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Exhibit 10.16(a)
EXECUTION COPY
▇▇▇▇ OF SALE
(BA1/2)
Dated as of July 20, 2000
between
PPL MONTANA, LLC
and
MONTANA OL3 LLC
COLSTRIP GENERATING UNITS 1 AND 2
AND RELATED COMMON FACILITIES
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▇▇▇▇ OF SALE
(BA1/2)
This ▇▇▇▇ OF SALE (BA1/2), dated as of July 20, 2000 (this "▇▇▇▇ of
Sale") is made between PPL MONTANA, LLC, a Delaware limited liability company
(the "Seller"), and MONTANA OL3 LLC, a Delaware limited liability company (the
"Buyer").
W I T N E S S E T H:
WHEREAS, the Seller owns an undivided interest in the Units 1 and 2
Site, the Common Facilities 1-2 Site, and the Common Facilities 1-2-3-4 Site
(collectively, the "Sites"), which are more particularly described on Exhibit A
hereto and made a part hereof;
WHEREAS, the Seller owns an undivided interest in Units 1 and 2, which
are more particularly described on Exhibit B hereto and made a part hereof;
WHEREAS, the Seller owns an undivided interest in the Common Facilities
1-2, and the Common Facilities 1-2-3-4 (collectively, the "Common Facilities"
and together with Units 1 and 2, the "Facility"), which are more particularly
described on Exhibit C hereto and made a part hereof; and
WHEREAS, the Seller desires to sell and the Buyer desires to purchase
the undivided interests described in Section 2 in Units 1 and 2, the Common
Facilities 1-2, and the Common Facilities 1-2-3-4 for the Purchase Price to be
paid by the Buyer to the Seller pursuant to the Participation Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained, and other good and valuable consideration, receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
Unless the context hereof shall otherwise require, capitalized terms
used, including those in the recitals, and not otherwise defined herein shall
have the respective meanings set forth in Appendix A attached hereto. The
general provisions of such Appendix A shall apply to the terms used in this ▇▇▇▇
of Sale and specifically defined herein.
SECTION 2. SALE OF THE UNDIVIDED INTEREST
The Seller does hereby GRANT, BARGAIN, CONVEY, SELL, ASSIGN, TRANSFER,
SET OVER, WARRANT AND CONFIRM unto the Buyer, its successors and assigns an
undivided interest equal to the Owner Lessor's Percentage of Seller's 50%
undivided interest in and to (i) Units 1 and 2, (ii) the Common Facilities 1-2,
and (iii) the Common Facilities 1-2-3-4 allocated to Units 1 and 2 pursuant to
the Common Facilities Agreement, in each case, as tenant in common with the
right to nonexclusive possession of such facilities;
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TO HAVE AND TO HOLD the same unto the Buyer, its successors and
assigns, FOREVER. It is the intent of this ▇▇▇▇ of Sale, that, from and after
the execution and delivery of this ▇▇▇▇ of Sale by the Seller, the Buyer will
own the undivided interests, as a tenant in common with the owners of the
remaining undivided interests in the Facility, who, together with the Buyer,
will also have the right to nonexclusive possession of the Facility to the
extent of their respective interests therein.
SECTION 3. WARRANT OF TITLE
The Seller does hereby WARRANT AND COVENANT that, (i) it is the true
and lawful owner of the Undivided Interest and has good right to sell the
Undivided Interest, that, except for Permitted Liens, title to the Undivided
Interest is on the date of execution hereof free and clear of all claims, liens,
security interests and encumbrances of any nature, (ii) good, clear, record and
marketable fee simple title to the Undivided Interest to the extent it
constitutes personal property is hereby conveyed to the Buyer free and clear of
all claims, liens, security interests and circumstances of any nature, and (iii)
the Seller will forever warrant and defend such title against the claims of all
Persons.
SECTION 4. SEVERANCE OF TITLE
The parties hereto understand and agree that (a) title to the Undivided
Interest, and every portion thereof, is severed, and shall be and remain
severed, from title to the real estate constituting the Colstrip Site, and shall
not, except as specifically contemplated by the Operative Documents, be affected
in any way by any instrument dealing with the Colstrip Site or any part thereof,
and (b) the Undivided Interest constitute personal property for all purposes,
other than possibly for the purposes of laws relating to ad valorem or property
taxes.
SECTION 5. WAIVER OF PARTITION
So long as the Facility or any part thereof as originally constructed,
reconstructed or added to is used or useful for the generation of electrical
power and energy, or to the end of the period permitted by Applicable Law,
whichever first occurs, the Buyer waives its right to partition whether by
partition in kind or sale and division of the proceeds thereof, and agrees that
it will not resort to any action at law or in equity to partition and further
waives the benefit of all laws that may now or hereafter authorize such
partition of the properties compromising the Facility. It is agreed that this
covenant shall be deemed to run with the land. The Buyer agrees to incorporate
this waiver in all deeds, deeds of trust, mortgages and instruments of
conveyance relating to the Undivided Interest or any interest or portion
thereof, whether delivered at the Closing or thereafter.
SECTION 6. DISCLAIMER OF WARRANTIES
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THE SELLER
CONVEYS THE UNDIVIDED INTEREST TO THE BUYER "AS-IS," "WHERE-IS," AND "WITH ALL
FAULTS," AND THE BUYER ACKNOWLEDGES THAT THE SELLER DOES NOT MAKE NOR SHALL BE
DEEMED TO HAVE MADE, AND EXPRESSLY DISCLAIMS, ANY AND ALL RIGHTS, CLAIMS,
WARRANTIES OR REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE,
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CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN, OPERATION,
MERCHANTABILITY OF THE FACILITY OR AS TO THE QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS, FREEDOM FROM
PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT, THE ABSENCE OF ANY LATENT OR OTHER
DEFECT, WHETHER OR NOT DISCOVERABLE, OR AS TO THE ABSENCE OF ANY OBLIGATIONS
BASED ON STRICT LIABILITY IN TORT OR ANY OTHER EXPRESS OR IMPLIED REPRESENTATION
OR WARRANTY WHATSOEVER WITH RESPECT THERETO.
SECTION 7. MISCELLANEOUS
Section 7.1 Governing Law. This ▇▇▇▇ of Sale shall be in all respects
governed by and construed in accordance with the laws of the State of Montana,
including all matters of construction, validity and performance (without giving
effect to the conflicts of laws provisions thereof).
Section 7.2 Counterparts. This ▇▇▇▇ of Sale may be executed by the
parties hereto in separate counterparts, each of which, when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 7.3 Headings. The headings of the sections of this ▇▇▇▇ of Sale
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 7.4 Effectiveness. This ▇▇▇▇ of Sale has been dated as of the
date first above written for convenience only. This ▇▇▇▇ of Sale shall become
effective on July 20, 2000, the date of execution and delivery by the Seller and
the Buyer.
Section 7.5 Limitation on Liability. It is expressly understood and
agreed by the parties hereto that (a) this ▇▇▇▇ of Sale is executed and
delivered by Wilmington Trust Company ("Wilmington"), not individually or
personally but solely as Lessor Manager under the LLC Agreement, in the exercise
of the powers and authority conferred and vested in it pursuant thereto, (b)
each of the representations, undertakings and agreements herein made on the part
of the Buyer is made and intended not as personal representations, undertakings
and agreements by Wilmington, but is made and intended for the purpose of
binding only the Buyer, (c) nothing herein contained shall be construed as
creating any liability on Wilmington, individually or personally, to perform any
covenant either expressed or implied contained herein, all such liability, if
any, being expressly waived by the parties hereto or by any Person claiming by,
through or under the parties hereto, and (d) under no circumstances shall
Wilmington, be personally liable for the payment of any indebtedness or expenses
of the Buyer or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Buyer under this
▇▇▇▇ of Sale.
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IN WITNESS WHEREOF, the parties hereto have caused this ▇▇▇▇ of Sale to
be duly executed and delivered under seal by their respective officers thereunto
duly authorized.
PPL MONTANA, LLC, as Seller
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
MONTANA OL3 LLC, as Buyer
By: Wilmington Trust Company,
not in its individual capacity, but solely as
Lessor Manager
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
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STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this the ____ day
of July, 2000 by ▇▇▇▇ ▇. ▇▇▇▇, Vice President of PPL MONTANA, LLC, a Delaware
limited liability company, to be the free act and deed on behalf of the limited
liability company.
___________________________
Notary Public
My Commission Expires
_______________________________
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this ____ day of
July, 2000 by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President of WILMINGTON TRUST COMPANY, a
Delaware banking corporation, to be the free act and deed on behalf of the
banking corporation as the Lessor Manager under the LLC AGREEMENT dated as of
July 13, 2000.
___________________________
Notary Public
My Commission Expires
_______________________________
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APPENDIX A
DEFINITIONS
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APPENDIX A
DEFINITIONS
(BA1/2)
COLSTRIP GENERATING UNITS 1 AND 2
AND RELATED COMMON FACILITIES
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APPENDIX A - DEFINITIONS
(BA1/2)
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;
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(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 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
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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 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.
DEFINED TERMS
"ABSTRACT OF LEASE" shall mean the Abstract of Facility Lease (BA1/2), 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.
"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
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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 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
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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).
"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 (BA1/2), 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 and Operating
Agreements 1-2 and the Common Facilities Agreement relating to the Undivided
Interest.
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"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 (BA1/2), 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.
"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
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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 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%.
16
"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;
(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.
17
"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 1-2 and the Common
Facilities 1-2-3-4.
"COMMON FACILITIES 1-2" shall mean all facilities, improvements, fixtures and
equipment, constructed or installed for use by Units 1 and 2 in common and
described as such on Exhibit C to the ▇▇▇▇ of Sale but excluding therefrom the
Transmission Facilities.
"COMMON FACILITIES 1-2 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 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 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.
18
"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 1-2 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 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,
19
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.
"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.
20
"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.
"EQUITY INVESTMENT" shall mean the amount of $31,151,219.51.
"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.
21
"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 either of Unit 1 or Unit 2, or in
the case of clause (d), both of Units 1 and 2, 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 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
22
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.
"EXPIRATION DATE" shall mean July 20, 2036, the last day of the Basic Lease
Term.
"FACILITY" shall mean a collective reference to Colstrip Units 1 and 2.
"FACILITY LEASE" shall mean the Facility Lease Agreement (BA1/2), dated as of
the Closing Date, between the Owner Lessor and PPL Montana, substantially in the
form of Exhibit B-1 to
23
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 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.
24
"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. EG00-67-000 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.
"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.
25
"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 Units 1 and 2 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 50% undivided interest in and to the ▇▇▇▇▇ ▇ ▇▇▇ ▇ ▇▇▇▇, (▇▇) a 50%
undivided interest in and to the Common Facilities 1-2 Site, and (iii) 50% of
the undivided interest in and to the Common Facilities 1-2-3-4 allocated to
Units 1 and 2 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.
"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.
26
"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 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.
27
"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 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
28
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.
"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.
29
"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 $146,237,669.38, as more fully
described in Section 2.2 of the Lease Indenture.
"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."
30
"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 (BA1/2), 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.
"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.
31
"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.
"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.
32
"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/NC1/2), 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 (BA1/2), 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 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.
33
"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 OL4 LLC.
"OTHER OWNER PARTICIPANTS" shall mean Montana OP1 LLC, and Montana OP4 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 (BA3), 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.
"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.
34
"OVERALL TRANSACTION" shall mean the Transaction and the Other Colstrip Lease
Transactions.
"OVERDUE RATE" shall mean 10.903%.
"OWNER LESSOR" shall mean Montana OL3 LLC, a Delaware limited liability company.
"OWNER LESSOR'S ACCOUNT" shall mean the account (No. 52134-0 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 OP3 LLC, a Delaware limited liability
company.
"OWNER PARTICIPANT'S ACCOUNT" shall mean the account (No. 52131-0) 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.
"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
35
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 (BA1/2), 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.
"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:
36
(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:
(a) such Person becomes a Core Subsidiary of PPL Montana; or
(b) 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;
37
(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
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
38
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 consecutive period of four full
fiscal quarters commencing on the first day of such period being
39
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, individually or collectively as the context may
require, the Unit 1 Principal Portion and/or the Unit 2 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 and Operating Agreements 1-2 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 Units 1 and 2 Interest in
the amount of $177,388,888.89.
"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
40
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, with respect to any Unit, the Common
Facilities 1-2, and the Common Facilities 1-2-3-4 associated therewith.
"RELATED COMMON FACILITIES INTEREST" shall mean (a) with respect to any Unit 1
Interest, the Related Common Facilities Interest 1, and (b) with respect to any
Unit 2 Interest, the Related Common Facilities Interest 2.
"RELATED COMMON FACILITIES INTEREST 1" shall mean (a) a 25% undivided interest
in and to the Common Facilities 1-2, and (b) 25% of the undivided interest in
and to the Common Facilities 1-2-3-4 allocated to Units 1 and 2 pursuant to the
Common Facilities Agreement.
"RELATED COMMON FACILITIES INTEREST 2" shall mean (a) a 25% undivided interest
in and to the Common Facilities 1-2, and (b) 25% of the undivided interest in
and to the Common Facilities 1-2-3-4 allocated to Units 1 and 2 pursuant to the
Common Facilities Agreement.
41
"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 (a) with respect to the Unit 1 Interest,
the portion of the Ground Interest relating to Colstrip ▇▇▇▇ ▇, and (b) with
respect to the Unit 2 Interest, the portion of the Ground Interest relating to
Colstrip ▇▇▇▇ ▇.
"RELATED LEASE INDENTURE TRUSTEE" shall mean the "Lease Indenture Trustee" under
the Related Transaction.
"RELATED OWNER LESSOR" shall mean the "Owner Lessor" under the Related
Transaction.
"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, with respect to any Unit, the Unit Site upon which
such Unit is located together with the Common Facilities Site upon which the
Related Common Facilities are located.
"RELATED TRANSACTION" shall mean the transaction contemplated by the
Participation Agreement of even date herewith entered into by PPL Montana, the
Owner Lessor, the Trust Company, the Owner Participant, the Lease Indenture
Trustee and the Pass Through Trustee, and designated (NC1/2).
"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.
42
"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 October 2, 2000,
followed by the Rent Payment Period commencing on October 2, 2000 and ending
January 2, 2001 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.
"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
43
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.
"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
44
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
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
(BA1/2), 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
45
(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.
"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.
46
"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 (BA1/2), 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.
"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 for the applicable Unit, as set forth on Schedule 2
of the Facility Lease for such Termination Date. If Termination Value should be
required to be calculated with respect to only one Unit Interest, such
Termination Value shall be 50% of the total amount calculated in the preceding
sentence.
"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:
47
(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;
(ix) the reasonable fees and expenses of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ &
Sutcliffe 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;
48
(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;
(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
49
(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.
"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, collectively, the Units 1 and 2 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 consisting of the assets
described in Exhibit B of the Site Lease and Sublease and specifically excluding
therefrom the Transmission Facilities.
"UNIT 1 INTEREST" shall mean the undivided interest in Unit 1 and the Related
Common Facilities Interest 1 conveyed to the Owner Lessor pursuant to the ▇▇▇▇
of Sale, and shall consist of an undivided Owner Lessor's Percentage of (a) a
50% undivided interest in and to ▇▇▇▇ ▇, (b) a 25%
50
undivided interest in and to the Common Facilities 1-2, and (c) 25% of the
undivided interest in and to the Common Facilities 1-2-3-4 allocated to Units 1
and 2 pursuant to the Common Facilities Agreement.
"UNIT 1 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 1 Interest, as set forth on Schedule 1 of such
Lessor Note.
"UNIT 1 SITE" shall mean that portion of the Units 1 and 2 Site on which Unit 1
is situated.
"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 consisting of the assets
described in Exhibit B of the Site Lease and Sublease and specifically excluding
therefrom the Transmission Facilities.
"UNIT 2 INTEREST" shall mean the undivided interest in Unit 2 and the Related
Common Facilities Interest 2 conveyed to the Owner Lessor pursuant to the ▇▇▇▇
of Sale, and shall consist of an undivided Owner Lessor's Percentage of (a) a
50% undivided interest in and to Unit 2, (b) a 25% undivided interest in and to
the Common Facilities 1-2, and (c) 25% of the undivided interest in and to the
Common Facilities 1-2-3-4 allocated to Units 1 and 2 pursuant to the Common
Facilities Agreement.
"UNIT 2 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 2 Interest, as set forth on Schedule 2 of such
Lessor Note.
"UNIT 2 SITE" shall mean that portion of the Units 1 and 2 Site on which Unit 2
is situated.
"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 specifically excluding therefrom the
Transmission Facilities.
"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."
"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, individually or collectively as the context may
require, the Unit 1 Interest and/or the Unit 2 Interest.
51
"UNIT PERCENTAGE" shall mean, with respect to any Unit, the undivided interest
in such Unit conveyed to the Owner Lessor pursuant to the ▇▇▇▇ of Sale.
"UNIT PRINCIPAL PORTION" shall mean a collective reference to the Unit 1
Principal Portion and the Unit 2 Principal Portion.
"UNIT SITES" shall mean a collective reference to the Units 1 and 2 Site.
"UNITS" shall mean, as the context may require, either Unit 1 or Unit 2.
"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.
"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
52
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.
53
INDEX
"Dollars" or the sign "$"..........................15
Abstract of Lease...................................6
Acquired Indebtedness...............................6
Actual Knowledge....................................6
Additional Certificates.............................6
Additional Equity Investment........................6
Additional Lessor Notes.............................6
Additional Subsidiary...............................6
Advisors to the Facility Lessee.....................7
Affiliate...........................................7
After-Tax Basis.....................................7
Allocated Rent......................................7
Applicable Law......................................7
Applicable Rate.....................................7
Appraisal Procedure.................................7
Appraiser...........................................8
Asset Purchase Agreement............................8
Asset Sale..........................................8
Assigned Documents..................................8
Assignment and Assumption Agreement.................8
Assignment and Reassignment(s) of Project
Agreements .......................................9
Assumed Deductions..................................9
Assumed Tax Rate....................................9
Authorized Agent....................................9
Balance Sheet.......................................9
Bankruptcy Code.....................................9
Basic Lease Rent....................................9
Basic Lease Term....................................9
Basic Site Lease Term...............................9
Basic Site Sublease Term............................9
▇▇▇▇(s) of Sale.....................................9
Burdensome Termination Event........................9
Business Day.......................................10
Capital Expenditures...............................10
Cash Flow Available for Fixed Charges..............10
Cash Flow to Fixed Charges Ratio...................10
Certificate Purchase Agreement.....................10
Certificateholders.................................10
Certificates.......................................10
Certificates Register..............................10
Change of Control..................................10
Change of Control Premium..........................11
Claim..............................................11
Closing............................................11
Closing Appraisal..................................11
Closing Date.......................................12
Code...............................................12
Colstrip Facility Leases...........................12
Colstrip Project...................................12
Colstrip Site......................................12
Colstrip Unit 1....................................12
Colstrip Unit 2....................................12
Colstrip Unit 3....................................12
Colstrip Unit 4....................................12
Colstrip Units 1 and 2.............................12
Colstrip Units 3 and 4.............................12
Common Facilities..................................12
Common Facilities 1-2..............................12
Common Facilities 1-2 Site.........................13
Common Facilities 1-2-3-4..........................13
Common Facilities 1-2-3-4 Site.....................13
Common Facilities Agreement........................13
Common Facilities Percentage.......................13
Common Facilities Site.............................13
Competitor.........................................13
Component..........................................13
Consolidated Subsidiary............................13
Consolidated Tangible Net Assets...................13
Core Subsidiary....................................14
Corporate Trust Office.............................14
Credit Agreement...................................14
Debt Covenant Termination Date.....................14
Debt Portion of Rent...............................14
Debt Portion of Termination Value..................14
Debt to Capital Ratio..............................14
Deduction Loss.....................................14
Depreciation Deduction.............................15
Discount Rate......................................15
Distribution.......................................15
DTC................................................15
EBITDA.............................................15
Effective Date.....................................15
Effective Rate.....................................15
Enforcement Notice.................................15
Engineering Consultant.............................15
Engineering Report.................................15
Environmental Condition............................15
Environmental Consultant...........................15
Environmental Laws.................................16
Environmental Report...............................16
Equity Contribution Agreement......................16
54
55
Equity Covenant Termination Date...................16
Equity Investment..................................16
Equity Portion of Periodic Lease Rent..............16
Equity Portion of Termination Value................16
ERISA..............................................16
Event of Default...................................16
Event of Loss......................................16
Excepted Payments..................................17
Excepted Rights....................................18
Excess Amount......................................18
Exchange Act.......................................18
Excluded Property..................................18
Excluded Taxes.....................................18
Existing Indebtedness..............................18
Expiration Date....................................18
Facility...........................................18
Facility Lease.....................................18
Facility Lease Term................................18
Facility Lessee....................................18
Facility Lessee's Interest.........................18
Facility Site Sublease.............................18
Fair Market Rental Value...........................19
Fair Market Sales Value............................19
Federal Power Act..................................19
FERC...............................................19
FERC (Owner Lessor) EWG Notice.....................20
FERC EWG (Owner Lessor) Order......................19
FERC EWG (PPLM) Order..............................19
FERC OATT Order....................................20
FERC Orders........................................20
FERC Part 2 Order..................................20
FERC Section 203 Order.............................20
FERC Section 205 Order.............................20
FERC Waiver Order..................................20
Final Determination................................20
First Wintergreen Renewal Lease Term...............20
Fixed Charges......................................20
Fixed Lease Term...................................21
FMV Renewal Lease Term.............................21
Fuel Consultant....................................21
Fuel Report........................................21
GAAP...............................................21
Governmental Entity................................21
Ground Interest....................................21
Ground Lessee......................................21
Ground Lessor......................................21
Ground Lessor's Release Rights.....................21
Ground Sublessee...................................21
Ground Sublessor...................................21
Guarantor..........................................21
Guaranty...........................................22
Hazardous Substance................................22
Holding Company Act................................22
Inclusion Loss.....................................22
Indebtedness.......................................22
Indemnitee.........................................22
Indenture Estate...................................22
Indenture Trustee's Liens..........................22
Independent Appraiser..............................23
Initial Purchasers.................................23
Interest Deductions................................23
Interim Lease Rent.................................23
Interim Lease Term.................................23
Investment.........................................23
IRS................................................24
Lease Debt.........................................24
Lease Debt Rate....................................24
Lease Event of Default.............................24
Lease Indenture....................................24
Lease Indenture Bankruptcy Default.................24
Lease Indenture Event of Default...................24
Lease Indenture Payment Default....................24
Lease Indenture Trustee............................24
Lease Indenture Trustee Office.....................24
Lease Indenture Trustee's Account..................24
Lease Obligations..................................24
Lease Payment Obligations..........................25
Lessee Action......................................25
Lessee Person......................................25
Lessee Section 467 Interest........................25
Lessee Section 467 Loan Balance....................25
Lessor Estate......................................25
Lessor Manager.....................................25
Lessor Note........................................25
Lessor Possession Date.............................25
Lessor Section 467 Interest........................26
Lessor Section 467 Loan Balance....................26
Lien...............................................26
List of Competitors................................26
LLC Agreement......................................26
Loans..............................................26
Majority in Interest of Noteholders................26
Make Whole Premium.................................26
Market Consultant..................................26
Market Report......................................27
Material Adverse Effect............................27
Maximum Probable Loss..............................27
Member Interest....................................27
Minimum Credit Standard............................27
Modification.......................................27
Montana Assets.....................................27
▇▇▇▇▇'▇............................................27
56
MPC................................................27
Non-Recourse Indebtedness..........................27
Nonseverable Modifications.........................28
Note Register......................................28
Noteholder.........................................28
Notes..............................................28
Obsolescence Termination Date......................28
Offering Memorandum................................28
Officer's Certificate..............................28
Omnibus Voting Agreement...........................28
OP Guarantor.......................................28
OP Member..........................................28
OP Member Interest.................................28
OP Parent Guaranty.................................28
Operating Agreement 1-2............................29
Operative Documents................................29
Operator...........................................29
Optional Modification..............................29
Original LLC Agreement.............................29
Other Bills of Sale................................29
Other Colstrip Lease Transactions..............29, 30
Other Facility Lease...............................29
Other Ground Interests.............................29
Other Lease Indenture Trustees.....................29
Other Lease Indentures.............................29
Other Lessor Managers..............................29
Other Operative Documents..........................29
Other Owner Lessors................................30
Other Owner Participants...........................30
Other Participation Agreements.....................30
Other Site Lease and Sublease......................30
Other Undivided Interest...........................30
Overdue Rate.......................................30
Owner Committee....................................31
Owner Lessor.......................................30
Owner Lessor's Account.............................30
Owner Lessor's Interest............................30
Owner Lessor's Lien................................30
Owner Lessor's Percentage..........................31
Owner Participant..................................31
Owner Participant's Account........................31
Owner Participant's Commitment.....................31
Owner Participant's Lien...........................31
Owner Participant's Net Economic Return............31
Ownership Agreement 1-2............................31
Ownership Agreement 3-4............................31
Ownership Agreements...............................32
Ownership and Operating Agreements 1-2.............32
Participation Agreement............................32
Pass Through Trust.................................32
Pass Through Trust Agreement.......................32
Pass Through Trustee...............................32
Periodic Lease Rent................................32
Permitted Business.................................32
Permitted Encumbrances.............................33
Permitted Instruments..............................33
Permitted Investment...............................33
Permitted Liens....................................34
Permitted Securities...............................34
Person.............................................34
Plan...............................................34
Pollution Control Facilities.......................35
Portland...........................................35
Power Market Consultant............................35
PPA................................................35
PPA Period.........................................35
PPL Corporation....................................35
PPL Montana........................................35
Pricing Assumptions................................35
Principal Portion..................................36
Proceeds...........................................36
Project Agreements.................................36
Project Committee..................................36
Proportional Rent..................................36
Prudent Industry Practice..........................36
Puget..............................................36
Purchase Price.....................................36
Qualified Shareholder..............................36
Qualifying Cash Bid................................36
Qualifying Letter of Credit........................36
Qualifying Letter of Credit Bank...................37
Rating Agencies....................................37
Rebuilding Closing Date............................37
Redemption Date....................................37
Regulatory Event of Loss...........................37
Related Common Facilities..........................37
Related Common Facilities Interest.................37
Related Common Facilities Interest 1...............37
Related Common Facilities Interest 2...............37
Related Common Facilities Site.....................37
Related Ground Interest............................37
Related Lease Indenture Trustee....................38
Related Owner Lessor...............................38
Related Party......................................38
Related Site.......................................38
Related Transaction................................38
Released Property..................................38
Renewal Lease Rent.................................38
Renewal Lease Term.................................38
Renewal Site Lease Term............................38
Renewal Site Sublease Term.........................38
Rent...............................................38
57
Rent Payment Date..................................38
Rent Payment Period................................39
Replacement Component..............................39
Required Modification..............................39
Requisition........................................39
Responsible Officer................................39
Restricted Investment..............................39
Restricted Payment.................................39
Revenues...........................................40
Rights Sharing Agreement...........................40
S&P................................................40
Scheduled Closing Date.............................40
Scheduled Lease Expiration Date....................40
Scheduled Payment Date.............................40
Scheduled to be Paid...............................40
SEC................................................40
Second Wintergreen Renewal Lease Term..............40
Section 467 Interest...............................40
Section 467 Loan Balance...........................40
Secured Indebtedness...............................41
Securities Act.....................................41
Security...........................................41
Severable Modification.............................41
Significant Indenture Default......................41
Significant Lease Default..........................41
Site Lease and Sublease............................41
Site Lease Term....................................41
Site Sublease Term.................................41
Site(s)............................................41
Special Lessee Transfer............................41
Special Lessee Transfer Amount.....................42
Special Lessee Transfer Event......................42
Subsidiary.........................................42
Supplemental Financing.............................42
Supplemental Lease Rent............................42
Tax................................................42
Tax Advance........................................42
Tax Assumptions....................................43
Tax Benefit........................................43
Tax Claim..........................................43
Tax Event..........................................43
Tax Indemnitee.....................................43
Tax Indemnity Agreement............................43
Tax Law Change.....................................43
Tax Loss...........................................43
Tax Representation.................................43
Tax Shelter Designation Agreement..................43
Taxes..............................................42
Term...............................................43
Termination Date...................................43
Termination Value..................................43
Title Policies.....................................43
Total Capitalization...............................44
Transaction........................................44
Transaction Cost Deductions........................46
Transaction Costs..................................44
Transaction Party(ies).............................46
Transferee.........................................46
Transmission Facilities............................46
Treasury Regulations...............................46
Trust Company......................................46
Trust Indenture Act................................46
U.S. Government Obligations........................48
UCC................................................47
Undivided Interest.................................47
Uniform Commercial Code............................47
Unit 1.............................................47
▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇....................................▇▇
▇▇▇▇ ▇ Principal Portion...........................47
Unit 1 Site........................................47
Unit 2.............................................47
▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇....................................▇▇
▇▇▇▇ ▇ Principal Portion...........................47
Unit 2 Site........................................47
Unit 3.............................................48
Unit 3 Site........................................48
Unit 4.............................................48
▇▇▇▇ ▇ 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
Water Rights.......................................49
Wintergreen Renewal Lease Term.....................49
Working Capital Facility...........................49
58
EXHIBIT A
TO
▇▇▇▇ OF SALE
DESCRIPTION OF SITES
Units 1 and 2 Site
Parcel 1 That portion of Section 34 in Township 2 North, Range 41 East,
PMM, described as ▇▇▇▇▇▇ ▇-▇ ▇▇▇ ▇-▇-▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇ amending Certificate of Survey No. 27875
(Tract 1), ▇▇. ▇▇▇▇▇, ▇▇. ▇▇▇▇▇ and Dedication of ▇▇▇▇▇▇
▇-▇-▇, ▇-▇-▇, ▇-▇ and 1-D filed July 30, 1986 for record in
the office of the Clerk and Recorder of Rosebud County,
Montana, under Document No. 54257.
Parcel 2 That portion of Section 21 in Township 2 North, Range 41 East,
PMM, described as ▇▇▇▇▇ ▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇
filed June 3, 1980 for record in the office of the Clerk and
Recorder of Rosebud County, Montana, under Document No. 27873.
Parcel 2A That portion of the N-1/2 of Section 28, Township 2 North,
Range 41 East described as Parcel 2A of Certificate of Survey
No. 85514 filed March 10, 1999 for record in the office of the
Clerk and Recorder of Rosebud County, Montana as Document No.
85514.
Parcel 3 That part of Section 29 in Township 2 North, Range 41 East,
PMM, described as ▇▇▇▇▇ ▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇
filed June 3, 1980 for record in the office of the Clerk and
Recorder of Rosebud County, Montana as Document No. 27877.
Parcel 4 That portion of the E-1/2 of Section 34, Township 2 North,
Range 41 East, PMM described as Parcel ▇-▇-▇ ▇▇▇ ▇▇▇▇▇▇ ▇-▇-▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇ filed March 10, 1999 for
record in the office of the Clerk and Recorder of Rosebud
County, Montana as Document No. 85561.
Parcel 4A That portion of the N-1/2 of Section 3, Township 1 North,
Range 41 East, PMM and the SE-1/4 of Section 34, Township 2
North, Range 41 East, PMM described as Parcel 4A of
Certificate of Survey 85515 filed March 10, 1999 for record in
the office of the Clerk and Recorder of Rosebud County,
Montana as Document No. 85515, excluding therefrom ▇▇▇▇▇ ▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ filed October 29, 1987 for record
in the office of the Clerk and Recorder of Rosebud County,
Montana as Document No. 58701.
59
Parcel 5 Township 2 North, Range 41 East, P.M.M., Rosebud County,
Montana
Section 20: All
EASEMENT: Easement for utilities reserved by Montana Power Company and
Puget Sound Power & Light Company in Deed dated April 1, 1983,
recorded May 2, 1983 in Book 79 Deeds, page 648, over and
across a part of the following described real property:
That portion of Sections 34 and 35 in Township 2 North, Range
41 East, P.M.M., described as Parcel 3 Amended Certificate of
Survey No. 85124 filed December 30, 1998 in the Office of the
Clerk and Recorder of Rosebud County, Montana as Document No.
85124.
Common Facilities 1-2 Site
Parcel 12A That portion of Sections 34 & 35, Township 2 North, Range 41
East, PMM, described as an 80-foot wide easement, being the
northerly 80 feet of Parcel 3 depicted on Certificate of
Survey No. 34152, on file in the office of the Clerk and
Recorder of Rosebud County, Montana, and running between
▇▇▇▇▇▇ ▇▇. ▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇ of said Parcel 3, for utilities
(including, but not limited to, electrical conduit, water
lines, conveyor systems and related facilities), right-of-way
and access; and
Parcel 12B That portion of Sections 34 & 35, Township 2 North, Range 41
East, PMM, described as a 30-foot wide easement being the
northerly 30 feet of Parcel 3 depicted on Certificate of
Survey No. 34152, on file in the office of the Clerk and
Recorder of Rosebud County, Montana, and running between
▇▇▇▇▇▇ ▇▇. ▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇ ▇▇ ▇▇▇▇▇▇ 3, for utilities
(including, but not limited to electrical conduit, water
lines, conveyor systems and related facilities), right-of-way
and access.
Both reserved in a deed dated April 1, 1983, recorded in Book
79 Deeds, page 648, records in the office of the Clerk and
Recorder of Rosebud County, Montana.
Common Facilities 1-2-3-4 Site
Parcel 35 That portion of Sections 34 and 35 in Township 2 North, Range
41 East, PMM, described as Parcel B Certificate of Survey No.
34152 filed January 8, 1981 for record in the office of the
Clerk and Recorder of Rosebud County, Montana as Document No.
34152.
Parcel 36 That portion of Sections 27 and 34 in Township 2 North, Range
41 East, PMM, described as Parcel C of Certificate of Survey
No. 34153 filed January 8, 1981 for record in the office of
the Clerk and Recorder of Rosebud County, Montana as Document
No. 34153.
60
Parcel 37 That portion of Section 35 in Township 2 North, Range 41 East
& Section 2 in Township 1 North, Range 41 East, PMM, described
as Tract ▇-▇, ▇▇▇▇▇ ▇-▇, ▇▇▇▇▇ ▇-▇ of Certificate of Survey
No. 34995 filed March 25, 1982 for record in the office of the
Clerk and Recorder of Rosebud County, Montana as Document No.
34995.
Parcel 38 That portion of Section 3 in Township 1 North, Range 41 East,
PMM, described as Parcel G of Certificate of Survey No. 34996
filed March 25, 1982 for record in the office of the Clerk and
Recorder of Rosebud County, Montana as Document No. 34996.
Parcel 39 That portion of Section 34 in Township 2 North, Range 41 East,
PMM, described as Parcel ▇-▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, filed March 17, 1999 for record in the office of
the Clerk and Recorder of Rosebud County, Montana as Document
No. 85561, excluding therefrom a tract of land described as
Parcel A-1-B of Certificate of Survey 85561
Parcel 40 That portion of Sections 28 and 33 in Township 2 North, Range
41 East, PMM, described as Parcel F-1 Amended and Parcel ▇-▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇ filed May 4, 1999
for record in the office of the Clerk and Recorder of Rosebud
County, Montana as Document No. 85920.
Parcel 41 That portion of Section 34 in Township 2 North, Range 41 East,
PMM, described as Parcel D-1 and Parcel ▇-▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇ filed January 10, 1984 for record in the
office of the Clerk and Recorder of Rosebud County, Montana as
Document No. 42210.
Parcel 42 That portion of Section 34 in Township 2 North, Range 41 East,
PMM, described as ▇▇▇▇▇ ▇-▇-▇, ▇▇▇▇▇ ▇-▇-▇ and Tract 1-A-3 of
Certificate of Survey No. 54257 amending Certificate of Survey
No. 27875 (Tract 1), Certificate of Survey ▇▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇ and Dedication of ▇▇▇▇▇▇
▇-▇-▇, ▇-▇-▇, ▇-▇ and 1-D, filed July 30, 1986 for record in
the office of the Clerk and Recorder of Rosebud County,
Montana as Document No. 54257, subject to dedication of Tract
1-A-2 (Willow Avenue) as a public road.
Parcel 43 That portion of Section 24 in Township 6 North, Range 39 East,
PMM, described as Tract A and Tract C of Certificate of Survey
No. 6100 filed February 13, 1974 for record in the office of
the Clerk and Recorder of Rosebud County, Montana as Document
No. 6100.
Parcel 44 That parcel commencing at the section corner common Sections
Thirteen (13), Fourteen (14), Twenty-three (23) and
Twenty-four (24), Township Six (6) North, of Range Thirty-nine
(39) East, M.P.M., Rosebud County, Montana, running thence
northerly along the section line common to Sections Fourteen
(14) and Thirteen (13) to the Yellowstone River; running
thence southeasterly along the Yellowstone River to a point
where the south boundary line of Section Thirteen (13) meets
the Yellowstone River; thence westerly along the south
boundary line
61
of the said Section Thirteen (13) to the point of beginning,
containing in all approximately 17 acres as described in deed
dated December 7, 1973, recorded December 12, 1973 in Book 73,
Page 127 and confirmed in Judgment and Decree dated March 21,
1975 by The District Court of the Sixteenth Judicial District,
in and for the County of Rosebud, recorded March 21, 1975 in
Book 19 Orders and Decree, page 996, records of the County
Clerk and Recorder of Rosebud County, Montana.
Parcel 45 Easements and rights-of-way more particularly described in
documents recorded in the office of the Clerk and Recorder of
Rosebud County, Montana, under the following Book and Page
numbers; which documents are incorporated herein by this
reference and made a part hereof:
Book 77 Deeds, page 29
Book 75 Deeds, page 306
Book 73 Deeds, page 430
Book 73 Deeds, page 466
Book 74 Deeds, page 245
Book 78 Deeds, page 782
Book 78 Deeds, page 838
Book 74 Deeds, page 169
Book 74 Deeds, page 110
Book 74 Deeds, page 70
Book 77 Deeds, page 941
Book 78 Deeds, page 134
Book 79 Deeds, page 238
Book 74 Deeds, page 14
Book 74 Deeds, page 65
Book 74 Deeds, page 112
Book 79 Deeds, page 240
Book 74 Deeds, page 62
Book 74 Deeds, page 67
Book 74 Deeds, page 242
Book 73 Deeds, page 891
Book 73 Deeds, page 893
Book 73 Deeds, page 284
Book 78 Deeds, page 131
Book 32 Misc., page 476
62
EXHIBIT B
TO
▇▇▇▇ OF SALE
DESCRIPTION OF THE FACILITY
▇▇▇▇ ▇
▇▇▇▇ ▇ consists of Colstrip Unit No. 1, a ▇▇▇ ▇ (▇▇▇▇▇ capacity)
coal-fired steam electric generating unit, located on the Units 1 and 2 Site in
Rosebud County, Montana, including, without limitation, the assets described in
Schedule B-1 hereto, but excluding the Common Facilities.
▇▇▇▇ ▇
▇▇▇▇ ▇ consists of 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, including, without limitation, the assets described in
Schedule B-2 hereto, but excluding the Common Facilities.
63
SCHEDULE B-1
UNIT 1
--------------------------------------------------------------------------------
FERC ACCOUNT 311
STRUCTURES AND IMPROVEMENTS
Other Facilities
Brine Concentrator, Wash Tray, Pump Building
Station Building
--------------------------------------------------------------------------------
FERC ACCOUNT 311.2
POLLUTION CONTROL EQUIPMENT
Ash Water Handling
Ash Handling Facilities
--------------------------------------------------------------------------------
FERC ACCOUNT 312
BOILER PLANT EQUIPMENT
Boiler Supporting Structures
Boiler Pressure Parts
Boiler Non-Pressure Parts
Soot Blower Equipment
Forced Draft Fans
Combustion Air Ducts
Main Combustion Air Heaters
Steam Supplied Combustion Air Preheaters
Coal Handling Equipment
Coal Feeders
Pulverized Fuel Equipment
Gas Fuel Equipment
Bottom Ash, Economizer Ash and Pyrite Handling System
Boiler Blowoff Tank
Deaerator Feedwater Heater with Storage Tank
Feedwater Heater #1-1
Feedwater Heater #1-2
Booster Pumps
Feedwater Heater #1-4
Feedwater Heater #1-5
Boiler Feed Pumps
Feedwater Heater #1-6
Boiler Plant Piping
Piping Labor Operations
Auxiliary Steam System
Boiler Water Treating Equipment
Condensate Storage Tanks
Stack
Induced Draft Fans
Other Auxiliary Equipment
--------------------------------------------------------------------------------
FERC ACCOUNT 312.2
POLLUTION CONTROL EQUIPMENT
Air Quality Control System
Scrubber
--------------------------------------------------------------------------------
64
UNIT 1
--------------------------------------------------------------------------------
FERC ACCOUNT 314
TURBOGENERATOR UNITS
Pedestal Substructures
Turbine Generator
Excitation and Voltage Regulation Systems
Lubricating Oil Systems
Stator Cooling Water System
Hydrogen Gas System
Bearing Cooling Water System
Condenser and Accessories
Condensate Pumps
Cooling Tower
Circulating Water Pumps
Lubricating Oil
--------------------------------------------------------------------------------
FERC ACCOUNT 315
ACCESSORY ELECTRIC EQUIPMENT
Conduits and Trays
Station Service and Startup Transformers
Generation Main Bus
Station Service Busways
Motor Control Centers
Local Control Stations and Receptacles
Wire and Cable
Switch Gear Control and Protective Equipment
Storage Battery Equipment
Misc. Electrical Material and Labor
Digital/Analog Control System
Control Boards
Miscellaneous Costs
--------------------------------------------------------------------------------
FERC ACCOUNT 316
MISCELLANEOUS POWER PLANT EQUIPMENT
Air Compressor Equipment
--------------------------------------------------------------------------------
65
SCHEDULE B-2
UNIT 2
FERC
ACCOUNT
--------------------------------------------------------------------------------
311 STRUCTURES AND IMPROVEMENTS
311-14 Other Facilities
311-17 Brine Concentrator, Wash Tray, Pump Building
311-18 Station Building
--------------------------------------------------------------------------------
311.2 POLLUTION CONTROL EQUIPMENT
311.2-16 Ash Water Handling
311.2-17 Ash Handling Facilities
--------------------------------------------------------------------------------
312 BOILER PLANT EQUIPMENT
312-11 Boiler Supporting Structures
312-12 Boiler Pressure Parts
312-13 Boiler Non-Pressure Parts
312-14 Soot Blower Equipment
312-15 Forced Draft Fans
312-16 Combustion Air Ducts
312-17 Main Combustion Air Heaters
312-18 Steam Supplied Combustion Air Preheaters
312-20 Coal Handling Equipment
312-21 Coal Feeders
312-22 Pulverized Fuel Equipment
312-26 Bottom Ash, Economizer Ash and Pyrite Handling System
312-27 Boiler Blowoff Tank
312-39 Deaerator Feedwater Heater with Storage Tank
312-30 Feedwater Heater #1-1
312-31 Feedwater Heater #1-2
312-33 Booster Pumps
312-34 Feedwater Heater #1-4
312-35 Feedwater Heater #1-5
312-36 Boiler Feed Pumps
312-37 Feedwater Heater #1-6
312-38 Boiler Plant Piping
312-39 Miscellaneous Pumps and Drives
312-40 Piping Labor Operations
312-41 Auxiliary Steam System
312-46 Boiler Water Treating Equipment
312-47 Condensate Storage Tanks
312-51 Stack
312-52 Induced Draft Fans
312-87 Other Auxiliary Equipment
--------------------------------------------------------------------------------
312.2 POLLUTION CONTROL EQUIPMENT
312.2-50 Air Quality Control System
66
UNIT 2
FERC
ACCOUNT
--------------------------------------------------------------------------------
312.2-52 Scrubber
--------------------------------------------------------------------------------
314 TURBOGENERATOR UNITS
314-11 Pedestal Substructures
314-14 Turbine Generator
314-17 Excitation and Voltage Regulation Systems
314-20 Lubricating Oil Systems
314-21 Stator Cooling Water System
314-22 Hydrogen Gas System
314-24 Bearing Cooling Water System
314-35 Condenser and Accessories
314-36 Condensate Pumps
314-37 Cooling Tower
314-38 Circulating Water Pumps
314-39 Circulating Water Ducts
--------------------------------------------------------------------------------
315 ACCESSORY ELECTRIC EQUIPMENT
315-15 Conduits and Trays
315-18 Station Service and Startup Transformers
315-19 Generation Main Bus
315-21 Motor Control Centers
315-22 Local Control Stations and Receptacles
315-26 Wire and Cable
315-30 Switch Gear Control and Protective Equipment
315-36 Storage Battery Equipment
315-49 Misc. Electrical Material and Labor
315-49 Misc. Electrical Material and Labor
315-60 Digital/Analog Control System
315-61 Control Boards
--------------------------------------------------------------------------------
316 MISCELLANEOUS POWER PLANT EQUIPMENT
316-11 Air Compressor Equipment
--------------------------------------------------------------------------------
67
EXHIBIT C
TO
▇▇▇▇ OF SALE
DESCRIPTION OF COMMON FACILITIES
Common Facilities 1-2
The Common Facilities 1-2 consists of all items of property,
constructed or installed for use by Units 1 and 2 in common pursuant to the
Ownership and Operating Agreements 1-2, and shall include, without limitation,
the assets described in Schedule C-1 hereto, other than those items listed on
such schedule that are required for use by Units 1 and 2 and Units 3 and 4 in
common pursuant to the Common Facilities Agreement.
Common Facilities 1-2-3-4
The Common Facilities 1-2-3-4 consists of all items of property,
constructed or installed for use by both of Units 1 and 2 and Units 3 and 4 in
common pursuant to the Common Facilities Agreement, and shall include, without
limitation, the Yellowstone river pumping plant, the surge pond, the
environmental building, the warehouse, the machine shop, the auto shop, the
training center, the administration building, the auxiliary services building,
the garage/warehouse, the meteorological and air quality monitoring structures,
and each of the other assets described in Schedule C-1 hereto to be used by both
of Units 1 and 2 and Units 3 and 4 in common pursuant to the Common Facilities
Agreement.
68
SCHEDULE C-1
COMMON FACILITIES 1-2 AND COMMON FACILITIES 1-2-3-4
FERC
ACCOUNT
--------------------------------------------------------------------------------
311 STRUCTURES AND IMPROVEMENTS
311-11 Site Preparation and Improvements
311-12 Site Facilities
311-14 Other Facilities
311-15 Water Supply System
311-17 Brine Concentrator, Wash Tray, Pump ▇▇▇▇▇▇▇▇
▇▇▇-▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
311-19 Other Structures
311-21 Water Supply System - Common
311-22 Intake Structure Equipment
311-23 Surge Pond #1 Structures
311-24 Surge Pond #1
--------------------------------------------------------------------------------
311.2 POLLUTION CONTROL
311.2-16 Ash Water Handling
311.2-17 Ash Handling Facilities
--------------------------------------------------------------------------------
312 BOILER PLANT EQUIPMENT
312-19 Coal Delivery Facilities
312-23 Gas Fuel Equipment
312-38 Boiler Plant Piping
312-40 Piping Labor Operations
312-41 Auxiliary Steam System
312-45 Auxiliary Boilers
312-46 Boiler Water Treating Equipment
312-48 Water Management Costs
312-87 Other Auxiliary Equipment
--------------------------------------------------------------------------------
312.2 POLLUTION CONTROL EQUIPMENT
312.2-50 Air Quality Control System
312.2-52 Scrubber
--------------------------------------------------------------------------------
314 TURBOGENERATOR UNITS
314-20 Lubricating Oil Systems
314-22 Hydrogen Gas System
314-48 Brine Concentrator
314-49 Water Management Costs
Miscellaneous Costs
69
COMMON FACILITIES 1-2 AND COMMON FACILITIES 1-2-3-4
FERC
ACCOUNT
--------------------------------------------------------------------------------
315 ACCESSORY ELECTRIC EQUIPMENT
315-15 Conduits and Trays
315-18 Station Service and Startup Transformers
315-21 Motor Control Centers
315-26 Wire and Cable
315-30 Switch Gear Control and Protective Equipment
315-49 Misc. Electrical Material and Labor
315-51 Emergency Generators
315-60 Digital/Analog Control System
315-61 Control Boards
315-62 Computer Data Logger
--------------------------------------------------------------------------------
316 MISCELLANEOUS POWER PLANT EQUIPMENT
316-11 Air Compressor Equipment
316-12 Building Crane and Miscellaneous Hoists
316-13 Office Shop and Laboratory
316-14 Miscellaneous Equipment
316-15 Office Shop and Laboratory Additional Equipment
--------------------------------------------------------------------------------