certain rights under the Ownership Agreement 3-4 and
the Common Facilities Agreement relating to the Undivided Interest.
"ASSUMED DEDUCTIONS" shall have the meaning specified in Section 1.1 of the Tax
Indemnity Agreement.
"ASSUMED TAX RATE" shall have the meaning specified in Section 1(a) of the Tax
Indemnity Agreement.
"AUTHORIZED AGENT" shall have the meaning specified in the Pass Through Trust
Agreement.
"BALANCE SHEET" shall mean the audited consolidated balance sheet of PPL Montana
and its Consolidated Subsidiaries as of December 31, 1999, which Balance Sheet
shall have been prepared in accordance with GAAP and utilizing assumptions made
in good faith and reasonable, as of the date of such Balance Sheet, and all
material assumptions with respect to such Balance Sheet are set forth therein.
"BANKRUPTCY CODE" shall mean the United States Bankruptcy Code of 1978, as
amended from time to time, 11 U.S.C. Section 101 et seq.
"BASIC LEASE RENT" shall have the meaning specified in Section 3.3(a) of the
Facility Lease.
"BASIC LEASE TERM" shall have the meaning specified in Section 3.2 of the
Facility Lease.
"BASIC SITE LEASE TERM" shall have the meaning specified in Section 2.2 of the
Site Lease and Sublease.
"BASIC SITE SUBLEASE TERM" shall have the meaning specified in Section 4.2 of
the Site Lease and Sublease.
"▇▇▇▇ OF SALE" shall mean the ▇▇▇▇ of Sale (BA3), dated as of the Closing Date,
between PPL Montana and the Owner Lessor, substantially in the form of Exhibit A
to the Participation Agreement duly completed, executed and delivered on the
Closing Date pursuant to which the Owner Lessor will acquire the Undivided
Interest from PPL Montana.
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"BURDENSOME TERMINATION EVENT" shall mean the occurrence of any event which
gives a Facility Lessee the right to terminate a Facility Lease pursuant to
Section 13.1 thereof.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a day on
which commercial banking institutions are authorized or required by law,
regulation or executive order to be closed in New York, New York, the city and
the state in which the Corporate Trust Office of any applicable Lease Indenture
Trustee or Lessor Manager is located or the city and state in which the
Corporate Trust Office of the Pass Through Trustee is located.
"CAPITAL EXPENDITURES" shall mean expenditures made or liabilities incurred for
the acquisition of any fixed assets or improvements, replacements, substitutions
or additions thereto that have a useful life of more than one year.
"CASH FLOW AVAILABLE FOR FIXED CHARGES" for any period shall mean, without
duplication, (i) consolidated EBITDA of PPL Montana and its Core Subsidiaries
for such period, minus (ii) the portion of such consolidated EBITDA described in
the foregoing clause (i) that is attributable to extraordinary gains or other
nonrecurring items included in EBITDA (other than to the extent such
extraordinary gains or nonrecurring items are offset by extraordinary losses),
minus (iii) for each Core Subsidiary having an interest holder other than PPL
Montana or its Core Subsidiaries, the amount described in the foregoing clause
(i) attributable to such interests, plus (iv) EBITDA of any Additional
Subsidiary and the proceeds from any asset sales received by any Additional
Subsidiaries, in each case, to the extent such amount is distributed to PPL
Montana or its Core Subsidiaries from such Additional Subsidiary during such
period (provided, however, that the amount described in this clause (iv) shall
not be included in the calculation of the Cash Flow Available for Fixed Charges
for any projected period), minus (v) Capital Expenditures made by PPL Montana
and its Core Subsidiaries during such period other than capital expenditures
financed with Indebtedness permitted under Sections 6.1(b)(i) or 7.1(b)(i) of
the Participation Agreement.
"CASH FLOW TO FIXED CHARGES RATIO" shall mean with respect to any Person for any
period, the ratio of (i) Cash Flow Available for Fixed Charges for such period
to (ii) Fixed Charges for such period.
"CERTIFICATE PURCHASE AGREEMENT" shall mean the Certificate Purchase Agreement,
dated the Effective Date, between PPL Montana and the Initial Purchasers.
"CERTIFICATEHOLDERS" shall mean each of the holders of Certificates, and each of
such holder's successors and permitted assigns.
"CERTIFICATES" shall mean the 8.903% Pass Through Certificates issued on the
Closing Date and any certificates issued in replacement therefor pursuant to
Section 3.3, 3.4 or 3.5 of the Pass Through Trust Agreement.
"CERTIFICATES REGISTER" shall mean the "Register" specified in Section 3.4 of
the Pass Through Trust Agreement.
"CHANGE OF CONTROL" shall mean the consummation of any transaction or series of
related transactions (including any merger or consolidation) the result of which
is that any person (as
91
such term is defined in Rule 13(d)(3) under the Exchange Act), other than (a)
PPL Corporation or any of its successors into which PPL Corporation has
consolidated or merged, (b) any person who comes to be a beneficial owner (as
defined below) directly or indirectly of more than 50% of the voting power of or
economic interest in PPL Corporation, or (c) any of PPL Corporation's direct or
indirect wholly-owned subsidiaries, becomes the "beneficial owner" (as such term
is defined in Rule 13(d)(3) under the Exchange Act, except that a person shall
be deemed to have "beneficial ownership" of all securities that such person has
the right to acquire, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition), directly or
indirectly, of more than 50% of the voting power of or economic interests in PPL
Montana; provided that a Change of Control shall be deemed not to have occurred
if ▇▇▇▇▇'▇ and S&P confirm that the then existing ratings of the Certificates
will not be lowered as a result of any of the foregoing events.
"CHANGE OF CONTROL PREMIUM" shall mean 1%.
"CLAIM" shall mean any liability (including in respect of negligence (whether
passive or active or other torts), strict or absolute liability in tort or
otherwise, warranty, latent or other defects (regardless of whether or not
discoverable), statutory liability, property damage, bodily injury or death),
obligation, loss, settlement, damage, penalty, claim, action, suit, proceeding
(whether civil or criminal), judgment, penalty, fine and other legal or
administrative sanction, judicial or administrative proceeding, cost, expense or
disbursement, including reasonable legal, investigation and expert fees,
expenses and reasonable related charges, of whatsoever kind and nature.
"CLOSING" shall have the meaning specified in Section 2.2(a) of the
Participation Agreement.
"CLOSING APPRAISAL" shall mean the appraisal, dated the Closing Date, prepared
by the Appraiser with respect to the Owner Lessor's Interest, which Closing
Appraisal shall:
(A) Determine the Purchase Price, which shall be the fair market value of
the Undivided Interest on the Closing Date;
(B) Determine the economic useful life of ▇▇▇▇ ▇, ▇▇▇▇ ▇, ▇▇▇▇ ▇, and the
Facility, and confirm that (i) ▇▇▇▇ ▇, ▇▇▇▇ ▇, ▇▇▇▇ ▇, and the Facility
each are reasonably estimated on the Closing Date to have a remaining
economic useful life equal to 133.33% of the Fixed Lease Term, and (ii)
each of the Units 1 and 2 Interest and the Unit 3 Interest shall have a
fair market value at the end of the Basic Lease Term equal to at least
20% of its Purchase Price, without regard to inflation or deflation
during the Basic Lease Term;
(C) Confirm that it is reasonable to expect that upon expiration or
termination of the Facility Lease, it will be commercially feasible for
a party other than the Facility Lessee to operate the Facility;
(D) Allocate the percentage of the Purchase Price eligible for each
category of Depreciation Deduction;
(E) Confirm that each Unit and the Facility is an integrated facility;
92
(F) Determine that none of the Renewal Lease Terms is likely to be
exercised; and
(G) Address any other matters that the Owner Participant shall reasonably
request.
"CLOSING DATE" shall have the meaning specified in Section 2.2(a) of the
Participation Agreement.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"COLSTRIP FACILITY LEASES" " shall mean the Facility Lease and the Other
Facility Leases.
"COLSTRIP PROJECT" shall mean the four unit coal-fired steam electric generating
project located in Rosebud County, Montana, consisting of Units 1 and 2 and
Units 3 and 4, the Common Facilities, and all other equipment or facilities
required for the generation of electricity at such units and the Colstrip Site.
"COLSTRIP SITE" shall mean the Unit Sites and the Common Facilities Site.
"COLSTRIP UNIT 1" shall mean Unit 1 and the Related Common Facilities.
"COLSTRIP UNIT 2" shall mean Unit 2 and the Related Common Facilities.
"COLSTRIP UNIT 3" shall mean Unit 3 and the Related Common Facilities.
"COLSTRIP UNIT 4" shall mean Unit 4 and the Related Common Facilities.
"COLSTRIP UNITS 1 AND 2" shall mean, collectively, Colstrip ▇▇▇▇ ▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇.
"COLSTRIP UNITS 3 AND 4" shall mean, collectively, Colstrip ▇▇▇▇ ▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇.
"COMMON FACILITIES" shall mean the Common Facilities 3-4 and the Common
Facilities 1-2-3-4.
"COMMON FACILITIES 1-2-3-4" shall mean all facilities, improvements, fixtures
and equipment constructed or installed for use by Units 1 and 2 and Units 3 and
4 in common on the Colstrip Site and described as such on Exhibit C to the ▇▇▇▇
of Sale but excluding therefrom the Transmission Facilities.
"COMMON FACILITIES 1-2-3-4 SITE" shall mean the land described as such on
Exhibit A to the ▇▇▇▇ of Sale, and all rights of way, easements, permits and
other appurtenances to such land (including the Water Rights) described on such
Exhibit or otherwise, and specifically excluding the Transmission Facilities.
"COMMON FACILITIES 3-4" shall mean all facilities, improvements, fixtures and
equipment constructed or installed for use by Units 3 and 4 in common and
described as such on Exhibit C to the ▇▇▇▇ of Sale but excluding therefrom the
Transmission Facilities.
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"COMMON FACILITIES 3-4 SITE" shall mean the land described as such on Exhibit A
to the ▇▇▇▇ of Sale, and all rights of way, easements, permits and other
appurtenances to such land (including the Water Rights) described on such
Exhibit or otherwise, and specifically excluding the Transmission Facilities and
the Common Facilities.
"COMMON FACILITIES AGREEMENT" shall mean the Common Facilities Agreement, dated
as of May 6, 1981 among MPC, Puget, Puget Colstrip Construction Company, Avista
Corporation (successor to The Washington Water Power Company), Portland and
Pacific Power & Light Company, relating to the ownership and operation of the
Common Facilities 1-2-3-4, as the same has been or may be amended, modified or
supplemented from time to time.
"COMMON FACILITIES PERCENTAGE" shall mean, with respect to the Related Common
Facilities for any Unit, the undivided interest in such Related Common
Facilities related to such Unit conveyed to the Owner Lessor pursuant to the
▇▇▇▇ of Sale.
"COMMON FACILITIES SITE" shall mean a collective reference to the Common
Facilities 3-4 Site and the Common Facilities 1-2-3-4 Site.
"COMPETITOR" shall have the meaning specified in Section 9.1(b) of the
Participation Agreement.
"COMPONENT" shall mean any appliance, part, instrument, appurtenance, accessory,
furnishing, equipment or other property of whatever nature that may from time to
time be incorporated in the Facility, except to the extent constituting
Modifications.
"CONSOLIDATED SUBSIDIARY" shall mean with respect to any Person at any date any
Subsidiary or other entity the accounts of which would be consolidated in
accordance with GAAP with those of such Person in its consolidated financial
statements as of such date.
"CONSOLIDATED TANGIBLE NET ASSETS" shall mean (at any date of determination) (i)
the total net assets of PPL Montana and its Core Subsidiaries determined in
accordance with GAAP, excluding, however, from the determination of total net
assets (a) goodwill, organizational expenses, research and product development
expenses, trademarks, tradenames, copyrights, patents, patent applications,
licenses and rights in any thereof, and other similar intangibles, (b) all
deferred charges or unamortized debt discount and expenses, (c) all reserves
carried and not deducted from assets, (d) securities which are not readily
marketable, (e) cash held in sinking or other analogous funds established for
the purpose of redemption, retirement or prepayment of capital stock or other
equity interests or Indebtedness, (f) any write-up in the book value of any
assets resulting from a revaluation thereof subsequent to the Closing Date, and
(g) any items not included in clauses (a) through (f) above which are treated as
intangibles in conformity with GAAP, plus (ii) the aggregate purchase price paid
by the Owner Lessor and the Other Owner Lessors pursuant to the ▇▇▇▇ of Sale and
the Other Bills of Sale respectively, plus (iii) the aggregate net book value of
all asset sales or dispositions made by PPL Montana or any of its Core
Subsidiaries since the Closing Date to the extent that the proceeds thereof or
other consideration received therefor are not invested in any Permitted Business
of PPL Montana or any of its Core Subsidiaries and are not retained by PPL
Montana or any of its Core Subsidiaries, minus (iv) for each Core Subsidiary
having an interest holder other than PPL Montana or its Core
94
Subsidiaries, the amount described in the foregoing clauses (i) and (iii)
attributable to such interest.
"CORE SUBSIDIARY" shall mean each Subsidiary of PPL Montana other than
Additional Subsidiaries thereof.
"CORPORATE TRUST OFFICE" shall have the meaning specified in the Pass Through
Trust Agreement.
"CREDIT AGREEMENT" shall mean that certain Credit Agreement, dated as of
November 16, 1999, among PPL Montana, The Chase Manhattan Bank, as
Administrative Agent, Chase Securities, Credit Suisse First Boston, UBS Warburg
LLC (successor to Warburg Dillon, Read LLC), and the other lenders a party
thereto, as the same may be amended from time to time.
"DEBT COVENANT TERMINATION DATE" shall have the meaning specified in Section 6
of the Participation Agreement.
"DEBT PORTION OF RENT" shall mean for any period, the portion of Periodic Lease
Rent payable under the Facility Lease equal to the scheduled principal and
interest due and payable on the Lessor Note during such period.
"DEBT PORTION OF TERMINATION VALUE" in respect of any determination of
Termination Value or amount determined by reference to Termination Value payable
pursuant to the Operative Documents shall mean an amount equal to the balance,
including scheduled (in accordance with the payment terms of the Lessor Note)
accrued interest, on the Lessor Note scheduled (in accordance with the payment
terms of the Lessor Note) to be outstanding on such date of determination.
"DEBT TO CAPITAL RATIO" shall mean, with respect to PPL Montana and its Core
Subsidiaries, the ratio as of the end of the last fiscal quarter for which
internal financial statements are available of (i) the aggregate principal
amount of Indebtedness of such Persons then outstanding to (ii) Total
Capitalization.
"DEDUCTION LOSS" shall have the meaning specified in Section 5(a) of the Tax
Indemnity Agreement.
"DEPRECIATION DEDUCTIONS" shall have the meaning specified in Section 1(a) of
the Tax Indemnity Agreement.
"DISCOUNT RATE" shall mean PPL Montana's incremental borrowing rate as
determined by PPL Montana in accordance with SFAS 13.
"DISTRIBUTION" shall mean, in respect of any Person, any dividend, distribution
or payment (including by way of redemption, repurchase, retirement, return or
repayment) in respect of shares of capital stock of such Person.
"DOLLARS" OR THE SIGN "$" shall mean United States dollars or other lawful
currency of the United States.
95
"DTC" shall mean The Depository Trust Company, a New York corporation.
"EBITDA" shall mean, with respect to any Person for any period, the income (or
loss) before interest and taxes of such Person, and, to the extent the following
items were included in determining such income (or loss), (i) plus depreciation,
amortization and other similar non-cash charges and reserves, (ii) minus
non-cash non-recurring income items, including extraordinary non-cash gains (or
losses), (iii) plus non-cash restructuring charges or other non-cash
non-recurring expense items and non-cash charges representing allocations from
Affiliates and (iv) plus GAAP lease rent expense.
"EFFECTIVE DATE" shall mean July 13, 2000, the date the Participation Agreement
shall have been executed and delivered by the parties thereto.
"EFFECTIVE RATE" shall have the meaning specified in Section 5(a) of the Tax
Indemnity Agreement.
"ENFORCEMENT NOTICE" shall have the meaning specified in Section 5.1 of the
Lease Indenture.
"ENGINEERING CONSULTANT" shall mean ▇.▇. ▇▇▇▇, Inc.
"ENGINEERING REPORT" shall mean the report of the Engineering Consultant, dated
July 13, 2000, addressed to the Owner Participant in substantially the form of
the Independent Engineer's Report attached as Appendix A to the Offering
Memorandum.
"ENVIRONMENTAL CONDITION" shall mean any action, omission, event, condition or
circumstance, including the presence of any Hazardous Substance, that does or
reasonably could (i) require assessment, investigation, abatement, correction,
removal or remediation, (ii) give rise to any obligation or liability of any
nature (whether civil or criminal, arising under a theory of negligence or
strict liability, or otherwise) under any Environmental Law, (iii) create or
constitute a public or private nuisance or trespass, or (iv) constitute a
violation of or non-compliance with any Environmental Law.
"ENVIRONMENTAL CONSULTANT" shall mean Pilko & Associates, Inc.
"ENVIRONMENTAL LAWS" shall mean any federal, state or local laws, ordinances,
rules, orders, statutes, decrees, judgments, injunctions, directives, permits,
licenses, approvals, codes and regulations relating to the environment, human
health, natural resources or Hazardous Substances, as each may from time to time
be amended, supplemented or supplanted.
"ENVIRONMENTAL REPORT" shall have the meaning specified in Section 4(n) of the
Participation Agreement.
"EQUITY CONTRIBUTION AGREEMENT" shall mean the Equity Contribution Agreement
dated as of July 20, 2000, between PPL Corporation and PPL Montana.
"EQUITY COVENANT TERMINATION DATE" shall have the meaning specified in Section 7
of the Participation Agreement.
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"EQUITY INVESTMENT" shall mean the amount of $30,848,780.49.
"EQUITY PORTION OF PERIODIC LEASE RENT" shall mean for any Rent Payment Date the
difference between (i) Periodic Lease Rent scheduled to be paid under the
Facility Lease on such Rent Payment Date and (ii) the Debt Portion of Rent.
"EQUITY PORTION OF TERMINATION VALUE" in respect of any determination of
Termination Value or amount determined by reference to Termination Value payable
pursuant to the Operative Documents shall mean an amount equal to the excess, if
any, of (i) the Termination Value on the date of determination, over (ii) the
Debt Portion of Termination Value.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EVENT OF DEFAULT" shall mean an Event of Default under the Pass Through Trust
Agreement.
"EVENT OF LOSS" shall mean with respect to Unit 3 any of the following events:
(H) loss of such Unit or use thereof due to destruction or damage to such
Unit or the Related Common Facilities that is beyond economic repair or
that renders such Unit permanently unfit for normal use;
(I) damage to such Unit or the Related Common Facilities that results in an
insurance settlement with respect to such Unit on the basis of a total
loss, or an agreed constructive or a compromised total loss;
(J) seizure, condemnation, confiscation or taking of, or requisition of
title to or use of, such Unit by any Governmental Entity (a
"Requisition") following exhaustion of all permitted appeals or an
election by PPL Montana not to pursue such appeals (provided that no
such contest shall extend beyond the earlier of (x) the date which is
one year after the loss of such title, or (y) the date which is 36
months prior to the end of the Basic Lease Term or any Renewal Lease
Term then in effect or elected by PPL Montana), but, in any case
involving Requisition of use but not of title, only if such Requisition
of use continues beyond the Basic Lease Term or any Renewal Lease Term
then in effect or elected by PPL Montana; and
(K) if elected by the Owner Participant, and only in such case as
termination of the Facility Lease and transfer of the Undivided
Interest to PPL Montana shall remove the basis of the regulation
described below, subjection of the Owner Participant's interest in the
Unit(s) to any rate of return regulation by any Governmental Entity, or
subjection of the Owner Participant or the Owner Lessor to any other
public utility regulation of any Governmental Entity or law that in the
reasonable opinion of the Owner Participant is burdensome, in either
case by reason of the participation of the Owner Lessor or the Owner
Participant in the transaction contemplated by the Operative Documents,
and not, in any event, as a result of (A) investments, loans or other
business activities of the Owner Participant or its Affiliates in
respect of equipment or facilities similar in nature to the Facility or
any part thereof or in any other electrical, steam, cogeneration or
other energy or utility related equipment or facilities or the general
business or other activities
97
of the Owner Participant or Affiliates or the nature of any of the
properties or assets from time to time owned, leased, operated, managed
or otherwise used or made available for use by the Owner Participant or
its Affiliates or (B) a failure of the Owner Participant to perform
routine, administrative or ministerial actions the performance of which
would not subject the Owner Participant to any adverse consequence (in
the reasonable opinion of the Owner Participant acting in good faith),
provided that PPL Montana, the Owner Lessor and Owner Participant agree
to cooperate and to take reasonable measures to alleviate the source or
consequence of any regulation constituting an Event of Loss under this
paragraph (d) (a "Regulatory Event of Loss"), at the cost and expense
of PPL Montana and so long as there shall be no adverse consequences to
the Owner Lessor or Owner Participant as a result of such cooperation
or the taking of reasonable measures.
"EXCEPTED PAYMENTS" shall mean and include (i)(A) any indemnity (whether or not
constituting Supplemental Lease Rent and whether or not a Lease Event of Default
exists) payable to either the Trust Company, the Lessor Manager or the Owner
Participant or to their respective Indemnitees and successors and permitted
assigns (other than the Lease Indenture Trustee) pursuant to Section 2.3, 11.1,
11.2, 13.1 or 13.2 of the Participation Agreement, Section 5.1 of the LLC
Agreement, and any payments under the Tax Indemnity Agreement or (B) any amount
payable by PPL Montana to the Owner Lessor or the Owner Participant to reimburse
any such Person for its costs and expenses in exercising its rights under the
Operative Documents, (ii)(A) insurance proceeds, if any, payable to the Owner
Lessor or the Owner Participant under insurance separately maintained by the
Owner Lessor or the Owner Participant with respect to the Facility as permitted
by Section 11.5 of the Facility Lease or (B) proceeds of personal injury or
property damage liability insurance maintained under any Operative Document for
the benefit of the Owner Lessor or the Owner Participant, (iii) any amount
payable to the Owner Participant as the purchase price of the Owner
Participant's right and interest in the Member Interest, (iv) any amounts
payable to the Owner Participant upon exercise by PPL Montana of the Special
Lessee Transfer pursuant to Section 15.1 of the Participation Agreement, (v) all
other fees expressly payable to the Owner Participant under the Operative
Documents, and (vi) any payments in respect of interest, or any payments made on
an After-Tax Basis, to the extent attributable to payments referred to in clause
(i) through (v) above that constitute Excepted Payments.
"EXCEPTED RIGHTS" shall have the meaning specified in Section 5.6 of the Lease
Indenture.
"EXCESS AMOUNT" shall have the meaning specified in Section 18.3 of the
Participation Agreement.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXCLUDED PROPERTY" shall mean Excepted Payments and Excepted Rights,
collectively.
"EXCLUDED TAXES" shall have the meaning specified in Section 11.2(b) of the
Participation Agreement.
"EXISTING INDEBTEDNESS" shall mean, with respect to any Person, Indebtedness of
such Person in existence at the time of the Closing.
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"EXPIRATION DATE" shall mean July 20, 2036, the last day of the Basic Lease
Term.
"FACILITY" shall mean Colstrip Unit 3.
"FACILITY LEASE" shall mean the Facility Lease Agreement (BA3), dated as of the
Closing Date, between the Owner Lessor and PPL Montana, substantially in the
form of Exhibit B-1 to the Participation Agreement duly completed, executed and
delivered on the Closing Date pursuant to which the Owner Lessor will lease the
Undivided Interest to PPL Montana.
"FACILITY LEASE TERM" shall mean the term of the Facility Lease, including the
Interim Lease Term, the Basic Lease Term and all Renewal Lease Terms.
"FACILITY LESSEE" shall mean PPL Montana as lessee under the Facility Lease.
"FACILITY LESSEE'S INTEREST" shall mean the Facility Lessee's right, title and
interest in and to the Undivided Interest under the Facility Lease and the
Ground Interest under the Site Lease and Sublease.
"FACILITY SITE SUBLEASE" shall mean the sublease described in Section 4.1 of the
Site Lease and Sublease.
"FAIR MARKET RENTAL VALUE" or "FAIR MARKET SALES VALUE" shall mean with respect
to any property or service as of any date, the cash rent or cash price
obtainable in an arm's length lease, sale or supply, respectively, between an
informed and willing lessee or purchaser under no compulsion to lease or
purchase and an informed and willing lessor or seller or supplier under no
compulsion to lease or sell or supply of the property or service in question,
and shall, in the case of any Unit Interest or an Owner Lessor's Interest, be
determined (except pursuant to Section 17 of the Facility Lease or as otherwise
provided below or in the Operative Documents) on the basis that (i) the
conditions contained in Sections 7 and 8 of the Facility Lease shall have been
complied with in all respects, (ii) the lessee or buyer shall have rights in, or
an assignment of, the Operative Documents to which the Owner Lessor is a party
and the obligations relating thereto, (iii) the Unit Interest or the Owner
Lessor's Interest, as the case may be, is free and clear of all Liens (other
than Owner Lessor's Liens, Owner Participant's Liens and Indenture Trustee's
Liens), (iv) taking into account the remaining term of the Site Lease and
Sublease, and (v) in the case the Fair Market Rental Value, taking into account
the terms of the Facility Lease and the other Operative Documents. If the Fair
Market Sales Value of the Owner Lessor's Interest is to be determined during the
continuance of a Lease Event of Default or in connection with the exercise of
remedies by the Owner Lessor pursuant to Section 17 of the Facility Lease, such
value shall be determined by an appraiser appointed solely by the Owner Lessor
on an "as-is", "where-is" and "with all faults" basis and shall take into
account all Liens (other than Owner Lessor's Liens, Owner Participant's Liens
and Indenture Trustee's Liens); provided, however, in any such case where the
Owner Lessor shall be unable to obtain constructive possession sufficient to
realize the economic benefit of the Owner Lessor's Interest, Fair Market Sales
Value of the Owner Lessor's Interest shall be deemed equal to $0. If in any case
other than in the preceding sentence the parties are unable to agree upon a Fair
Market Sales Value of the Owner Lessor's Interest within 30 days after a request
therefor has been made, the Fair Market Sales Value of the Owner Lessor's
Interest shall be determined by appraisal pursuant to the
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Appraisal Procedures. Any fair market value determination of a Severable
Modification shall take into consideration any liens or encumbrances to which
the Severable Modification being appraised is subject and which are being
assumed by the transferee.
"FEDERAL POWER ACT" shall mean the Federal Power Act, as amended.
"FERC" shall mean the Federal Energy Regulatory Commission of the United States
or any successor or predecessor agency thereto.
"FERC EWG (OWNER LESSOR) ORDER" shall mean the order issued by the FERC on
February 14, 2000, in Docket No. and EG00-70-000 granting to the Owner Lessor
"exempt wholesale generator" status under the Holding Company Act.
"FERC EWG (PPLM) ORDER" shall mean the order issued by the FERC on September 24,
1999, in Docket No. EG99-185-000 granting to PPL Montana "exempt wholesale
generator" status under the Holding Company Act.
"FERC OATT ORDER" shall mean the Order issued by the FERC on December 29, 1999,
in Docket No.ER00-417-000 accepting for filing under Section 205 of the Federal
Power Act PPL Montana's open access transmission tariff.
"FERC ORDERS" shall mean, collectively, the FERC EWG (PPLM) Order, the FERC
Section 203 Order, the FERC Part II Order, the FERC Section 205 Order, the FERC
Waiver Order, the FERC EWG (Owner Lessor) Order, and the FERC OATT Order.
"FERC (OWNER LESSOR) EWG NOTICE" shall mean the notification of no material
change in the facts dated as of July 20, 2000, to be filed with the FERC in
Docket Nos. EG00-65, EG00-66, EG00-67, EG00-68, EG00-69, EG00-70, EG00-71, and
EG00-72 with respect to "exempt wholesale generator" status under the Holding
Company Act in compliance with Section 365.8 of the FERC's regulations.
"FERC PART II ORDER" shall mean the order issued by the FERC on June 22, 1999,
in Docket No. EC99-36-000, granting approval under Section 203 of the Federal
Power Act for the transfer of jurisdictional facilities from MPC to PPL Montana.
"FERC SECTION 203 ORDER" shall mean the order issued by the FERC on September
22, 1999, in Docket No. EC99-95-000, granting approval under Section 203 of the
Federal Power Act for the sale and leaseback of the FERC jurisdictional
facilities to the Owner Lessor by PPL Montana.
"FERC SECTION 205 ORDER" shall mean the order issued by the FERC on August 24,
1999, in Docket No. ER99-3491-000, granting approval for the blanket issuance of
securities or assumption of liabilities under Section 204 of the Federal Power
Act by PPL Montana and granting approval for PPL Montana to sell power at market
based rates under Section 205 of the Federal Power Act.
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"FERC WAIVER ORDER" shall mean the Order issued by the FERC on September 17,
1999, in Docket No. EL99-79-000, disclaiming jurisdiction under Section 201(b)
of the Federal Power Act over the Owner Lessor, the Lessor Manager and the Owner
Participant.
"FINAL DETERMINATION" shall have the meaning specified in Section 9 of the Tax
Indemnity Agreement.
"FIRST WINTERGREEN RENEWAL LEASE TERM" shall have the meaning specified in
Section 15.1 of the Facility Lease.
"FIXED CHARGES" shall mean, with respect to PPL Montana and its Core
Subsidiaries for any period, the sum, without duplication, of (i) the aggregate
amount of interest expense with respect to Indebtedness of such Persons for such
period, including (A) the net costs under interest rate hedge agreements, (B)
all capitalized interest (except to the extent that such interest is either (x)
not paid in cash or (y) if paid in cash, is paid solely with the proceeds of the
Indebtedness in respect of which such interest accrued), and (C) the interest
portion of any deferred payment obligation; (ii) the aggregate amount of all
mandatory scheduled payments (whether designated as payments or prepayments) and
sinking fund payments with respect to principal of any Indebtedness of such
Persons; and (iii) the aggregate amount of all payments due under the Facility
Lease, in each case, Scheduled to be Paid.
"FIXED LEASE TERM" shall mean the Basic Lease Term and the Interim Lease Term.
"FMV RENEWAL LEASE TERM" shall have the meaning specified in Section 15.3 of the
Facility Lease.
"FUEL CONSULTANT" shall mean ▇▇▇▇ ▇. ▇▇▇▇ Company.
"FUEL REPORT" shall mean the Report of the Fuel Consultant, dated June 22, 2000,
addressed to the Owner Participant in substantially the form of the Independent
Fuel Consultant's Report attached as Appendix C to the Offering Memorandum.
"GAAP" shall mean generally accepted accounting principles used in the United
States consistently applied.
"GOVERNMENTAL ENTITY" shall mean and include any national government, any
political subdivision of a national government or of any state, county or local
jurisdiction therein or any board, commission, department, division, organ,
instrumentality, court or agency of any thereof.
"GROUND INTEREST" shall mean the undivided interest in the Unit 3 Site and the
Common Facilities Site leased to the Owner Lessor pursuant to the Site Lease and
Sublease, and shall consist of an undivided Owner Lessor's Percentage of (i) a
30% undivided interest in and to the ▇▇▇▇ ▇ ▇▇▇▇, (▇▇) a 15% undivided interest
in and to the Common Facilities 3-4 Site, and (iii) 15% of the undivided
interest in and to the Common Facilities 1-2-3-4 allocated to Units 3 and 4
pursuant to the Common Facilities Agreement.
"GROUND LESSEE" shall mean the Owner Lessor as lessee of the Ground Interest
under the Site Lease and Sublease.
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"GROUND LESSOR" shall mean PPL Montana as lessor of the applicable Ground
Interest under the Site Lease and Sublease.
"GROUND LESSOR'S RELEASE RIGHTS" shall have the meaning specified in Section 6.2
of the Site Lease and Sublease.
"GROUND SUBLESSEE" shall mean PPL Montana as sublessee of the applicable Ground
Interest under the Site Lease and Sublease.
"GROUND SUBLESSOR" shall mean the Owner Lessor as sublessor of the applicable
Ground Interest under the Site Lease and Sublease.
"GUARANTOR" shall mean ▇▇▇▇ Atlantic Credit Corporation.
"GUARANTY" shall mean the OP Parent Guaranty or any other guaranty agreement
entered into pursuant to Section 9.1 of the Participation Agreement in form and
substance substantially in the form of Exhibit G to the Participation Agreement.
"HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, hazardous
substance, hazardous waste, toxic substance, chemical substance, extremely
hazardous substance, petroleum or petroleum-derived substance, waste, or
additive, asbestos, PCBs, radioactive material, corrosive, explosive, flammable
or infectious material, lead, radon or other compound, element, material or
substance in any form whatsoever (including products) defined, regulated,
restricted or controlled by or under any Environmental Law.
"HOLDING COMPANY ACT" shall mean the Public Utility Holding Company Act of 1935,
as amended.
"INCLUSION LOSS" shall have the meaning specified in Section 5(a) of the Tax
Indemnity Agreement.
"INDEBTEDNESS" of any Person shall mean (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person to pay the deferred purchase price of property or services, (iv) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (v)
all Lease Obligations of such Person, (vi) all obligations, contingent or
otherwise, of such Person under acceptance, letter of credit or similar
facilities, (vii) all unconditional obligations of such Person to purchase,
redeem, retire, defease or otherwise acquire for value any capital stock or
other equity interests of such Person or any warrants, rights or options to
acquire such capital stock or other equity interests, (viii) all Indebtedness of
any other Person of the type referred to in clauses (i) through (vii) guaranteed
by such Person or for which such Person shall otherwise (including pursuant to
any keepwell, makewell or similar arrangement) become directly or indirectly
liable, and (ix) all third party Indebtedness of the type referred to in clauses
(i) through (vii) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any lien or
security interest on property (including accounts and contract rights) owned by
the Person whose
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Indebtedness is being measured, even though such Person has not assumed or
become liable for the payment of such third party Indebtedness, the amount of
such obligation being deemed to be the lesser of the value of such property or
the amount of the obligation so secured.
"INDEMNITEE" shall have the meaning specified in Section 11.1(a) of the
Participation Agreement.
"INDENTURE ESTATE" shall have the meaning specified in the Granting Clause of
the Lease Indenture.
"INDENTURE TRUSTEE'S LIENS" shall mean any Lien on the Lessor Estate or any part
thereof arising as a result of (i) Taxes against or affecting the Lease
Indenture Trustee, or any Affiliate thereof that is not related to, or that is
in violation of, any Operative Document or the transactions contemplated
thereby, (ii) Claims against or any act or omission of the Lease Indenture
Trustee, or Affiliate thereof that is not related to, or that is in violation
of, any Operative Document or the transactions contemplated thereby or that is
in breach of any covenant or agreement of the Lease Indenture Trustee specified
therein, (iii) Taxes imposed upon the Lease Indenture Trustee, or any Affiliate
thereof that are not indemnified against by PPL Montana pursuant to any
Operative Document, or (iv) Claims against or affecting the Lease Indenture
Trustee, or any Affiliate thereof arising out of the voluntary or involuntary
transfer by the Lease Indenture Trustee of any portion of the interest of the
Lease Indenture Company or the Lease Indenture Trustee in the Lessor Estate,
other than pursuant to the Operative Documents.
"INDEPENDENT APPRAISER" shall mean a disinterested, licensed industrial property
appraiser who is a Member of the Appraisal Institute having experience in the
business of evaluating facilities similar to the Facility.
"INITIAL PURCHASERS" shall mean Chase Securities Inc., Credit Suisse First
Boston Corporation, UBS Warburg LLC, TD Securities (USA) Inc.
"INTEREST DEDUCTIONS" shall have the meaning specified in Section 1.1 of the Tax
Indemnity Agreement.
"INTERIM LEASE RENT" shall have the meaning specified in Section 3.3(a) of the
Facility Lease.
"INTERIM LEASE TERM" shall have the meaning specified in Section 3.1 of the
Facility Lease.
"INVESTMENT" shall mean with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, equity interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If PPL Montana
or any Core Subsidiary of PPL Montana sells or otherwise disposes of any equity
interests of any direct or indirect Core Subsidiary of PPL Montana such that,
after giving effect to any such sale or disposition, such Person is no longer a
Core Subsidiary of PPL Montana, PPL Montana or such Core Subsidiary shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of
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the equity interests of such Core Subsidiary not sold or disposed of in an
amount determined as provided in Section 6.2 or Section 7.2 of the Participation
Agreement, as the case may be. The acquisition by PPL Montana or any Core
Subsidiary of PPL Montana of a Person that holds an Investment in a third Person
shall be deemed to be an Investment by PPL Montana or such Core Subsidiary in
such third Person in an amount equal to the fair market value of the Investment
held by the acquired Person in such third Person in an amount determined as
provided in Section 6.2 or Section 7.2 of the Participation Agreement, as the
case may be.
"IRS" shall mean the Internal Revenue Service of the United States Department of
Treasury or any successor agency.
"LEASE DEBT" shall mean the debt evidenced by the Certificates, and other debt
issued pursuant to Section 13 of the Participation Agreement.
"LEASE DEBT RATE" shall mean the interest rate under an applicable Lessor Note.
"LEASE EVENT OF DEFAULT" shall have the meaning specified in Section 16 of the
Facility Lease.
"LEASE INDENTURE" shall mean the Indenture of Trust, Mortgage and Security
Agreement, dated as of the Closing Date, between the Owner Lessor and the Lease
Indenture Trustee, substantially in the form of Exhibit E to the Participation
Agreement duly completed, executed and delivered on the Closing Date pursuant to
which the Owner Lessor will issue the Lessor Note.
"LEASE INDENTURE BANKRUPTCY DEFAULT" shall mean any event or occurrence, which,
with the passage of time or the giving of notice or both, would become a Lease
Indenture Event of Default under Section 4.1(e) or (f) of the Lease Indenture.
"LEASE INDENTURE EVENT OF DEFAULT" shall have the meaning specified in Section
4.2 of the Lease Indenture.
"LEASE INDENTURE PAYMENT DEFAULT" shall mean any event or occurrence, which,
with the passage of time or the giving of notice or both, would become a Lease
Indenture Event of Default under Section 4.2(b) of the Lease Indenture.
"LEASE INDENTURE TRUSTEE" shall mean The Chase Manhattan Bank, not in its
individual capacity, but solely as Lease Indenture Trustee under the Lease
Indenture, and each other Person who may from time to time be acting as Lease
Indenture Trustee in accordance with the provisions of the Lease Indenture.
"LEASE INDENTURE TRUSTEE OFFICE" shall mean the office to be used for notices to
the Lease Indenture Trustee from time to time pursuant to Section 9.5 of the
Lease Indenture.
"LEASE INDENTURE TRUSTEE'S ACCOUNT" shall mean the account specified on Schedule
11 to the Participation Agreement or such other account of the Lease Indenture
Trustee, as the Lease Indenture Trustee may from time to time specify in a
notice to the other parties to the Participation Agreement.
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"LEASE OBLIGATIONS" shall mean, without duplication, (i) indebtedness
represented by obligations under a lease that is required to be capitalized for
financial reporting purposes and (ii) with respect to noncapital leases of
electric generating facilities (A) non-recourse indebtedness of the lessor in
such a lease, or (B) if such amount is indeterminable, then the present value,
determined using a discount rate equal to the incremental borrowing rate (as
defined in SFAS No. 13) of the lessee under such a lease, of rent obligations
under such lease.
"LEASE PAYMENT OBLIGATIONS" shall mean, without duplication, with respect to any
Person for any period, (i) the interest component of all Lease Obligations of
such Person that are described in clause (i) of the definition of "Lease
Obligations" and that are Scheduled to be Paid during such period, plus (ii) the
principal portion of all Lease Obligations of such Person that are described in
clause (i) of the definition of "Lease Obligations" that are Scheduled to be
Paid during such period, plus (iii) all rent payment obligations relating to
Lease Obligations of such Person described in clause (ii) of the definition of
"Lease Obligations" and that are Scheduled to be Paid during such period.
"LESSEE ACTION" shall have the meaning specified in Section 5(a) of the Tax
Indemnity Agreement.
"LESSEE PERSON" shall have the meaning specified in Section 4(d) of the Tax
Indemnity Agreement.
"LESSEE SECTION 467 INTEREST" shall have the meaning set forth in Section 3.3(c)
of the Facility Lease.
"LESSEE SECTION 467 LOAN BALANCE" shall have the meaning ascribed to that term
in the definition of "Section 467 Loan Balance."
"LESSOR ESTATE" shall mean all the estate, right, title and interest of the
Owner Lessor in, to and under the Undivided Interest, the Ground Interest, the
Operative Documents, and the Project Agreements, including all funds advanced to
the Owner Lessor by the Owner Participant, all installments and other payments
of Basic Lease Rent, Supplemental Lease Rent, Termination Value under the
Facility Lease, condemnation awards, purchase price, sale proceeds, insurance
proceeds and all other proceeds, rights and interests of any kind for or with
respect to the estate, right, title and interest of the Owner Lessor in, to and
under the Undivided Interest, the Ground Interest, the Operative Documents, and
the Project Agreements, and any of the foregoing, but shall not include Excluded
Property.
"LESSOR MANAGER" shall mean Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity, but solely as Independent Manager
under the LLC Agreement and each other Person that may from time to time be
acting as Independent Manager in accordance with the provisions of the LLC
Agreement.
"LESSOR NOTE" shall mean the lessor note issued by the Owner Lessor in favor of
the Pass Through Trustee in the amount of $144,817,886.18, as more fully
described in Section 2.2 of the Lease Indenture.
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"LESSOR POSSESSION DATE" shall have the meaning specified in the Assignment and
Reassignment of Project Agreement.
"LESSOR SECTION 467 INTEREST" shall have the meaning set forth in Section 3.3(c)
of the Facility Lease.
"LESSOR SECTION 467 LOAN BALANCE" shall have the meaning ascribed to that term
in the definition of "Section 467 Loan Balance."
"LIEN" shall mean any mortgage, security deed, security title, pledge, lien,
charge, encumbrance, lease, and security interest or title retention
arrangement.
"LIST OF COMPETITORS" shall mean the initial list attached to the Participation
Agreement as Schedule 4, as amended from time to time pursuant to Section 9.1(b)
of the Participation Agreement.
"LLC AGREEMENT" shall mean the Amended and Restated Limited Liability Company
Agreement (BA3), dated as of the Effective Date, between the Trust Company and
the Owner Participant pursuant to which the Owner Lessor shall be governed.
"LOAN" shall mean the loan evidenced by the Lessor Note.
"MAJORITY IN INTEREST OF NOTEHOLDERS" as of any date of determination, shall
mean Noteholders holding in aggregate more than 50% of the total outstanding
principal amount of the Notes; provided, however, that any Note held by PPL
Montana and/or any Affiliate of PPL Montana shall not be considered outstanding
for purposes of this definition unless PPL Montana and/or such Affiliate shall
hold title to all the Notes outstanding.
"MAKE WHOLE PREMIUM" shall mean, with respect to any Lessor Note subject to
redemption pursuant to the Lease Indenture, an amount equal to the Discounted
Present Value of such Lessor Note less the unpaid principal amount of such
Lessor Note; provided that the Make Whole Premium shall not be less than zero.
For purposes of this definition, the "Discounted Present Value" of any Lessor
Note subject to redemption pursuant to the Lease Indenture shall be equal to the
discounted present value of all principal and interest payments scheduled to
become due after the date of such redemption in respect of such Lessor Note,
calculated using a discount rate equal to the sum of (i) the yield to maturity
on the U.S. Treasury security having an average life equal to the remaining
average life of such Lessor Note and trading in the secondary market at the
price closest to par and (ii) 50 basis points; provided, however, that if there
is no U.S. Treasury security having an average life equal to the remaining
average life of such Lessor Note, such discount rate shall be calculated using a
yield to maturity interpolated or extrapolated on a straight-line basis
(rounding to the nearest calendar month, if necessary) from the yields to
maturity for two U.S. Treasury securities having average lives most closely
corresponding to the remaining life of such Lessor Note and trading in the
secondary market at the price closest to par.
"MARKET CONSULTANT" shall mean PHB ▇▇▇▇▇▇ ▇▇▇▇▇▇ Consulting, Inc.
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"MARKET REPORT" shall mean the Report of the Market Consultant, dated May 23,
2000, addressed to the Owner Participant in substantially the form of the
Independent Market Consultant's Report attached as Appendix B to the Offering
Memorandum.
"MATERIAL ADVERSE EFFECT" shall mean a materially adverse change in (i) the
business, assets, revenues, results of operations, financial condition or
prospects of PPL Montana and its Core Subsidiaries, taken as a whole, (ii) the
ability of PPL Montana to perform its obligations under the Operative Documents,
or (iii) the validity or enforceability of the Operative Documents, the Liens
granted thereunder, or the rights and remedies thereto.
"MAXIMUM PROBABLE LOSS" shall mean the largest loss which can occur under the
worst conditions that are likely to occur.
"MEMBER INTEREST" shall mean the membership interest of the Owner Participant in
the Owner Lessor.
"MINIMUM CREDIT STANDARD" shall mean a credit rating from S&P and Moody's of at
least (i) BBB and Baa3, respectively, or (ii) BBB- and Baa2, respectively.
"MODIFICATION" shall mean an addition, betterment or enlargement of the
Facility, including any Required Modifications and Optional Modifications, but
not Components.
"MONTANA ASSETS" shall mean the assets acquired from MPC pursuant to the Asset
Purchase Agreement, including the undivided interest in the Colstrip Project
acquired pursuant to such Asset Purchase Agreement.
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investors Service, Inc. and any successor thereto.
"MPC" shall mean The Montana Power Company.
"NON-RECOURSE INDEBTEDNESS" shall mean Indebtedness:
(i) as to which neither PPL Montana nor any of its Core Subsidiaries
(a) provides credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness), (b) is directly or indirectly
liable as a guarantor or otherwise, or (c) constitutes the lender;
(ii) which, if in default, would not permit (upon notice, lapse of time
or both) any holder (as such) of any other Indebtedness of PPL Montana or any of
its Core Subsidiaries to declare a default on such other Indebtedness, cause the
payment thereof to be accelerated or payable prior to its stated maturity, or
take enforcement action against an Additional Subsidiary; and
(iii) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of PPL Montana or any of its
Core Subsidiaries.
"NONSEVERABLE MODIFICATIONS" shall mean any Modification that is not readily
removable without causing material damage to the Facility.
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"NOTE REGISTER" shall have the meaning specified in Section 2.8 of the Lease
Indenture.
"NOTEHOLDER" shall mean any holder from time to time of an outstanding Note.
"NOTES" shall mean any Lessor Note or Additional Lessor Notes issued pursuant to
the Lease Indenture.
"OBSOLESCENCE TERMINATION DATE" shall have the meaning specified in Section 14.1
of the Facility Lease.
"OFFERING MEMORANDUM" shall mean the Offering Memorandum, dated as of July 20,
2000, with respect to the Certificates.
"OFFICER'S CERTIFICATE" shall mean with respect to any Person, a certificate
signed (i) in the case of a corporation or limited liability company, by the
Chairman of the Board, the President, or a Vice President of such Person or any
Person authorized by or pursuant to the organizational documents, the bylaws or
any resolution of the board of directors, board of managers, or executive
committee of such Person (whether general or specific) to execute, deliver and
take actions on behalf of such Person in respect of any of the Operative
Documents, (ii) in the case of a partnership, by the Chairman of the Board of
Directors, the President or any Vice President, the Treasurer or an Assistant
Treasurer of a corporate general partner, and (iii) in the case of the Lease
Indenture Trustee or the Pass Through Trustee, a certificate signed by a
Responsible Officer of the Lease Indenture Trustee or the Pass Through Trustee.
"OMNIBUS VOTING AGREEMENT" shall mean the Omnibus Voting Rights Agreement
(BA/NC-3), dated as of the Closing Date, among PPL Montana, Owner Lessor, the
Other Owner Lessor with respect to the Facility, the Lease Indenture Trustee,
and the Other Lease Indenture Trustee with respect to the Facility which
Agreement is attached as Exhibit H to the Participation Agreement.
"OP GUARANTOR" shall mean the Guarantor or any Person that shall guaranty the
obligations of a Transferee under the Operative Documents in accordance with
Section 9.1(a) of the Participation Agreement.
"OP MEMBER" shall mean any member of the Owner Participant.
"OP MEMBER INTEREST" shall mean the membership interest of any OP Member in the
Owner Participant.
"OP PARENT GUARANTY" shall mean the OP Parent Guaranty (BA3), dated as of the
Effective Date, by the Guarantor in favor of the Transaction Parties.
"OPERATING AGREEMENT 1-2" shall mean the Operation and Maintenance of Colstrip
Steam Electric Generating Plant dated as of July 30, 1971, between PPL Montana
(successor to MPC) and Puget, relating to the ownership and operation of Units 1
and 2.
"OPERATIVE DOCUMENTS" shall mean the Participation Agreement, the ▇▇▇▇ of Sale,
the Facility Lease, the Abstract of Lease, the Site Lease and Sublease, the
Assignment and Reassignment of Project Agreements, the Omnibus Voting Rights
Agreement, the Lease Indenture, the Lessor
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Note, the Pass Through Trust Agreement, the Certificates, the Registration
Rights Agreement, the LLC Agreement, the Tax Indemnity Agreement, the OP Parent
Guaranty and any Qualifying Letter of Credit.
"OPERATOR" shall mean PPL Montana.
"OPTIONAL MODIFICATION" shall have the meaning specified in Section 8.2 of the
Facility Lease.
"ORIGINAL LLC AGREEMENT shall mean the Limited Liability Company Agreement,
dated as of September 20, 1999, pursuant to which the Owner Lessor was created.
"OTHER BILLS OF SALE" shall mean each of the bills of sale executed and
delivered pursuant to the Other Participation Agreements.
"OTHER COLSTRIP LEASE TRANSACTIONS" shall mean the transactions entered into
pursuant to the Other Participation Agreements.
"OTHER FACILITY LEASES" shall mean each of the facility leases executed and
delivered pursuant to the Other Participation Agreements.
"OTHER GROUND INTERESTS" shall mean the undivided leasehold interests in the
Colstrip Site conveyed to the Other Owner Lessors under the Other Site Lease and
Sublease.
"OTHER LEASE INDENTURE TRUSTEES" shall mean each of the lease indenture trustees
relating to the Other Lease Indentures.
"OTHER LEASE INDENTURES" shall mean each of the lease indentures executed and
delivered pursuant to the Other Participation Agreements.
"OTHER LESSOR MANAGERS" shall mean each of the lessor managers acting on behalf
of the Other owner Lessors pursuant to the Other Operative Documents.
"OTHER OPERATIVE DOCUMENTS" shall mean the "Operative Documents" for each of
the Other Colstrip Lease Transactions.
"OTHER OWNER LESSORS" shall mean Montana OL1 LLC, and Montana OL3 LLC.
"OTHER OWNER PARTICIPANTS" shall mean Montana OP1 LLC, and Montana OP3 LLC.
"OTHER PARTICIPATION AGREEMENTS" shall mean a collective reference to each of
the other three separate Participation Agreements entered into by PPL Montana,
the applicable Other Owner Lessor, the Trust Company, the applicable Other Owner
Participant, the Other Lease Indenture Trustees and the Pass Through Trustee and
designated NC1/2, NC3 and BA1/2, each dated as of the Effective Date, pursuant
to which PPL Montana has agreed to (a) sell to the applicable Other Owner
Lessors certain undivided interests in Colstrip ▇▇▇▇▇ ▇ ▇▇▇ ▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇, ▇▇▇ (▇) lease from the applicable Other Owner Lessors such undivided interest
in Colstrip Units 1 and 2 and Colstrip Unit 3 pursuant to the Other Facility
Leases.
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"OTHER SITE LEASE AND SUBLEASE" shall mean each of the site and subleases
executed and delivered pursuant to the Other Participation Agreements.
"OTHER UNDIVIDED INTEREST" shall mean the "Undivided Interest" in the Colstrip
Project conveyed to the Other Owner Lessors under the Other Bills of Sale.
"OVERALL TRANSACTION" shall mean the Transaction and the Other Colstrip Lease
Transactions.
"OVERDUE RATE" shall mean 10.903%.
"OWNER LESSOR" shall mean Montana OL4 LLC, a Delaware limited liability company.
"OWNER LESSOR'S ACCOUNT" shall mean the account (No. 52135-0) maintained by the
Owner Lessor with Wilmington Trust Company, ABA#▇▇▇▇▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ or such other account of the Owner Lessor, as the Owner Lessor may
from time to time specify in a notice to the Lease Indenture Trustee pursuant to
Section 9.5 of the Lease Indenture.
"OWNER LESSOR'S INTEREST" shall mean the Owner Lessor's right, title and
interest in and to the Undivided Interest and the Ground Interest under the ▇▇▇▇
of Sale and the Site Lease and Sublease, respectively.
"OWNER LESSOR'S LIEN" shall mean any Lien on the Lessor Estate or any part
thereof arising as a result of (i) Taxes against or affecting the Trust Company
or the Lessor Manager, or any Affiliate thereof that is not related to, or that
is in violation of, any Operative Document or the transactions contemplated
thereby, (ii) Claims against or any act or omission of the Trust Company or the
Lessor Manager, or Affiliate thereof that is not related to, or that is in
violation of, any Operative Document or the transactions contemplated thereby or
that is in breach of any covenant or agreement of the Trust Company or the
Lessor Manager specified therein, (iii) Taxes imposed upon the Trust Company or
the Lessor Manager, or any Affiliate thereof that are not indemnified against by
PPL Montana pursuant to any Operative Document, or (iv) Claims against or
affecting the Trust Company or the Lessor Manager, or any Affiliate thereof
arising out of the voluntary or involuntary transfer by the Trust Company or the
Lessor Manager of any portion of the interest of the Trust Company or the Lessor
Manager in the Owner Lessor's Interest, other than pursuant to the Operative
Documents.
"OWNER LESSOR'S PERCENTAGE" shall mean 86.111111112%.
"OWNER PARTICIPANT" shall mean Montana OP4 LLC, a Delaware limited liability
company.
"OWNER PARTICIPANT'S ACCOUNT" shall mean the account (No. 52132-0) maintained by
the Owner Participant with Wilmington Trust Company, ABA#▇▇▇▇▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or such other account of the Owner Participant, as the Owner
Participant may from time to time specify in a notice to the Lease Indenture
Trustee pursuant to Section 9.5 of the Lease Indenture.
"OWNER PARTICIPANT'S COMMITMENT" shall mean the Owner Participant's investment
in the Owner Lessor contemplated by Section 2.1(a) of the Participation
Agreement.
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"OWNER PARTICIPANT'S LIEN" shall mean any Lien on the Lessor Estate or any part
thereof arising as a result of (i) Claims against or any act or omission of the
Owner Participant that is not related to, or that is in violation of, any
Operative Document or the transactions contemplated thereby or that is in breach
of any covenant or agreement of the Owner Participant set forth therein, (ii)
Taxes against the Owner Participant that are not indemnified against by PPL
Montana pursuant to the Operative Documents or (iii) Claims against or affecting
the Owner Participant arising out of the voluntary or involuntary transfer by
the Owner Participant (except as contemplated or permitted by the Operative
Documents) of any portion of the interest of the Owner Participant in the Member
Interest.
"OWNER PARTICIPANT'S NET ECONOMIC RETURN" shall mean the Owner Participant's
anticipated (i) net after-tax yield, calculated according to the multiple
investment sinking fund method of analysis, and (ii) aggregate GAAP income and
after-tax cash flow.
"OWNER'S COMMITTEE" shall have the meaning specified in each respective Project
Agreement.
"OWNERSHIP AGREEMENT 1-2" shall mean the Construction and Ownership Agreement,
dated as of July 30, 1971, between PPL Montana (successor to MPC) and Puget,
relating to the ownership and operation of Units 1 and 2.
"OWNERSHIP AGREEMENT 3-4" shall mean the Ownership and Operation Agreement
Colstrip Units 3 and 4, dated as of May 6, 1981, among MPC, Puget, Puget
Colstrip Construction Company, Avista Corporation (successor to The Washington
Water Power Company), Portland, and Pacific Power & Light Company, relating to
the ownership and operation of the Common Facilities 3-4.
"OWNERSHIP AGREEMENTS" shall mean the Ownership and Operating Agreements 1-2 and
the Ownership Agreement 3-4.
"OWNERSHIP AND OPERATING AGREEMENTS 1-2" shall mean a collective reference to
the Ownership Agreement 1-2 and the Operating Agreement 1-2.
"PARTICIPATION AGREEMENT" shall mean the Participation Agreement (BA3), dated as
of the Effective Date, among PPL Montana, the Owner Lessor, Wilmington Trust
Company, in its individual capacity and as Lessor Manager, the Owner
Participant, and The Chase Manhattan Bank, as Lease Indenture Trustee and as
Pass Through Trustee.
"PASS THROUGH TRUST" shall mean the pass through trust created pursuant to the
Pass Through Trust Agreement.
"PASS THROUGH TRUST AGREEMENT" shall mean the Pass Through Trust Agreement,
dated as of the Effective Date, between PPL Montana and the Pass Through
Trustee.
"PASS THROUGH TRUSTEE" shall mean The Chase Manhattan Bank, not in its
individual capacity, but solely as Pass Through Trustee under the Pass Through
Trust Agreement, and each other Person that may from time to time be acting as a
Pass Through Trustee in accordance with the provisions of the Pass Through Trust
Agreement.
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"PERIODIC LEASE RENT" shall have the meaning specified in Section 3.3(a) of the
Facility Lease.
"PERMITTED BUSINESS" shall mean any of the following:
(L) the generation, transmission, distribution, marketing and sale of power
from the Montana Assets (and any expansions related to the Montana
Assets or acquisitions of similar generating assets in Montana);
(M) activities related to the ownership and operation of the Rosebud Coal
Mine or other coal assets in North America for the supply of fuel to
the Montana Assets (and any expansions related to the Montana Assets or
acquisitions of similar generating assets in Montana);
(N) all activities related or incidental to those set forth in clauses (a)
and (b); and
(O) if Moody's and S&P confirm that the then existing ratings of the
Certificates will not fall below an investment grade rating as a result
of PPL Montana's or any of its Core Subsidiaries' participation in such
activities, any other activity related to non-nuclear generation,
transmission, distribution, marketing and sale of power in North
America.
"PERMITTED ENCUMBRANCES" shall mean all matters shown as exceptions on Schedule
B to each of the Title Policies as in effect on the Closing Date.
"PERMITTED INSTRUMENTS" shall mean (a) Permitted Securities, (b) overnight loans
to or other customary overnight investments in commercial banks of the type
referred to in paragraph (d) below, (c) open market commercial paper of any
corporation (other than PPL Montana or any Affiliate) incorporated under the
laws of the United States or any State thereof which is rated not less than
"prime-1" or its equivalent by Moody's and "A-1" or its equivalent by S&P
maturing within one year after such investment, (d) certificates of deposit and
issued by commercial banks organized under the laws of the United States or any
State thereof or a domestic branch of a foreign bank (i) having a combined
capital and surplus in excess of $500,000,000 and (ii) which are rated "AA" or
better by S&P and "Aa2" or better by Moody's; provided that no more than
$20,000,000 may be invested in such deposits at any one such bank and (e) a
money market fund registered under the Investment Company Act of 1940, as
amended, the portfolio of which is limited to Permitted Securities.
"PERMITTED INVESTMENT" shall mean:
(1) any Investment in PPL Montana or in a Core Subsidiary of PPL
Montana;
(2) any Investment in cash equivalents;
(3) any Investment by PPL Montana or any Core Subsidiary of PPL Montana
in a Person, if as a result of such Investment:
1. such Person becomes a Core Subsidiary of PPL Montana; or
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2. such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, PPL Montana or a wholly-owned Core Subsidiary of PPL Montana;
(4) any acquisition of assets solely in exchange for the issuance of
equity interests of PPL Montana;
(5) hedging obligations entered into in the ordinary course of business
and not for speculative purposes;
(6) any Investment made from the proceeds of capital contributions to,
or the issuance and sale of equity interests in, PPL Montana not constituting
Indebtedness other than the equity contributions required by Sections 4.02(o) or
4.03(h) of the Credit Agreement; and
(7) other Investments in any Person (including any Additional
Subsidiary) having an aggregate fair market value (measured on the date each
such Investment was made and without giving effect to subsequent changes in
value), when taken together with all other Investments made pursuant to this
clause (7) since the Closing Date not to exceed $30 million.
"PERMITTED LIENS" shall mean (i) the interests of PPL Montana, the Owner
Participant, the Owner Lessor, the Lessor Manager, the Lease Indenture Trustee,
and the Pass Through Trustee under any of the Operative Documents; (ii) all
Owner Lessor's Liens, Owner Participant's Liens and Indenture Trustee's Liens;
(iii) the reversionary interests of PPL Montana in the Colstrip Site; (iv) the
interests of the Other Owner Lessors and the Other Lease Indenture Trustees in
the Facility, the Colstrip Site and the Project Agreements; (v) the interests of
PPL Montana, the Other Owner Participants, the Other Owner Lessors, the Other
Lessor Managers, the Other Lease Indenture Trustees, and the Pass Through
Trustee under any of the Other Operative Documents; (vi) the Project Agreements;
(vii) the interest of the co-owners of Unit 4 as tenants in common in Unit 4 and
the Common Facilities 3-4 and the Common Facilities 1-2-3-4 and the rights of
such owners under the Ownership Agreement 3-4 and the Common Facilities
Agreement; (viii) the interest of the co-owners of Unit 3 as tenants in common
of Unit 3 and the Common Facilities and the rights of such co-owners under the
Ownership Agreement 3-4 and the Common Facilities Agreement; (ix) the interest
of the co-owners of Units 1 and 2 as tenants in common of Units 1 and 2 and the
Common Facilities and the rights of such co-owners under the Ownership and
Operating Agreements 1-2 and the Common Facilities Agreement; and (x) Permitted
Encumbrances.
"PERMITTED SECURITIES" shall mean securities (and security entitlements with
respect thereto) that are (i) direct obligations of the United States of America
or obligations guaranteed as to principal and interest by the full faith and
credit of the United States of America, and (ii) securities issued by agencies
of the U.S. Federal government whether or not backed by the full faith and
credit of the United States rated "AAA" and "Aaa", or better by S&P and ▇▇▇▇▇'▇,
respectively, which, in either case under clauses (i) or (ii) are not callable
or redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such U.S. Government obligation or a specific payment of interest on or
principal of any such U.S. Government obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
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by law) such custodian is not authorized to make any deduction in the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government obligation or the specific payment
of interest on or principal of the U.S. Government obligation evidenced by such
depository receipt.
"PERSON" shall mean any individual, corporation, cooperative, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"PLAN" shall mean any "employee benefit plan" (as defined in Section 3(3) of
ERISA) that is subject to ERISA, any "plan" (as defined in Section 4975(e)(1) of
the Code) that is subject to Section 4975 of the Code, any trust created under
any such plan or any "governmental plan" (as defined in Section 3(32) of ERISA
or Section 414(d) of the Code) that is organized in a jurisdiction having
prohibitions on transactions with government plans similar to those contained in
Section 406 of ERISA or Section 4975 of the Code.
"POLLUTION CONTROL FACILITIES" shall mean that portion of the Facility that was
financed pursuant to those Pollution Control Revenue Refunding Bonds, Series
1993A, due May 1, 2023, of the City of Forsyth, Montana in the original
principal amount of $90,205,000 and Series 1993B, due December 1, 2023, of the
City of Forsyth, Montana, in the original principal amount of $80,000,000.
"PORTLAND" shall mean Portland General Electric Company.
"POWER MARKET CONSULTANT" shall mean PHB ▇▇▇▇▇▇ ▇▇▇▇▇▇ Consulting, Inc., or
another nationally recognized power market consultant selected by PPL Montana.
"PPA" shall mean (A) an arm's length, executed, valid and binding agreement
between PPL Montana or any Core Subsidiary and either (i) a third party
purchaser whose long-term senior debt is rated no less than Baa3 by ▇▇▇▇▇'▇ and
BBB- by S&P or (ii) an Affiliate of PPL Montana, provided that such Affiliate
has executed a valid and binding agreement with a third party purchaser whose
long-term senior debt is rated no less than Baa3 by ▇▇▇▇▇'▇ and BBB- by S&P with
substantially the same terms (other than pricing) as such Affiliate's agreement
with PPL Montana or such Core Subsidiary, in each case, for the sale of electric
energy or capacity by PPL Montana or Core Subsidiary to such third party or
Affiliate of PPL Montana or (B) financial hedge agreements relating to energy or
capacity pricing that are (i) supported by available energy or capacity or PPL
Montana and its Core Subsidiaries and (ii) with counterparties having long-term
senior debt that is rated no less than Baa3 by ▇▇▇▇▇'▇ and BBB- by S&P.
"PPA PERIOD" shall mean any consecutive period of four full fiscal quarters (or
shorter period of not less than one full fiscal quarter that is equal to the
period being evaluated for purposes of determining whether such period is a PPA
Period) during which PPL Montana and its Core Subsidiaries have committed to
sell at a scheduled or formula price (as opposed to pure spot market price) at
lease 50% of their total projected energy sales (measured in MWh and, in the
case of Core Subsidiaries that are not directly or indirectly wholly owned by
PPL Montana, taking into account only such portion of such projected energy
sales as directly corresponds to PPL Montana's direct or indirect ownership
interest in such Core Subsidiary) (i) for the
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consecutive period of four full fiscal quarters commencing on the first day of
such period being evaluated and (ii) for the consecutive period of four full
fiscal quarters commencing on the one year anniversary of such period being
evaluated, in each case, pursuant to one or more PPAs). "PPL CORPORATION" shall
mean PPL Corporation, a Pennsylvania corporation.
"PPL MONTANA" shall mean PPL Montana, LLC, a Delaware limited liability company.
"PRICING ASSUMPTIONS" shall mean the "Pricing Assumptions" attached as Schedule
2 to the Participation Agreement.
"PRINCIPAL PORTION" shall mean the Unit 3 Principal Portion.
"PROCEEDS" shall mean the proceeds from the sale of the Certificates by the Pass
Through Trusts to the Certificateholders on the Closing Date.
"PROJECT AGREEMENTS" shall mean the Ownership Agreement 3-4, Rights Sharing
Agreement and the Common Facilities Agreement.
"PROJECT COMMITTEE" shall have the meaning specified in section 1 of the
Assignment and Reassignment of Project Agreements.
"PROPORTIONAL RENT" shall have the meaning set forth in Section 3.3(c).
"PRUDENT INDUSTRY PRACTICE" shall mean, at a particular time, either (a) any of
the practices, methods and acts engaged in or approved by a significant portion
of the competitive electric generating industry operating in the western United
States at such time, or (b) with respect to any matter to which the practices
referred to in clause (a) do not exist, any of the practices, methods and acts
which, in the exercise of reasonable judgment in light of the facts known at the
time the decision was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with good business practices,
reliability, safety and expedition. "Prudent Industry Practice" is not intended
to be limited to the optimum practice, method or act to the exclusion of all
others, but rather to be a spectrum of possible practices, methods or acts
having due regard for, among other things, manufacturers' warranties and the
requirements of governmental bodies of competent jurisdiction. Notwithstanding
the foregoing, the parties acknowledge and agree that practices, methods and
acts consistent with the objectives set forth in the Reliability Based
Production program, including the organizational structure and strategies being
implemented at the Facility as of the Closing Date, are acceptable and shall be
deemed to be "Prudent Industry Practice."
"PUGET" shall mean Puget Sound Energy, Inc.
"PURCHASE PRICE" shall mean the purchase price of the Unit 3 Interest in the
amount of $175,666,666.67.
"QUALIFIED SHAREHOLDER" shall mean an Person who holds a minority interest in a
Core Subsidiary, provided that S&P and ▇▇▇▇▇'▇ confirmed that, at the time of
such Person's
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acquisition of such interest in the Core Subsidiary, such acquisition and any
transactions related thereto did not result in a downgrade of the then current
ratings of the Certificates.
"QUALIFYING CASH BID" shall have the meaning specified in Section 13.2 of the
Facility Lease.
"QUALIFYING LETTER OF CREDIT" shall mean an irrevocable unconditional stand by
letter of credit substantially in the form of Exhibit I to the Participation
Agreement, issued by a Qualifying Letter of Credit Bank.
"QUALIFYING LETTER OF CREDIT BANK" shall mean any bank or other financial
institution whose senior unsecured debt obligations (or long-term deposits) is
rated at least rated A3 or higher by ▇▇▇▇▇'▇ and A- or higher by S&P. A
Qualifying Letter of Credit Bank shall cease to be a Qualifying Letter of Credit
Bank if such entity shall at any time be rated below the ratings set forth in
the immediately preceding sentence.
"RATING AGENCIES" shall mean S&P and ▇▇▇▇▇'▇.
"REASONABLE BASIS" for a position shall exist if tax counsel may properly advise
reporting such position on a tax return in accordance with Formal Opinion 85-352
issued by the Standing Committee on Ethics and Professional Responsibility of
the American Bar Association (or any successor to such opinion).
"REBUILDING CLOSING DATE" shall have the meaning specified in Section 10.3(d) of
the Facility Lease.
"REDEMPTION DATE" shall mean, when used with respect to any Note to be redeemed,
the date fixed for such redemption by or pursuant to the Lease Indenture or the
respective Note, which date shall be a Termination Date.
"REGULATORY EVENT OF LOSS" shall have the meaning specified in clause (d) of the
definition of "Event of Loss."
"RELATED COMMON FACILITIES" shall mean the Common Facilities 3-4 and the Common
Facilities 1-2-3-4 associated therewith.
"RELATED COMMON FACILITIES INTEREST" shall mean with respect to any Unit 3
Interest, the Related Common Facilities Interest 3.
"RELATED COMMON FACILITIES INTEREST 3" shall mean an undivided Owner Lessor's
Percentage of (a) a 15% undivided interest in and to the Common Facilities 3-4,
and (b) 15% of the undivided interest in and to the Common Facilities 1-2-3-4
allocated to Units 3 and 4 pursuant to the Common Facilities Agreement.
"RELATED COMMON FACILITIES SITE" shall mean, with respect to any Unit, that
portion of the Common Facilities Site upon which the Related Common Facilities
are located.
"RELATED GROUND INTEREST" shall mean the Ground Interest.
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"RELATED PARTY" shall mean, with respect to any Person or its successors and
assigns, an Affiliate of such Person or its successors and assigns and any
director, officer, servant, employee or agent of that Person or any such
Affiliate or their respective successors and assigns; provided that the Lessor
Manager and the Owner Lessor shall not be treated as Related Parties to each
other and neither the Owner Lessor nor the Lessor Manager shall be treated as a
Related Party to any Owner Participant except that, for purposes of Section 11
of the Participation Agreement, the Owner Lessor will be treated as a Related
Party to an Owner Participant to the extent that the Owner Lessor acts on the
express direction or with the express consent of such Owner Participant.
"RELATED SITE" shall mean, the Unit Site upon which such Unit is located
together with the Common Facilities Site upon which the Related Common
Facilities are located.
"RELEASED PROPERTY" shall have the meaning specified in Section 6.2 of the Site
Lease and Sublease.
"RENEWAL LEASE RENT" shall mean the Basic Lease Rent payable during any
Wintergreen Renewal Lease Term or FMV Renewal Lease Term, in each case as
determined in accordance with Section 15.3 of the Facility Lease.
"RENEWAL LEASE TERM" shall mean any Wintergreen Renewal Lease Term or any FMV
Renewal Lease Term.
"RENEWAL SITE LEASE TERM" shall have the meaning specified in Section 2.3(c) of
the Site Lease and Sublease.
"RENEWAL SITE SUBLEASE TERM" shall have the meaning specified in Section 4.3 of
the Site Lease and Sublease.
"RENT" shall mean Periodic Lease Rent, Renewal Lease Rent and Supplemental Lease
Rent.
"RENT PAYMENT DATE" shall mean each January 2 and July 2, commencing January 2,
2001, to and including July 2, 2036, and July 20, 2036.
"RENT PAYMENT PERIOD" shall mean in the case of the first Rent Payment Period
the period commencing on the Closing Date and ending on but excluding October 2,
2000, followed by the Rent Payment Period commencing on October 2, 2000 and
ending on but excluding January 2, 2000, and thereafter, each six-month period
(i) commencing, on each Rent Payment Date through and including the Expiration
Date, and (ii) ending on but excluding the following January 2 or July 2, as the
case may be; provided that the last Rent Payment Period shall end on, and
include, the expiration date of the Facility Lease Term.
"REPLACEMENT COMPONENT" shall have the meaning specified in Section 7.2 of the
Facility Lease.
"REQUIRED MODIFICATION" shall have the meaning specified in Section 8.1 of the
Facility Lease.
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"REQUISITION" shall have the meaning specified in clause (c) of the definition
of "Event of Loss."
"RESPONSIBLE OFFICER" shall mean, with respect to any Person, (i) its Chairman
of the Board, its President, any Senior Vice President, the Chief Financial
Officer, any Vice President, the Treasurer or any other management employee (a)
that has the power to take the action in question and has been authorized,
directly or indirectly, by the Board of Directors (or equivalent body) of such
Person, (b) working under the direct supervision of such Chairman of the Board,
President, Senior Vice President, Chief Financial Officer, Vice President or
Treasurer, and (c) whose responsibilities include the administration of the
transactions and agreements contemplated by the Operative Documents, and (ii)
with respect to the Lessor Manager, the Lease Indenture Trustee and the Pass
Through Trustee, an officer in their respective corporate trust administration
departments.
"RESTRICTED INVESTMENT" shall mean any Investment other than a Permitted
Investment.
"RESTRICTED PAYMENT" shall mean (i) the declaration or payment of any dividend
or making of any other payment or distribution (including any payment in
connection with any merger or consolidation involving PPL Montana or any of its
Core Subsidiaries) on account of PPL Montana's or any of its Core Subsidiaries'
equity interests or to the direct or indirect holders of PPL Montana's or any of
its Core Subsidiaries' equity interests in their capacity as such (provided,
however, that the following dividends or distributions shall not be Restricted
Payments: (A) a dividend or distribution not in excess of $50 million on the
Closing Date; (B) dividends or distributions payable in equity interests of PPL
Montana or any Core Subsidiary (so long as it remains a Core Subsidiary and PPL
Montana's direct or indirect percentage ownership interest in any Core
Subsidiary is not reduced as a result of such dividend or distribution), (C)
dividends or distributions to PPL Montana or any Core Subsidiary, and (D)
dividends or distributions to any shareholder of a Core Subsidiary other than
PPL Montana or another Core Subsidiary, so long as such shareholder is a
Qualified Shareholder and such dividend or distribution shall be made pro rata
to each of the holders of such type of securities or other interests in respect
of which such dividend or distribution is being made, in each case, in
accordance with their respective holdings of such securities or other interests
in the Core Subsidiary making such dividend or distribution; (ii) the purchase,
redemption or other acquisition or retirement by PPL Montana for value
(including in connection with any merger or consolidation involving PPL Montana)
of any equity interests of PPL Montana; (iii) the making of any payment on or
with respect to, or the purchase, redemption, defeasance or other acquisition or
retirement for value of any Indebtedness that is subordinated to the obligations
of PPL Montana under the Facility Lease; or (iv) the making of any Restricted
Investment.
"REVENUES" shall have the meaning specified in the Granting Clause of the Lease
Indenture.
"RIGHTS SHARING AGREEMENT" shall mean the MPC/PP&L Colstrip Units 3 and 4
Generating Project Reciprocal Sharing Agreement, entered into as December 17,
1999 between PPL Montana and The Montana Power Company.
"S&P" shall mean Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or any successor thereto.
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"SCHEDULED CLOSING DATE" shall mean July 20, 2000, and any date set for the
Closing in a notice of postponement pursuant to Section 2.3(a) of the
Participation Agreement.
"SCHEDULED LEASE EXPIRATION DATE" shall mean July 20, 2036.
"SCHEDULED PAYMENT DATE" shall mean a Rent Payment Date.
"SCHEDULED TO BE PAID" shall mean, with respect to any liability or expense for
any period, the amount of such liability or expense scheduled to be paid during
such period or the amount of such liability or expense that would have been
scheduled to be paid during such period had the payment schedule with respect to
such liability or expense been divided equally into successive periods having a
duration equal to the duration of such period.
"SEC" means the Securities and Exchange Commission, as from time to time
constituted, created under the Securities Exchange Act of 1934, or, if at any
time after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"SECOND WINTERGREEN RENEWAL LEASE TERM" shall have the meaning specified in
Section 15.2 of the Facility Lease.
"SECTION 467 INTEREST" shall mean and include the Lessor Section 467 Interest
and the Lessee Section 467 Interest.
"SECTION 467 LOAN BALANCE" shall mean for any Termination Date, with respect to
the Undivided Interest, an amount equal to the product of the Purchase Price
multiplied by the percentage set forth for such Termination Date under the
caption "Section 467 Loan Balance Percentage" on Schedule 2 of the Facility
Lease for such Termination Date. If the percentage set forth under such caption
is positive, the Section 467 Loan Balance shall constitute a loan made by the
Facility Lessee to the Owner Lessor ("Lessor Section 467 Loan Balance") and, if
such percentage is negative, shall constitute a loan made by the Owner Lessor to
the Facility Lessee ("Lessee Section 467 Loan Balance").
"SECURED INDEBTEDNESS" shall have the meaning specified in Section 1 of the
Lease Indenture.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITY" shall have the same meaning as in Section 2(1) of the Securities Act.
"SEVERABLE MODIFICATION" shall mean any Modification that is readily removable
without causing material damage to the Facility.
"SIGNIFICANT LEASE DEFAULT" shall mean any of: (i) if PPL Montana shall fail to
make any payment of Periodic Lease Rent, Renewal Lease Rent, or Termination
Value after the same shall have become due and payable, (ii) if PPL Montana
shall fail to make any payment of Supplemental Lease Rent (other than Excepted
Payments or Termination Value) in excess of $250,000 after the same shall have
become due and payable, except to the extent such amounts are in dispute and
have not been established to be due and payable, and (iii) an event that is, or
119
with the passage of time or the giving of notice would become, a "Lease Event of
Default" under clauses (e), (g), (h), (i) or (k) of Section 16 of any Facility
Lease.
"SIGNIFICANT INDENTURE DEFAULT" shall means a failure by the Owner Lessor to
make any payment of principal or interest on the Lessor Note after the same
shall have become due and payable.
"SITE(S)" shall have the meaning specified in the recitals of Site Lease and
Sublease.
"SITE LEASE AND SUBLEASE" shall mean the Site Lease and Sublease Agreement
(BA3), dated as of the Closing Date, between PPL Montana and the Owner Lessor,
substantially in the form of Exhibit C to the Participation Agreement duly
completed, executed and delivered on the Closing Date pursuant to which PPL
Montana will lease the Ground Interest to, and sublease such Ground Interest
from, the Owner Lessor.
"SITE LEASE TERM" shall have the meaning specified in Section 2.3(d) of the Site
Lease and Sublease.
"SITE SUBLEASE TERM" shall have the meaning specified in Section 4.3 of the Site
Lease and Sublease.
"SPECIAL LESSEE TRANSFER" shall have the meaning specified in Section 15.1 of
the Participation Agreement.
"SPECIAL LESSEE TRANSFER AMOUNT" shall mean for any date, the amount determined
as follows:
(ii) if the determination date shall be a Termination Date,
the Termination Value under the Facility Lease on such date, or (ii) if such
date shall not be a Termination Date, the Termination Value under the Facility
Lease on the immediately succeeding Termination Date; plus
(iii) in the case of a termination pursuant to Section 13.1 of
the Facility Lease, the amount, if any, by which the Qualifying Cash Bid exceeds
Termination Value determined in accordance with clause (i) above, plus
(iv) any unpaid Basic Lease Rent or Renewal Lease Rent due
before the date of such determination, minus
(v) the sum of all outstanding principal and accrued interest
on the Notes, if any, on such determination date (in each case, if such
determination date is a Rent Payment Date, before taking into account any Basic
Lease Rent or Renewal Lease Rent due on such determination date).
"SPECIAL LESSEE TRANSFER EVENT" shall mean the occurrence of either of (i) a
Regulatory Event of Loss, and (ii) if the Owner Lessor has agreed to sell, and
PPL Montana has agreed to buy, the Undivided Interest, a Burdensome Termination
Event under Section 13.1 of the Facility Lease.
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"SUBSIDIARY" shall mean, with respect to any Person (the "parent"), any
corporation or other entity of which sufficient securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors (or equivalent body) or other Persons performing similar functions are
at the time directly or indirectly owned by such parent.
"SUPPLEMENTAL FINANCING" shall have the meaning specified in Section 13.1 of the
Participation Agreement.
"SUPPLEMENTAL LEASE RENT" shall mean any and all amounts, liabilities and
obligations (other than Basic Lease Rent) that PPL Montana assumes or agrees to
pay under the Operative Documents (whether or not identified as "Supplemental
Lease Rent") to the Owner Lessor or any other Person, including Termination
Value.
"TAX" or "TAXES" shall mean all fees, taxes (including sales taxes, use taxes,
stamp taxes, value-added taxes, ad valorem taxes and property taxes (personal
and real, tangible and intangible), levies, assessments, withholdings and other
charges and impositions of any nature, plus all related interest, penalties,
fines and additions to tax, now or hereafter imposed by any federal, state,
local or foreign government or other taxing authority.
"TAX ADVANCE" shall have the meaning specified in Section 11.2(g)(iii)(5) of the
Participation Agreement.
"TAX ASSUMPTIONS" shall mean the items described in Section 1 of the Tax
Indemnity Agreement.
"TAX BENEFIT" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
"TAX CLAIM" shall have the meaning specified in Section 11.2(g)(i) of the
Participation Agreement.
"TAX EVENT" shall mean any event or transaction treated, for Federal income tax
purposes, as a taxable sale or exchange of the Lessor Note.
"TAX INDEMNITEE" shall have the meaning specified in Section 11.2(a) of the
Participation Agreement.
"TAX INDEMNITY AGREEMENT" shall mean the Tax Indemnity Agreement (BA3), dated as
of the Closing Date, between PPL Montana and the Owner Participant.
"TAX LAW CHANGE" shall have the meaning specified in Section 14.2(a)(iii) of the
Participation Agreement.
"TAX LOSS" shall have the meaning specified in Section 5(a) of the Tax Indemnity
Agreement.
"TAX REPRESENTATION" shall mean each of the items described in Section 4 of the
Tax Indemnity Agreement.
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"TAX SHELTER DESIGNATION AGREEMENT" shall mean that certain agreement pursuant
to which, inter alia, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇ has agreed to file a Form 8264 (and
attachments) with the IRS.
"TERM" shall mean the Fixed Lease Term and the Renewal Lease Term, if any, of
the Facility Lease.
"TERMINATION DATE" shall mean each of the monthly dates during the Facility
Lease Term identified as a "Termination Date" on Schedule 2 of the Facility
Lease.
"TERMINATION VALUE" for any Termination Date shall mean, with respect to the
Undivided Interest, an amount equal to the product of the Purchase Price and the
Termination Value Percentage as set forth on Schedule 2 of the Facility Lease
for such Termination Date.
"TITLE POLICIES" shall mean each of the title policies issued to the Owner
Lessor, the Lease Indenture Trustee and PPL Montana relating to the Transaction.
"TOTAL CAPITALIZATION" shall mean, with respect to any Person, the sum, without
duplication, of (i) total common stock equity or analogous ownership interests
of such Person, (ii) preferred stock and preferred securities of such Person,
(iii) additional paid in capital or analogous interests of such Person, (iv)
retained earnings of such Person, (v) the aggregate principal amount of
Indebtedness of such Person then outstanding, and (vi) the total equity
contributed by the Owner Participants on the Closing Date.
"TRANSACTION" shall mean, collectively, each of the transactions contemplated
under the Participation Agreement and of the other Operative Documents.
"TRANSACTION COSTS" shall mean the following costs to the extent substantiated
or otherwise supported in reasonable detail:
(vi) the cost of reproducing and printing the Operative
Documents and the Offering Memorandum and all costs and fees, including filing
and recording fees and recording, transfer, mortgage, intangible and similar
taxes in connection with the execution, delivery, filing and recording of the
Facility Lease, the Site Lease and Sublease, and any other Operative Document,
and any other document required to be filed or recorded pursuant to the
provisions hereof or of any other Operative Document and any Uniform Commercial
Code filing fees in respect of the perfection of any security interests created
by any of the Operative Documents or as otherwise reasonably required by the
Owner Lessor or the Lease Indenture Trustee;
(vii) the reasonable fees and expenses of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
LLP, counsel to the Owner Participant, for services rendered in connection with
the negotiation, execution and delivery of the Participation Agreement and the
other Operative Documents;
(viii) the reasonable fees and expenses of ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇▇ PPLP, Montana counsel to the Owner Participant, for services rendered
in connection with the negotiation, execution and delivery of the Participation
Agreement and the other Operative Documents;
122
(ix) the reasonable fees and expenses of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ LLP, special counsel to PPL Montana, for services rendered in
connection with the negotiation, execution and delivery of the Participation
Agreement and the other Operative Documents;
(x) the reasonable fees and expenses of Winthrop, Stimson,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to PPL Montana, for services rendered in connection
with the negotiation, execution and delivery of the Participation Agreement and
the other Operative Documents;
(xi) the reasonable fees and expenses of ▇▇▇▇▇▇▇, Bellingham,
▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., Montana counsel to PPL Montana, for services rendered in
connection with the negotiation, execution and delivery of the Participation
Agreement and the other Operative Documents;
(xii) the reasonable fees and expenses of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ &
▇▇▇▇▇, regulatory counsel to PPL Montana, for services rendered in connection
with the negotiation, execution and delivery of the Participation Agreement and
the other Operative Documents;
(xiii) the reasonable fees and expenses of Morris, James,
Hitchens & ▇▇▇▇▇▇▇▇ LLP, counsel for the Owner Lessor, the Lessor Manager, and
the Trust Company for services rendered in connection with the negotiation,
execution and delivery of the Participation Agreement and the other Operative
Documents;
(xiv) the reasonable fees and expenses of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
counsel to the Initial Purchasers, for services rendered in connection with the
negotiation, execution and delivery of the Participation Agreement and the other
Operative Documents, and the Certificate Purchase Agreement;
(xv) the reasonable fees and expenses of ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇
LLP, counsel for the Lease Indenture Trustee, the Lease Indenture Company, the
Pass Through Trustee and the Pass Through Company, for services rendered in
connection with the negotiation, execution and delivery of the Participation
Agreement and the other Operative Documents;
(xvi) the fees and expenses of the Advisors to PPL Montana,
for services rendered in connection with the transactions contemplated by the
Participation Agreement;
(xvii) the underwriting discounts and commissions payable to,
and reasonable out-of-pocket expenses of, the Initial Purchasers;
(xviii) the reasonable fees and expenses of
PricewaterhouseCoopers LLP for services rendered in connection with the
Transaction;
(xix) the reasonable out-of-pocket expenses of the Owner
Participant and the Owner Lessor (including computer time procurement);
(xx) the initial fees and expenses of the Lessor Manager, the
Lease Indenture Trustee and the Pass Through Trustee in connection with the
execution and delivery of the Participation Agreement and the other Operative
Documents to which either one is or will be a party;
123
(xxi) the fees and expenses of the Appraiser, for services
rendered in connection with delivering the Closing Appraisal required by Section
4 of the Participation Agreement;
(xxii) the fees and expenses of the Engineering Consultant,
for services rendered in connection with delivering the Engineering Report
required by Section 4 of the Participation Agreement;
(xxiii) the fees and expenses of the Market Consultant, for
services rendered in connection with delivering the Market Report required by
Section 4 of the Participation Agreement;
(xxiv) the fees and expenses of the Fuel Consultant, for
services rendered in connection with delivering the Fuel Report required by
Section 4 of the Participation Agreement;
(xxv) the fees and expenses of Aon Risk Services, Inc.;
(xxvi) the fees and expenses of the Environmental Consultant;
(xxvii) the fees and expenses of the Rating Agencies in
connection with the rating of PPL Montana and the Lease Debt; and
(xxviii) the premiums and any other fees and expenses relating
to the Title Policies.
Notwithstanding the foregoing, Transaction Costs shall not include internal
costs and expenses such as salaries and overhead of whatsoever kind or nature
nor costs incurred by the parties to the Participation Agreement pursuant to
arrangements with third parties for services (other than those expressly
referred to above), such as computer time procurement (other than out-of-pocket
expenses of the Owner Participant), financial analysis and consulting, advisory
services, and costs of a similar nature.
"TRANSACTION COST DEDUCTIONS" shall have the meaning set forth in Section 1(a)
of the Tax Indemnity Agreement.
"TRANSACTION PARTY(IES)" shall mean, individually or collectively as the context
may require, all or any of the parties to the Operative Documents (including the
Trust Company, the Lease Indenture Company, and the Pass Through Company).
"TRANSFEREE" shall have the meaning specified in Section 9.1(a) of the
Participation Agreement.
"TRANSMISSION FACILITIES" shall mean all transmission lines, switch yards,
substations and other equipment, property, or rights necessary for the
transmission of electricity from the Colstrip Project to the power grid,
including each of the items described on Schedule 5 to the Participation
Agreement.
"TREASURY REGULATIONS" shall mean regulations, including temporary regulations,
promulgated under the Code.
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"TRUST COMPANY" shall mean the Wilmington Trust Company.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 as in force at the
date as of which this instrument was executed except as provided in Section 905;
provided, however, that in the event the Trust Indenture Act of 1939 is amended
after such date, "Trust Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
"UNDIVIDED INTEREST" shall mean the Unit 3 Interest.
"UNIFORM COMMERCIAL CODE" OR "UCC" shall mean the Uniform Commercial Code as in
effect in the applicable jurisdiction.
"UNIT 1" shall mean Colstrip Unit No. 1, a 333 MW (gross capacity) coal-fired
steam electric generating unit located on the Units 1 and 2 Site in Rosebud
County, Montana, designated "Colstrip ▇▇▇▇ ▇," and Sublease and specifically
excluding therefrom the Transmission Facilities.
"UNIT 2" shall mean Colstrip Unit No. 2, a 333 MW (gross capacity) coal-fired
steam electric generating unit located on the Units 1 and 2 Site in Rosebud
County, Montana, designated "Colstrip ▇▇▇▇ ▇," and specifically excluding
therefrom the Transmission Facilities.
"UNIT 3" shall mean Colstrip Unit No. 3, a 805 MW (gross capacity) coal-fired
steam electric generating unit located on the Unit 3 Site in Rosebud County,
Montana, designated "Colstrip ▇▇▇▇ ▇," and consisting of the assets described in
Exhibit B of the Site Lease and Sublease and specifically excluding therefrom
the Transmission Facilities.
"UNIT 3 INTEREST" shall mean the undivided interest in Unit 3 and the Related
Common Facilities Interest 3 conveyed to the Owner Lessor pursuant to the ▇▇▇▇
of Sale, and shall consist of an undivided Owner Lessor's Percentage of (a) a
30% undivided interest in and to Unit 3, (b) a 15% undivided interest in and to
the Common Facilities 3-4, and (c) 15% of the undivided interest in and to the
Common Facilities 1-2-3-4 allocated to Units 3 and 4 pursuant to the Common
Facilities Agreement.
"UNIT 3 PRINCIPAL PORTION" shall mean, with respect to any Lessor Note, an
amount equal to the portion of the principal of such Lessor Note relating to the
purchase of the related Unit 3 Interest, as set forth on Schedule 3 of such
Lessor Note.
"UNIT 3 SITE" shall mean the land on which Unit 3 is situated, which is
described as the Unit 3 Site in Exhibit A to the Site Lease and Sublease, and
all rights of way, easements, permits and other appurtenances to such land
(including the Water Rights) described on such Schedule or otherwise, and
specifically excluding the Transmission Facilities and the Common Facilities
Site.
"UNIT 4" shall mean Colstrip Unit No. 4, a 805 MW (gross capacity) coal-fired
steam electric generating unit located on the Unit 4 Site in Rosebud County,
Montana, designated "Colstrip Unit 4."
125
"UNIT 4 SITE" shall mean the land on which Unit 4 is situated, which is
described as the Unit 4 Site.
"UNIT INTEREST" shall mean the Unit 3 Interest.
"UNIT PERCENTAGE" shall mean, with respect to Unit 3, the undivided interest in
such Unit conveyed to the Owner Lessor pursuant to the ▇▇▇▇ of Sale.
"UNIT PRINCIPAL PORTION" shall mean the Unit 3 Principal Portion.
"UNIT SITE" shall mean the Unit 3 Site.
"UNITS" shall mean Unit 3.
"UNITS 1 AND 2" shall mean, collectively, ▇▇▇▇ ▇ ▇▇▇ ▇▇▇▇ ▇.
"UNITS 1 AND 2 INTEREST" shall mean a collective reference to the undivided
interest in Units 1 and 2 and the Related Common Facilities conveyed to the
Owner Lessor pursuant to the ▇▇▇▇ of Sale, and shall consist of the Unit 1
Interest and the Unit 2 Interest.
"UNITS 1 AND 2 SITE" shall mean the land on which Units 1 and 2 are situated,
which is described as the Units 1 and 2 Site in Exhibit A to the Site Lease and
Sublease, and all rights of way, easements, permits and other appurtenances to
such land (including the Water Rights) described on such Schedule or otherwise,
and specifically excluding the Transmission Facilities and the Common Facilities
Site.
"UNITS 3 AND 4" shall mean, collectively, ▇▇▇▇ ▇ and Unit 4.
"U.S. GOVERNMENT OBLIGATIONS" shall mean securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii) are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any deduction in the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.
"VERIFIER" shall have the meaning specified in Section 3.5(c) of the Facility
Lease.
"VOTE SHARING AGREEMENT" shall mean that certain project committee vote sharing
agreement between PPL Montana and MPC entered into as of December 17, 1999.
126
"VOTING AGREEMENT" shall mean the Omnibus Voting Rights Agreement (3), dated as
of the Closing Date, between PPL Montana and the Owner Lessor and the Other
Owner Lessors, substantially in the form of Exhibit H to the Participation
Agreement duly completed, executed and delivered on the Closing Date.
"WATER RIGHTS" shall mean any and all rights of PPL Montana to use, apply and
appropriate water necessary for make-up, cooling, pollution control, screen
cleansing and other auxiliary uses associated with and necessary to the
efficient operation of the Facility, including, all appropriative rights
recognized under Montana law. These appropriative rights are included in the
claim made by Claim No. 42KJ-W-094423-00 filed with the Montana Water Courts.
"WINTERGREEN RENEWAL LEASE TERMS" shall have the meaning specified in Section
15.2 of the Facility Lease.
"WORKING CAPITAL FACILITY" shall mean any Revolving Loan (as such term is
defined in the Credit Agreement) extended to PPL Montana pursuant to tranche B
of the Credit Agreement.
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INDEX
"Dollars" or the sign "$" ............................................... 16
Abstract of Lease ....................................................... 7
Acquired Indebtedness ................................................... 7
Actual Knowledge ........................................................ 7
Additional Certificates ................................................. 7
Additional Equity Investment ............................................ 8
Additional Lessor Notes ................................................. 8
Additional Subsidiary ................................................... 8
Advisors to the Facility Lessee ......................................... 8
Affiliate ............................................................... 8
After-Tax Basis ......................................................... 8
Allocated Rent .......................................................... 8
Applicable Law .......................................................... 8
Applicable Rate ......................................................... 9
Appraisal Procedure ..................................................... 9
Appraiser ............................................................... 9
Asset Purchase Agreement ................................................ 9
Asset Sale .............................................................. 9
Assigned Documents ...................................................... 10
Assignment and Assumption Agreement ..................................... 10
Assignment and Reassignment(s) of Project Agreements .................... 10
Assumed Deductions ...................................................... 10
Assumed Tax Rate ........................................................ 10
Authorized Agent ........................................................ 10
Balance Sheet ........................................................... 10
Bankruptcy Code ......................................................... 10
Basic Lease Rent ........................................................ 10
Basic Lease Term ........................................................ 10
Basic Site Lease Term ................................................... 10
Basic Site Sublease Term ................................................ 11
▇▇▇▇(s) of Sale ......................................................... 11
Burdensome Termination Event ............................................ 11
Business Day ............................................................ 11
Capital Expenditures .................................................... 11
Cash Flow Available for Fixed Charges ................................... 11
Cash Flow to Fixed Charges Ratio ........................................ 11
Certificate Purchase Agreement .......................................... 11
Certificateholders ...................................................... 11
Certificates ............................................................ 12
Certificates Register ................................................... 12
Change of Control ....................................................... 12
Change of Control Premium ............................................... 12
Claim ................................................................... 12
Closing ................................................................. 12
Closing Appraisal ....................................................... 12
Closing Date ............................................................ 13
Code .................................................................... 13
Colstrip Facility Leases ................................................ 13
Colstrip Project ........................................................ 13
Colstrip Site ........................................................... 13
Colstrip Unit 1 ......................................................... 13
Colstrip Unit 2 ......................................................... 13
Colstrip Unit 3 ......................................................... 13
Colstrip Unit 4 ......................................................... 13
Colstrip Units 1 and 2 .................................................. 13
Colstrip Units 3 and 4 .................................................. 13
Common Facilities ....................................................... 14
Common Facilities 1-2-3-4 ............................................... 14
Common Facilities 1-2-3-4 Site .......................................... 14
Common Facilities 3-4 ................................................... 14
Common Facilities 3-4 Site .............................................. 14
Common Facilities Agreement ............................................. 14
Common Facilities Percentage ............................................ 14
Common Facilities Site .................................................. 14
Competitor .............................................................. 14
Component ............................................................... 14
Consolidated Subsidiary ................................................. 14
Consolidated Tangible Net Assets ........................................ 15
Core Subsidiary ......................................................... 15
Corporate Trust Office .................................................. 15
Credit Agreement ........................................................ 15
Debt Covenant Termination Date .......................................... 15
Debt Portion of Rent .................................................... 15
Debt Portion of Termination Value ....................................... 15
Debt to Capital Ratio ................................................... 16
Deduction Loss .......................................................... 16
Depreciation Deduction .................................................. 16
Discount Rate ........................................................... 16
Distribution ............................................................ 16
DTC ..................................................................... 16
EBITDA .................................................................. 16
Effective Date .......................................................... 16
Effective Rate .......................................................... 16
Enforcement Notice ...................................................... 16
Engineering Consultant .................................................. 16
Engineering Report ...................................................... 16
Environmental Condition ................................................. 17
Environmental Consultant ................................................ 17
Environmental Laws ...................................................... 17
Environmental Report .................................................... 17
Equity Contribution Agreement ........................................... 17
128
Equity Covenant Termination Date ........................................ 17
Equity Investment ....................................................... 17
Equity Portion of Periodic Lease Rent ................................... 17
Equity Portion of Termination Value ..................................... 17
ERISA ................................................................... 17
Event of Default ........................................................ 17
Event of Loss ........................................................... 17
Excepted Payments ....................................................... 18
Excepted Rights ......................................................... 19
Excess Amount ........................................................... 19
Exchange Act ............................................................ 19
Excluded Property ....................................................... 19
Excluded Taxes .......................................................... 19
Existing Indebtedness ................................................... 19
Expiration Date ......................................................... 19
Facility ................................................................ 19
Facility Lease .......................................................... 19
Facility Lease Term ..................................................... 19
Facility Lessee ......................................................... 20
Facility Lessee's Interest .............................................. 20
Facility Site Sublease .................................................. 20
Fair Market Rental Value ................................................ 20
Fair Market Sales Value ................................................. 20
Federal Power Act ....................................................... 20
FERC .................................................................... 20
FERC (Owner Lessor) EWG Notice .......................................... 21
FERC EWG (Owner Lessor) Order ........................................... 21
FERC EWG (PPLM) Order ................................................... 21
FERC OATT Order ......................................................... 21
FERC Orders ............................................................. 21
FERC Part 2 Order ....................................................... 21
FERC Section 203 Order .................................................. 21
FERC Section 205 Order .................................................. 21
FERC Waiver Order ....................................................... 21
Final Determination ..................................................... 21
First Wintergreen Renewal Lease Term .................................... 21
Fixed Charges ........................................................... 22
Fixed Lease Term ........................................................ 22
FMV Renewal Lease Term .................................................. 22
Fuel Consultant ......................................................... 22
Fuel Report ............................................................. 22
GAAP .................................................................... 22
Governmental Entity ..................................................... 22
Ground Interest ......................................................... 22
Ground Lessee ........................................................... 22
Ground Lessor ........................................................... 22
Ground Lessor's Release Rights .......................................... 22
Ground Sublessee ........................................................ 23
Ground Sublessor ........................................................ 23
Guarantor ............................................................... 23
Guaranty ................................................................ 23
Hazardous Substance ..................................................... 23
Holding Company Act ..................................................... 23
Inclusion Loss .......................................................... 23
Indebtedness ............................................................ 23
Indemnitee .............................................................. ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ........................................................ 24
Indenture Trustee's Liens ............................................... 24
Independent Appraiser ................................................... 24
Initial Purchasers ...................................................... 24
Interest Deductions ..................................................... 24
Interim Lease Rent ...................................................... 24
Interim Lease Term ...................................................... 24
Investment .............................................................. 24
IRS ..................................................................... 25
Lease Debt .............................................................. 25
Lease Debt Rate ......................................................... 25
Lease Event of Default .................................................. 25
Lease Indenture ......................................................... 25
Lease Indenture Bankruptcy Default ...................................... 25
Lease Indenture Event of Default ........................................ 25
Lease Indenture Payment Default ......................................... 25
Lease Indenture Trustee ................................................. 25
Lease Indenture Trustee Office .......................................... 25
Lease Indenture Trustee's Account ....................................... 26
Lease Obligations ....................................................... 26
Lease Payment Obligations ............................................... 26
Lessee Action ........................................................... 26
Lessee Person ........................................................... 26
Lessee Section 467 Interest ............................................. 26
Lessee Section 467 Loan Balance ......................................... 26
Lessor Estate ........................................................... 26
Lessor Manager .......................................................... 26
Lessor Note ............................................................. 27
Lessor Possession Date .................................................. 27
Lessor Section 467 Interest ............................................. 27
Lessor Section 467 Loan Balance ......................................... 27
Lien .................................................................... 27
List of Competitors ..................................................... 27
LLC Agreement ........................................................... 27
Loans ................................................................... 27
Majority in Interest of Noteholders ..................................... 27
Make Whole Premium ...................................................... 27
Market Consultant ....................................................... 28
Market Report ........................................................... 28
Material Adverse Effect ................................................. 28
Maximum Probable Loss ................................................... 28
Member Interest ......................................................... 28
Minimum Credit Standard ................................................. 28
Modification ............................................................ 28
Montana Assets .......................................................... 28
▇▇▇▇▇'▇ ................................................................. 28
129
MPC ..................................................................... 28
Non-Recourse Indebtedness ............................................... 28
Nonseverable Modifications .............................................. 29
Note Register ........................................................... 29
Noteholder .............................................................. 29
Notes ................................................................... 29
Obsolescence Termination Date ........................................... 29
Offering Memorandum ..................................................... 29
Officer's Certificate ................................................... 29
Omnibus Voting Agreement ................................................ 29
OP Guarantor ............................................................ 29
OP Member ............................................................... 29
OP Member Interest ...................................................... 30
OP Parent Guaranty ...................................................... 30
Operating Agreement 1-2 ................................................. 30
Operative Documents ..................................................... 30
Operator ................................................................ 30
Optional Modification ................................................... 30
Original LLC Agreement .................................................. 30
Other Bills of Sale ..................................................... 30
Other Colstrip Lease Transactions ....................................... 30,31
Other Facility Lease .................................................... 30
Other Ground Interests .................................................. 30
Other Lease Indenture Trustees .......................................... 30
Other Lease Indentures .................................................. 30
Other Lessor Managers ................................................... 31
Other Operative Documents ............................................... 31
Other Owner Lessors ..................................................... 31
Other Owner Participants ................................................ 31
Other Participation Agreements .......................................... 31
Other Site Lease and Sublease ........................................... 31
Other Undivided Interest ................................................ 31
Overdue Rate ............................................................ 31
Owner Committee ......................................................... 32
Owner Lessor ............................................................ 31
Owner Lessor's Account .................................................. 31
Owner Lessor's Interest ................................................. 31
Owner Lessor's Lien ..................................................... 32
Owner Lessor's Percentage ............................................... 32
Owner Participant ....................................................... 32
Owner Participant's Account ............................................. 32
Owner Participant's Commitment .......................................... 3,32
Owner Participant's Lien ................................................ 32
Owner Participant's Net Economic Return ................................. 32
Ownership Agreement 1-2 ................................................. 33
Ownership Agreement 3-4 ................................................. 33
Ownership Agreements .................................................... 33
Ownership and Operating Agreements 1-2 .................................. 33
Participation Agreement ................................................. 33
Pass Through Trust ...................................................... 33
Pass Through Trust Agreement ............................................ 33
Pass Through Trustee .................................................... 33
Periodic Lease Rent ..................................................... 33
Permitted Business ...................................................... 33
Permitted Encumbrances .................................................. 34
Permitted Instruments ................................................... 34
Permitted Investment .................................................... 34
Permitted Liens ......................................................... 35
Permitted Securities .................................................... 35
Person .................................................................. 35
Plan .................................................................... 35
Pollution Control Facilities ............................................ 36
Portland ................................................................ 36
Power Market Consultant ................................................. 36
PPA ..................................................................... 36
PPA Period .............................................................. 36
PPL Corporation ......................................................... 36
PPL Montana ............................................................. 36
Pricing Assumptions ..................................................... 37
Principal Portion ....................................................... 37
Proceeds ................................................................ 37
Project Agreements ...................................................... 37
Project Committee ....................................................... 37
Proportional Rent ....................................................... 37
Prudent Industry Practice ............................................... 37
Puget ................................................................... 37
Purchase Price .......................................................... 37
Qualified Shareholder ................................................... 37
Qualifying Cash Bid ..................................................... 37
Qualifying Letter of Credit ............................................. 38
Qualifying Letter of Credit Bank ........................................ 38
Rating Agencies ......................................................... 38
Rebuilding Closing Date ................................................. 38
Redemption Date ......................................................... 38
Regulatory Event of Loss ................................................ 38
Related Common Facilities ............................................... 38
Related Common Facilities Interest ...................................... 38
Related Common Facilities Interest 3 .................................... 38
Related Common Facilities Site .......................................... 38
Related Ground Interest ................................................. 38
Related Party ........................................................... 38
Related Site ............................................................ 39
Released Property ....................................................... 39
Renewal Lease Rent ...................................................... 39
Renewal Lease Term ...................................................... 39
Renewal Site Lease Term ................................................. 39
Renewal Site Sublease Term .............................................. 39
Rent .................................................................... 39
Rent Payment Date ....................................................... 39
Rent Payment Period ..................................................... 39
Replacement Component ................................................... 39
Required Modification ................................................... 39
130
Requisition ............................................................. 39
Responsible Officer ..................................................... 40
Restricted Investment ................................................... 40
Restricted Payment ...................................................... 40
Revenues ................................................................ 40
Rights Sharing Agreement ................................................ 40
S&P ..................................................................... 40
Scheduled Closing Date .................................................. 41
Scheduled Lease Expiration Date ......................................... 41
Scheduled Payment Date .................................................. 41
Scheduled to be Paid .................................................... 41
SEC ..................................................................... 41
Second Wintergreen Renewal Lease Term ................................... 41
Section 467 Interest .................................................... 41
Section 467 Loan Balance ................................................ 41
Secured Indebtedness .................................................... 41
Securities Act .......................................................... 41
Security ................................................................ 41
Severable Modification .................................................. 41
Significant Indenture Default ........................................... 42
Significant Lease Default ............................................... 41
Site Lease and Sublease ................................................. 42
Site Lease Term ......................................................... 42
Site Sublease Term ...................................................... 42
Site(s) ................................................................. 42
Special Lessee Transfer ................................................. 42
Special Lessee Transfer Amount .......................................... 42
Special Lessee Transfer Event ........................................... 43
Subsidiary .............................................................. 43
Supplemental Financing .................................................. 43
Supplemental Lease Rent ................................................. 43
Tax ..................................................................... 43
Tax Advance ............................................................. 43
Tax Assumptions ......................................................... 43
Tax Benefit ............................................................. 43
Tax Claim ............................................................... 43
Tax Event ............................................................... 43
Tax Indemnitee .......................................................... 43
Tax Indemnity Agreement(s) .............................................. 43
Tax Law Change .......................................................... 44
Tax Loss ................................................................ 44
Tax Representation ...................................................... 44
Tax Shelter Designation Agreement ....................................... 44
Taxes ................................................................... 43
Term .................................................................... 44
Termination Date ........................................................ 44
Termination Value ....................................................... 44
Title Policies .......................................................... 44
Total Capitalization .................................................... 44
Transaction ............................................................. 44
Transaction Cost Deductions ............................................. 46
Transaction Costs ....................................................... 44
Transaction Party(ies) .................................................. 46
Transferee .............................................................. 47
Transmission Facilities ................................................. 47
Treasury Regulations .................................................... 47
Trust Company ........................................................... 47
Trust Indenture Act ..................................................... 47
U.S. Government Obligations ............................................. 48
UCC ..................................................................... 47
Undivided Interest ...................................................... 47
Uniform Commercial Code ................................................. 47
Unit 1 .................................................................. 47
Unit 2 .................................................................. 47
Unit 3 .................................................................. 47
Unit 3 Interest ......................................................... 47
Unit 3 Principal Portion ................................................ 48
▇▇▇▇ ▇ ▇▇▇▇ ............................................................. ▇▇
▇▇▇▇ ▇ .................................................................. 48
Unit 4 Site ............................................................. 48
Unit Interest ........................................................... 48
Unit Percentage ......................................................... 48
Unit Principal Portion .................................................. 48
Unit Site ............................................................... 48
Units ................................................................... 48
Units 1 and 2 ........................................................... 48
Units 1 and 2 Interest .................................................. 48
Units 1 and 2 Site ...................................................... 48
Units 3 and 4 ........................................................... 48
Verifier ................................................................ 49
Vote Sharing Agreement .................................................. 49
Voting Agreement ........................................................ 49
Water Rights ............................................................ ▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Lease Term .......................................... 49
Working Capital Facility ................................................ 49
131
SCHEDULE 1
TO
PARTICIPATION
AGREEMENT
RECORDINGS AND FILINGS
1. Land Recordings
(A) ▇▇▇▇ of Sale (BA3), dated the Closing Date, between PPL Montana and
the Owner Lessor to be filed with Clerk and Recorder of Rosebud
County, Montana
(B) Site Lease and Sublease (BA3), dated as of the Closing Date, between
PPL Montana and the Owner Lessor filed with Clerk and Recorder of
Rosebud County, Montana
(C) Abstract of Facility Lease (BA3), dated as of the Closing Date,
between the Owner Lessor and PPL Montana filed with Clerk and
Recorder of Rosebud County, Montana
(D) Indenture of Trust, Mortgage and Security Agreement (BA3), dated the
Closing Date, between the Owner Lessor and the Lease Indenture
Trustee filed with Clerk and Recorder of Rosebud County, Montana
2. UCC Filings
(A) Montana Primary Filings.
(1) Primary UCC Filings Against the Owner Lessor
- UCC-1 naming the Owner Lessor, as debtor, and the Lease
Indenture Trustee, as secured party, filed with the
Secretary of State of Montana
- UCC-1 naming the Owner Lessor, as debtor, and the Lease
Indenture Trustee, as secured party, filed with the
Clerk and Recorder of Rosebud County, Montana
(2) Primary Informational Filing Against the Owner Lessor
- Informational Filing naming the Owner Lessor, as debtor,
and the Lease Indenture Trustee, as secured party filed
with the Secretary of the State of Montana
(B) Montana Precautionary Filings:
(1) Precautionary UCC Filings Against PPL Montana
- UCC-1 naming PPL Montana as debtor, the Owner Lessor, as
secured party, and the Lease Indenture Trustee, as
assignee, filed with the Secretary of the State of
Montana
132
- UCC-1 naming PPL Montana as debtor, the Owner Lessor, as
secured party, and the Lease Indenture Trustee, as
assignee, filed with Clerk and Recorder of Rosebud
County, Montana
(2) Precautionary Informational Filings Against PPL Montana
- Informational Filing naming PPL Montana, as debtor, the
Owner Lessor, as secured party, and the Lease Indenture
Trustee, as assignee, filed with the Secretary of the
State of Montana
(C) Delaware Primary Filing:
(1) Primary UCC Filing Against the Owner Lessor
- UCC-1 naming the Owner Lessor, as debtor, and the Lease
Indenture Trustee, as secured party, filed with the
Secretary of the State of Delaware
(D) Delaware Precautionary Filing:
(1) Precautionary UCC Filing Against PPL Montana
- UCC-1 naming PPL Montana, as debtor, the Owner Lessor,
as secured party, and the Lease Indenture Trustee, as
assignee, filed with the Secretary of the State of
Delaware
133
SCHEDULE 2
TO
PARTICIPATION
AGREEMENT
APPENDIX A
PRICING ASSUMPTIONS
(BA3)
Periodic Lease Rent, Allocated Rent, Proportional Rent, Section 467 Loan
Balance, Section 467 Interest and Termination Values should be computed on the
basis of the following Pricing Assumptions:
1. EQUITY FUNDING: The Owner Participant will advance
(a) its Equity Investment and (b)
amounts necessary to pay all
Transaction Expenses.
2. EQUITY INVESTMENT: $72.0 million multiplied by
42.▇▇▇▇▇▇▇▇▇▇%
3. COST RECOVERY DEDUCTIONS:
Percentage of
Deduction Purchase Price
--------- --------------
20-year, 150 percent 99.40%
Declining Balance
Switching to Straight
Line
15-Year, 150 percent 0.04%
Declining Balance
Switching to Straight
Line
39-Year, Straight Line 0.56%
In case of the 20-year and 15-year
deductions, utilizing the half-year
convention and a full first tax year.
In the case of 39-year deductions, utilizing
the mid-month convention.
4. FEDERAL TAX RATE 35%
5. CLOSING DATE: July 20, 2000
6. TRANSACTION EXPENSES: 3.00% of the Purchase Price
SCHD. 2-1
134
7. RENT PAYMENT DATES: January 2 and July 2
8. FIRST RENT PAYMENT DATE: January 2, 2001
9. EXPIRATION OF BASIC LEASE
TERM: July 20, 2036
10. THE PURCHASE PRICE: $410 million times 42.▇▇▇▇▇▇▇▇▇▇%
11. GAAP TREATMENT: The Lease will meet the qualifications for
operating lease treatment by the Lessee.
12. LEASE DEBT
MAXIMUM MATURITY 20 years
MAXIMUM AVERAGE LIFE 12 years
INTEREST ONLY PERIOD None required
INTEREST RATE 8.903%
DISCOUNT RATE FOR GAAP 9.370%
13. INTEREST ONLY PAYMENTS: None required.
14. 110% OF LONG-TERM AFR: 6.93% (semi-annual compounding).
SCHD. 2-2
135
15. ANNUAL RENTAL CAPS: All amounts set forth below are to be
multiplied by 43.▇▇▇▇▇▇▇▇▇▇% and are
with respect to payments made on July
2 of the stated year and January 2 of
the following year:
2000 $21,929.200
2001 $36,127,200
2002 $48,338,000
2003 $46,110,400
2004 $42,744,333
2005 $37,490,000
2006 $37,283,226
2007 $35,219,375
2008 $37,209,091
2009 $38,846,765
2010 $40,501,429
2011 $40,921,944
2012 $41,406,216
2013 $44,330,263
2014 $45,820,000
2015 $39,783,000
2016 $15,291,700
2017 $15,970,300
2018 $16,235,500
2019 $17,319,100
Thereafter $18,383,300
SCHD. 2-3
136
SCHEDULE 3
TO
PARTICIPATION
AGREEMENT
VALUES FOR
PERIODIC LEASE RENT, ALLOCATED RENT, PROPORTIONAL RENT,
SECTION 467 LOAN BALANCE, SECTION 467 INTEREST
TERMINATION VALUES AND LESSOR NOTE AMORTIZATION
137
Periodic Lease Rent Percentages
Rent Payment Dates Periodic Lease Rent Percentage
Oct 2 2000 0.000000000%
Jan 2 2001 5.348585366%
Jul 2 2001 5.188447202%
Jan 2 2002 3.623064993%
Jul 2 2002 8.378365359%
Jan 2 2003 3.411390739%
Jul 2 2003 8.041131021%
Jan 2 2004 3.205308004%
Jul 2 2004 7.407178071%
Jan 2 2005 3.018269002%
Jul 2 2005 6.270394045%
Jan 2 2006 2.873508394%
Jul 2 2006 6.375861578%
Jan 2 2007 2.717608178%
Jul 2 2007 6.019458787%
Jan 2 2008 2.570632677%
Jul 2 2008 6.688026884%
Jan 2 2009 2.387361165%
Jul 2 2009 7.306419080%
Jan 2 2010 2.168401651%
Jul 2 2010 7.968160951%
Jan 2 2011 1.910236366%
Jul 2 2011 8.357727905%
Jan 2 2012 1.623234046%
Jul 2 2012 8.741890724%
Jan 2 2013 1.357186349%
Jul 2 2013 9.832342973%
Jan 2 2014 0.979916295%
Jul 2 2014 10.601366256%
Jan 2 2015 0.574243500%
Jul 2 2015 9.506229857%
Jan 2 2016 0.196940874%
Jul 2 2016 3.599395122%
Jan 2 2017 0.130287805%
Jul 2 2017 0.861995122%
Jan 2 2018 0.097715854%
Jul 2 2018 0.829423171%
Jan 2 2019 0.065143902%
Jul 2 2019 0.796851220%
Jan 2 2020 0.032571951%
Jul 2 2020 0.764279268%
Jan 2 2021 0.574238447%
Jul 2 2021 0.813964974%
Jan 2 2022 0.850613103%
Jul 2 2022 0.850613103%
Jan 2 2023 0.888842103%
138
Jul 2 2023 0.888842103%
Jan 2 2024 0.928729273%
Jul 2 2024 0.928729273%
Jan 2 2025 0.970346535%
Jul 2 2025 0.970346535%
Jan 2 2026 1.013768931%
Jul 2 2026 1.013768931%
Jan 2 2027 1.059074758%
Jul 2 2027 1.059074758%
Jan 2 2028 0.968862341%
Jul 2 2028 0.914690317%
Jan 2 2029 0.892256545%
Jul 2 2029 0.892256545%
Jan 2 2030 0.892256545%
Jul 2 2030 0.892256545%
Jan 2 2031 0.892256545%
Jul 2 2031 0.892256545%
Jan 2 2032 0.892256545%
Jul 2 2032 0.385376175%
Jan 2 2033 0.024390244%
Jul 2 2033 0.024390244%
Jan 2 2034 0.024390244%
Jul 2 2034 0.024390244%
Jan 2 2035 0.024390244%
Jul 2 2035 0.024390244%
Jan 2 2036 0.024390244%
Jul 2 2036 0.024390244%
Jul 20 2036 0.024390244%
139
Allocation of Periodic Lease Rent
Rent Payment Period
---------------------------
From and To but Allocation Proportional Section 467
Including Excluding Rent Percentage Rent Percentage Interest Percentage
2-Oct-00 2-Jan-01 1.152476028% 1.812669013% 0.000000000%
2-Jan-01 2-Jul-01 0.000000000% 0.000000000% 0.122519502%
2-Jul-01 2-Jan-02 4.622780940% 7.270929336% 0.306544498%
2-Jan-02 2-Jul-02 0.000000000% 0.000000000% 0.190767765%
2-Jul-02 2-Jan-03 4.609832175% 7.250562904% 0.487688228%
2-Jan-03 2-Jul-03 0.047382013% 0.074524680% 0.371559310%
2-Jul-03 2-Jan-04 4.562257797% 7.175735664% 0.660476749%
2-Jan-04 2-Jul-04 0.054555063% 0.085806793% 0.545786950%
2-Jul-04 2-Jan-05 4.555310454% 7.164808552% 0.818383983%
2-Jan-05 2-Jul-05 0.129924010% 0.204350651% 0.703063393%
2-Jul-05 2-Jan-06 4.479559263% 7.045663483% 0.937612943%
2-Jan-06 2-Jul-06 0.180984089% 0.284660367% 0.825536057%
2-Jul-06 2-Jan-07 4.428637123% 6.965570724% 1.065201004%
2-Jan-07 2-Jul-07 0.251396432% 0.395408244% 0.954918316%
2-Jul-07 2-Jan-08 4.358115896% 6.854651590% 1.182879587%
2-Jan-08 2-Jul-08 0.289436518% 0.455239497% 1.075425109%
2-Jul-08 2-Jan-09 4.320257269% 6.795105744% 1.328654673%
2-Jan-09 2-Jul-09 0.388793511% 0.611512893% 1.221964207%
2-Jul-09 2-Jan-10 4.220556709% 6.638291970% 1.496283766%
2-Jan-10 2-Jul-10 0.431250018% 0.678290503% 1.393248299%
2-Jul-10 2-Jan-11 4.178420002% 6.572017356% 1.694118364%
2-Jan-11 2-Jul-11 4.586690668% 7.214164844% 1.591288854%
2-Jul-11 2-Jan-12 0.000000000% 0.000000000% 1.686051473%
2-Jan-12 2-Jul-12 4.609904113% 7.250676051% 1.800718216%
2-Jul-12 2-Jan-13 0.000000000% 0.000000000% 1.914783691%
2-Jan-13 2-Jul-13 5.456373098% 8.582042658% 2.028157453%
2-Jul-13 2-Jan-14 0.000000000% 0.000000000% 2.141756014%
2-Jan-14 2-Jul-14 5.634327249% 8.861937396% 2.249921960%
2-Jul-14 2-Jan-15 0.000000000% 0.000000000% 2.388152966%
2-Jan-15 2-Jul-15 5.634327249% 8.861937396% 2.490800003%
2-Jul-15 2-Jan-16 0.000000000% 0.000000000% 2.599430957%
2-Jan-16 2-Jul-16 5.634327249% 8.861937396% 2.696325241%
2-Jul-16 2-Jan-17 0.000000000% 0.000000000% 2.607405821%
2-Jan-17 2-Jul-17 5.634327249% 8.861937396% 2.702266905%
2-Jul-17 2-Jan-18 0.000000000% 0.000000000% 2.518702454%
2-Jan-18 2-Jul-18 5.634327249% 8.861937396% 2.609361348%
2-Jul-18 2-Jan-19 0.000000000% 0.000000000% 2.421449101%
2-Jan-19 2-Jul-19 5.634327249% 8.861937396% 2.507609548%
2-Jul-19 2-Jan-20 0.000000000% 0.000000000% 2.315042983%
2-Jan-20 2-Jul-20 5.634327249% 8.861937396% 2.396387841%
2-Jul-20 2-Jan-21 0.000000000% 0.000000000% 2.198838825%
2-Jan-21 2-Jul-21 5.634327249% 8.861937396% 2.294925953%
2-Jul-21 2-Jan-22 0.000000000% 0.000000000% 2.095582893%
2-Jan-22 2-Jul-22 5.634327249% 8.861937396% 2.197668584%
2-Jul-22 2-Jan-23 0.000000000% 0.000000000% 1.996225413%
2-Jan-23 2-Jul-23 5.634327249% 8.861937396% 2.096193003%
2-Jul-23 2-Jan-24 0.000000000% 0.000000000% 1.892558339%
2-Jan-24 2-Jul-24 5.634327249% 8.861937396% 1.990315954%
140
2-Jul-24 2-Jan-25 0.000000000% 0.000000000% 1.784394741%
2-Jan-25 2-Jul-25 5.634327249% 8.861937396% 1.879846526%
2-Jul-25 2-Jan-26 0.000000000% 0.000000000% 1.671539585%
2-Jan-26 2-Jul-26 5.634327249% 8.861937396% 1.764585525%
2-Jul-26 2-Jan-27 0.000000000% 0.000000000% 1.553789376%
2-Jan-27 2-Jul-27 5.634327249% 8.861937396% 1.644325118%
2-Jul-27 2-Jan-28 0.000000000% 0.000000000% 1.430931793%
2-Jan-28 2-Jul-28 5.170947056% 8.133111029% 1.514084660%
2-Jul-28 2-Jan-29 0.000000000% 0.000000000% 1.316429416%
2-Jan-29 2-Jul-29 4.609904113% 7.250676051% 1.392960384%
2-Jul-29 2-Jan-30 0.000000000% 0.000000000% 1.220907225%
2-Jan-30 2-Jul-30 4.609904113% 7.250676051% 1.294128350%
2-Jul-30 2-Jan-31 0.000000000% 0.000000000% 1.118650661%
2-Jan-31 2-Jul-31 4.609904113% 7.250676051% 1.188328596%
2-Jul-31 2-Jan-32 0.000000000% 0.000000000% 1.009184946%
2-Jan-32 2-Jul-32 4.609904113% 7.250676051% 1.075069894%
2-Jul-32 2-Jan-33 0.000000000% 0.000000000% 0.874438425%
2-Jan-33 2-Jul-33 4.609904113% 7.250676051% 0.905582838%
2-Jul-33 2-Jan-34 0.000000000% 0.000000000% 0.686570480%
2-Jan-34 2-Jul-34 5.606940934% 8.818862900% 0.711205270%
2-Jul-34 2-Jan-35 0.000000000% 0.000000000% 0.431120055%
2-Jan-35 2-Jul-35 5.634327249% 8.861937396% 0.446903486%
2-Jul-35 2-Jan-36 0.000000000% 0.000000000% 0.156167683%
2-Jan-36 2-Jul-36 3.114530896% 4.898682060% 0.162424016%
2-Jul-36 20-Jul-36 0.000000000% 0.000000000% -0.000084220%
183.371741374% 288.415780697041% 105.044039322810%
141
Termination Value Percentages
Gross Termination Section 467 Loan
Termination Date Value Percentage Balance Percentage
Jul 20 2000 0.00000000% 0.00000000%
Aug 20 2000 104.16702947% 0.00000000%
Sep 20 2000 105.07660605% 0.00000000%
Oct 20 2000 105.97409822% 0.00000000%
Nov 20 2000 106.87405525% 0.00000000%
Dec 20 2000 107.77649840% 0.00000000%
Jan 20 2001 106.86637857% 3.54816830%
Feb 20 2001 107.75047361% 3.56858822%
Mar 20 2001 108.63674194% 3.58900814%
Apr 20 2001 109.52520228% 3.60942805%
May 20 2001 110.40508632% 3.62984797%
Jun 20 2001 111.28710733% 3.65026789%
Jul 20 2001 112.17422821% 8.87753751%
Aug 20 2001 113.06592475% 8.92862826%
Sep 20 2001 113.95966277% 8.97971901%
Oct 20 2001 114.84467267% 9.03080976%
Nov 20 2001 115.73166640% 9.08190051%
Dec 20 2001 116.62066106% 9.13299126%
Jan 20 2002 110.21837970% 5.52463999%
Feb 20 2002 111.08125179% 5.55643462%
Mar 20 2002 111.94608322% 5.58822924%
Apr 20 2002 112.81289087% 5.62002387%
May 20 2002 113.67166401% 5.65181850%
Jun 20 2002 114.53236113% 5.68361313%
Jul 20 2002 115.39349568% 14.12346516%
Aug 20 2002 116.26218162% 14.20474653%
Sep 20 2002 117.13275451% 14.28602790%
Oct 20 2002 117.99520286% 14.36730927%
Nov 20 2002 118.85948437% 14.44859064%
Dec 20 2002 119.72561486% 14.52987201%
Jan 20 2003 113.32140669% 10.76036833%
Feb 20 2003 114.16181404% 10.82229488%
Mar 20 2003 115.00403139% 10.88422143%
Apr 20 2003 115.84807436% 10.94614798%
May 20 2003 116.68471315% 11.00807454%
Jun 20 2003 117.52312945% 11.07000109%
Jul 20 2003 118.28785186% 19.12742572%
Aug 20 2003 119.13434660% 19.23750518%
Sep 20 2003 119.98258480% 19.34758464%
Oct 20 2003 120.82333595% 19.45766410%
Nov 20 2003 121.66578104% 19.56774356%
Dec 20 2003 122.50993466% 19.67782301%
Jan 20 2004 116.15936138% 15.80600583%
Feb 20 2004 116.97853618% 15.89697032%
142
Mar 20 2004 117.79938369% 15.98793482%
Apr 20 2004 118.62191832% 16.07889931%
May 20 2004 119.43763499% 16.16986380%
Jun 20 2004 120.25499454% 16.26082829%
Jul 20 2004 120.98824050% 23.70042376%
Aug 20 2004 121.81459270% 23.83682109%
Sep 20 2004 122.64255653% 23.97321843%
Oct 20 2004 123.46362625% 24.10961576%
Nov 20 2004 124.28626206% 24.24601309%
Dec 20 2004 125.11047746% 24.38241042%
Jan 20 2005 118.75142582% 20.36073614%
Feb 20 2005 119.55102818% 20.47791337%
Mar 20 2005 120.35217725% 20.59509060%
Apr 20 2005 121.15488637% 20.71226783%
May 20 2005 121.95131921% 20.82944507%
Jun 20 2005 122.74927143% 20.94662230%
Jul 20 2005 123.34553459% 27.15329788%
Aug 20 2005 124.15360988% 27.30956670%
Sep 20 2005 124.96317591% 27.46583553%
Oct 20 2005 125.76639574% 27.62210435%
Nov 20 2005 126.57106444% 27.77837317%
Dec 20 2005 127.37719450% 27.93464200%
Jan 20 2006 121.12007757% 23.90754805%
Feb 20 2006 121.90257132% 24.04513739%
Mar 20 2006 122.68649629% 24.18272673%
Apr 20 2006 123.47186483% 24.32031607%
May 20 2006 124.25145823% 24.45790542%
Jun 20 2006 125.03245785% 24.59549476%
Jul 20 2006 125.53136077% 30.84825181%
Aug 20 2006 126.32187435% 31.02578531%
Sep 20 2006 127.11376792% 31.20331881%
Oct 20 2006 127.89982225% 31.38085231%
Nov 20 2006 128.68721813% 31.55838581%
Dec 20 2006 129.47596712% 31.73591931%
Jan 20 2007 123.28225075% 27.65446200%
Feb 20 2007 124.04806713% 27.81361505%
Mar 20 2007 124.81520904% 27.97276810%
Apr 20 2007 125.58368791% 28.13192115%
May 20 2007 126.34686875% 28.29107421%
Jun 20 2007 127.11135239% 28.45022726%
Jul 20 2007 127.48319388% 34.25622698%
Aug 20 2007 128.25710870% 34.45337358%
Sep 20 2007 129.03230249% 34.65052018%
Oct 20 2007 129.80213976% 34.84766678%
Nov 20 2007 130.57322085% 35.04481337%
Dec 20 2007 131.34555649% 35.24195997%
Jan 20 2008 125.24711392% 31.14434221%
Feb 20 2008 125.99737827% 31.32357973%
Mar 20 2008 126.74887209% 31.50281725%
Apr 20 2008 127.50160599% 31.68205476%
May 20 2008 128.24911643% 31.86129228%
Jun 20 2008 128.99783259% 32.04052980%
143
Jul 20 2008 129.29304696% 38.47787766%
Aug 20 2008 130.04933092% 38.69932011%
Sep 20 2008 130.80679572% 38.92076255%
Oct 20 2008 131.55897733% 39.14220500%
Nov 20 2008 132.31230439% 39.36364744%
Dec 20 2008 133.06678681% 39.58508989%
Jan 20 2009 127.01018551% 35.38811871%
Feb 20 2009 127.74269679% 35.59177941%
Mar 20 2009 128.47633725% 35.79544011%
Apr 20 2009 129.21111663% 35.99910081%
May 20 2009 129.94069294% 36.20276151%
Jun 20 2009 130.67137312% 36.40642222%
Jul 20 2009 130.79083800% 43.33242106%
Aug 20 2009 131.52657073% 43.58180169%
Sep 20 2009 132.26338086% 43.83118231%
Oct 20 2009 132.99492588% 44.08056294%
Nov 20 2009 133.72751218% 44.32994357%
Dec 20 2009 134.46114876% 44.57932420%
Jan 20 2010 128.54089734% 40.34851096%
Feb 20 2010 129.25308255% 40.58071901%
Mar 20 2010 129.96629020% 40.81292706%
Apr 20 2010 130.68052909% 41.04513511%
May 20 2010 131.38960652% 41.27734316%
Jun 20 2010 132.09967958% 41.50955121%
Jul 20 2010 132.13053522% 49.06171671%
Aug 20 2010 132.84348425% 49.34406977%
Sep 20 2010 133.55740093% 49.62642284%
Oct 20 2010 134.26609199% 49.90877590%
Nov 20 2010 134.97571399% 50.19112896%
Dec 20 2010 135.68627494% 50.47348202%
Jan 20 2011 129.80928104% 46.08377114%
Feb 20 2011 130.49835094% 46.34898595%
Mar 20 2011 131.18833036% 46.61420076%
Apr 20 2011 131.87922716% 46.87941556%
May 20 2011 132.56533997% 47.14463037%
Jun 20 2011 133.25233682% 47.40984518%
Jul 20 2011 126.70112724% 48.82809931%
Aug 20 2011 127.35211417% 49.10910789%
Sep 20 2011 128.00395851% 49.39011647%
Oct 20 2011 128.65095841% 49.67112505%
Nov 20 2011 129.29878136% 49.95213363%
Dec 20 2011 129.94743444% 50.23314221%
Jan 20 2012 130.60268224% 52.14885151%
Feb 20 2012 131.26636977% 52.44897121%
Mar 20 2012 131.93085945% 52.74909091%
Apr 20 2012 132.59615818% 53.04921062%
May 20 2012 133.25672554% 53.34933032%
Jun 20 2012 133.91806813% 53.64945002%
Jul 20 2012 127.30877096% 55.45219095%
Aug 20 2012 127.92455522% 55.77132156%
Sep 20 2012 128.54094699% 56.09045218%
Oct 20 2012 129.15240408% 56.40958279%
144
Nov 20 2012 129.76443137% 56.72871341%
Dec 20 2012 130.37703378% 57.04784402%
Jan 20 2013 130.99600621% 58.73549836%
Feb 20 2013 131.62307414% 59.07352460%
Mar 20 2013 132.25068394% 59.41155085%
Apr 20 2013 132.87884029% 59.74957709%
May 20 2013 133.50411472% 60.08760333%
Jun 20 2013 134.12991556% 60.42562957%
Jul 20 2013 126.14440437% 62.02531598%
Aug 20 2013 126.72386316% 62.38227532%
Sep 20 2013 127.30383225% 62.73923466%
Oct 20 2013 127.88088283% 63.09619399%
Nov 20 2013 128.45842293% 63.45315333%
Dec 20 2013 129.03645678% 63.81011266%
Jan 20 2014 129.62237203% 65.15780489%
Feb 20 2014 130.21597104% 65.53279188%
Mar 20 2014 130.81004681% 65.90777888%
Apr 20 2014 131.40460345% 66.28276587%
May 20 2014 131.99703923% 66.65775286%
Jun 20 2014 132.58994174% 67.03273986%
Jul 20 2014 124.29202754% 69.16097881%
Aug 20 2014 124.83146235% 69.55900430%
Sep 20 2014 125.37129123% 69.95702980%
Oct 20 2014 125.90891168% 70.35505529%
Nov 20 2014 126.44691056% 70.75308079%
Dec 20 2014 126.98529113% 71.15110628%
Jan 20 2015 127.53171549% 72.13363998%
Feb 20 2015 128.08534881% 72.54877331%
Mar 20 2015 128.63935112% 72.96390665%
Apr 20 2015 129.19372558% 73.37903998%
May 20 2015 129.74633139% 73.79417331%
Jun 20 2015 130.29929732% 74.20930665%
Jul 20 2015 121.96167788% 75.27959554%
Aug 20 2015 122.46196081% 75.71283403%
Sep 20 2015 122.96253881% 76.14607252%
Oct 20 2015 123.46127040% 76.57931102%
Nov 20 2015 123.96028367% 77.01254951%
Dec 20 2015 124.45958108% 77.44578800%
Jan 20 2016 124.96671045% 78.08565680%
Feb 20 2016 125.48056999% 78.53504434%
Mar 20 2016 125.99470243% 78.98443188%
Apr 20 2016 126.50911011% 79.43381942%
May 20 2016 127.02197447% 79.88320696%
Jun 20 2016 127.53510315% 80.33259450%
Jul 20 2016 119.16918283% 75.51054782%
Aug 20 2016 119.62805218% 75.94511546%
Sep 20 2016 120.08694384% 76.37968310%
Oct 20 2016 120.54403707% 76.81425073%
Nov 20 2016 121.00113728% 77.24881837%
Dec 20 2016 121.45824455% 77.68338601%
Jan 20 2017 121.92401293% 78.25772756%
Feb 20 2017 122.39610538% 78.70810538%
145
Mar 20 2017 122.86819783% 79.15848319%
Apr 20 2017 123.34029029% 79.60886101%
May 20 2017 123.81238274% 80.05923883%
Jun 20 2017 124.28447520% 80.50961665%
Jul 20 2017 115.87301660% 72.94169574%
Aug 20 2017 116.30908632% 73.36147949%
Sep 20 2017 116.74515604% 73.78126323%
Oct 20 2017 117.18122576% 74.20104697%
Nov 20 2017 117.61729548% 74.62083071%
Dec 20 2017 118.05336519% 75.04061446%
Jan 20 2018 118.49850080% 75.56717994%
Feb 20 2018 118.94968034% 76.00207350%
Mar 20 2018 119.40085987% 76.43696706%
Apr 20 2018 119.85203940% 76.87186062%
May 20 2018 120.30321894% 77.30675417%
Jun 20 2018 120.75439846% 77.74164773%
Jul 20 2018 112.32159219% 70.12523584%
Aug 20 2018 112.73602436% 70.52881069%
Sep 20 2018 113.15045652% 70.93238554%
Oct 20 2018 113.56488869% 71.33596039%
Nov 20 2018 113.97932086% 71.73953524%
Dec 20 2018 114.39375302% 72.14311009%
Jan 20 2019 114.81680124% 72.62044489%
Feb 20 2019 115.24559348% 73.03837981%
Mar 20 2019 115.67438572% 73.45631474%
Apr 20 2019 116.10317796% 73.87424966%
May 20 2019 116.53197020% 74.29218459%
Jun 20 2019 116.96076244% 74.71011951%
Jul 20 2019 108.50510344% 67.04371160%
Aug 20 2019 108.89637260% 67.42955210%
Sep 20 2019 109.28764175% 67.81539260%
Oct 20 2019 109.67891091% 68.20123309%
Nov 20 2019 110.07018006% 68.58707359%
Dec 20 2019 110.46144922% 68.97291409%
Jan 20 2020 110.86085286% 69.39946102%
Feb 20 2020 111.26567949% 69.79885900%
Mar 20 2020 111.67050612% 70.19825697%
Apr 20 2020 112.07533276% 70.59765494%
May 20 2020 112.48015939% 70.99705292%
Jun 20 2020 112.88498602% 71.39645089%
Jul 20 2020 104.40486316% 63.67843583%
Aug 20 2020 104.77133630% 64.04490897%
Sep 20 2020 105.13780943% 64.41138211%
Oct 20 2020 105.50428257% 64.77785525%
Nov 20 2020 105.87075571% 65.14432838%
Dec 20 2020 106.23722885% 65.51080152%
Jan 20 2021 106.61331070% 66.46112182%
Feb 20 2021 106.99579836% 66.84360948%
Mar 20 2021 107.37828601% 67.22609714%
Apr 20 2021 107.76077367% 67.60858480%
May 20 2021 108.14326133% 67.99107245%
Jun 20 2021 108.52574899% 68.37356011%
146
Jul 20 2021 100.02636495% 60.68814104%
Aug 20 2021 100.37562876% 61.03740486%
Sep 20 2021 100.72489258% 61.38666868%
Oct 20 2021 101.07415639% 61.73593249%
Nov 20 2021 101.42342021% 62.08519631%
Dec 20 2021 101.77268402% 62.43446012%
Jan 20 2022 102.13215641% 63.64454561%
Feb 20 2022 102.49843451% 64.01082371%
Mar 20 2022 102.86471260% 64.37710180%
Apr 20 2022 103.23099070% 64.74337990%
May 20 2022 103.59726880% 65.10965800%
Jun 20 2022 103.96354690% 65.47593610%
Jul 20 2022 95.44815916% 57.81074558%
Aug 20 2022 95.78086340% 58.14344982%
Sep 20 2022 96.11356763% 58.47615405%
Oct 20 2022 96.44627187% 58.80885829%
Nov 20 2022 96.77897610% 59.14156253%
Dec 20 2022 97.11168034% 59.47426676%
Jan 20 2023 97.45542749% 60.70580986%
Feb 20 2023 97.80479299% 61.05517536%
Mar 20 2023 98.15415850% 61.40454086%
Apr 20 2023 98.50352400% 61.75390636%
May 20 2023 98.85288950% 62.10327186%
Jun 20 2023 99.20225500% 62.45263736%
Jul 20 2023 90.67102989% 54.80854410%
Aug 20 2023 90.98645628% 55.12397049%
Sep 20 2023 91.30188267% 55.43939688%
Oct 20 2023 91.61730906% 55.75482327%
Nov 20 2023 91.93273545% 56.07024966%
Dec 20 2023 92.24816184% 56.38567605%
Jan 20 2024 92.57574406% 57.63960748%
Feb 20 2024 92.90746339% 57.97132680%
Mar 20 2024 93.23918271% 58.30304613%
Apr 20 2024 93.57090204% 58.63476545%
May 20 2024 93.90262136% 58.96648478%
Jun 20 2024 94.23434069% 59.29820410%
Jul 20 2024 85.68661577% 51.67612319%
Aug 20 2024 85.98401489% 51.97352231%
Sep 20 2024 86.28141401% 52.27092143%
Oct 20 2024 86.57881314% 52.56832056%
Nov 20 2024 86.87621226% 52.86571968%
Dec 20 2024 87.17361138% 53.16311880%
Jan 20 2025 87.48435223% 54.44040964%
Feb 20 2025 87.79765998% 54.75371739%
Mar 20 2025 88.11096774% 55.06702515%
Apr 20 2025 88.42427549% 55.38033290%
May 20 2025 88.73758325% 55.69364066%
Jun 20 2025 89.05089100% 56.00694841%
Jul 20 2025 80.48597551% 48.40783461%
Aug 20 2025 80.76456544% 48.68642454%
Sep 20 2025 81.04315538% 48.96501447%
Oct 20 2025 81.32174531% 49.24360440%
147
Nov 20 2025 81.60033524% 49.52219433%
Dec 20 2025 81.87892517% 49.80078426%
Jan 20 2026 82.17211929% 51.10244772%
Feb 20 2026 82.46621687% 51.39654531%
Mar 20 2026 82.76031446% 51.69064289%
Apr 20 2026 83.05441204% 51.98474048%
May 20 2026 83.34850964% 52.27883807%
Jun 20 2026 83.64260723% 52.57293566%
Jul 20 2026 75.05978089% 44.99778516%
Aug 20 2026 75.31874579% 45.25675006%
Sep 20 2026 75.57771068% 45.51571496%
Oct 20 2026 75.83667558% 45.77467985%
Nov 20 2026 76.09564048% 46.03364475%
Dec 20 2026 76.35460537% 46.29260964%
Jan 20 2027 76.62951726% 47.61970287%
Feb 20 2027 76.90357145% 47.89375706%
Mar 20 2027 77.17762563% 48.16781124%
Apr 20 2027 77.45167982% 48.44186543%
May 20 2027 77.72573401% 48.71591962%
Jun 20 2027 77.99978819% 48.98997380%
Jul 20 2027 69.39829993% 41.43982602%
Aug 20 2027 69.63678856% 41.67831465%
Sep 20 2027 69.87527719% 41.91680328%
Oct 20 2027 70.11444461% 42.15529192%
Nov 20 2027 70.35361788% 42.39378055%
Dec 20 2027 70.59279706% 42.63226918%
Jan 20 2028 70.84820107% 43.84793544%
Feb 20 2028 71.10054851% 44.10028288%
Mar 20 2028 71.35289595% 44.35263033%
Apr 20 2028 71.60524340% 44.60497777%
May 20 2028 71.85974938% 44.85732521%
Jun 20 2028 72.11427398% 45.10967266%
Jul 20 2028 64.22317097% 38.12383386%
Aug 20 2028 64.44257587% 38.34323877%
Sep 20 2028 64.66198077% 38.56264367%
Oct 20 2028 64.88514592% 38.78204857%
Nov 20 2028 65.10834348% 39.00145347%
Dec 20 2028 65.33157375% 39.22085838%
Jan 20 2029 65.56972027% 40.34017292%
Feb 20 2029 65.80188033% 40.57233298%
Mar 20 2029 66.03404040% 40.80449305%
Apr 20 2029 66.26620046% 41.03665311%
May 20 2029 66.50318966% 41.26881318%
Jun 20 2029 66.74022049% 41.50097324%
Jul 20 2029 59.71571598% 35.35750848%
Aug 20 2029 59.91920052% 35.56099302%
Sep 20 2029 60.12268505% 35.76447756%
Oct 20 2029 60.33112810% 35.96796209%
Nov 20 2029 60.53961390% 36.17144663%
Dec 20 2029 60.74814282% 36.37493117%
Jan 20 2030 60.97034137% 37.47799436%
Feb 20 2030 61.18602943% 37.69368242%
148
Mar 20 2030 61.40171749% 37.90937048%
Apr 20 2030 61.61740555% 38.12505854%
May 20 2030 61.83850845% 38.34074660%
Jun 20 2030 62.05965804% 38.55643466%
Jul 20 2030 55.01921465% 32.39615544%
Aug 20 2030 55.20565643% 32.58259722%
Sep 20 2030 55.39209820% 32.76903899%
Oct 20 2030 55.58466133% 32.95548077%
Nov 20 2030 55.77727724% 33.14192255%
Dec 20 2030 55.96994639% 33.32836432%
Jan 20 2031 56.17622076% 34.41403044%
Feb 20 2031 56.37459224% 34.61208521%
Mar 20 2031 56.57296644% 34.81013997%
Apr 20 2031 56.77134340% 35.00819474%
May 20 2031 56.97660632% 35.20624950%
Jun 20 2031 57.18193139% 35.40430427%
Jul 20 2031 50.12561191% 29.22602516%
Aug 20 2031 50.29548913% 29.39422265%
Sep 20 2031 50.46538083% 29.56242015%
Oct 20 2031 50.64217031% 29.73061764%
Nov 20 2031 50.81903388% 29.89881513%
Dec 20 2031 50.99597218% 30.06701262%
Jan 20 2032 51.18645751% 31.13405515%
Feb 20 2032 51.36881152% 31.31323347%
Mar 20 2032 51.55119291% 31.49241178%
Apr 20 2032 51.73360192% 31.67159010%
May 20 2032 51.92326681% 31.85076841%
Jun 20 2032 52.11302213% 32.02994673%
Jul 20 2032 45.03935747% 25.32376202%
Aug 20 2032 45.19768016% 25.46950176%
Sep 20 2032 45.35611135% 25.61524149%
Oct 20 2032 45.52508847% 25.76098123%
Nov 20 2032 45.70070221% 25.90672097%
Dec 20 2032 45.87655543% 26.05246071%
Jan 20 2033 46.06195189% 26.22570513%
Feb 20 2033 46.24940587% 26.37663560%
Mar 20 2033 46.43715263% 26.52756608%
Apr 20 2033 46.62519454% 26.67849655%
May 20 2033 46.82014658% 26.82942702%
Jun 20 2033 47.01545152% 26.98035750%
Jul 20 2033 39.94514754% 19.88310093%
Aug 20 2033 40.11101866% 19.99752934%
Sep 20 2033 40.27730217% 20.11195775%
Oct 20 2033 40.45061401% 20.22638617%
Nov 20 2033 40.62439788% 20.34081458%
Dec 20 2033 40.79865758% 20.45524299%
Jan 20 2034 40.98247304% 20.59652513%
Feb 20 2034 41.16815558% 20.71505934%
Mar 20 2034 41.35437643% 20.83359355%
Apr 20 2034 41.54113988% 20.95212776%
May 20 2034 41.73746587% 21.07066197%
Jun 20 2034 41.93441548% 21.18919619%
149
Jul 20 2034 33.29413787% 12.48524922%
Aug 20 2034 33.45444503% 12.55710256%
Sep 20 2034 33.61546128% 12.62895591%
Oct 20 2034 33.78620788% 12.70080925%
Nov 20 2034 33.95774726% 12.77266259%
Dec 20 2034 34.13008577% 12.84451593%
Jan 20 2035 34.31382375% 12.94233786%
Feb 20 2035 34.49918651% 13.01682178%
Mar 20 2035 34.68543813% 13.09130569%
Apr 20 2035 34.87258574% 13.16578961%
May 20 2035 35.07034550% 13.24027352%
Jun 20 2035 35.26909351% 13.31475743%
Jul 20 2035 26.58753569% 4.52262062%
Aug 20 2035 26.74930314% 4.54864856%
Sep 20 2035 26.91215875% 4.57467651%
Oct 20 2035 27.08582023% 4.60070446%
Nov 20 2035 27.26066521% 4.62673241%
Dec 20 2035 27.43670318% 4.65276035%
Jan 20 2036 27.62427833% 4.70380418%
Feb 20 2036 27.81324888% 4.73087485%
Mar 20 2036 28.00351729% 4.75794552%
Apr 20 2036 28.19509398% 4.78501618%
May 20 2036 28.42209127% 4.81208685%
Jun 20 2036 28.65069128% 4.83915752%
Jul 20 2036 24.00000000% -0.02439025%
150
SCHEDULE OF PRINCIPAL AMORTIZATION
PRINCIPAL AMOUNT PAYABLE
PAYMENT DATES (% OF UNIT 1 PRINCIPAL PORTION)
2-Jan-01 0.000000000%
2-Jul-01 1.272781070%
2-Jan-02 0.000000000%
2-Jul-02 5.768047340%
2-Jan-03 0.000000000%
2-Jul-03 5.615680470%
2-Jan-04 0.000000000%
2-Jul-04 5.096745560%
2-Jan-05 0.000000000%
2-Jul-05 3.944674560%
2-Jan-06 0.000000000%
2-Jul-06 4.248224850%
2-Jan-07 0.000000000%
2-Jul-07 4.005029590%
2-Jan-08 0.000000000%
2-Jul-08 4.994082840%
2-Jan-09 0.000000000%
2-Jul-09 5.966568050%
2-Jan-10 0.000000000%
2-Jul-10 7.034911240%
2-Jan-11 0.000000000%
2-Jul-11 7.820710060%
2-Jan-12 0.000000000%
2-Jul-12 7.249704140%
2-Jan-13 0.000000000%
2-Jul-13 10.280473370%
2-Jan-14 0.000000000%
2-Jul-14 11.054437870%
2-Jan-15 0.000000000%
2-Jul-15 10.281360950%
2-Jan-16 0.000000000%
2-Jul-16 1.816272190%
2-Jan-17 0.000000000%
2-Jul-17 0.887573960%
2-Jan-18 0.000000000%
2-Jul-18 0.887573960%
2-Jan-19 0.000000000%
2-Jul-19 0.887573960%
2-Jan-20 0.000000000%
2-Jul-20 0.887573960%
2-Jan-21 0.000000000%
151
2-Jul-21 0.000000000%
2-Jan-22 0.000000000%
2-Jul-22 0.000000000%
2-Jan-23 0.000000000%
2-Jul-23 0.000000000%
2-Jan-24 0.000000000%
2-Jul-24 0.000000000%
2-Jan-25 0.000000000%
2-Jul-25 0.000000000%
2-Jan-26 0.000000000%
2-Jul-26 0.000000000%
2-Jan-27 0.000000000%
2-Jul-27 0.000000000%
2-Jan-28 0.000000000%
2-Jul-28 0.000000000%
2-Jan-29 0.000000000%
2-Jul-29 0.000000000%
2-Jan-30 0.000000000%
2-Jul-30 0.000000000%
2-Jan-31 0.000000000%
2-Jul-31 0.000000000%
2-Jan-32 0.000000000%
2-Jul-32 0.000000000%
2-Jan-33 0.000000000%
2-Jul-33 0.000000000%
2-Jan-34 0.000000000%
2-Jul-34 0.000000000%
2-Jan-35 0.000000000%
2-Jul-35 0.000000000%
2-Jan-36 0.000000000%
2-Jul-36 0.000000000%
20-Jul-36 0.000000000%
152
SCHEDULE 4
TO
PARTICIPATION
AGREEMENT
INITIAL LIST OF COMPETITORS
1. Southern Company
2. AES
3. NRG
4. Reliant
5. FPL (Florida Power & Light)
6. PSEG (Public Service Enterprise Group)
SCHD. 4-1
153
SCHEDULE 5
TO
PARTICIPATION
AGREEMENT
TRANSMISSION FACILITIES
OVERVIEW
Colstrip has interrelated Transmission Facilities consisting of eight broad
categories: Colstrip Unit 1, Colstrip Unit 2, Start-Up for Colstrip Units 1 and
2, Colstrip Unit 3, Colstrip Unit 4, Start-Up for Colstrip Units 3 and 4,
Colstrip 230 kV Switchyard and the Colstrip Transmission System (CTS). The
Colstrip 230 kV Switchyard consists of 230 kV, 115 kV and 69 kV facilities.
COLSTRIP UNIT 1 AND 2 AND START-UP FOR COLSTRIP UNITS 1 AND 2
That portion owned by PPL Montana in the two 230 kV transmission lines
approximately 0.4 miles in length each, which connect Colstrip Units 1 and 2 to
the Colstrip Switchyard, start-up transformer, airbreak switch 105 and
approximately 0.5 miles of 115 kV transmission line connecting the start-up
transformer to the Colstrip 230 kV Switchyard. (see Appendix G14-1 and 2).
COLSTRIP UNIT 3 AND START-UP FOR COLSTRIP UNITS 3 AND 4
That portion owned by PPL Montana of approximately 0.4 miles of 500 kV
transmission line connecting Colstrip Unit 3 to the Colstrip 500 kV Switchyard
and that portion of Colstrip Unit 3 in the 230 kV and 115 kV facilities from the
230 kV GPORs in the Colstrip 230 kV Switchyard consisting of PCBs 230-64 and
230-20, airbreak switches 230-64X, 230-64Y, 230-20L, and 230-20B, the 230 kV bus
and airbreak 206, 230/115 kV transformer bank 6 and PCBs 100-204 and 100-202,
airbreak switches 107, 108 and 109, two start up transformers and approximately
0.5 miles of the 115 kV transmission line (see Appendix G14-3)
COLSTRIP 230 KV SWITCHYARD
- Ownership of PPL Montana related to Colstrip Unit 3 in PCBs 100-202,
230-64, and 230-20, and associated airbreak switches, 230/115 kV
transformer bank 6 and airbreak switches 106 and 206.
- Ownership of PPL Montana in directly connected relays and associated
protective equipment and controls associated with Colstrip Units 1, 2, 3
and 1 and 2 start-up.
SCHD. 5-1
154
- Ownership of PPL Montana related to Colstrip Unit 3 in directly
connected relays and associated protective equipment for direct controls
for the PCBs for the Colstrip Units 3 and 4 115kV start-up transmission
line.
COLSTRIP TRANSMISSION SYSTEM
The Colstrip Transmission System (CTS) described in Exhibit A to the Colstrip
Project Transmission Agreement has a limited number of assets which are involved
in the sale by PPL Montana. These assets are in the Colstrip 500 kV Switchyard
and include only the relaying systems for the Colstrip Unit 3 3500 kV
transmission line from Colstrip Unit 3 to the Colstrip 500 kV Switchyard
Generation Point of receipt "GPOR".
SCHD. 5-2
155
SCHEDULE 6
TO
PARTICIPATION
AGREEMENT
AFFILIATE TRANSACTIONS
- Brokering and Contract Management Agreement between PPL Montana, LLC and PPL
EnergyPlus, LLC dated as of December 17, 1999.
- Memorandum of Understanding between PPL Montana, LLC and PPL EnergyPlus, LLC
dated as of June 26, 2000.
- Certain Service Level Agreements (SLA) of various dates between PPL Montana,
LLC and PPL Corporation (anticipated to be assigned to PPL Services, LLC) for
corporate services as requested in the areas of:
- ISD (Network, Business and Corporate Solutions)
- External Affairs (Communications and Governmental Services)
- Corporate Audit Services
- Human Resources and Development
- Financial (Corporate Disbursements & Treasury)
SCHD. 6-1
156
SCHEDULE 7
TO
PARTICIPATION
AGREEMENT
ENVIRONMENTAL CONDITIONS
- On January 27, 2000 - a Violation Letter was issued by the Montana Department
of Environmental Quality for violations of the Montana Water Quality Act. The
letter refers to a September 1999 transformer cooling oil spill that occurred
while MPC still operated Units 1 and 2 and required that a remediation plan
be approved by the Department and implemented.
- On February 29, 2000, a Violation Letter was issued by the Montana Department
of Environmental Quality relating to the Certificate of Environmental
Compatibility and Public Need for Colstrip Units 3 and 4 for failure to
operate the facility as a closed loop water system. The letter refers to
seepage from a saddledam at the Unit 3 and 4 effluent holding ponds. It
requires that PPL Montana monitor water quality and water level in certain
water wells, identify the source of seepage and outline proposed repairs
before July 31, 2000 and prepare an emergency evacuation plan for the area
downstream of the saddledam by December 31, 2000.
- On March 8, 2000, a Letter was issued by the Montana Department of
Environmental Quality for violations relating to the Colstrip Project's
Certificate of Environmental Compatibility. The violations concern a fly ash
effluent return water spill near one of the Unit 3 and 4 effluent holding
ponds, beginning on December 11, 1999 while MPC still operated the Units. On
June 28, 2000, the Department, MPC and PPL Montana entered into a formal
Notice of Violation and Administrative Order on Consent which required MPC
pay a fine of $3,800 and, as current operator of the Colstrip Project, PPL
Montana was required to install and maintain a permanent groundwater
collection system downstream of the spill.
- On March 29, 2000, a spill occurred of clear flush water being pumped from
the Units 1 and 2 A/B Flyash Pond by pipeline to the Stage II Evaporation
Pond. The spill was promptly reported to the Department and
corrective/remedial measures were undertaken. As of July 11, 2000, no action
has been taken by the Department relating to the spill.
SCHD. 7-1
157
SCHEDULE 8
TO
PARTICIPATION
AGREEMENT
GUARANTEES OF INDEBTEDNESS OR PERFORMANCE
None
SCHD. 8-1
158
SCHEDULE 9
TO
PARTICIPATION
AGREEMENT
LITIGATION
None
SCHD. 9-1
159
SCHEDULE 10
TO
PARTICIPATION
AGREEMENT
LIENS
None
SCHD. 10-1
160
SCHEDULE 11
TO
PARTICIPATION
AGREEMENT
INDENTURE TRUSTEE'S ACCOUNT
The Chase Bank Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001
Attention: A. Marsula
ABA # 021 000 021
Account Number: 910 2 758100
Account Name: Corp Incoming Wire House Acct
For Further Credit to: PPL Montana LLC, Lease Indenture Trustee's Account for
BA3 Trust Account Number C42436-F
161
EXHIBIT A
TO
PARTICIPATION
AGREEMENT
FORM OF
BILL OF SALE
EXH. A-1
162
EXHIBIT B-1
TO
PARTICIPATION
AGREEMENT
FORM OF
FACILITY LEASE
EXH. B-1-1
163
EXHIBIT B-2
TO
PARTICIPATION
AGREEMENT
FORM OF
ABSTRACT OF FACILITY LEASE
EXH. B-2-1
164
EXHIBIT C
TO
PARTICIPATION
AGREEMENT
FORM OF
SITE LEASE AND SUBLEASE
EXH. C-1
165
EXHIBIT D
TO
PARTICIPATION
AGREEMENT
FORM OF
ASSIGNMENT AND REASSIGNMENT OF PROJECT AGREEMENTS
EXH. D-1
166
EXHIBIT E
TO
PARTICIPATION
AGREEMENT
FORM OF
LEASE INDENTURE
EXH. E-1
167
EXHIBIT F
TO
PARTICIPATION
AGREEMENT
FORM OF
ASSIGNMENT AND ASSUMPTION AGREEMENT
EXH. F-1
168
EXHIBIT G
TO
PARTICIPATION
AGREEMENT
FORM OF
GUARANTY
EXH. G-1
169
EXHIBIT H
TO
PARTICIPATION
AGREEMENT
FORM OF
OMNIBUS VOTING RIGHTS AGREEMENT
EXH. H-1
170
EXHIBIT I
TO
PARTICIPATION
AGREEMENT
FORM OF
QUALIFYING LETTER OF CREDIT
EXH. I-1
171
EXHIBIT J-1
TO
PARTICIPATION
AGREEMENT
FORM OF
OPINION OF ORRICK, HERRINGTON & SUTCLIFFE LLP - CORPORATE OPINION
EXH. J-1-1
172
EXHIBIT J-2
TO
PARTICIPATION
AGREEMENT
FORM OF
OPINION OF ORRICK, HERRINGTON & SUTCLIFFE LLP - REGULATORY OPINION
EXH. J-2-1
173
EXHIBIT K-1
TO
PARTICIPATION
AGREEMENT
FORM OF
OPINION OF MOULTON, BELLINGHAM, LONGO & MATHER LLP - CORPORATE OPINION
EXH. K-1-1
174
EXHIBIT K-2
TO
PARTICIPATION
AGREEMENT
FORM OF
OPINION OF MOULTON, BELLINGHAM, LONGO & MATHER LLP - REGULATORY OPINION
EXH. K-2-1
175
EXHIBIT L
TO
PARTICIPATION
AGREEMENT
FORM OF
OPINION OF WINTHROP, STIMSON, PUTNAM & ROBERTS
EXH. L-1
176
EXHIBIT M
TO
PARTICIPATION
AGREEMENT
FORM OF
OPINION OF JONES, DAY, REAVIS & POGUE LLP
EXH. M-1
177
EXHIBIT N
TO
PARTICIPATION
AGREEMENT
FORM OF
OPINION OF MICHAEL D. FLYNN, ESQ.,
(COUNSEL TO THE OWNER PARTICIPANT, THE OP MEMBER, AND THE GUARANTOR)
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EXH. N-1
178
EXHIBIT O
TO
PARTICIPATION
AGREEMENT
FORM OF
OPINION OF DEWEY BALLANTINE LLP
EXH. O-1
179
EXHIBIT P
TO
PARTICIPATION
AGREEMENT
FORM OF
OPINION OF MORRIS, JAMES, HITCHENS & WILLIAMS LLP
EXH. P-1
180
EXHIBIT Q
TO
PARTICIPATION
AGREEMENT
FORM OF
OPINION OF KELLEY DRYE & WARREN LLP
(AS COUNSEL TO THE LEASE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEE)
-----------------------------------------------------------------------
EXH. Q-1