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Exhibit 4.7(a)
FACILITY LEASE AGREEMENT
(BA1/2)
Dated as of July 20, 2000
between
MONTANA OL3 LLC,
as Owner Lessor
and
PPL MONTANA, LLC,
as Facility Lessee
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COLSTRIP GENERATING UNITS 1 AND 2
AND RELATED COMMON FACILITIES
CERTAIN OF THE RIGHT, TITLE AND INTEREST OF THE OWNER LESSOR IN AND TO THIS
LEASE AND THE RENT DUE AND TO BECOME DUE HEREUNDER HAVE BEEN ASSIGNED AS
COLLATERAL SECURITY TO, AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF THE
CHASE MANHATTAN BANK, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS LEASE
INDENTURE TRUSTEE UNDER AN INDENTURE OF TRUST, MORTGAGE AND SECURITY AGREEMENT
(BA1/2), DATED AS OF JULY 20, 2000, BETWEEN SAID LEASE INDENTURE TRUSTEE, AS
SECURED PARTY, AND THE OWNER LESSOR, AS DEBTOR. SEE SECTION 21 HEREOF FOR
INFORMATION CONCERNING THE RIGHTS OF THE ORIGINAL HOLDER AND THE HOLDERS OF THE
VARIOUS COUNTERPARTS HEREOF.
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TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS............................................................................ 2
SECTION 2. LEASE OF THE UNDIVIDED INTEREST........................................................ 2
Section 2.1. Lease............................................................................ 2
Section 2.2. Personal Property................................................................ 2
SECTION 3. FACILITY LEASE TERM AND RENT........................................................... 2
Section 3.1. Interim Lease Term............................................................... 2
Section 3.2. Basic Lease Term................................................................. 2
Section 3.3. Rent............................................................................. 3
Section 3.4. Supplemental Lease Rent.......................................................... 4
Section 3.5. Adjustment of Lease Schedules.................................................... 4
Section 3.6. Manner of Payments............................................................... 6
SECTION 4. DISCLAIMER OF WARRANTIES; RIGHT OF QUIET ENJOYMENT..................................... 6
Section 4.1. Disclaimer of Warranties......................................................... 6
Section 4.2. Quiet Enjoyment.................................................................. 8
SECTION 5. RETURN OF UNDIVIDED INTEREST........................................................... 8
Section 5.1. Return........................................................................... 8
Section 5.2. Condition Upon Return............................................................ 9
Section 5.3. Environmental Reports............................................................ 9
SECTION 6. LIENS.................................................................................. 10
SECTION 7. MAINTENANCE; REPLACEMENTS OF COMPONENTS................................................ 10
Section 7.1. Maintenance...................................................................... 10
Section 7.2. Replacement of Components........................................................ 11
SECTION 8. MODIFICATIONS.......................................................................... 11
Section 8.1. Required Modifications........................................................... 11
Section 8.2. Optional Modifications........................................................... 12
Section 8.3. Title to Modifications........................................................... 12
SECTION 9. NET LEASE.............................................................................. 13
SECTION 10. EVENTS OF LOSS......................................................................... 14
Section 10.1. Occurrence of Events of Loss..................................................... 14
Section 10.2. Payment of Termination Value; Termination of Periodic Lease Rent and
Renewal Lease Rent............................................................... 15
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 10.3. Rebuild or Replace............................................................... 17
Section 10.4. Application of Payments Not Relating to an Event of Loss......................... 19
SECTION 11. INSURANCE.............................................................................. 20
Section 11.1. Property Insurance............................................................... 20
Section 11.2. Liability Insurance.............................................................. 20
Section 11.3. Provisions with Respect to Insurance............................................. 20
Section 11.4. Reports.......................................................................... 21
Section 11.5. Additional Insurance by Owner Lessor............................................. 22
Section 11.6. Waiver of Requirements........................................................... 22
Section 11.7. Application of Insurance Proceeds................................................ 23
SECTION 12. INSPECTION............................................................................. 24
SECTION 13. TERMINATION OPTION FOR BURDENSOME EVENTS............................................... 24
Section 13.1. Election to Terminate............................................................ 24
Section 13.2. Solicitation of Offers; Payments Upon Termination................................ 25
Section 13.3. Procedure for Exercise of Termination Option..................................... 26
Section 13.4. Assumption of the Lessor Note.................................................... 27
Section 13.5. Certain Conditions to Termination................................................ 27
SECTION 14. TERMINATION FOR OBSOLESCENCE........................................................... 27
Section 14.1. Termination...................................................................... 27
Section 14.2. Solicitation of Offers........................................................... 28
Section 14.3. Right of Owner Lessor to Retain such Unit Interest............................... 28
Section 14.4. Procedure for Exercise of Termination Option..................................... 29
Section 14.5. Certain Conditions to Termination................................................ 31
SECTION 15. LEASE RENEWAL.......................................................................... 32
Section 15.1. First Wintergreen Renewal Lease Term............................................. 32
Section 15.2. Second Wintergreen Renewal Lease Term............................................ 32
Section 15.3. Fair Market Value Renewal Lease Terms............................................ 33
Section 15.4. Renewal Lease Rent for the Renewal Lease Terms................................... 33
Section 15.5. Determination of Fair Market Rental Value........................................ 34
Section 15.6. Simultaneous Renewals............................................................ 35
SECTION 16. EVENTS OF DEFAULT...................................................................... 35
SECTION 17. REMEDIES............................................................................... 37
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 17.1. Remedies for Lease Event of Default.............................................. 37
Section 17.2. Cumulative Remedies.............................................................. 40
Section 17.3. No Delay or Omission to be Construed as Waiver................................... 40
Section 17.4. Significant Lease Default; Drawings Under Qualifying Letter of Credit............ 40
SECTION 18. SECURITY INTEREST AND INVESTMENT OF SECURITY FUNDS..................................... 41
SECTION 19. FACILITY LESSEE'S RIGHT TO SUBLEASE.................................................... 41
SECTION 20. OWNER LESSOR'S RIGHT TO PERFORM........................................................ 42
SECTION 21. SECURITY FOR OWNER LESSOR'S OBLIGATION TO THE LEASE INDENTURE TRUSTEE.................. 42
SECTION 22. WAIVER OF RIGHT TO PARTITION........................................................... 43
SECTION 23. MISCELLANEOUS.......................................................................... 43
Section 23.1. Amendments and Waivers........................................................... 43
Section 23.2. Notices.......................................................................... 43
Section 23.3. Survival......................................................................... 45
Section 23.4. Successors and Assigns........................................................... 45
Section 23.5. "True Lease"..................................................................... 45
Section 23.6. Business Day..................................................................... 45
Section 23.7. Governing Law.................................................................... 45
Section 23.8. Severability..................................................................... 45
Section 23.9. Counterparts..................................................................... 46
Section 23.10. Headings and Table of Contents................................................... 46
Section 23.11. Further Assurances............................................................... 46
Section 23.12. Effectiveness.................................................................... 46
Section 23.13. Limitation of Liability.......................................................... 46
Section 23.14. Measuring Life................................................................... 46
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SCHEDULE 1 - PERIODIC LEASE RENT PERCENTAGES
SCHEDULE 2 - TERMINATION VALUE PERCENTAGES
SCHEDULE 3 - ALLOCATION OF PERIODIC LEASE RENT
EXHIBIT A - DESCRIPTION OF COLSTRIP SITE
EXHIBIT B - DESCRIPTION OF THE FACILITY
EXHIBIT C - DESCRIPTION OF THE COMMON FACILITIES -
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FACILITY LEASE AGREEMENT
(BA1/2)
This FACILITY LEASE AGREEMENT (BA1/2), dated as of July 20, 2000 (this
"Facility Lease"), between MONTANA OL3 LLC, a Delaware limited liability company
(the "Owner Lessor"), and PPL MONTANA, LLC, a Delaware limited liability company
(the "Facility Lessee" or "PPL Montana").
WITNESSETH:
WHEREAS, Units 1 and 2 and the Common Facilities are located on the
Units 1 and 2 Site and the Common Facilities Site, respectively, which are more
particularly described on Exhibit A hereto;
WHEREAS, rights and obligations as tenants-in-common of the co-owners
of the Units 1 and 2 Site and the Common Facilities Site and all improvements
constructed, and all personal property situated, thereon, including Units 1 and
2 and the Common Facilities, are governed by the Ownership and Operating
Agreements 1-2 and the Common Facilities Agreement;
WHEREAS, pursuant to the Site Lease and Sublease, PPL Montana has
leased an undivided interest in the Units 1 and 2 Site and the Common Facilities
Site, each of which is described in Exhibit B hereto, to the Owner Lessor (which
undivided interests are collectively referred to herein as the "Ground Interest"
and are described in more detail in the definition of such term in Appendix A to
the Participation Agreement referred to in Section 1); and the Owner Lessor has
subleased the Ground Interest to PPL Montana for the term equal to the term of
this Facility Lease, including any renewals hereof;
WHEREAS, pursuant to the Bill of Sale which has been recorded with the
Clerk and Recorder for Rosebud County, Montana on even date hereof, the Owner
Lessor has acquired from PPL Montana an undivided interest in Units 1 and 2 and
the Related Common Facilities (which undivided interests are collectively
referred to herein as the "Undivided Interest" and are described in more detail
in the definition of such term in Appendix A to the Participation Agreement
referred to in Section 1);
WHEREAS, Units 1 and 2 and the Related Common Facilities do not include
the Units 1 and 2 Site or the Common Facilities Site or any part thereof, and no
part of the Units 1 and 2 Site or the Common Facilities Site is being leased to
the Facility Lessee under this Facility Lease; and
WHEREAS, pursuant to this Facility Lease, the Owner Lessor will lease
the Undivided Interest to the Facility Lessee for the Fixed Lease Term and the
Renewal Lease Terms, if any, provided herein.
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NOW, THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS
Unless the context hereof otherwise requires, capitalized terms used in
this Facility Lease, including those in the recitals, and not otherwise defined
herein shall have the respective meanings set forth in Appendix A to the
Participation Agreement (BA1/2), dated as of July 13, 2000 among PPL Montana,
the Owner Lessor, the Owner Participant referred to therein, Wilmington Trust
Company, in the capacities referred to therein, and The Chase Manhattan Bank, in
the capacities referred to therein. The general provisions of such Appendix A
shall apply to the terms used in this Facility Lease and specifically defined
herein.
SECTION 2. LEASE OF THE UNDIVIDED INTEREST
Section 2.1. Lease. The Owner Lessor hereby leases the Undivided
Interest, upon the terms and conditions set forth herein, to the Facility Lessee
for the Interim Lease Term, the Basic Lease Term and, subject to the Facility
Lessee's exercise of the renewal option or options in Section 15, one or more
Renewal Lease Terms, and the Facility Lessee hereby leases the Undivided
Interest, upon the terms and conditions set forth herein, from the Owner Lessor.
The Facility Lessee and the Owner Lessor understand and agree that this Facility
Lease is subject to the Permitted Encumbrances. The Undivided Interest shall be
subject to the terms of this Facility Lease from the date on which this Facility
Lease is executed and delivered.
Section 2.2. Personal Property. 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. The Undivided
Interest constitutes personal property for all purposes, other than possibly for
the purposes of laws relating to ad valorem or property taxes.
SECTION 3. FACILITY LEASE TERM AND RENT
Section 3.1. Interim Lease Term. The interim lease term of this
Facility Lease for the Undivided Interest (the "Interim Lease Term") shall
commence on the Closing Date and shall terminate at 11:59 p.m. (New York City
time) on October 20, 2000, subject to early termination in whole pursuant to
Section 10, 13, 14 or 17 hereof or with respect to either Unit Interest pursuant
to Section 10 or 14 hereof.
Section 3.2. Basic Lease Term. The basic lease term of this Facility
Lease for the Undivided Interest (the "Basic Lease Term") shall commence on
October 21, 2000 and shall terminate at 11:59 p.m. (New York City time) on July
20, 2036, subject to earlier termination in whole pursuant to Section 10, 13, 14
or 17 hereof or with respect to either Unit Interest pursuant to Section 10 or
14 hereof.
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Section 3.3. Rent.
(a) Payment of Rent. The Facility Lessee hereby agrees to pay
to the Owner Lessor interim rent with respect to the Interim Lease Term
("Interim Lease Rent") and basic lease rent, payable with respect to the Basic
Lease Term ("Basic Lease Rent," and together with Interim Lease Rent, "Periodic
Lease Rent") for the lease of the Undivided Interest as follows: each payment of
Periodic Lease Rent shall be in the amount equal to the product of the Purchase
Price multiplied by the Periodic Lease Rent Percentage set forth opposite such
Rent Payment Date on Schedule 1 hereto, subject to Section 3.5 hereof. In the
event this Facility Lease shall have been terminated pursuant to Section 10 or
14 with respect to either the Unit 1 Interest or the Unit 2 Interest, Periodic
Lease Rent payable on any Rent Payment Date thereafter shall be 50% of the
amount calculated pursuant to the immediately preceding sentence. All Periodic
Lease Rent to be paid pursuant to this Section 3.3 shall be payable in the
manner set forth in Section 3.6.
(b) Allocation of Rent. The Periodic Lease Rent allocated to
each Rent Payment Period for the use by the Facility Lessee of the Undivided
Interest shall be an amount equal to the product of the Purchase Price
multiplied by the Allocation Percentage for the Undivided Interest as set forth
in Schedule 3 hereof (the "Allocated Rent"). In the event this Facility Lease
shall have been terminated pursuant to Section 10 or 14 with respect to either
the Unit 1 Interest or the Unit 2 Interest, the Allocated Rent with respect to
the remainder of the Term shall be 50% of the amount computed pursuant to the
immediately preceding sentence. Notwithstanding that Periodic Lease Rent is
payable in accordance with Section 3.3(a) hereof, the Allocated Rent calculated
pursuant to this Section 3.3(b) shall represent and be the amount of Periodic
Lease Rent for which the Facility Lessee becomes liable on account of the use of
the Undivided Interest for each calendar year included in whole or in part in
the Term.
(c) Deduction/Inclusion of Rent and Interest Under Section 467
of the Code. It is the intention of the Owner Lessor and the Facility Lessee
that the allocation of Periodic Lease Rent to each Rent Payment Period as
provided in Section 3.3(b) constitutes a specific allocation of fixed rent
within the meaning of Treasury Regulation section 1.467-1(c)(2)(ii) with the
effect that the Owner Lessor and the Facility Lessee, on any federal income tax
returns filed by them (or, on any income tax returns on which their income is
included), shall accrue the amounts of rental income and rental expense,
respectively, set forth for each Rent Payment Period in an amount equal to the
product of the Purchase Price multiplied by the percentage set forth for such
Rent Payment Period in Schedule 3 under the caption "Proportional Rent
Percentage" (the "Proportional Rent"). In addition, (i) if, with respect to any
Rent Payment Period, the Section 467 Interest Percentage set forth in Schedule 3
is positive, the Owner Lessor shall deduct interest expense and the Facility
Lessee shall accrue interest income with respect to such period in an amount
equal to the product of the Purchase Price multiplied by the percentage set
forth for such Rent Payment Period on Schedule 3 under the caption "Section 467
Interest Percentage" ("Lessor Section 467 Interest") and (ii) if, with respect
to any Rent Payment Period, then Section 467 Interest Percentage set fort in
Schedule 3 is negative, the Owner Lessor shall accrue interest income and
Facility Lessee shall deduct interest expense with respect to such period in an
amount equal to the product of the Purchase Price multiplied by the percentage
set forth for such Rent Payment Period on Schedule 3 under the caption "Section
467 Interest Percentage" ("Lessee Section 467 Interest)". In the event that this
Facility Lease shall have been
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terminated pursuant to Section 10 or 14 with respect to either the Unit 1
Interest or the Unit 2 Interest, the amounts otherwise computed pursuant this
Section 3.3(c) with respect to the remainder of the Lease Term shall be 50% of
the amounts so computed.
(d) Repayment of any Lessor Section 467 Loan Balance or any
Lessee Section 467 Loan Balance. If the Facility Lease is terminated prior to
July 20, 2036 with respect to any Unit Interest or the Facility Lessee is
otherwise required to pay Termination Value (or amounts computed by reference
thereto) (A) the Owner Lessor shall make a payment to the Facility Lessee on the
applicable Termination Date equal to the Lessor Section 467 Loan Balance on such
date, if any, with respect to such Unit Interest and (B) the Facility Lessee
shall make a payment to the Owner Lessor on the applicable Termination Date
equal to the Lessee Section 467 Loan Balance on such date, if any, with respect
to such Unit Interest. Notwithstanding the foregoing, either party may elect by
notice to the other to offset any Lessor 467 Loan Balance owed by the Owner
Lessor to the Facility Lessee against the amount of Termination Value (or
amounts computed with respect thereto) due and payable by the Facility Lessee to
the Owner Lessor on such date, and the Facility Lessee shall pay an amount equal
to the excess of such Termination Value (or the amount computed with respect
thereto) over such Lessor 467 Loan Balance or the Owner Lessor shall pay an
amount equal to the excess of such Lessor 467 Loan Balance over such Termination
Value (or the amount computed with respect thereto). Notwithstanding the
foregoing or anything herein to the contrary, in connection with any early
termination with respect to any Unit Interest pursuant to Section 10, 13, 14 or
17, the Facility Lessee shall be obligated to pay the Debt Portion of
Termination Value with respect to such Unit Interest on the applicable
Termination Date without offset. The obligations of the Owner Lessor and the
Facility Lessee to repay the Lessor Section 467 Loan Balance and the Lessee
Section 467 Loan Balance, respectively, shall, except as otherwise provided in
this Section 3.3(d), survive termination of this Facility Lease.
Section 3.4. Supplemental Lease Rent. The Facility Lessee also agrees
to pay to the Owner Lessor, or to any other Person entitled thereto as expressly
provided herein or in any other Operative Document, as appropriate, any and all
Supplemental Lease Rent, promptly as the same shall become due and owing, or
where no due date is specified, promptly after demand by the Person entitled
thereto, and in the event of any failure on the part of the Facility Lessee to
pay any Supplemental Lease Rent, the Owner Lessor shall have all rights, powers
and remedies provided for herein or by law or equity or otherwise for the
failure to pay Periodic Lease Rent or Renewal Lease Rent. The Facility Lessee
will also pay as Supplemental Lease Rent, to the extent permitted by Applicable
Law, an amount equal to interest at the Overdue Rate on any part of any payment
of Periodic Lease Rent or Renewal Lease Rent not paid when due for any period
for which the same shall be overdue and on any Supplemental Lease Rent not paid
when due (whether on demand or otherwise) for the period from such due date
until the same shall be paid. All Supplemental Lease Rent to be paid pursuant to
this Section 3.4 shall be payable in the manner set forth in Section 3.6.
Section 3.5. Adjustment of Lease Schedules.
(a) The Facility Lessee and the Owner Lessor agree that
Periodic Lease Rent, Allocated Rent, Proportional Rent, Section 467 Loan
Balance, Section 467 Interest and Termination Values payable with respect to the
Undivided Interest shall be adjusted, either
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upwards or downwards, to reflect (i) the principal amount, amortization and
interest rate on any Additional Lessor Notes issued pursuant to Section 2.12 of
the Lease Indenture in connection with a refinancing of the Lessor Note pursuant
to Section 13.2 of the Participation Agreement, and (ii) the issuance of
Additional Lessor Notes pursuant to Section 2.12 of the Lease Indenture in
connection with the financing of Modifications to the Facility pursuant to
Section 13.1 of the Participation Agreement. Any adjustments pursuant to this
Section 3.5 shall be calculated to preserve the Owner Participant's Net Economic
Return through the end of the Fixed Lease Term; provided, however, that to the
extent consistent with preserving the Owner Participant's Net Economic Return,
all adjustments shall at the option of the Facility Lessee be calculated to (x)
minimize the average annual Periodic Lease Rent over the Fixed Lease Term for
the Facility Lessee's GAAP accounting purposes and/or (y) minimize the present
value to the Facility Lessee of the Periodic Lease Rent; provided, that no such
adjustment shall require the Owner Participant to record a loss as of the date
such adjustment is made or shall change such Owner Participant's book earnings
for the year in which such adjustment is made by more than +/-5%. Adjustments
will be made using the same method of computation and assumptions originally
used (other than those that have changed as the result of the event giving rise
to the adjustment) in the calculation of the Periodic Lease Rent. The
adjustments contemplated by this Section 3.5 will result in corresponding
adjustments to Allocated Rent, Proportional Rent, Section 467 Loan Balances,
Section 467 Interest and Termination Values.
(b) Anything herein or in any other Operative Document to the
contrary notwithstanding, Periodic Lease Rent payable on any Rent Payment Date,
whether or not adjusted in accordance with this Section 3.5, shall, in the
aggregate, be in an amount at least sufficient to pay in full principal and
interest payable on the Lessor Note on such Rent Payment Date. Anything herein
or in any other Operative Document to the contrary notwithstanding, Termination
Values (excluding the Equity Portion of Termination Value) payable on any date
under this Facility Lease, whether or not adjusted in accordance with this
Section 3.5, shall in the aggregate, together with all other Rent due and owing
on such date, exclusive of any portion thereof that is an Excepted Payment, be
in an amount at least sufficient to pay in full the principal of, premium (other
than premium, if any, paid by the Owner Lessor pursuant to Section 14), if any,
and accrued interest on the Lessor Note payable on such date.
(c) Any adjustment pursuant to this Section 3.5 shall
initially be computed by the Owner Participant, subject to the verification
procedure described in this Section 3.5(c). Once computed, the results of such
computation shall promptly be delivered by the Owner Participant to the Facility
Lessee. Within 20 days after the receipt of the results of any such adjustment,
the Facility Lessee may request that a nationally recognized firm of accountants
or lease advisors selected by the Owner Participant and reasonably satisfactory
to the Facility Lessee (the "Verifier") verify, after consultation with the
Owner Participant and the Facility Lessee, the accuracy of such adjustment in
accordance with this Section 3.5. The Owner Participant and the Facility Lessee
hereby agree, subject to the execution by the Verifier of an appropriate
confidentiality agreement, to provide the Verifier with all information and
materials as shall be necessary in connection therewith. If the Verifier
confirms that such adjustment is in accordance with this Section 3.5, it shall
so certify to the Facility Lessee, the Owner Lessor and the Owner Participant
and such certification shall be final, binding and conclusive on the Facility
Lessee, the Owner Participant and the Owner Lessor. If the Verifier concludes
that such adjustment is not in accordance with this Section 3.5, and the
adjustments to Periodic Lease
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Rent, Allocated Rent, Proportional Rent, Section 467 Loan Balance, Section 467
Interest or Termination Value calculated by the Verifier are different from
those calculated by the Owner Participant, then it shall so certify to the
Facility Lessee, the Owner Lessor and the Owner Participant and the Verifier's
calculation shall be final, binding and conclusive on the Facility Lessee, the
Owner Lessor and the Owner Participant. If the Facility Lessee does not request
verification of any adjustment within the period specified above, the
computation provided by the Owner Participant shall be final, binding and
conclusive on the Facility Lessee, the Owner Lessor and the Owner Participant.
The final determination of any adjustment hereunder shall be set forth in an
amendment to this Facility Lease, executed and delivered by the Owner Lessor and
the Facility Lessee and consented to by the Owner Participant; provided,
however, that any omission to execute and deliver such amendment shall not
affect the validity and effectiveness of any such adjustment. The reasonable
fees, costs and expenses of the Verifier in verifying an adjustment pursuant to
this Section 3.5 shall be paid by the Facility Lessee; provided, however, that,
in the event that such Verifier determines that the present value of Periodic
Lease Rent to be made under this Facility Lease as calculated by the Owner
Participant is greater than the present value of the correct Periodic Lease Rent
as certified by the Verifier, in each case, discounted annually at the Discount
Rate, by more than five basis points, then such expenses of the Verifier shall
be paid by the Owner Participant. Notwithstanding anything herein to the
contrary, the sole responsibility of the Verifier shall be to verify the
calculations hereunder and matters of interpretation of this Facility Lease or
any other Operative Document shall not be within the scope of the Verifier's
responsibilities.
Section 3.6. Manner of Payments. All Rent (whether Periodic Lease Rent,
Renewal Lease Rent or Supplemental Lease Rent) shall be paid by the Facility
Lessee in lawful currency of the United States of America in immediately
available funds to the recipient not later than 11:00 a.m. (New York City time)
on the date due. All Rent payable to the Owner Lessor (other than Excepted
Payments) shall be paid by the Facility Lessee to the Owner Lessor by payment to
the Owner Lessor's Account, or to such other place as the Owner Lessor shall
notify the Facility Lessee in writing; provided, however, that so long as the
Lien of the Lease Indenture has not been discharged, the Owner Lessor hereby
irrevocably directs (it being agreed and understood that such direction shall be
deemed to have been revoked after the Lien of the Lease Indenture shall have
been fully discharged in accordance with its terms), and the Facility Lessee
agrees, that all payments of Rent (other than Excepted Payments) payable to the
Owner Lessor shall be paid by wire transfer directly to the Lease Indenture
Trustee's Account or to such other place as the Lease Indenture Trustee shall
notify the Facility Lessee in writing pursuant to the Lease Indenture. Payments
constituting Excepted Payments shall be made to the Person entitled thereto at
the address for such Person set forth in the Participation Agreement, or to such
other place as such Person shall notify the Facility Lessee in writing.
SECTION 4. DISCLAIMER OF WARRANTIES; RIGHT OF QUIET ENJOYMENT
Section 4.1. Disclaimer of Warranties.
(a) Without waiving any claim the Facility Lessee may have
against any manufacturer, vendor or contractor, THE FACILITY LESSEE ACKNOWLEDGES
AND AGREES SOLELY FOR THE BENEFIT OF THE OWNER LESSOR AND THE OWNER PARTICIPANT
THAT (i) THE FACILITY AND EACH COMPONENT THEREOF IS OF A
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SIZE, DESIGN, CAPACITY AND MANUFACTURE ACCEPTABLE TO THE FACILITY LESSEE, (ii)
THE FACILITY LESSEE IS SATISFIED THAT THE FACILITY AND EACH COMPONENT THEREOF IS
SUITABLE FOR THEIR RESPECTIVE PURPOSES, (iii) NEITHER THE OWNER LESSOR NOR THE
OWNER PARTICIPANT IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND, (iv)
THE UNDIVIDED INTEREST IS LEASED HEREUNDER TO THE EXTENT PROVIDED HEREBY FOR THE
INTERIM LEASE TERM, THE BASIC LEASE TERM AND THE RENEWAL LEASE TERMS, IF ANY,
SPECIFIED HEREIN SUBJECT TO ALL APPLICABLE LAWS NOW IN EFFECT OR HEREAFTER
ADOPTED, INCLUDING (1) ZONING REGULATIONS, (2) ENVIRONMENTAL LAWS OR (3)
BUILDING RESTRICTIONS, AND IN THE STATE AND CONDITION OF EVERY PART THEREOF WHEN
THE SAME FIRST BECAME SUBJECT TO THIS FACILITY LEASE WITHOUT REPRESENTATION OR
WARRANTY OF ANY KIND BY THE OWNER LESSOR OR THE OWNER PARTICIPANT AND (v) THE
OWNER LESSOR LEASES FOR THE INTERIM LEASE TERM, THE BASIC LEASE TERM AND THE
RENEWAL LEASE TERMS, IF ANY, SPECIFIED HEREIN AND THE FACILITY LESSEE TAKES THE
UNDIVIDED INTEREST UNDER THIS FACILITY LEASE "AS-IS", "WHERE-IS" AND "WITH ALL
FAULTS", AND THE FACILITY LESSEE ACKNOWLEDGES THAT NEITHER THE OWNER LESSOR, NOR
THE OWNER PARTICIPANT MAKES NOR SHALL BE DEEMED TO HAVE MADE, AND EACH EXPRESSLY
DISCLAIMS, ANY AND ALL RIGHTS, CLAIMS, WARRANTIES OR REPRESENTATIONS, EITHER
EXPRESS OR IMPLIED, AS TO THE VALUE, CONDITION, FITNESS FOR ANY PARTICULAR
PURPOSE, DESIGN, OPERATION, MERCHANTABILITY THEREOF OR AS TO THE TITLE OF THE
FACILITY, 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, except that the Owner Lessor represents and warrants that
on the Closing Date, the Undivided Interest will be free of Owner Lessor's
Liens. It is agreed that all such risks, as between the Owner Lessor and the
Owner Participant on the one hand and the Facility Lessee on the other hand are
to be borne by the Facility Lessee with respect to acts, occurrences or
omissions during the Facility Lease Term. Neither of the Owner Lessor nor the
Owner Participant shall have any responsibility or liability to the Facility
Lessee or any other Person with respect to any of the following: (x) any
liability, loss or damage caused or alleged to be caused directly or indirectly
by the Facility or any Component or by any inadequacy thereof or deficiency or
defect therein or by any other circumstances in connection therewith; (y) the
use, operation or performance of the Facility or any Component thereof or any
risks relating thereto; or (z) the delivery, operation, servicing, maintenance,
repair, improvement, replacement or decommissioning of the Facility or any
Component thereof. The provisions of this paragraph (a) of this Section 4.1 have
been negotiated, and, except to the extent otherwise expressly stated, the
foregoing provisions are intended to be a complete exclusion and negation of any
representations or warranties of the Owner Lessor, express or implied, with
respect to the Facility or any Components thereof, the Undivided Interest that
may arise pursuant to any Applicable Law now or hereafter in effect, or
otherwise.
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(b) During the Facility Lease Term, so long as no Lease Event
of Default shall have occurred and be continuing, the Owner Lessor hereby
appoints irrevocably and constitutes the Facility Lessee its agent and
attorney-in-fact, coupled with an interest, to assert and enforce, from time to
time, in the name and for the account of the Owner Lessor and the Facility
Lessee, as their interests may appear, but in all cases at the sole cost and
expense of the Facility Lessee, whatever claims and rights the Owner Lessor may
have in respect of the Facility or any Component thereof, or the Undivided
Interest against any manufacturer, vendor or contractor, or under any express or
implied warranties relating to the Facility or any Component thereof, or the
Undivided Interest.
Section 4.2. Quiet Enjoyment. The Owner Lessor agrees that,
notwithstanding any provision of any other Operative Document, so long as no
Lease Event of Default shall have occurred and be continuing, it shall not
interfere with or interrupt the quiet enjoyment of the use, operation and
possession by the Facility Lessee of the interest in the Undivided Interest
conveyed by this Facility Lease subject to the terms of this Facility Lease.
SECTION 5. RETURN OF UNDIVIDED INTEREST
Section 5.1. Return. Upon expiration or early termination of this
Facility Lease with respect to any Unit Interest (other than a termination
pursuant to Section 10 or, if the Unit Interest is being transferred to the
Facility Lessee, Section 13), the Facility Lessee, at its own expense, shall
return such Unit Interest (together with the undivided interest in all
Modifications to such Unit and the allocable portion of the undivided interest
in all Modifications to the Related Common Facilities, that, in either case,
shall have vested in the Owner Lessor pursuant to the first sentence of Section
8.3) to the Owner Lessor or any permitted transferee or assignee of the Owner
Lessor by surrendering such Unit Interest into the possession of the Owner
Lessor or such transferee or assignee at the location of such Unit on the
Related Site. In connection with such return, the Facility Lessee shall (a)
assign, to the extent permitted by Applicable Law, a corresponding undivided
interest in, and shall cooperate with all reasonable requests of the Owner
Participant, the Owner Lessor or a permitted transferee or assignee of either of
such parties for purposes of obtaining, or enabling the Owner Participant, the
Owner Lessor or such transferees or assignees to obtain, any and all licenses,
permits, approvals and consents of any Governmental Entities or other Persons
that are or will be required to be obtained by the Owner Participant, the Owner
Lessor or such transferee or assignee in connection with the use, operation or
maintenance of such Unit and the Related Common Facilities on or after such
return in compliance with the Project Agreements and Applicable Law; and (b)
provide the Owner Lessor or a permitted transferee or assignee of Owner Lessor
copies of all documents, instruments, plans, maps, specifications, manuals,
drawings and other documentary materials relating to the installation,
maintenance, operation, construction, design, modification and repair of such
Unit and the Related Common Facilities, as shall be in the Facility Lessee's
possession and shall be reasonably appropriate or necessary for the continued
operation of such Unit. Upon such return, the right to use such Unit Interest
granted hereunder for the benefit of the Facility Lessee shall cease and
terminate and, in the case of the return of either the Unit 1 Interest or the
Unit 2 Interest, such Unit Interest shall no longer be deemed to be a part of
the Undivided Interest.
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Section 5.2. Condition Upon Return. At the time of a return of a Unit
Interest by the Facility Lessee to the Owner Lessor pursuant to Section 5.1
(other than a return pursuant to Section 14), the following conditions shall be
complied with, all at the Facility Lessee's sole cost and expense:
(a) such Unit and the Related Common Facilities will be in at
least as good condition as if they had been maintained, repaired and operated
during the Facility Lease Term in compliance with the provisions of this
Facility Lease, ordinary wear and tear excepted, and there shall be no deferred
maintenance in respect of such Unit or the Related Common Facilities;
(b) such Unit Interest shall be free and clear of all Liens
other than Permitted Liens;
(c) such Unit shall have at least the capability and
functional ability to generate electricity, on a continuous basis in normal
commercial operating conditions, substantially at the ratings for which it was
designed after taking into account all Modifications to such Unit and the
Related Common Facilities made in accordance with this Facility Lease (ordinary
wear and tear excepted);
(d) such Unit and the Related Common Facilities shall be in
compliance with all requirements of manufacturers required for the maintenance
in full force and effect of any material warranty then in effect with respect to
such Unit and the Related Common Facilities;
(e) no Component of such Unit or the Related Common Facilities
shall be a temporary Component and any Replacement Component of such Unit or the
Related Common Facilities shall satisfy the standards of Section 7.2; and
(f) the Facility Lessee, at the request of the Owner Lessor,
shall sell (subject to all existing encumbrances) to the Owner Lessor (or its
designee) at the then Fair Market Sales Value thereof, determined by agreement
between the Facility Lessee and the Owner Lessor or, absent agreement, by an
appraisal conducted according to the Appraisal Procedures, (i) an undivided
interest in all Severable Modifications made to such Unit equal to the Unit
Percentage, and (ii) to the extent such Modifications relate to such Unit, an
undivided interest in all Severable Modifications to the Related Common
Facilities equal to the Common Facilities Percentage (other than, in either
case, Severable Modifications referred to in the first sentence of Section 8.3).
The appraiser's fees and expenses incurred pursuant to this clause (f) shall be
paid by the Owner Lessor.
Section 5.3. Environmental Reports. In connection with the return of a
Unit Interest to the Owner Lessor pursuant to Section 5, the Facility Lessee
shall, at its own expense, provide the Owner Lessor and the Owner Participant
and, so long as the Lien of the Lease Indenture on such Unit shall not have been
terminated or discharged, the Lease Indenture Trustee (a) not later than 180
days prior to the later of the Expiration Date or the last day of the last
Renewal Lease Term elected by the Facility Lessee, or (b) in connection with any
return pursuant to Section 17, as promptly as possible after a request therefor
by the Owner Lessor, the Owner Participant or, so long as the Lien of the Lease
Indenture on such Unit shall not have been terminated or discharged, the Lease
Indenture Trustee, a phase I environmental survey, which shall be
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expanded to a phase II environmental survey if, as a result of the phase I
survey, facts are revealed that would reasonably necessitate a phase II survey,
prepared by a reputable environmental consulting firm (selected by the Facility
Lessee and reasonably acceptable to the Owner Participant) as to the
environmental condition of such Unit, the Related Common Facilities and the
Related Site and the compliance or non-compliance with applicable Environmental
Law and the presence or absence of any Environmental Condition, in form and
scope reasonably satisfactory to the Owner Participant. The provisions of such
surveys shall not relieve the Facility Lessee of any indemnification obligation
or liability with respect to Environmental Conditions, known or unknown, in
respect of such Unit, the Related Common Facilities or the Related Site and the
Facility Lessee will take any and all actions necessary to ensure that such
Unit, the Related Common Facilities and the Related Site comply with all
applicable Environmental Laws. If such survey shall indicate that either such
Unit, the Related Common Facilities or the Related Site is not in compliance
with applicable Environmental Laws, the Facility Lessee shall, within 90 days of
the Owner Lessor having received such survey, provide the Owner Participant and,
so long as the Lien of the Lease Indenture on such Unit shall not have been
terminated or discharged, the Lease Indenture Trustee with a remediation plan
designed to bring such Unit, the Related Common Facilities and the Related Site
into compliance with applicable Environmental Laws as promptly as is reasonably
practical and without materially adversely affecting the continued operation of
such Unit; provided, however, that the Facility Lessee shall be solely
responsible for any liability that may arise from any delay in returning such
Unit, and/or the Related Common Facilities and/or the Related Site to full
compliance with applicable Environmental Laws. The obligations of the Facility
Lessee set forth in this Section 5.3 shall survive the termination of this
Facility Lease and the expiration of the Facility Lease Term.
SECTION 6. LIENS
The Facility Lessee will not directly or indirectly create, incur,
assume or suffer to exist any Lien on or with respect to the Undivided Interest,
or any interest therein or in, to or on its interest in this Facility Lease or
its interest in any other Operative Document, except Permitted Liens, and the
Facility Lessee shall promptly notify the Owner Lessor of the imposition of any
such Lien of which the Facility Lessee is aware and shall promptly, at its own
expense, take such action as may be necessary to fully discharge or release any
such Lien.
SECTION 7. MAINTENANCE; REPLACEMENTS OF COMPONENTS
Section 7.1. Maintenance. The Facility Lessee, at its own cost and expense,
will exercise all rights, powers, elections and options available to it or any
of its Affiliates under the Project Agreements to (a) cause the Facility to be
maintained in as good condition, repair and working order, in all material
respects as when delivered, ordinary wear and tear excepted, (i) in accordance
with Prudent Industry Practice, (ii) in compliance with all Applicable Laws of
any Governmental Entity having jurisdiction, including all Environmental Laws,
unless such noncompliance could not reasonably be expected to result in a
Material Adverse Effect, and (iii) in accordance with the terms of all insurance
policies required to be maintained pursuant to Section 11, and (b) cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the reasonable judgment of the Facility Lessee may be
necessary so that the Facility may be operated in accordance with the Project
Agreements.
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Section 7.2. Replacement of Components. In the ordinary course of
maintenance, service, repair or testing, the Facility Lessee or the Operator, at
its own cost and expense, may remove or cause or permit to be removed from the
Facility any Component; provided, however, that the Facility Lessee shall
exercise all rights, powers, elections and options available to it under the
Project Agreements to (a) cause such Component to be replaced by a replacement
Component which shall be free and clear of all Liens (except Permitted Liens)
and in as good operating condition as the Component replaced, assuming that the
Component replaced was maintained in accordance with this Facility Lease (each
such replacement Component being herein referred to as a "Replacement
Component") and (b) cause such replacement to be performed in a manner which
does not diminish the current or residual value, remaining useful life or
utility of the Facility by more than a de minimis amount below the current or
residual value, the remaining useful life or the utility thereof immediately
prior to such replacement or cause the Facility to become "limited-use" property
within the meaning of Rev. Proc. 75-28, 1975-1 C.B. 752 or Rev. Proc. 76-30,
1976-2 C.B. 647. If any Component to the Facility an undivided interest in which
is subject to this Facility Lease, is at any time removed from the Facility,
such undivided interest in the Component shall remain subject to this Facility
Lease, wherever located, until such time as such Component shall be replaced by
a Replacement Component which has been incorporated in the Facility and which
meets the requirements for Replacement Components specified above. Immediately
upon any Replacement Component becoming incorporated in the Facility, without
further act (and at no cost to the Owner Lessor and with no adjustment to the
Purchase Price, Periodic Lease Rent or Renewal Lease Rent), (i) the undivided
interest in the replaced Component shall no longer be subject to this Facility
Lease, (ii) title to the Owner Lessor's undivided interest in the removed
Component (to the extent part of the Undivided Interest) shall thereupon vest in
the Facility Lessee or such other Person as shall be designated by the Facility
Lessee, free and clear of all rights of the Owner Lessor and the Lease Indenture
Trustee, (iii) title to an undivided interest equal to the applicable Unit
Percentage (for Components of such Unit) or Common Facilities Percentage (for
Components of the Related Common Facilities) in the Replacement Component shall
thereupon vest with the Owner Lessor and such undivided interest shall (x)
become subject to this Facility Lease and the Lien of the Lease Indenture, and
(y) be deemed a part of the Undivided Interest for all purposes of this Facility
Lease. Notwithstanding anything in this Section 7.2 or elsewhere in this
Facility Lease to the contrary, if the Facility Lessee has determined that a
Component is surplus or obsolete, it shall have the right to remove such
Component without replacing it; provided, that no such Component may be so
removed without being replaced if such removal would diminish the current or
residual value, remaining useful life or utility of the Facility by more than a
de minimis amount below the current or residual value, the remaining useful life
or the utility thereof immediately prior to such removal or cause the Facility
to become "limited use" property within the meaning of Rev. Proc. 75-28, 1975-1
C.B. 752 or Rev. Proc. 76-30, 1976-2 C.B. 647.
SECTION 8. MODIFICATIONS
Section 8.1. Required Modifications. The Facility Lessee, at its own
cost and expense, shall exercise all rights, powers, elections and options
available to it under the applicable Project Agreements to make or cause or
permit to be made all Modifications to the Facility as they relate to the
Undivided Interest as are required by Applicable Law (each, a "Required
Modification"); provided, however, that the Facility Lessee may, in good faith
and by appropriate proceedings,
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diligently contest the validity or application of any Applicable Laws in any
reasonable manner which does not involve any danger of (a) foreclosure, sale,
forfeiture or loss of, or imposition of a Lien on any part of the Undivided
Interest or impair the use, operation or maintenance of the Facility in any
material respect, or (b) any criminal or material civil liability being incurred
by, or any material adverse effect on the interests of, the Owner Participant or
the Owner Lessor including subjecting the Owner Participant or the Owner Lessor
to regulation as a public utility under Applicable Law.
Section 8.2. Optional Modifications. The Facility Lessee at any time
may, at its own cost and expense, make or cause or permit to be made any
Modification to the Facility as the Facility Lessee considers desirable in the
proper conduct of its business (any such non-Required Modification being
referred to as an "Optional Modification"); provided that the Facility Lessee
shall exercise all rights, powers, elections and options available to it and any
of its Affiliates under the Project Agreements to prevent any Optional
Modification from being made to the Facility that would diminish by more than a
de minimis amount the current or residual value, remaining useful life or
utility of the Facility, below the current or residual value, remaining useful
life or utility of the Facility immediately prior to such Optional Modification
assuming the Facility was then in the condition required to be maintained by the
terms of this Facility Lease, or cause the Facility to become "limited use"
property, within the meaning of Rev. Proc. 75-28, 1975-1 C.B. 752 or Rev. Proc.
76-30, 1976-2 C.B. 647.
Section 8.3. Title to Modifications. Title to an undivided interest
equal to the applicable Unit Percentage (in the case of Modifications to a Unit)
or Common Facilities Percentage (in the case of Modifications to the Related
Common Facilities) in (a) all Required Modifications, (b) all Nonseverable
Modifications and (c) all Modifications financed by the Owner Lessor by an
Additional Equity Investment or a Supplemental Financing pursuant to Section
13.1 of the Participation Agreement shall (at no cost to the Owner Lessor and
with no adjustment to the Purchase Price or, except as provided herein, Periodic
Lease Rent or Renewal Lease Rent) immediately vest in the Owner Lessor, and such
undivided interest shall immediately (i) become subject to this Facility Lease
and, so long as the Lien of the Lease Indenture shall not have been terminated
or discharged, the Lien of the Lease Indenture, and (ii) be deemed part of the
Undivided Interest for all purposes of this Facility Lease. The Facility Lessee,
at its own cost and expense, shall take such steps as the Owner Lessor and, so
long as the Lien of the Lease Indenture shall not have been terminated or
discharged, the Lease Indenture Trustee may reasonably require from time to time
to confirm that title in such undivided interest has vested in the Owner Lessor
and that such undivided interest is subject to this Facility Lease and, so long
as the Lien of the Lease Indenture shall not have been terminated or discharged,
the Lien of the Lease Indenture. No interest in any Optional Modification which
is a Severable Modification (other than Severable Modifications which are
financed by the Owner Lessor by an Additional Equity Investment or a
Supplemental Financing pursuant to Section 13.1 of the Participation Agreement)
shall vest in the Owner Lessor or become subject to this Facility Lease or the
Lien of the Lease Indenture; provided, however, that if the Facility Lessee
shall, at its cost and expense, cause such Optional Modifications which are
Severable Modifications to be made to the Facility, the Owner Lessor shall have
the right, immediately prior to the return of any Unit Interest to the Owner
Lessor hereunder, to purchase in accordance with Section 5.2(f) an undivided
interest equal to the applicable Unit Percentage (for Modifications to such
Unit) or Common Facilities Percentage (for Modifications to the Related Common
Facilities to the extent
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such Modifications relate to such Unit) in any such Optional Modifications which
are Severable Modifications. The purchase price for such undivided interest
shall be the then Fair Market Sales Value of such undivided interest as
determined pursuant to Section 5.2(f). If the Owner Lessor does not elect to
purchase such Optional Modifications which are Severable Modifications, the
Facility Lessee may, to the extent permitted by the Project Agreements, remove
such Modifications at the end of the Facility Lease Term, all at the Facility
Lessee's cost and expense.
SECTION 9. NET LEASE
This Facility Lease is a "net lease" and the Facility Lessee's
obligation to pay all Periodic Lease Rent and Renewal Lease Rent payable
hereunder (and, except as expressly set forth in Section 3.3(d), all amounts,
including Termination Value (or amounts computed by reference thereto), in lieu
of Periodic Lease Rent or Renewal Lease Rent following termination of this
Facility Lease in whole or in part) shall be absolute and unconditional under
any and all circumstances and shall not be terminated, extinguished, diminished,
lost or otherwise impaired by any circumstance of any character, including by
(i) any setoff, counterclaim, recoupment, defense or other right which the
Facility Lessee may have against the Owner Lessor, the Owner Participant, the
Lease Indenture Trustee or any other Person, including any claim as a result of
any breach by any of said parties of any covenant or provision in this Facility
Lease or any other Operative Document, (ii) any lack or invalidity of title or
any defect in the title, condition, design, operation, merchantability or
fitness for use of the Facility or any Component or any portion of either
thereof, or any eviction by paramount title or otherwise, or any unavailability
of the Facility, the Colstrip Site, any Component or any portion of either
thereof, any other portion of the Undivided Interest, or any part thereof, (iii)
any loss or destruction of, or damage to, the Facility or any Component or any
portion of either thereof or interruption or cessation in the use or possession
thereof or any part thereof by the Facility Lessee for any reason whatsoever and
of whatever duration, (iv) the condemnation, requisitioning, expropriation,
seizure or other taking of title to or use of the Colstrip Site, the Facility,
any Component or any portion of either thereof, or any other portion of the
Undivided Interest by any Governmental Entity or otherwise, (v) the invalidity
or unenforceability or lack of due authorization or other infirmity of this
Facility Lease or any other Operative Document, (vi) the lack of right, power or
authority of the Owner Lessor to enter into this Facility Lease or any other
Operative Document, (vii) any ineligibility of the Facility or any Component or
any portion of either thereof for any particular use, whether or not due to any
failure of the Facility Lessee to comply with any Applicable Law, (viii) any
event of "force majeure" or any frustration, (ix) any legal requirement similar
or dissimilar to the foregoing, any present or future law to the contrary
notwithstanding, (x) any insolvency, bankruptcy, reorganization or similar
proceeding by or against the Facility Lessee or any other Person, (xi) any Lien
of any Person with respect to the Colstrip Site, the Facility, any Component or
any portion of either thereof, any other portion of the Undivided Interest or
any part thereof, (xii) the existence of any Qualifying Letter of Credit other
than to the extent of drawings thereunder, or (xiii) any other cause, whether
similar or dissimilar to the foregoing, any present or future law
notwithstanding, except as expressly set forth herein or in any other Operative
Document, it being the intention of the parties hereto that all Periodic Lease
Rent and Renewal Lease Rent (and all amounts, including Termination Value, in
lieu of Periodic Lease Rent or Renewal Lease Rent following termination of this
Facility Lease in whole or in part) payable by the Facility Lessee hereunder
shall continue to be payable in all events in the manner and at
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times provided for herein. Such Periodic Lease Rent or Renewal Lease Rent (and
except as expressly set forth in Section 3.3(d), all amounts, including
Termination Value (or amounts computed by reference thereto), in lieu of
Periodic Lease Rent or Renewal Lease Rent following termination of this Facility
Lease in whole or in part) shall not be subject to any abatement and the
payments thereof shall not be subject to any setoff or reduction for any reason
whatsoever, including any present or future claims of the Facility Lessee or any
other Person against the Owner Lessor or any other Person under this Facility
Lease or otherwise. To the extent permitted by Applicable Law, the Facility
Lessee hereby waives any and all rights which it may now have or which at any
time hereafter may be conferred upon it, by statute or otherwise, to terminate,
cancel, quit or surrender this Facility Lease with respect to the Undivided
Interest except in accordance with Sections 10, 13, 14 or 15. If for any reason
whatsoever this Facility Lease shall be terminated in whole or in part by
operation of law or otherwise, except as specifically provided herein, the
Facility Lessee nonetheless agrees, to the extent permitted by Applicable Law,
to pay to the Owner Lessor an amount equal to each installment of Periodic Lease
Rent (or, in connection with a termination of a Renewal Lease Term, Renewal
Lease Rent) and all Supplemental Lease Rent due and owing, at the time such
payment would have become due and payable in accordance with the terms hereof
had this Facility Lease not been so terminated. Nothing contained herein shall
be construed to waive any claim which the Facility Lessee might have under any
of the Operative Documents or otherwise or to limit the right of the Facility
Lessee to make any claim it might have against the Owner Lessor or any other
Person or to pursue such claim in such manner as the Facility Lessee shall deem
appropriate.
SECTION 10. EVENTS OF LOSS
Section 10.1. Occurrence of Events of Loss. The Owner Participant or
the Owner Lessor will promptly notify the Facility Lessee of any event of which
it is aware that upon election of the Owner Participant would result in a
Regulatory Event of Loss. If an Event of Loss described in clauses (a) or (b) of
the definition of Event of Loss shall occur with respect to any Unit, then no
later than six months following such occurrence the Facility Lessee shall notify
the Owner Lessor, the Owner Participant and, so long as the Lien of the Lease
Indenture shall not have been terminated or discharged, the Lease Indenture
Trustee and the Pass Through Trustee in writing of its election to either (a) if
no Significant Lease Default or Lease Event of Default (other than Lease Events
of Default arising as a result of such Event of Loss) has occurred and is
continuing and subject to the satisfaction of the conditions set forth in
Section 10.3(a) and (b), rebuild or replace such Unit to the extent of the
Undivided Interest and subject to the Project Agreements and the Related Common
Facilities so that such Unit to the extent of the Undivided Interest shall have
a current and residual value, remaining useful life and utility at least equal
to that of such Unit prior to such Event of Loss, assuming such Unit and the
Related Common Facilities were in the condition and repair required to be
maintained by this Facility Lease or (b) terminate this Facility Lease with
respect to such Unit Interest pursuant to Section 10.2 hereof. The Facility
Lessee may elect the option provided in clause (b) of the preceding sentence
regardless of whether such Unit and the Related Common Facilities are to be
rebuilt or replaced. If the Facility Lessee fails to make an election as
provided above, an Event of Loss shall be deemed to occur as of the end of the
six month period referred to in the second sentence of this Section 10.1 and the
Facility Lessee will be deemed to have made the election to terminate this
Facility Lease with respect to such Unit Interest pursuant to Section 10.2.
Notwithstanding the foregoing, the Facility Lessee may make either such election
only if (i) the Facility Lessee makes an identical
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election under the Other Facility Lease with respect to the Facility, and (ii)
in the case of an election under Section 10.1(a), the Facility Lessee shall have
complied with Section 10.3(a) and (b) hereunder and under the Other Facility
Lease with respect to the Facility.
Section 10.2. Payment of Termination Value; Termination of Periodic
Lease Rent and Renewal Lease Rent.
(a) If (x) an Event of Loss described in clause (a) or (b) of
the definition of Event of Loss shall have occurred with respect to any Unit and
the Facility Lessee shall elect not to rebuild or replace such Unit and the
Related Common Facilities pursuant to Section 10.1(a) hereof or an Event of Loss
with respect to such Unit shall be deemed to occur pursuant to the penultimate
sentence of Section 10.1, or (y) an Event of Loss described in clause (c) or (d)
of the definition of Event of Loss shall occur with respect to any Unit, then,
on the next Termination Date at least one month after the Facility Lessee's
notice of its election referred to in the second sentence of Section 10.1 or at
least one month after the occurrence of a deemed Event of Loss pursuant to the
penultimate sentence of Section 10.1 in the case of clause (x) above, or on the
next Termination Date occurring at least three months after the occurrence of
such Event of Loss or, if earlier, at least one month after receipt of insurance
proceeds in respect of such Event of Loss in the case of clause (y) above, the
Facility Lessee shall terminate the Facility Lease with respect to the Unit
Interest pertaining to such Unit (or in the case of an Event of Loss described
in clause (d) of the definition of Event of Loss with respect to all Unit
Interests then subject to this Facility Lease) and pay to the Owner Lessor (A)
the Termination Value with respect to such Unit Interest or Unit Interests
determined as of the relevant Termination Date, plus (B) all amounts of
Supplemental Lease Rent with respect to such Unit Interest or Unit Interests
(including all documented out-of-pocket costs and expenses of the Owner Lessor,
the Owner Participant, the Lease Indenture Trustee and the Pass Through Trustee,
and all sales, use, value added and other Taxes required to be indemnified by
the Facility Lessee pursuant to Section 11.2 of the Participation Agreement
associated with the exercise of the termination option pursuant to this Section
10.2) due and payable on or prior to such Termination Date, plus (C) any unpaid
Periodic Lease Rent and Renewal Lease Rent with respect to such Unit Interest or
Unit Interests due before such Termination Date, plus (D) the Lessee Section 467
Loan Balance, if any, determined as of the relevant Termination Date and the
Owner Lessor shall pay to the Facility Lessee the Lessor Section 467 Loan
Balance, if any, determined as of such Termination Date. The obligation to make
such payments shall be subject to the provisions of Section 3.3(d), and all
payments of Rent under this Section 10.2(a) shall, to the extent required by
Section 3.6(a), be made to the Lease Indenture Trustee.
(b) Concurrently with the payment of all sums required to be
paid pursuant to this Section 10.2, (i) Periodic Lease Rent and Renewal Lease
Rent with respect to such Unit Interest or Unit Interests shall cease to accrue,
(ii) the Facility Lessee's obligations under Sections 6, 7, 8, 11 and 12 with
respect to such Unit Interest or Unit Interests shall terminate, (iii) the
Facility Lessee shall cease to have any other liability to the Owner Lessor with
respect to such Unit Interest or Unit Interests except for Supplemental Lease
Rent and other obligations (including those under Sections 11.1 and 11.2 of the
Participation Agreement) surviving pursuant to the express provisions of any
Operative Document, (iv) unless the Facility Lessee assumes the Lessor Note
pursuant to Section 10.2(c), the Owner Lessor shall pay the portion of the
outstanding principal and accrued interest on the Lessor Note relating to such
Unit Interest or
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Unit Interests pursuant to Section 2.10(a) and (e) of the Lease Indenture, (v)
this Facility Lease shall terminate with respect to such Unit Interest or Unit
Interests and, in the case of the return of either the Unit 1 Interest or the
Unit 2 Interest, the Unit Interest relating to the damaged or destroyed Unit
shall no longer be deemed to be a part of the Undivided Interest, (vi) the Owner
Lessor shall, at the Facility Lessee's cost and expense, execute and deliver to
the Facility Lessee a release or termination of this Facility Lease with respect
to such Unit Interest or Unit Interests, (vii) the Owner Lessor shall transfer
(by an appropriate instrument of transfer in form and substance reasonably
satisfactory to the Owner Lessor and prepared and recorded by and at the expense
of the Facility Lessee) all of its right, title and interest in and to such Unit
Interest or Unit Interests and the Related Ground Interest to the Facility
Lessee pursuant to this Section 10.2 hereof and Section 9.1 of the Site Lease
and Sublease, respectively, on an "as is", "where is" and "with all faults"
basis, without representations or warranties other than a warranty as to the
absence of Owner Lessor's Liens and a warranty of the Owner Participant as to
the absence of Owner Participant's Liens; and (viii) the Owner Lessor shall
discharge the Lien of the Lease Indenture with respect to such Unit Interest or
Unit Interests and execute and deliver appropriate releases and other documents
or instruments necessary or desirable to effect the foregoing, all to be
prepared, filed and recorded (as appropriate) at the cost and expense of the
Facility Lessee.
(c) Notwithstanding the foregoing provisions of paragraph (a)
of this Section 10.2, in the case of a Regulatory Event of Loss, if (i) the
Facility Lessee shall have executed and delivered an assumption agreement to
assume in full the Lessor Note as permitted by and in accordance with Section
2.10(b) of the Lease Indenture, (ii) all other conditions contained in such
Section 2.10(b) shall have been satisfied, and (iii) no Significant Lease
Default or Lease Event of Default shall have occurred or be continuing after
giving effect to such assumption, then, the obligation of the Facility Lessee to
pay Termination Value shall be reduced by the outstanding principal amount and
accrued interest of the Lessor Note so assumed by the Facility Lessee.
(d) Any payments with respect to such Unit Interest or Unit
Interests received at any time by the Owner Lessor, the Lease Indenture Trustee
or the Facility Lessee from any Governmental Entity as a result of the
occurrence of an Event of Loss described in clause (c) of the definition of
Event of Loss or from insurance proceeds as a result of the occurrence of an
Event of Loss described in clause (a) or (b) of the definition of Event of Loss
shall be applied as follows:
(i) all such payments received at any time by the
Facility Lessee shall be promptly paid to the Owner Lessor or
if the Lien of the Lease Indenture shall not have been
terminated or discharged, to the Lease Indenture Trustee, for
application pursuant to the following provisions of this
Section 10.2, except that so long as no Significant Lease
Default or Lease Event of Default shall have occurred and be
continuing (other than Lease Events of Default arising as a
result of such Event of Loss), the Facility Lessee may retain
any amounts that the Owner Lessor would at the time be
obligated to pay to the Facility Lessee as reimbursement under
the provisions of paragraph (ii) below;
(ii) so much of such payments as shall not exceed the
amount required to be paid by the Facility Lessee pursuant to
paragraph (a) of this
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Section 10.2 shall be applied in reduction of the Facility
Lessee's obligation to pay such amount if not already paid by
the Facility Lessee or, if already paid by the Facility
Lessee, shall, so long as no Significant Lease Default or
Lease Event of Default (other than Lease Events of Default
arising as a result of such Event of Loss) shall have occurred
and be continuing, be applied to reimburse the Facility Lessee
for its payment of such amount; and
(iii) the balance, if any, of such payments remaining
thereafter shall be apportioned between the Owner Lessor and
the Facility Lessee as their interests may appear.
Notwithstanding the foregoing, if the Facility Lessee shall have
elected to rebuild or replace any Unit and the Related Common Facilities
pursuant to Section 10.1(a), any insurance proceeds received by the Owner
Lessor, the Lease Indenture Trustee or the Facility Lessee as a result of the
occurrence of an Event of Loss described in clause (a) or (b) of the definition
of Event of Loss shall be applied as provided in Section 11.7.
Section 10.3. Rebuild or Replace. The Facility Lessee's right to
rebuild or replace any Unit and the Related Common Facilities pursuant to
Section 10.1(a) shall be subject to the fulfillment, at the Facility Lessee's
sole cost and expense, in addition to the conditions contained in said clause
(a), of the following conditions:
(a) the Facility Lessee shall, on the date it gives notice
pursuant to Section 10.1(a) of its election to rebuild or replace such
Unit and the Related Common Facilities, (i) deliver to the Owner
Participant an indemnity against all adverse tax risks as a result of
such proposed rebuilding or replacement, such indemnity to be in form
and substance satisfactory to the Owner Participant, (ii) deliver to
the Owner Participant and, so long as the Lien of the Lease Indenture
shall not have been terminated or discharged, the Lease Indenture
Trustee (A) a report of R.W. Beck or another independent engineer, such
other engineer and such report to be reasonably acceptable to the Owner
Participant and, so long as the Lien of the Lease Indenture shall not
have been terminated or discharged, the Lease Indenture Trustee, to the
effect that the rebuilding or replacement of such Unit and the Related
Common Facilities is technologically feasible and economically viable
and that such rebuilding or replacement can be completed by a date 36
months prior to the end of the Basic Lease Term or any Renewal Lease
Term then in effect or elected by the Facility Lessee, (B) an appraisal
of an independent appraiser, such appraiser and such appraisal to be
reasonably acceptable to the Owner Participant, and, so long as the
Lien of the Lease Indenture shall not have been terminated or
discharged, the Lease Indenture Trustee to the effect that the
replacement facilities to the extent of the Undivided Interest, will
have at least the same value, residual value, useful life and utility
as such Unit and the Related Common Facilities to the extent of the
Undivided Interest as immediately prior to the Event of Loss, and (C)
an Officer's Certificate of the Facility Lessee to the effect that it
reasonably believes that the Facility Lessee will have sufficient funds
available to continue to pay Periodic Lease Rent and Renewal Lease Rent
during the period of such rebuilding or replacement, and (iii)
demonstrate to the reasonable satisfaction of the Owner Participant
and, so long as the Lien of the Lease Indenture shall not have been
terminated or discharged, the Lease Indenture Trustee that adequate
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financial resources are available, from insurance proceeds (including
any amounts held by the Lease Indenture Trustee) or otherwise, to
complete such rebuilding or replacement;
(b) receipt by the Owner Participant of (i) a tax opinion of
its counsel, such opinion to be satisfactory to the Owner Participant,
to the effect that, assuming the proposed rebuilding or replacement is
completed in the manner and within the time proposed, such rebuilding
or replacement will not cause any unindemnified adverse tax
consequences to the Owner Participant, such opinion to take into
account any payments (or indemnities made pursuant to clause (ii) or
(iii) of this Section 10.3(b)) made or caused to be made by the
Facility Lessee (in its sole discretion) to reimburse (or protect) the
Owner Participant for any loss of Tax Benefits, (ii) an indemnity
against such risk in form and substance satisfactory to the Owner
Participant from an entity that meets the Minimum Credit Standard, or
(iii) any other indemnity arrangements satisfactory to the Owner
Participant;
(c) the Facility Lessee shall cause the rebuilding or
replacement of such Unit and the Related Common Facilities to commence
as soon as practicable after notifying the Owner Lessor and, so long as
the Lien of the Lease Indenture shall not have been terminated or
discharged, the Lease Indenture Trustee and the Pass Through Trustee
pursuant to Section 10.1(a), of its election to rebuild or replace such
Unit and the Related Common Facilities, and in all events within 18
months of the occurrence of the event that caused such Event of Loss
and will cause work on such rebuilding or replacement to proceed
diligently thereafter. As the rebuilding or replacement of such Unit
and the Related Common Facilities progresses, title to an undivided
interest equal to the applicable Unit Percentage in the rebuilt or
replacement Unit and the applicable Common Facilities Percentage in the
rebuilt or replacement Related Common Facilities shall vest in the
Owner Lessor and such undivided interest shall become subject to this
Facility Lease and, so long as the Lien of the Lease Indenture shall
not have been terminated or discharged, the Lien of the Lease Indenture
and be deemed a part of the Undivided Interest for all purposes of this
Facility Lease, automatically without any further act by any Person;
and
(d) on the date of the completion of such rebuilding or
replacement of such Unit and the Related Common Facilities (the
"Rebuilding Closing Date") the following documents shall be duly
authorized, executed and delivered and, if appropriate, filed for
recordation by the respective party or parties thereto and shall be in
full force and effect, and an executed counterpart of each thereto
shall be delivered to the Owner Lessor, the Owner Participant and, so
long as the Lien of the Lease Indenture shall not have been terminated
or discharged, the Lease Indenture Trustee; (i) supplements to this
Facility Lease subjecting an undivided interest equal to the applicable
Unit Percentage or Common Facilities Percentage in the rebuilt or
replacement facilities to this Facility Lease (with no change in
Purchase Price or the Periodic Lease Rent or Renewal Lease Rent as a
result of such rebuilding or replacement), (ii) so long as the Lien of
the Lease Indenture shall not have been terminated or discharged,
supplements to the Lease Indenture subjecting such undivided interests
in the rebuilt or replacement facilities to the Lien of the Lease
Indenture, (iii) such recordings and filings as may be reasonably
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requested by the Owner Participant and the Lease Indenture Trustee to
be made or filed, (iv) an opinion of counsel of the Facility Lessee,
such counsel and such opinion to be reasonably satisfactory to the
Owner Participant and, so long as the Lien of the Lease Indenture shall
not have been terminated or discharged, the Lease Indenture Trustee to
the effect that (A) the supplements to this Facility Lease required by
clause (i) above constitute effective instruments for subjecting such
undivided interests in the rebuilt or replacement facilities to this
Facility Lease, (B) the supplements to the Lease Indenture required by
clause (ii) above, if any, constitute effective instruments for
subjecting such undivided interests in the rebuilt or replacement
facilities to the Lien of the Lease Indenture, and (C) all filings and
other action necessary to perfect and protect the Owner Lessor's and,
if applicable, the Lease Indenture Trustee's interest in such undivided
interests in the rebuilt or replacement facilities have been
accomplished, (v) an appraisal by an Independent Appraiser, certifying
that the rebuilt or replacement facilities have a current and residual
value, remaining useful life and utility at least equal to the current
and residual value, remaining useful life and utility of such Unit
Interest immediately prior to such Event of Loss (assuming such Unit
and the Related Common Facilities were in the condition and repair
required to be maintained by the terms of this Facility Lease), (vi) a
report by an independent engineer certifying that rebuilt or
replacement facilities are in a state of repair and condition required
by this Facility Lease, (vii) an Officer's Certificate of the Facility
Lessee as to compliance with this Section 10.3 and that no Lease Event
of Default shall have occurred and be continuing as a result of the
rebuild or replacement, and (viii) satisfactory evidence as to the
compliance with Section 11 of this Facility Lease with respect to the
rebuilt or replacement facilities.
Whether or not the transactions contemplated by this Section 10.3 are
consummated, the Facility Lessee agrees to pay or reimburse, on an After-Tax
Basis, any costs or expenses (including reasonable legal fees and expenses)
incurred by the Owner Lessor, the Owner Participant, the Lease Indenture Trustee
and the Pass Through Trustee in connection with the transactions contemplated by
this Section 10.3.
Section 10.4. Application of Payments Not Relating to an Event of Loss.
(a) In the event that during the Facility Lease Term the use
of all or any portion of the Undivided Interest is requisitioned or taken by or
pursuant to a request of any Governmental Entity under the power of eminent
domain or otherwise for a period which does not constitute an Event of Loss, the
Facility Lessee's obligation to pay all installments of Periodic Lease Rent and
Renewal Lease Rent shall continue for the duration of such requisitioning or
taking. The Facility Lessee shall be entitled to receive and retain for its own
account all sums payable for any such period by such Governmental Entity as
compensation for such requisition or taking of possession. Any amount referred
to in this Section 10.4(a) which is payable to the Facility Lessee shall not be
paid to the Facility Lessee, or if it has been previously paid directly to the
Facility Lessee, shall not be retained by the Facility Lessee, if at the time of
such payment a Significant Lease Default or Lease Event of Default shall have
occurred and be continuing, but shall be paid to and held by the Owner Lessor
or, so long as the Lien of the Lease Indenture shall not have been terminated or
discharged, the Lease Indenture Trustee as security for the obligations of the
Facility Lessee under this Facility Lease, and upon the earlier of (i) 180 days
after the Owner Lessor (or the Lease Indenture Trustee) shall have received such
amount,
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provided the Owner Lessor (or the Lease Indenture Trustee) has not proceeded to
exercise any remedy under Section 17 and it is not stayed or prevented by law or
otherwise from exercising such remedy and (ii) such time as there shall not be
continuing any such Significant Lease Default or Lease Event of Default, such
amount shall be paid to the Facility Lessee.
(b) Any insurance proceeds with respect to the Undivided
Interest received at any time by the Owner Lessor, the Lease Indenture Trustee
or the Facility Lessee under any of the insurance policies required to be
maintained by the Facility Lessee under Section 11 as a result of any damage to
the Facility or any part thereof which does not constitute an Event of Loss
shall be applied as follows: (i) in accordance with Section 11.7; and (ii) the
balance, if any, of such insurance proceeds remaining thereafter shall be paid
to the Facility Lessee.
SECTION 11. INSURANCE
Section 11.1. Property Insurance. Subject to Section 11.6, the Facility
Lessee will maintain (or cause to be maintained) all risk property insurance
customarily carried by prudent operators of coal-fired electric generating
facilities of comparable size and risk of the Facility (to the extent of the
Undivided Interest), and against loss or damage from such causes as are
customarily insured against, which includes coverage for boiler and machinery
coverage to cover mechanical breakdown and, in any case, in an amount equal to
the Maximum Probable Loss of the Facility (to the extent of the Undivided
Interest) with a deductible not to exceed $2.5 million per occurrence.
Section 11.2. Liability Insurance. Subject to Section 11.6, the
Facility Lessee will maintain (or cause to be maintained) commercial general
liability insurance, commercial automobile liability insurance and contractual
liability coverage, insuring against claims for bodily injury (including death)
and property damage to third parties arising out of the ownership, operation,
maintenance, condition and use of the Facility and the Colstrip Site, with
limits not less than $35 million per occurrence/aggregate with a deductible not
to exceed $2.5 million per occurrence. The Facility Lessee will periodically
review the liability insurance maintained by it or on its behalf and will, if
necessary, revise such coverage and limits (including deductibles) in order that
the liability insurance maintained by it or on its behalf is consistent with
that maintained by prudent operators of similar facilities of comparable size
and risk to the Facility; provided that the Facility Lessee may not (except as
permitted by Section 11.6) increase deductibles or decrease coverage as compared
to the amounts specified herein without the written consent of the Owner Lessor
and, so long as the Lien of the Lease Indenture has not been terminated or
discharged, the Lease Indenture Trustee. Such liability insurance may be
purchased either in a single limit or in combination with a general and an
excess policy.
Section 11.3. Provisions with Respect to Insurance.
(a) Subject to Section 11.6, the Facility Lessee will place
the insurance maintained pursuant to this Section 11 with companies having an
A.M. Best rating of at least "A-" or a comparable rating by S&P or, if not so
rated, of comparable financial strength. All insurance policies required to be
maintained pursuant to Section 11.2 shall name the Owner Lessor, the Lessor
Manager, the Trust Company, the Owner Participant and, so long as the Lien of
the Lease Indenture shall not have been terminated or discharged, the Lease
Indenture Trustee
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as additional insureds, as their interests may appear. All insurance policies
required to be maintained pursuant to this Section 11 shall also provide for at
least 30 days' prior written notice (10 days for non-payment) by the insurance
carrier to the Owner Lessor, the Owner Participant and, so long as the Lien of
the Lease Indenture shall not have been terminated or discharged, the Lease
Indenture Trustee in the event of cancellation, non-renewal, termination,
expiration or material change. The Facility Lessee will place the insurance
required by this Section 11 with insurance companies which agree to waive all
claims for premiums from, and all subrogation rights against, the Owner Lessor,
the Owner Participant and the Lease Indenture Trustee. All the insurance
maintained pursuant to this Section 11.3 shall be primary without right of
contribution of any other insurance carried by or on behalf of the Owner Lessor,
the Owner Participant or the Lease Indenture Trustee with respect to their
respective interests in the Facility, and the Colstrip Site.
(b) Subject to Section 11.6, the Facility Lessee will ensure
that the respective interests of the Owner Lessor, the Owner Participant and the
Lease Indenture Trustee shall not be invalidated by any act or neglect of the
Facility Lessee, or any breach or violation by the Facility Lessee of any
warranties, declarations or conditions contained in such policies or by the use
of the Facility for purposes more hazardous than permitted by such policies.
Additionally, the Facility Lessee will use its best efforts to provide that such
policies shall be endorsed to provide that, inasmuch as the policies are written
to cover more than one insured, all terms, conditions, insuring agreements and
endorsements, with the exception of limits of liability, shall operate in the
manner as if there were a separate policy covering each insured. The Facility
Lessee shall, at its own expense, make or cause to be made all proofs of loss
and take all other steps necessary to collect the proceeds of such insurance.
Section 11.4. Reports.
(a) The Facility Lessee shall furnish the Owner Lessor, the
Owner Participant and, so long as the Lien of the Lease Indenture shall not have
been terminated or discharged, the Lease Indenture Trustee and the Pass Through
Trustee annually with a report of an independent insurance broker or consultant
(selected by the Facility Lessee and reasonably acceptable to the Owner Lessor)
identifying all insurance coverages in place and certifying that (i) all
premiums in respect of such policies are current and (ii) that such coverage is
in compliance with all insurance requirements set forth in this Section 11.
(b) The Facility Lessee shall provide the Owner Lessor, the
Owner Participant and so long as the Lien of the Lease Indenture shall hot have
been terminated or discharged, the Lease Indenture Trustee written notice at
least thirty (30) days in advance of the effective date of any material
reduction in the amount or type of property insurance coverage or any reduction
in business interruption insurance. Such notice shall specify such changes and
be accompanied by a officer's certificate of PPL Montana stating that, as so
changed, the policies will continue to comply with the provisions of Sections
11.1 and 11.3.
(c) Within ten (10) business days prior to the expiration and
renewal of any insurance policy required to be maintained pursuant to this
Section 11 or as soon thereafter as reasonably practicable but in any event
within ten (10) business days after such expiration and renewal, the Facility
Lessee shall provide the Owner Lessor, the Owner Participant, and, so long
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as the Lien of the Lease Indenture shall not have been terminated or discharged,
the Lease Indenture Trustee certificates from insurance brokers or carriers to
the effect that such policy is in effect and in the case of policies maintained
pursuant to Section 11.2, indicating their status as additional insureds.
Section 11.5. Additional Insurance by Owner Lessor. At any time the
Owner Lessor (either directly or in the name of the Owner Participant), the
Owner Participant or the Lease Indenture Trustee may at its own expense and for
its own account carry insurance with respect to its interest in the Undivided
Interest; provided, that such insurance does not in any way interfere with the
Facility Lessee's ability to obtain insurance required to be maintained under
the Project Agreements or this Section 11. Any insurance payments received from
policies maintained by the Owner Lessor, the Owner Participant or the Lease
Indenture Trustee pursuant to the previous sentence shall be retained by the
Owner Lessor, the Owner Participant or the Lease Indenture Trustee, as the case
may be, without reducing or otherwise affecting the Facility Lessee's
obligations hereunder.
Section 11.6. Waiver of Requirements.
(a) If any insurance required to be maintained by the Facility
Lessee pursuant to this Section 11 (including the limits or deductibles or any
other terms under policies for such insurance) ceases to be available on a
commercially reasonable basis, the Facility Lessee shall provide written notice
to the Owner Lessor and, so long as the Lien of the Lease Indenture shall not
have been terminated or discharged, the Lease Indenture Trustee accompanied by a
letter from the Facility Lessee's insurance broker stating that such insurance
is unavailable on a commercially reasonable basis. Such notice shall be given
not less than thirty (30) days prior to the scheduled date for renewal of any
such policy. Upon receipt of such notice by the Owner Lessor, the Owner Lessor
and the Facility Lessee shall immediately enter into good faith negotiations in
order to obtain an alternative to such insurance.
(b) In the event that the Owner Lessor and the Facility Lessee
cannot reach a resolution acceptable to both parties within ten (10) days, the
Owner Lessor and the Facility Lessee shall make arrangements for the formation
of an insurance panel consisting of the Facility Lessee's insurance advisor (or
broker), the Owner Lessor's insurance advisor (or broker) and an independent
insurance expert from a nationally recognized insurance brokerage firm, chosen
by the Facility Lessee and reasonably acceptable to the Owner Lessor. Such
independent expert shall conduct a separate review of the relevant insurance
requirements of this Section 11 and the market for such insurance at the time,
giving due consideration to the representations of both insurance advisors, and
upon conclusion of such review shall issue a written report stating whether such
insurance is available or unavailable on a commercially reasonable basis.
(c) If the insurance expert concludes that such insurance is
not available on a commercially reasonable basis, the insurance expert shall
provide a written recommendation (which shall include the amount and type of
insurance which is available upon a commercially reasonable basis) not less than
fifteen (15) days before the date for renewal of such insurance. The Facility
Lessee shall, prior to the expiration of the insurance then in effect, obtain
the insurance required by this Section 11 that is available on a commercially
reasonable basis. If the senior unsecured long-term rating of the Facility
Lessee shall be rated at least investment grade
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at the time of renewal, the recommendation of the insurance expert shall be
conclusive and binding upon the Facility Lessee and the Facility Lessee shall,
for the immediately succeeding one (1) year policy period, only be required to
carry the insurance required by this Section 11 that the expert has certified is
available on a commercially reasonable basis.
(d) If the senior unsecured debt of the Facility Lessee is
below investment grade at such time of renewal and in the Owner Participant's
reasonable judgment, keeping the insurance coverage at the level that is
available on a commercially reasonable basis is reasonably likely to result in a
Material Adverse Effect, then the Facility Lessee shall (a) obtain the insurance
required by Section 11 whether or not available on a commercially reasonable
basis or (b) obtain the insurance that is available on a commercially reasonable
basis and provide collateral or credit support for the difference of a type and
in an amount satisfactory to the Owner Participant. For the purposes of this
Section 11.6, insurance will be considered "not available on a commercially
reasonable basis" if it is not obtainable or obtainable only at excessive costs
which are not justified in terms of the risk to be insured and is generally not
being carried by or applicable to projects or operations similar to the Facility
because of such excessive costs.
(e) All fees, costs and expenses associated with the insurance
panel (including the review by the insurance expert) shall be for the sole
account of the Facility Lessee.
Section 11.7. Application of Insurance Proceeds.
(a) All proceeds of the insurance maintained pursuant to
Section 11.1 hereof and Section 11.1 of the Other Facility Leases up to
$25,000,000 on account of any damage to or destruction of the Facility and/or
Colstrip Units 1 and 2 or any part thereof (in each case less the actual costs,
fees and expenses incurred in the collection thereof), shall, subject to Section
11.7(d), be paid to or retained by the Facility Lessee for application in repair
or replacement of the affected property. All proceeds of the insurance
maintained pursuant to Section 11.1 hereof and Section 11.1 of the Other
Facility Leases in excess of $25,000,000 on account of such damage or
destruction to the Facility and/or Colstrip Units 1 and 2, shall to the extent
they relate to the Undivided Interest be paid to the Owner Lessor or, if the
Lien of the Lease Indenture shall not have been terminated or discharged, the
Lease Indenture Trustee and be applied and dealt with as set forth in this
Section 11.7.
(b) All such proceeds actually received on account of any such
damage or destruction other than in connection with an Event of Loss shall,
unless a Significant Lease Default or a Lease Event of Default shall have
occurred and be continuing, be paid over to the Facility Lessee or as it may
direct from time to time as restoration progresses, to pay (or reimburse the
Facility Lessee for) the cost of restoration, if the amount of such proceeds
received by the Lease Indenture Trustee or the Owner Lessor, together with such
additional amounts, if any, theretofore expended by the Facility Lessee out of
its own funds for such restoration, are sufficient to pay the estimated cost of
completing such restoration, but only upon receipt by the Owner Lessor and, so
long as the Lien of the Lease Indenture shall not have been terminated or
discharged, the Lease Indenture Trustee of a written application of the Facility
Lessee accompanied by an Officer's Certificate of the Facility Lessee setting
forth in reasonable detail the nature of such restoration, the actual cash
expenditures made to date for such restoration and
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the estimated cost to complete such restoration and stating that no Significant
Lease Default or Lease Event of Default has occurred and is continuing.
(c) All such proceeds received or payable on account of an
Event of Loss shall, unless the Facility Lessee has elected to rebuild or
replace the affected Facility, be dealt with in accordance with Section 10.2(d).
(d) Notwithstanding the foregoing provisions of this Section
11 or Section 10, so long as a Significant Lease Default or Lease Event of
Default shall have occurred and be continuing, the proceeds of any insurance
required to be maintained pursuant to this Section 11 that would otherwise be
payable to or for the account of, or that would otherwise be retained by, the
Facility Lessee pursuant to this Section 11 or Section 10.2(d) will be held as
security for the obligations of the Facility Lessee under this Facility Lease by
the Owner Lessor or, so long as the Lien of the Lease Indenture shall not have
been terminated or discharged, the Lease Indenture Trustee and, at such time
thereafter as no Significant Lease Default or Lease Event of Default shall be
continuing, such amount shall be paid promptly to the Facility Lessee.
SECTION 12. INSPECTION
During the Facility Lease Term, each of the Owner Participant, the
Owner Lessor, and, so long as the Lien of the Lease Indenture shall not have
been terminated or discharged, the Lease Indenture Trustee and the Pass Through
Trustee and their representatives may, during normal business hours, on
reasonable notice to the Facility Lessee and at their own risk and expense
(except, at the expense but not risk, of the Facility Lessee when a Significant
Lease Default or a Lease Event of Default has occurred and is continuing),
inspect the Facility and the records with respect to the operations and
maintenance thereof, in the Facility Lessee's custody or to which the Facility
Lessee has access; provided, however, that so long as no Significant Lease
Default or Lease Event of Default shall have occurred and be continuing, each
such Person shall only be entitled to make one inspection in any twelve-month
period, provided, further, however, that any such Person may make more than one
inspection during the last twelve months of the Facility Lease Term unless the
Facility Lessee has exercised its option under Section 15 to renew this Facility
Lease beyond such twelve month period. Any such inspection will not unreasonably
interfere with the operation or maintenance of the Facility or the conduct by
the Facility Lessee of its business and will be in accordance with the Facility
Lessee's and the Operator's safety and insurance programs. In no event shall the
Owner Lessor, the Owner Participant, the Lease Indenture Trustee or the Pass
Through Trustee have any duty or obligation to make any such inspection and such
Persons shall not incur any liability or obligation by reason of not making any
such inspection.
SECTION 13. TERMINATION OPTION FOR BURDENSOME EVENTS
Section 13.1. Election to Terminate. On or after the occurrence of
either of the events specified below, the Facility Lessee shall have the right,
at its option, upon at least 30 days' prior written notice to the Owner Lessor,
the Owner Participant, and, so long as the Lien of the Lease Indenture shall not
have been terminated or discharged, the Lease Indenture Trustee and the Pass
Through Trustee, to terminate this Facility Lease in whole on the Termination
Date specified in
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such notice (which shall be a date occurring not more than 90 days after the
date of such notice) if:
(a) as a result of a change in Applicable Law, it shall have
become illegal for the Facility Lessee to continue this Facility Lease
or for the Facility Lessee to make payments under this Facility Lease
or the other Operative Documents, and the transactions contemplated by
the Operative Documents cannot be restructured to comply with such
change in law in a manner acceptable to the Facility Lessee, the Owner
Participant, the Owner Lessor, and, so long as the Lien of the Lease
Indenture shall not have been terminated or discharged, the Lease
Indenture Trustee and the Pass Through Trustee; or
(b) one or more events outside the control of the Facility
Lessee shall have occurred which will, or can reasonably be expected
to, give rise to an obligation by the Facility Lessee to pay or
indemnify in respect of the Tax Indemnity Agreement or Section 11.1 or
11.2 of the Participation Agreement; provided, however, that (i) such
indemnity obligation (and the underlying cost or Tax) can be avoided in
whole or in part if this Facility Lease is terminated and the Owner
Lessor sells the Owner Lessor's Interest and (ii) the amount of such
avoided payments hereunder would exceed (on a present value basis,
discounted at the Discount Rate, compounded on an annual basis to the
date of the termination) three (3) percent of the Purchase Price for
the Undivided Interest, and provided, further, that no such termination
option shall exist if the applicable indemnitee shall waive its right
to, or the Owner Participant shall arrange for payment of (without
reimbursement by the Facility Lessee or any Affiliate thereof), amounts
of indemnification payments under the Tax Indemnity Agreement or
Section 11.1 or 11.2 of the Participation Agreement in excess of such
amount as to cause such avoided payments, computed in accordance with
the preceding proviso, not to exceed three percent of the Purchase
Price.
No termination of this Facility Lease pursuant to this Section 13.1 shall become
effective unless the conditions set forth in Section 13.5 are satisfied. If the
Facility Lessee does not give notice of its exercise of the termination option
under this Section 13.1 within twelve months of the date the Facility Lessee
receives notice or Actual Knowledge of an event or condition described above,
the Facility Lessee will lose its right to terminate this Facility Lease
pursuant to this Section 13.1 as a result of such event or condition.
Section 13.2. Solicitation of Offers; Payments Upon Termination. Upon
receipt of a termination notice from the Facility Lessee pursuant to Section
13.1, the Owner Lessor may, but shall be under no obligation to, sell the Owner
Lessor's Interest and, at the request of the Owner Lessor, the Facility Lessee
will, as non-exclusive agent for the Owner Lessor, use commercially reasonable
efforts to obtain cash bids for the Owner Lessor's Interest. In connection with
such termination, the Facility Lessee may, but shall be under no obligation to,
make an offer to purchase the Owner Lessor's Interest on the Termination Date
set forth in the termination notice for cash in an amount at least equal to the
Termination Value for the Undivided Interest on such Termination Date, on an "as
is", "where is" and "with all faults" basis without any representation, other
than by the Owner Lessor that the Owner Lessor's Interest is free of Owner
Lessor's Liens and a warranty of the Owner Participant as to the absence of
Owner Participant's
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Liens (any such offer by the Facility Lessee shall be a "Qualifying Cash Bid").
If the Facility Lessee makes a Qualifying Cash Bid and the Owner Lessor accepts
such offer, the Facility Lessee shall pay the Owner Lessor on the Termination
Date (a) the amount of such Qualifying Cash Bid plus (b) all amounts due and
payable under Section 13.3 (but shall have no obligation to pay Termination
Value). If the Owner Lessor (x) rejects a Qualifying Cash Bid from the Facility
Lessee, (y) accepts an offer from a third party, or (z) elects to retain the
Owner Lessor's Interest, the Facility Lessee shall pay to the Owner Lessor on
the Termination Date all amounts due and payable under Section 13.3 (but shall
have no obligation to pay Termination Value). Any transfer to a third party
shall be subject to the Project Agreements. If, within 10 days of the
Termination Date set forth in the notice of termination, the Owner Lessor does
not (1) receive a Qualifying Cash Bid from the Facility Lessee, (2) accept an
offer from a third party, or (3) elect to retain the Owner Lessor's Interest,
this Facility Lease shall continue, the Facility Lessee will lose its right to
terminate this Facility Lease for such burdensome event, and any and all rights
that the Owner Lessor had immediately prior to the receipt of the termination
notice referred to in Section 13.1 above (including any right to indemnification
which may have given rise to such burdensome termination option) shall remain in
full force and effect in all respects.
Section 13.3. Procedure for Exercise of Termination Option. If the
Facility Lessee shall have exercised its option to terminate the Facility Lease
under Section 13.1, on the Termination Date specified in the Facility Lessee's
notice of such exercise, the Facility Lessee shall, subject to the last sentence
of Section 13.2, pay to the Owner Lessor (a) all amounts of Supplemental Lease
Rent (including all reasonable out-of-pocket costs and expenses of the Owner
Lessor, the Owner Participant, the Lease Indenture Trustee and the Pass Through
Trustee, all sales, use, value added and other Taxes required to be indemnified
by the Facility Lessee pursuant to Section 11.2 of the Participation Agreement
associated with the exercise of the termination option pursuant to this Section
13 and all indemnity amounts not obviated by the termination) due and payable on
or prior to the Termination Date, (b) any unpaid Periodic Lease Rent due before
such Termination Date, but shall not be required to pay Termination Value, and
(c) the Lessee Section 467 Loan Balance, if any, determined as of the relevant
Termination Date and the Owner Lessor shall pay to the Facility Lessee the
Lessor Section 467 Loan Balance, if any, determined as of such Termination Date.
The obligation to make such payments shall be subject to the provisions of
Section 3.3(d), and all Rent payments under Section 13.2 and this Section 13.3
shall, to the extent required by Section 3.6(a), be made to the Lease Indenture
Trustee. Concurrently with the payment of all sums specified in Section 13.2 and
this Section 13.3 (i) Periodic Lease Rent shall cease to accrue, (ii) the
Facility Lessee shall cease to have any liability to the Owner Lessor hereunder
or under the other Operative Documents, except for Supplemental Lease Rent and
other obligations (including those under Sections 11.1 and 11.2 of the
Participation Agreement) surviving pursuant to the express terms of any
Operative Document, (iii) unless the Facility Lessee assumes the Lessor Note
pursuant to Section 13.4, the Owner Lessor shall pay the outstanding principal
and accrued interest on the Lessor Note pursuant to Section 2.10(a) of the Lease
Indenture, (iv) this Facility Lease shall terminate, (v) the Owner Lessor shall,
at the Facility Lessee's cost and expense, execute and deliver to the Facility
Lessee a release or termination of this Facility Lease, (vi) in connection with
any sale of Owner Lessor's Interest pursuant to Section 13.2, the Owner Lessor
shall transfer (by an appropriate instrument of transfer in form and substance
reasonably satisfactory to the Owner Lessor and prepared by and at the expense
of the Facility Lessee) all of its right, title and interest in and to the Owner
Lessor's Interest to the purchaser pursuant to this
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Section 13.3 on an "as is", "where is" and "with all faults" basis, without
representations or warranties other than a warranty as to the absence of Owner
Lessor's Liens and a warranty of the Owner Participant as to the absence of
Owner Participant's Liens, and (vii) the Owner Lessor shall discharge the Lien
of the Lease Indenture and execute and deliver appropriate releases and other
documents or instruments necessary or desirable to effect the foregoing, all to
be prepared, filed and recorded (as appropriate) at the cost and expense of the
Facility Lessee. It shall be a condition of the termination of this Facility
Lease pursuant to this Section 13 that the Facility Lessee shall pay all amounts
it is obligated to pay under Section 13.2 and this Section 13.3. If the Facility
Lessee fails to consummate the termination option under this Section 13 after
giving notice of its intention to do so, (i) the Facility Lease shall continue,
(ii) such failure to consummate shall not constitute a default under the
Facility Lease, and (iii) unless such failure is a consequence of a failure of
the Owner Lessor or Owner Participant to fulfill their obligations under this
Section 13 or Section 3.3(d), the Facility Lessee will lose its right to
terminate this Facility Lease pursuant to this Section 13 as a result of such
event or condition during the remainder of the Facility Lease Term.
Section 13.4. Assumption of the Lessor Note. Notwithstanding the
foregoing provisions of Section 13.2, (a) if the Facility Lessee submits a
Qualifying Cash Bid, and the Owner Lessor accepts such Bid, (b) the Facility
Lessee shall have executed and delivered an assumption agreement to assume in
full the Lessor Note as permitted by and in accordance with Section 2.10(b) of
the Lease Indenture, (c) all other conditions contained in such Section 2.10(b)
shall have been satisfied, and (d) no Significant Lease Default or Lease Event
of Default shall have occurred and be continuing after giving effect to such
assumption, then the obligation of the Facility Lessee to pay the purchase price
set forth in its Qualifying Cash Bid shall be reduced by the outstanding
principal amount of and accrued interest on the Lessor Note so assumed by the
Facility Lessee.
Section 13.5. Certain Conditions to Termination. Anything to the
contrary in this Section 13 notwithstanding, the Facility Lessee and the Owner
Lessor agree for the benefit of the Lease Indenture Trustee (without relieving
the Owner Lessor of any liability hereunder) that, so long as the Lien of the
Lease Indenture shall not have been terminated or discharged, no termination of
this Facility Lease pursuant to this Section 13 shall be effective and the
Facility Lessee's rights and obligations under this Facility Lease immediately
prior to the electing to terminate this Facility Lease pursuant to Section 13.1
shall remain in full force and effect in all respects (regardless of whether the
Owner Lessor shall elect to retain or sell the Undivided Interest in connection
with such proposed termination) unless and until the Facility Lessee shall have
assumed the Lessor Note pursuant to Section 13.4 or the Owner Lessor shall have
paid all outstanding principal and accrued interest on the Lessor Note pursuant
to Section 13.3 and all other amounts due under the Lease Indenture on such
proposed date of termination.
SECTION 14. TERMINATION FOR OBSOLESCENCE
Section 14.1. Termination. Upon at least six months' prior written
notice to the Owner Lessor, the Owner Participant and, so long as the Lien of
the Lease Indenture has not been terminated or discharged, the Lease Indenture
Trustee and the Pass Through Trustee (which notice shall be accompanied by a
certification by the board of managers of the Facility Lessee as to one or more
of the matters described in clause (a) and (b) below and an Officer's
Certificate
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setting forth in reasonable detail the basis on which it is exercising this
termination option), the Facility Lessee shall have the option, so long as no
Lease Event of Default shall have occurred and be continuing, to terminate this
Facility Lease in whole or with respect to any Unit Interest on any Termination
Date occurring on or after the fifth anniversary of the Closing Date (the date
of termination selected by the Facility Lessee being the "Obsolescence
Termination Date") on the terms and conditions set forth in this Section 14 if
the Facility Lessee's board of directors determines in good faith that:
(a) such Unit is economically or technologically obsolete, as
a result of (i) a change in Applicable Law, regulation or tariff of
general application, or (ii) imposition by FERC or any other
Governmental Entity having or claiming jurisdiction over the Facility
Lessee, or the Facility of any conditions or requirements including
requiring significant capital improvement to such Unit or the Related
Common Facilities; or
(b) such Unit is otherwise economically or technologically
obsolete or such Unit Interest is surplus to the Facility Lessee's
needs or is no longer useful in its trade or business, including, as a
result of (x) a change in the markets for the wholesale purchase and/or
sale of energy or (y) any material abrogation of power purchase or sale
agreements.
No termination of this Facility Lease pursuant to this Section 14.1 with respect
to a Unit Interest shall become effective unless (i) the Facility Lessee makes
an identical election under the Other Facility Lease to which the Facility is
subject pursuant to Section 14.1 thereof, and (ii) the conditions set forth in
Section 14.5 hereof and thereof are satisfied.
Section 14.2. Solicitation of Offers. If the Facility Lessee shall give
the Owner Lessor notice pursuant to Section 14.1 and the Owner Lessor shall not
have elected to retain the Owner Lessor's Interest with respect to such Unit
pursuant to Section 14.3 hereof, the Facility Lessee shall, as non-exclusive
agent for the Owner Lessor, use its commercially reasonable efforts to obtain
bids and, subject to Section 14.5 hereof and, subject to the Project Agreements,
sell such Owner Lessor's Interest on the Obsolescence Termination Date, all of
the proceeds of which will be for the account of the Owner Lessor; provided that
so long as the Lien of the Lease Indenture shall not have been terminated or
discharged, the proceeds of such sale shall be paid directly to the Lease
Indenture Trustee; provided, further, that this sentence shall not limit the
Owner Lessor's obligation to pay the Lessor Section 467 Loan Balance, if any.
The Owner Lessor shall also have the right to obtain bids for the sale of such
Owner Lessor's Interest either directly or through agents other than the
Facility Lessee. At least 120 days prior to the Obsolescence Termination Date
the Facility Lessee shall certify to the Owner Lessor and the Lease Indenture
Trustee each bid or offer, the amount and terms thereof and the name and address
of the party (which shall not be the Facility Lessee, any Affiliate or any third
party with whom it or an Affiliate has an arrangement to use or operate such
Unit to generate power for the benefit of the Facility Lessee or such Affiliate
after the termination of this Facility Lease with respect to such Unit Interest)
submitting such bid or offer.
Section 14.3. Right of Owner Lessor to Retain such Unit Interest. The
Owner Lessor may, upon payment of the Lessor Section 467 Loan Balance, if any,
payable to the Facility Lessee with respect to such Unit Interest, irrevocably
elect to retain, rather than sell, the Owner
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Lessor's Interest with respect to such Unit by giving notice to the Facility
Lessee at least 90 days prior to the Obsolescence Termination Date. If the Owner
Lessor elects to retain such Owner Lessor's Interest pursuant to this Section
14.3, on the Obsolescence Termination Date the Facility Lessee shall pay to the
Owner Lessor (a) all Supplemental Lease Rent with respect to such Unit Interest
(including all reasonable out-of-pocket costs and expenses of the Owner Lessor,
the Owner Participant, the Lease Indenture Trustee and the Pass Through Trustee
(excluding the fees and costs of any broker unless engaged by the Facility
Lessee on the Owner Lessor's behalf) and all sales, use, value added and other
Taxes required to be indemnified by the Facility Lessee pursuant to Section 11.2
of the Participation Agreement associated with the exercise of the termination
option pursuant to this Section 14.3 due and payable on such Obsolescence
Termination Date, (b) any unpaid Periodic Lease Rent (or, in connection with a
termination of a Renewal Lease Term, Renewal Lease Rent) with respect to such
Unit Interest due before such Obsolescence Termination Date, but shall not be
required to pay Termination Value with respect to such Unit Interest and (c) the
Lessee Section 467 Loan Balance, if any, determined as of Obsolescence
Termination Date. All Rent payments under this Section 14.3 shall, to the extent
required by Section 3.6(a), be made to the Lease Indenture Trustee. Concurrently
with the payment of all sums required to be paid pursuant to this Section 14.3,
(i) Periodic Lease Rent and Renewal Lease Rent with respect to such Unit
Interest shall cease to accrue, (ii) the Facility Lessee's obligations under
Sections 6, 7, 8, 11 and 12 with respect to such Unit Interest shall terminate,
(iii) the Facility Lessee shall cease to have any other liability hereunder to
the Owner Lessor hereunder or under the other Operative Documents with respect
to such Unit Interest, except for Supplemental Lease Rent and other obligations
(including those under Sections 11.1 and 11.2 of the Participation Agreement)
surviving pursuant to the express terms of any Operative Document, (iv) the
Owner Lessor shall pay the portion of the outstanding principal and accrued
interest on the Lessor Note relating to such Unit Interest pursuant to Section
2.10(a) and (e) of the Lease Indenture, (v) if, and to the extent, the fair
market value of such Unit Interest exceeds the Termination Value with respect to
such Unit Interest, the Owner Lessor shall pay a portion of any premium due with
respect to the Lessor Note up to but not exceeding such excess, with the
balance, if any, paid by the Facility Lessee, (vi) this Facility Lease shall
terminate with respect to such Unit Interest, (vii) the Owner Lessor shall, at
the Facility Lessee's cost and expense, execute and deliver to the Facility
Lessee a release and termination of this Facility Lease with respect to such
Unit Interest and in the case of a termination with respect to either the Unit 1
Interest or the Unit 2 Interest, the Unit Interest which is obsolete shall no
longer be deemed to be part of the Undivided Interest, (viii) the Facility
Lessee will return the Owner Lessor's Interest related to such Unit Interest to
the Owner Lessor in accordance with Section 5.1, and (ix) the Owner Lessor shall
cause the Indenture Trustee to discharge the Lien of the Lease Indenture with
respect to such Unit Interest and execute and deliver appropriate releases and
other documents or instruments necessary or desirable to effect the foregoing,
all to be prepaid, filed and recorded (as appropriate) at the cost and expense
of the Facility Lessee. It shall be a condition to the termination of this
Facility Lease pursuant to this Section 14.3, that the Facility Lessee shall pay
all amounts that it is obligated to pay under this Section 14.3.
Section 14.4. Procedure for Exercise of Termination Option. If the
Owner Lessor has not elected to retain the Owner Lessor's Interest with respect
to such Unit Interest in accordance with Section 14.3 hereof, on the
Obsolescence Termination Date the Owner Lessor shall sell the Owner Lessor's
Interest in such Unit Interest under this Section 14.4 hereof and Section 9.1 of
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the Site Lease and Sublease to the bidder or bidders (which shall not be the
Facility Lessee, any Affiliate thereof or any third party with whom it or an
Affiliate has an arrangement to use or operate such Unit to generate power for
the benefit of the Facility Lessee or such Affiliate after the termination of
this Facility Lease with respect to such Unit Interest), that shall have
submitted the highest cash bid or bids with respect to the Owner Lessor's
Interest, and the Facility Lessee shall certify to the Owner Lessor, the Owner
Participant and, so long as the Lien of the Lease Indenture shall not have been
terminated or discharged, the Lease Indenture Trustee and the Pass Through
Trustee that such buyer is not the Facility Lessee, any Affiliate thereof or any
third party with whom it or an Affiliate has an arrangement to use or operate
such Unit to generate power for the benefit of the Facility Lessee or such
Affiliate after the termination of this Facility Lease with respect to such Unit
Interest. On the Obsolescence Termination Date, the Facility Lessee shall pay to
the Owner Lessor (a) the excess, if any, of Termination Value with respect to
such Unit Interest determined as of such Obsolescence Termination Date over the
total sales price of the Owner Lessor's Interest paid to or retained by the
Owner Lessor, after deducting from the sales price the expenses, if any,
incurred by the Owner Lessor and the Owner Participant in connection with such
sale, plus (b) any unpaid Periodic Lease Rent or Renewal Lease Rent with respect
to such Unit Interest due before such Obsolescence Termination Date, plus (c)
all amounts of Supplemental Lease Rent with respect to such Unit Interest
(including all reasonable out-of-pocket costs and expenses of the Owner Lessor,
the Owner Participant, the Lease Indenture Trustee and the Pass Through Trustee
(excluding the fees and costs of any broker unless engaged by the Facility
Lessee on the Owner Lessor's behalf) and all sales, use, value added and other
Taxes required to be indemnified by the Facility Lessee pursuant to Section 11.2
of the Participation Agreement associated with the exercise of the termination
option pursuant to this Section 14) due and payable on such Obsolescence
Termination Date, plus (d) the Lessee Section 467 Loan Balance, if any,
determined as of the Obsolescence Termination Date, plus (e) any premium due on
the portion of the Lessor Note being prepaid pursuant to this Section 14,
provided, however, if the total sales price of the Owner Lessor's Interest paid
or retained by the Owner Lessor exceeds the Termination Value with respect to
such Unit Interest as determined as of the Obsolescence Termination Date, the
Owner Lessor shall pay a portion of such premium up to but not exceeding such
excess, with the balance, if any, paid by the Facility Lessee and the Owner
Lessor shall pay to the Facility Lessee the Lessor Section 467 Loan Balance, if
any, determined as of such Obsolescence Termination Date. The obligations to
make such payments shall be subject to the provisions of Section 3.3(d), and all
Rent payments under this Section 14.4 shall, to the extent required by Section
3.6(a), be made to the Lease Indenture Trustee. Concurrently with the payment of
all sums required to be paid pursuant to this Section 14.4, (i) Periodic Lease
Rent and Renewal Lease Rent with respect to such Unit Interest shall cease to
accrue, (ii) the Facility Lessee's obligations under Sections 6, 7, 8, 11 and 12
with respect to such Unit Interest shall terminate, (iii) the Facility Lessee
shall cease to have any other liability hereunder to the Owner Lessor hereunder
or under the other Operative Documents with respect to such Unit Interest,
except for Supplemental Lease Rent and other obligations (including Sections
11.1 and 11.2 of the Participation Agreement) surviving pursuant to the express
terms of any Operative Document, (iv) the Owner Lessor will pay the portion of
the outstanding principal, premium, if any, payable by the Owner Lessor
hereunder and accrued interest on the Lessor Note relating to such Unit Interest
pursuant to Section 2.10 of the Lease Indenture, (v) this Facility Lease shall
terminate with respect to such Unit Interest, (vi) the Owner Lessor shall, at
the Facility Lessee's cost and expense, execute and deliver to the Facility
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Lessee a release or termination of this Facility Lease with respect to such Unit
Interest and, in the case of a termination with respect to either the Unit 1
Interest or the Unit 2 Interest, the Unit Interest which is obsolete shall no
longer be deemed to be part of the Undivided Interest, (vii) the Owner Lessor
will transfer (by an appropriate instrument of transfer in form and substance
reasonably satisfactory to the Owner Lessor and prepared and recorded by and at
the expense of the Facility Lessee) the Owner Lessor's Interest relating to such
Unit Interest under this Section 14.4, to the purchaser on an "as is", "where
is" and "with all faults" basis, without representations or warranties other
than a warranty as to the absence of Owner Lessor's Liens and a warranty from
the Owner Participant as to the absence of Owner Participant's Liens, and (viii)
the Owner Lessor shall execute and deliver appropriate releases and other
documents or instruments necessary or desirable to effect the foregoing, all to
be prepaid, filed and recorded (as appropriate) at the cost and expense of the
Facility Lessee. Unless the Owner Lessor shall have elected to retain the Owner
Lessor's Interest pursuant to Section 14.3 or the Owner Lessor with the consent
of the Facility Lessee shall have entered into a legally binding contract to
sell the Owner Lessor's Interest, the Facility Lessee may, at its election,
revoke its notice of termination on at least 30 days' prior notice to the Owner
Lessor, the Owner Participant and, so long as the Lien of the Lease Indenture
shall not have been terminated or discharged, the Lease Indenture Trustee and
the Pass Through Trustee in which event this Facility Lease shall continue with
respect to such Unit Interest; provided, however, that the Facility Lessee shall
not be permitted to re-initiate a notice to terminate pursuant to Section 14.1
more than once in any five year period. The Owner Lessor shall be under no duty
to solicit bids, to inquire into the efforts of the Facility Lessee to obtain
bids or otherwise take any action in arranging any such sale of the Owner
Lessor's Interest other than, if the Owner Lessor has not elected to retain the
Owner Lessor's Interest, to transfer the Owner Lessor's Interest in accordance
with clause (vii) of this Section 14.4. It shall be a condition of the Owner
Lessor's obligation to consummate a sale of the Owner Lessor's Interest that the
Facility Lessee shall pay all amounts it is obligated to pay under this Section
14.4. If no sale shall occur on the Obsolescence Termination Date, the notice of
termination shall be deemed revoked and this Facility Lease shall continue with
respect to such Unit Interest in full force and effect in accordance with its
terms (without prejudice to the Facility Lessee's right to exercise its rights
under this Section 14).
Section 14.5. Certain Conditions to Termination. Anything to the
contrary in this Section 14 notwithstanding, the Facility Lessee and the Owner
Lessor agree for the benefit of the Lease Indenture Trustee (without relieving
the Owner Lessor of any liability hereunder) that, so long as the Lien of the
Lease Indenture shall not have been terminated or discharged, no termination
pursuant to this Section 14 shall be effective and the Facility Lessee's rights
and obligations under this Facility Lease with respect to the Unit Interest
referred to in the applicable notice of termination pursuant to Section 14.1
shall remain in full force and effect in all respects (regardless of whether the
Owner Lessor shall elect to retain or sell the Owner Lessor's Interest in
connection with such proposed termination) unless and until the Owner Lessor
shall have paid the portion of the outstanding principal and accrued interest on
the Lessor Note with respect to such Unit Interest and the Owner Lessor and/or
the Facility Lessee shall have paid any Make-Whole Premium arising from a
termination pursuant to clause (b) of Section 14.1 to the extent provided in
Section 14.3 and 14.4, as applicable) and all other amounts due under the Lease
Indenture with respect thereto shall have been paid.
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SECTION 15. LEASE RENEWAL
Section 15.1. First Wintergreen Renewal Lease Term. Not earlier than 42
months prior to the expiration of the Basic Lease Term, unless a Significant
Lease Default or a Lease Event of Default shall have occurred and be continuing,
the Facility Lessee may deliver to the Owner Lessor notice (which notice may be
in addition to a notice of the Facility Lessee's tentative interest in electing
an FMV Renewal Lease Term under Section 15.3) of the Facility Lessee's tentative
interest in renewing this Facility Lease with respect to Undivided Interest for
a term (the "First Wintergreen Renewal Lease Term") commencing on the day
following the last day of the Basic Lease Term and ending on the earlier of (a)
the latest date as of which the estimated fair market value of the Undivided
Interest determined by an Independent Appraiser selected by the Facility Lessee
and reasonably acceptable to the Owner Lessor, subsequent to the Facility
Lessee's tentative election of the First Wintergreen Renewal Lease Term (but not
earlier than 36 months prior to the expiration of the Basic Lease Term), shall
equal or exceed 20% of the Purchase Price with respect to the Undivided Interest
(without taking into account inflation or deflation subsequent to the Closing
Date) and (b) the date as of which the sum of the number of years of the
proposed First Wintergreen Renewal Lease Term and the Basic Lease Term shall
equal 75% of the estimated economic useful life of the relevant Units and the
Colstrip Project as of the Closing Date, as determined by such Independent
Appraiser. Unless the Facility Lessee shall have irrevocably elected to renew
this Facility Lease for an FMV Renewal Lease Term under Section 15.3, and
provided that neither a Significant Lease Default or Lease Event of Default
shall have occurred and be continuing on such notice date or on the date of
expiration of the Basic Lease Term, on or prior to 18 months before the
expiration of the Basic Lease Term, the Facility Lessee may deliver to the Owner
Lessor a further notice irrevocably electing to renew this Facility Lease with
respect to the Undivided Interest for the First Wintergreen Renewal Lease Term
determined as aforesaid and the First Wintergreen Renewal Lease Term shall
thereupon take effect as provided herein.
Section 15.2. Second Wintergreen Renewal Lease Term. Not earlier than
42 months prior to the expiration of the First Wintergreen Renewal Lease Term,
unless a Significant Lease Default or a Lease Event of Default shall have
occurred and be continuing, the Facility Lessee may deliver to the Owner Lessor
notice (which notice may be in addition to a notice of the Facility Lessee's
tentative interest in electing an FMV Renewal Lease Term under Section 15.3) of
the Facility Lessee's tentative interest in renewing this Facility Lease with
respect to Undivided Interest for a term (the "Second Wintergreen Renewal Lease
Term" and together with the First Wintergreen Renewal Lease Term, the
"Wintergreen Renewal Lease Terms") commencing on the day following the last day
of the First Wintergreen Renewal Lease Term and ending on the earlier of (a) the
latest date as of which the estimated fair market value of the Undivided
Interest determined, by an Independent Appraiser selected by the Facility Lessee
and reasonably acceptable to the Owner Lessor, subsequent to the Facility
Lessee's tentative election of the Second Wintergreen Renewal Lease Term (but
not earlier than 36 months prior to the expiration of the First Wintergreen
Renewal Lease Term), shall equal or exceed 20% of the Purchase Price with
respect to the Undivided Interest (without taking into account inflation or
deflation subsequent to the Closing Date) and (b) the date as of which the sum
of the number of years of the proposed Second Wintergreen Renewal Lease Term,
the First Wintergreen Renewal Lease Term and the Basic Lease Term shall equal
75% of the estimated economic useful life of the relevant Units and the Colstrip
Project as of the Closing Date, as determined by such
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Independent Appraiser. Unless the Facility Lessee shall have irrevocably elected
to renew this Facility Lease for a FMV Renewal Lease Term under Section 15.3,
and provided that neither a Significant Lease Default nor a Lease Event of
Default shall have occurred and be continuing on such notice date or on the date
of expiration of the First Wintergreen Renewal Lease Term, on or prior to 18
months before the expiration of the First Wintergreen Renewal Lease Term, the
Facility Lessee may deliver to the Owner Lessor a further notice irrevocably
electing to renew this Facility Lease with respect to the Undivided Interest for
the Second Wintergreen Renewal Lease Term determined as aforesaid and the Second
Wintergreen Renewal Lease Term shall thereupon take effect as provided herein.
Section 15.3. Fair Market Value Renewal Lease Terms. Not earlier than
42 months prior to the expiration of the Basic Lease Term, the First Wintergreen
Renewal Lease Term, the Second Wintergreen Renewal Lease Term, or any other
Renewal Lease Term, unless a Significant Lease Default or Lease Event of Default
shall have occurred and be continuing, the Facility Lessee may deliver to the
Owner Lessor notice (which notice may be in addition to a notice of the Facility
Lessee's tentative interest in electing the First Wintergreen Renewal Lease Term
or the Second Wintergreen Renewal Lease Term) of the Facility Lessee's tentative
interest in renewing this Facility Lease with respect to the Undivided Interest
for a term (each such term, a "FMV Renewal Lease Term") commencing on the day
following the last day of the Basic Lease Term or a Renewal Lease Term otherwise
expiring and extending for no less than two years and no more than five years;
provided that, unless such FMV Renewal Lease Term extends to the end of the
useful life of such Units, no such FMV Renewal Lease Term shall extend beyond
the date that is three (3) years prior to the end of the useful life of such
Units (as set forth in the most recent appraisal obtained pursuant to Section
4.1(o) of the Participation Agreement, Section 15.1 or 15.2 of this Facility
Lease or Section 2.3(a) or (b) of the Site Lease and Sublease). Unless the
Facility Lessee shall have irrevocably elected to renew this Facility Lease for
a Wintergreen Renewal Lease Term pursuant to Sections 15.1 or 15.2 (it being
understood that the exercise by the Facility Lessee of its right to renew this
Facility Lease at the end of the Basic Lease Term or at the end of the First
Wintergreen Renewal Lease Term pursuant to Sections 15.1 or 15.2 hereof,
respectively, shall not impair its right to renew this Facility Lease at any
time thereafter pursuant to this Section 15.3), and provided that neither a
Significant Lease Default nor a Lease Event of Default shall have occurred and
be continuing on any such notice date or on the date of expiration of the Basic
Lease Term or the Renewal Lease Term immediately preceding such FMV Renewal
Lease Term, as the case may be, on or prior to 18 months before the expiration
of the existing Basic Lease Term or the relevant Renewal Lease Term as the case
may be, the Facility Lessee may deliver to the Owner Lessor a further notice
irrevocably electing to renew this Facility Lease with respect to the Undivided
Interest for the FMV Renewal Lease Term tentatively elected as aforesaid and the
FMV Renewal Lease Term shall thereupon take effect as provided herein.
Section 15.4. Renewal Lease Rent for the Renewal Lease Terms.
(a) Renewal Lease Rent shall be paid on each January 2 and
July 2 during each Renewal Lease Term. The installment of Renewal Lease Rent for
the Undivided Interest payable on each such Rent Payment Date during the
Wintergreen Renewal Lease Terms shall be determined as follows:
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(i) for each year in the period commencing on the
first day of the First Wintergreen Renewal Lease Term and
ending on the earlier of (x) the last day of the last
Wintergreen Renewal Lease Term elected by the Facility Lessee
or (y) the date which is 5 years after the last day of the
Basic Lease Term (such period being referred to as the
"Initial Period") Renewal Lease Rent shall be equal to 80% of
the average Basic Lease Rent for the Undivided Interest during
the Basic Lease Term;
(ii) for each year in the period commencing on the
day following the last day of the Initial Period and ending on
the earlier of (A) the last day of the last Wintergreen
Renewal Lease Term elected by the Facility Lessee or (B) the
date which is 5 years after the last day of the Initial
Period, Renewal Lease Rent shall be equal to 60% of the
average Basic Lease Rent for the Undivided Interest during the
Basic Lease Term; and
(iii) thereafter, Renewal Lease Rent shall be equal
to the lesser of (i) the Fair Market Rental Value for the
Undivided Interest, and (ii) 50% of the average Basic Lease
Rent for the Undivided Interest during the Basic Lease Term.
The average Basic Lease Rent during the Basic Lease Term for the
Undivided Interest shall be determined without regard to any amount attributable
to adjustments to Basic Lease Rent pursuant to clause (i) and, unless the
applicable Modifications were financed by an Additional Equity Investment,
clause (ii) of Section 3.5(a). Renewal Lease Rent for any FMV Renewal Lease Term
shall be determined in accordance with Section 15.4(b)
(b) Renewal Lease Rent payable on each Rent Payment Date
during any FMV Renewal Lease Term for the Undivided Interest shall be equal to
105% of the Fair Market Rental Value thereof determined at the commencement of
such FMV Renewal Lease Term; provided, however, that if, on or prior to the
commencement of any FMV Renewal Lease Term, the Owner Lessor and the Facility
Lessee agree or, in the absence of such agreement, if the Facility Lessee shall
provide the Owner Participant with an opinion of counsel reasonably satisfactory
to the Owner Participant (as to matters of form, substance and authorship) or
with a private letter ruling, in each case to the effect that the Renewal Lease
Rent for a FMV Renewal Lease Term can be set at the Fair Market Rental Value
without resulting in adverse Federal income tax consequences to the Owner
Participant under Section 467 of the Code, the Renewal Lease Rent for the
Undivided Interest for the remainder of any current and for any subsequent FMV
Renewal Lease Term will be equal to 100% of the Fair Market Rental Value of such
Unit Interest.
Section 15.5. Determination of Fair Market Rental Value. The Fair
Market Rental Value of the Undivided Interest as of the commencement of any
Renewal Lease Term shall be determined by agreement of the Owner Lessor and the
Facility Lessee within six months after receipt by the Owner Lessor of the
tentative notice from the Facility Lessee of its election to renew pursuant to
Section 15.1, 15.2 or 15.3 (but not more than 36 months before the commencement
of such Renewal Lease Term) or, if they shall fail to agree within such six
month period, shall be determined by an Independent Appraiser selected by the
Facility Lessee
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and reasonably acceptable to the Owner Lessor. The appraiser's fees and expenses
shall be borne by the Facility Lessee.
Section 15.6. Simultaneous Renewals.
This Facility Lease may only be renewed in whole. In addition, if the
Owner Participant or any of its Affiliates is a party to any of the Other
Colstrip Lease Transactions, then the Facility Lessee shall make the same
election (to renew or not renew) under Sections 15.1, 15.2, and 15.3 of each of
the Other Facility Leases to which it is a party for such Other Colstrip Lease
Transactions to which the Owner Participant or any of its Affiliates is a party.
SECTION 16. EVENTS OF DEFAULT
The following events shall constitute a "Lease Event of Default"
hereunder (whether any such event shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or regulation of
any Governmental Entity):
(a) the Facility Lessee shall fail to make any payment of
Periodic Lease Rent, Renewal Lease Rent, or Termination Value after the
same shall have become due and such failure shall have continued (after
application of the proceeds of any Qualifying Letter of Credit) for
five (5) Business Days after the same shall become due; or
(b) the Facility Lessee shall fail to make any payment of
Supplemental Lease Rent (other than Excepted Payments, unless the Owner
Participant shall have declared a default with respect thereto, or
Termination Value) after the same shall have become due and such
failure shall have continued from a period of 30 days after receipt by
the Facility Lessee of written notice of such default from the Owner
Participant, the Owner Lessor, the Lease Indenture Trustee or the Pass
Through Trustee; or
(c) the Facility Lessee shall fail to observe or perform its
obligation to maintain (or cause to be maintained) insurance in the
amounts and on the terms set forth in Section 11; or
(d) the Facility Lessee shall fail to perform or observe any
covenant, obligation or agreement to be performed or observed by it
under this Facility Lease or any other Operative Document (other than
any covenant, obligation or agreement contained in the Tax Indemnity
Agreement or any covenant, obligation or agreement referred to in
clauses (a), (b), (c), (e) or (k) of this Section 16) in any material
respect, which shall continue unremedied for 30 days after receipt by
the Facility Lessee of written notice thereof from the Owner
Participant, Owner Lessor, Lease Indenture Trustee or the Pass Through
Trustee; provided, however, that if such condition cannot be remedied
within such 30-day period, then the period within which to remedy such
condition shall be extended up to an additional 180 days, so long as
the Facility Lessee diligently pursues such remedy and such condition
is reasonably capable of being remedied within such additional 180-day
period; provided, further, that in the case of the Facility Lessee's
obligation set forth in clause (a)(ii) of Section 7.1, if, to the
extent and for so long as a test, challenge, appeal or proceeding shall
be prosecuted in good faith by
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the Facility Lessee, the failure by the Facility Lessee to comply with
such requirement shall not constitute a Lease Event of Default if such
test, challenge, appeal or proceeding shall not involve any danger of
(i) foreclosure, sale, forfeiture or loss of, or imposition of a lien
on, any part of the Undivided Interest or the impairment of the use,
operation or maintenance of the Facility in any material respect, or
(ii) any criminal liability being incurred by, or any material adverse
effect on the interests of, the Owner Participant, the Owner Lessor,
the Lease Indenture Trustee or the Pass Through Trustee including,
subjecting the Owner Participant or the Owner Lessor to regulation as a
public utility under Applicable Law; and provided, further, that in the
case of the Facility Lessee's obligation set forth in clause (a)(ii) of
Section 7.1, if the noncompliance is not a type that can be immediately
remedied, the failure to comply shall not be a Lease Event of Default
if the Facility Lessee is taking all reasonable action to remedy such
noncompliance and if, but only if, such noncompliance shall not involve
any danger described in clause (i) or (ii) of the preceding proviso;
and provided, further, such noncompliance, or such test, challenge,
appeal or proceeding to review shall not extend beyond the date 36
months prior to the scheduled expiration of the Basic Lease Term or any
Renewal Lease Term then in effect or elected by the Facility Lessee; or
(e) to the extent such covenants are in effect, the Facility
Lessee shall fail to perform or observe in any material respect the
covenants set forth in Sections 5.2, 6.1, 6.2, 6.3, 7.1, 7.2, 15.2 or,
to the extent such covenant relates to liens in respect of borrowed
money, 6.4 of the Participation Agreement; or
(f) any representation or warranty made by the Facility Lessee
in the Operative Documents (other than a Tax Representation) or in the
certificate delivered by the Facility Lessee at the Closing pursuant to
Section 4(g) of the Participation Agreement shall prove to have been
incorrect in any material respect when made and continues to be
material and unremedied for a period of 30 days after receipt by the
Facility Lessee of written notice thereof; provided, however, that if
such condition cannot be remedied within such 30-day period, then the
period within which to remedy such condition shall be extended up to an
additional 120 days, so long as the Facility Lessee diligently pursues
such remedy and such condition is reasonably capable of being remedied
within such additional 120-day period; or
(g) the Facility Lessee shall (i) commence a voluntary case or
other proceeding seeking relief under Title 11 of the Bankruptcy Code
or liquidation, reorganization or other relief with respect to itself
or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect, or apply for or consent to the appointment of a
trustee, receiver, liquidator, custodian or other similar official of
it or any substantial part of its property, or (ii) consent to, or fail
to controvert in a timely manner, any such relief or the appointment of
or taking possession by any such official in any voluntary case or
other proceeding commenced against it, or (iii) file an answer
admitting the material allegations of a petition filed against it in
any such proceeding, or (iv) make a general assignment for the benefit
of creditors; or
(h) an involuntary case or other proceeding shall be commenced
against the Facility Lessee seeking (i) liquidation, reorganization or
other relief with respect to it or
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its debts under Title 11 of the Bankruptcy Code or any bankruptcy,
insolvency or other similar law now or hereafter in effect, or (ii) the
appointment of a trustee, receiver, liquidator, custodian or other
similar official with respect to it or any substantial part of its
property or (iii) the winding-up or liquidation of the Facility Lessee;
and such involuntary case or other proceeding shall remain undismissed
and unstayed for a period of 60 days; or
(i) so long as any of the Certificates are outstanding,
default under any bond, debenture, note or other evidence of
Indebtedness (but excluding Indebtedness arising under the Other
Colstrip Lease Transactions or Non-Recourse Indebtedness) for money
borrowed by the Facility Lessee under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness of the Facility Lessee, whether
such indebtedness now exists or shall hereafter be created, which
Indebtedness is in an aggregate principal amount exceeding $75,000,000
and which default shall have resulted in such Indebtedness becoming or
being declared due and payable prior to the date on which it would
otherwise have become due and payable, without such Indebtedness having
been discharged, or such acceleration having been rescinded or
annulled; or
(j) so long as any of the Certificates are outstanding, and
PPL Montana or any of its Affiliates is the Facility Lessee under this
Facility Lease, the occurrence of a Change of Control; or
(k) the Facility Lessee shall fail (i) to cause a Qualifying
Letter of Credit to be replaced, or reinstated to the full amount
required, in accordance with Section 6.5(e) of the Participation
Agreement within 90 days of any drawing thereon, or (ii) to perform or
observe any of the other covenants in Section 6.5 of the Participation
Agreement.
SECTION 17. REMEDIES
Section 17.1. Remedies for Lease Event of Default. Upon the occurrence
of any Lease Event of Default and at any time thereafter so long as the same
shall be continuing, the Owner Lessor may, at its option, declare this Facility
Lease to be in default by written notice to the Facility Lessee; provided that
upon the occurrence of a Lease Event of Default described in paragraph (g) or
(h) of Section 16, this Facility Lease shall automatically be deemed to be in
default without the need for giving any notice; and at any time thereafter, so
long as the Facility Lessee shall not have remedied all outstanding Lease Events
of Default, the Owner Lessor may do one or more of the following as the Owner
Lessor in its sole discretion shall elect, to the extent permitted by, and
subject to compliance with any mandatory requirements of, Applicable Law then in
effect:
(a) proceed by appropriate court action or actions, either at
law or in equity, to enforce performance by the Facility Lessee, at the
Facility Lessee's sole cost and expense, of the applicable covenants
and terms of this Facility Lease or to recover damages for breach
thereof;
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(b) by notice in writing to the Facility Lessee, terminate
this Facility Lease whereupon all right of the Facility Lessee to the
possession and use under this Facility Lease of the Undivided Interest
shall absolutely cease and terminate but the Facility Lessee shall
remain liable as hereinafter provided; and thereupon, the Owner Lessor
may demand that the Facility Lessee, and the Facility Lessee shall,
upon written demand of the Owner Lessor and at the Facility Lessee's
expense, forthwith return possession of the Undivided Interest to the
Owner Lessor in the manner and condition required by, and otherwise in
accordance with all of the provisions of Section 5, except those
provisions relating to periods of notice; and the Owner Lessor may
thenceforth hold, possess and enjoy the same free from any right of the
Facility Lessee, or its successor or assigns, to use the Undivided
Interest for any purpose whatever;
(c) sell the Owner Lessor's Interest at public or private
sale, as the Owner Lessor may determine, free and clear of any rights
of the Facility Lessee under this Facility Lease and without any duty
to account to the Facility Lessee with respect to such sale or for the
proceeds thereof (except to the extent required by paragraph (f) below
if the Owner Lessor elects to exercise its rights under said paragraph
and by Applicable Law), in which event the Facility Lessee's obligation
to pay Periodic Lease Rent hereunder due for any periods subsequent to
the date of such sale shall terminate (except to the extent that
Periodic Lease Rent and Renewal Lease Rent is to be included in
computations under paragraph (e) or (f) below if the Owner Lessor
elects to exercise its rights under said paragraphs);
(d) hold, keep idle or lease to others the Owner Lessor's
Interest as the Owner Lessor in its sole discretion may determine, free
and clear of any rights of the Facility Lessee under this Facility
Lease and without any duty to account to the Facility Lessee with
respect to such action or inaction or for any proceeds with respect
thereto, except that the Facility Lessee's obligation to pay Periodic
Lease Rent and Renewal Lease Rent due for any periods subsequent to the
date upon which the Facility Lessee shall have been deprived of
possession and use of the Undivided Interest pursuant to this Section
17 shall be reduced by the net proceeds, if any, received by the Owner
Lessor from leasing the Undivided Interest to any Person other than the
Facility Lessee;
(e) whether or not the Owner Lessor shall have exercised, or
shall thereafter at any time exercise, any of its rights under
paragraph (b) above with respect to the Undivided Interest, the Owner
Lessor, by written notice to the Facility Lessee specifying a
Termination Date that shall be not earlier than 10 days after the date
of such notice, may demand that the Facility Lessee pay to the Owner
Lessor, and the Facility Lessee shall pay to the Owner Lessor, on the
Termination Date specified in such notice, any unpaid Periodic Lease
Rent and Renewal Lease Rent due before such Termination Date, any
Supplemental Lease Rent due and payable as of the payment date
specified in such notice, the Lessee Section 467 Loan Balance, if any,
computed as of the Termination Date, plus as liquidated damages for
loss of a bargain and not as a penalty (in lieu of the Periodic Lease
Rent and Renewal Lease Rent due after the Termination Date specified in
such notice), (i) an amount equal to the excess, if any, of the
Termination Value for the Undivided Interest computed as of the
Termination Date specified in such notice over the Fair Market Sales
Value of the Owner Lessor's Interest as of the Termination Date
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specified in such notice, or (ii) an amount equal to the excess, if
any, of Termination Value for the Undivided Interest computed as of the
Termination Date specified in such notice over the Fair Market Rental
Value of the Owner Lessor's Interest until the end of the Basic Lease
Term or the then current Renewal Lease Term, after discounting such
Fair Market Rental Value semiannually to present value as of the
Termination Date specified in such notice at a rate equal to the Lease
Debt Rate, and upon payment of such excess amount under either clause
(i) or (ii) of this paragraph (e), this Facility Lease, and the
Facility Lessee's obligation to pay Periodic Lease Rent hereunder due
for any periods subsequent to the date of such payment shall terminate;
(f) if the Owner Lessor shall have sold the Owner Lessor's
Interest pursuant to paragraph (c) above, the Owner Lessor may, if it
shall so elect, demand that the Facility Lessee pay to the Owner
Lessor, and the Facility Lessee shall pay to the Owner Lessor, as
liquidated damages for loss of a bargain and not as a penalty (in lieu
of the Periodic Lease Rent and Renewal Lease Rent due for any periods
subsequent to the date of such sale), an amount equal to (i) any unpaid
Periodic Lease Rent and Renewal Lease Rent due before the date of such
sale and, (ii) if that date is not a Termination Date, the daily
equivalent of Periodic Lease Rent or Renewal Lease Rent for the period
from the preceding Termination Date to the date of such sale, plus
(iii) the amount, if any, by which the Termination Value for the
Undivided Interest computed as of the Termination Date next preceding
the date of such sale or, if such sale occurs on a Rent Payment Date or
a Termination Date then computed as of such date, exceeds the net
proceeds of such sale, plus (iv) the Lessee Section 467 Loan Balance,
if any, computed as of such date or if that date is not a Termination
Date, as of the Termination Date next preceding the date of such sale
and, upon payment of such amount, this Facility Lease and the Facility
Lessee's obligation to pay Periodic Lease Rent and Renewal Lease Rent
for any periods subsequent to the date of such payment shall terminate;
(g) apply any amounts which are held by the Owner Lessor or
the Lease Indenture Trustee under Section 10.2(d) or 11.7 as security
for the Facility Lessee's obligations hereunder against any amounts
owed by the Facility Lessee hereunder or under any other Operative
Document; or
(h) exercise its rights under any Qualifying Letter of Credit
and apply the proceeds thereof against any amounts owed by the Facility
Lessee hereunder or under any other Operative Document.
In addition, the Facility Lessee shall be liable, except as otherwise
provided above, for (i) any and all unpaid Periodic Lease Rent and Renewal Lease
Rent due hereunder before or during the exercise of any of the foregoing
remedies, (ii) in the case of a Lease Event of Default described in Section
16(j), any Change of Control Premium payable under Section 4.2(a) of the Lease
Indenture, and (iii) on an After-Tax Basis, for legal fees and other costs and
expenses incurred by reason of the occurrence of any Lease Event of Default or
the exercise of the Owner Lessor's remedies with respect thereto, including the
repayment in full of any costs and expenses necessary to be expended in
connection with the return of the Undivided Interest in accordance with Section
5 hereof, including, any costs and expenses incurred by the Owner Lessor, the
Owner Participant, the Lease Indenture Trustee and the Pass Through Trustee in
connection with
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retaking constructive possession of, or in repairing, such Undivided Interest in
order to cause it to be in compliance with all maintenance standards imposed by
this Facility Lease.
Upon termination of this Facility Lease pursuant to clause (b) or an
election by the Owner Lessor to receive liquidated damages under clauses (e) or
(f), then on the Applicable Date the Facility Lessee shall (without duplication
of the amounts paid under clause (e) or (f) above) pay to the Owner Lessor the
Lessee Section 467 Loan Balance calculated as of the Applicable Date or if the
Applicable Date is not a Termination Date, as of the next preceding Termination
Date, and the Owner Lessor shall pay to the Facility Lessee the Lessor Section
467 Loan Balance calculated as of the Applicable Date, or if the Applicable Date
is not a Termination Date, the Termination Date, next preceding the Applicable
Date. The Applicable Date shall be the earlier to occur of (i) the date this
Facility Lease is terminated pursuant to clause (b), (ii) the Termination Date
specified in any notice pursuant to clause (e), or (iii) the date of any sale
pursuant to clause (e). The obligation to make such payments shall be subject to
the provisions of Section 3.3(d), and all payments of Rent under this Section
10.2(a) shall, to the extent required by Section 3.6(a), be made to the Lease
Indenture Trustee.
Section 17.2. Cumulative Remedies. The remedies in this Facility Lease
provided in favor of the Owner Lessor shall not be deemed exclusive, but shall
be cumulative and shall be in addition to all other remedies in its favor
existing at law or in equity; and the exercise or beginning of exercise by the
Owner Lessor of any one or more of such remedies shall not, except as
specifically provided in this Section 17, preclude the simultaneous or later
exercise by the Owner Lessor of any or all of such other remedies. To the extent
permitted by Applicable Law, the Facility Lessee hereby waives any rights now or
hereafter conferred by statute or otherwise which may require the Owner Lessor
to sell, lease or otherwise use the Undivided Interest or any Component thereof
in mitigation of the Owner Lessor's damages as set forth in this Section 17 or
which may otherwise limit or modify any of the Owner Lessor's rights and
remedies in this Section 17.
Section 17.3. No Delay or Omission to be Construed as Waiver. No delay
or omission to exercise any right, power or remedy accruing to the Owner Lessor
upon any breach or default by the Facility Lessee under this Facility Lease
shall impair any such right, power or remedy of the Owner Lessor, nor shall any
such delay or omission be construed as a waiver of any breach or default, or of
any similar breach or default hereafter occurring; nor shall any waiver of a
single breach or default be deemed a waiver of any subsequent breach or default.
Section 17.4. Significant Lease Default; Drawings Under Qualifying
Letter of Credit. Notwithstanding anything herein to the contrary and without
limiting the Owner Lessor's rights to draw upon any Qualified Letter of Credit
under Section 17.1(h), upon the occurrence and during the continuance of a
Significant Lease Default of the type described in clause (i) of the definition
of Significant Lease Default, the Owner Lessor shall have the right to draw upon
any Qualifying Letter of Credit to pay any portion of Periodic Lease Rent or
Termination Value which was not paid when due.
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SECTION 18. SECURITY INTEREST AND INVESTMENT OF SECURITY FUNDS.
Any moneys received by the Owner Lessor or the Lease Indenture Trustee
pursuant to Section 10.2(d) or 11.7 shall, until paid to the Facility Lessee in
accordance with such Sections, be held by the Owner Lessor or the Lease
Indenture Trustee, as the case may be, as security for the Facility Lessee's
obligations under this Facility Lease and be invested in Permitted Instruments
by the Owner Lessor or the Lease Indenture Trustee, as the case may be, at the
sole risk of the Facility Lessee, from time to time as directed in writing by
the Facility Lessee if such instruments are reasonably available for purchase.
Any gain (including interest received) realized as the result of any such
Permitted Instrument (net of any fees, commissions, taxes and other expenses, if
any, incurred in connection with such Permitted Instrument) shall be applied or
remitted to the Facility Lessee in the same manner as the principal invested.
SECTION 19. FACILITY LESSEE'S RIGHT TO SUBLEASE
The Facility Lessee shall have the right to sublease the Undivided
Interest without the consent of the Owner Lessor, the Owner Participant, the
Lease Indenture Trustee or the Pass Through Trustee under the following
conditions:
(a) the sublessee (i) is a solvent corporation, partnership,
business trust, limited liability company or other person or entity not
subject to bankruptcy proceedings, (ii) is not involved in material
litigation with the Owner Participant, and (iii) is, or its operating
and maintenance obligations under the sublease are guaranteed by, or
such obligations are contracted to be performed by, an experienced,
reputable operator of coal-fired electric generating assets;
(b) the Owner Lessor, the Owner Participant, and so long as
the Lien of the Lease Indenture shall not have been terminated or
discharged, the Lease Indenture Trustee and the Pass Through Trustee
shall have received an opinion of counsel, which opinion and counsel
shall be reasonably acceptable to each such recipient, to the effect
that all regulatory approvals required to enter into the sublease have
been obtained;
(c) the sublease does not extend beyond the scheduled
expiration of the applicable Basic Lease Term or any Renewal Lease Term
then in effect or elected by the Facility Lessee (and may be terminated
upon early termination of this Facility Lease) and is expressly
subordinated to this Facility Lease;
(d) all terms and conditions of this Facility Lease and the
other Operative Documents remain in effect and the Facility Lessee
remains fully and primarily liable for its obligations under this
Facility Lease and the other Operative Documents;
(e) no Significant Lease Default or Lease Event of Default
under this Facility Lease shall have occurred and be continuing;
(f) the sublease prohibits further assignment or subletting;
(g) the sublease requires the sublessee to operate and
maintain the Facility in a manner consistent with this Facility Lease;
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(h) the sublease does not cause the property to become
"tax-exempt use property" within the meaning of Section 168(h) of the
Code (unless the Facility Lessee shall make a payment to the Owner
Participant contemporaneously with the execution of the sublease that
in the reasonable judgement of the Owner Participant compensates such
Owner Participant for the adverse tax consequences resulting from the
classification of the property as "tax-exempt use property"); and
(i) so long as the Lien of the Lease Indenture shall not have
been terminated or discharged, the terms of the sublease do not result
in any prepayment of Periodic Lease Rent or any lump sum or advance
payments to the Facility Lessee or any of its Affiliates in excess of
$1,000,000 in the aggregate.
As a condition precedent to such sublease, the Facility Lessee shall
provide the Owner Lessor, the Owner Participant, and, so long as the Lien of the
Lease Indenture shall not have been terminated or discharged, the Lease
Indenture Trustee with all documentation in respect of such sublease and an
opinion of counsel to the effect that such sublease complies with the provisions
of this Section 19 (such documentation, counsel and opinion to be reasonably
satisfactory to such recipients). The Facility Lessee shall pay, on an After-Tax
Basis, all reasonable documented out-of-pocket expenses of the Owner Lessor, the
Owner Participant, the Lease Indenture Trustee and the Pass Through Trustee in
connection with such sublease.
SECTION 20. OWNER LESSOR'S RIGHT TO PERFORM
If the Facility Lessee fails to make any payment required to be made by
it hereunder or fails to perform or comply with any of its other agreements
contained herein after notice to the Facility Lessee and failure of the Facility
Lessee to so perform or comply within 10 days thereafter, the Owner Lessor or
the Owner Participant may itself make such payment or perform or comply with
such agreement in a reasonable manner, but shall not be obligated hereunder to
do so, and the amount of such payment and of the reasonable expenses of the
Owner Lessor or the Owner Participant incurred in connection with such payment
or the performance of or compliance with such agreement, as the case may be,
together with interest thereon at the Overdue Rate, to the extent permitted by
Applicable Law, shall be deemed to be Supplemental Lease Rent, payable by the
Facility Lessee to the Owner Lessor on demand.
SECTION 21. SECURITY FOR OWNER LESSOR'S OBLIGATION TO THE LEASE INDENTURE
TRUSTEE
In order to secure the Lessor Note, the Owner Lessor will assign and
grant a Lien to the Lease Indenture Trustee in and to all of the Owner Lessor's
right, title and interest in, to and under this Facility Lease, and grant a
security interest in favor of the Lease Indenture Trustee in all of the Owner
Lessor's right, title and interest in and to the Undivided Interest (other than
Excepted Payments and Excepted Rights). The Facility Lessee hereby consents to
such assignment and to the creation of such Lien and security interest and
acknowledges receipt of copies of the Lease Indenture, it being understood that
such consent shall not affect any requirement or the absence of any requirement
for any consent of the Facility Lessee under any other circumstances. Unless and
until the Facility Lessee shall have received written notice from the Lease
Indenture Trustee that the Lien of the Lease Indenture has been fully
terminated, the
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Lease Indenture Trustee shall have the right to exercise the rights of the Owner
Lessor under this Facility Lease to the extent set forth in and subject in each
case to the exceptions set forth in the Lease Indenture. TO THE EXTENT, IF ANY,
THAT THIS FACILITY LEASE CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN
THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO
SECURITY INTEREST IN THIS FACILITY LEASE MAY BE CREATED THROUGH THE TRANSFER OR
POSSESSION OF ANY COUNTERPART HEREOF OTHER THAN THE ORIGINAL COUNTERPART, WHICH
SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED
BY THE LEASE INDENTURE TRUSTEE ON THE SIGNATURE PAGE THEREOF.
SECTION 22. WAIVER OF RIGHT TO 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 Owner Lessor 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 comprising the Facilities. It is agreed that this
covenant shall be deemed to run with the land. All instruments of conveyance
which effect, evidence or vest the ownership interest of the Owner Lessor in the
Facility shall contain this waiver of right to partition.
SECTION 23. MISCELLANEOUS
Section 23.1. Amendments and Waivers. No term, covenant, agreement or
condition of this Facility Lease may be terminated, amended or compliance
therewith waived (either generally or in a particular instance, retroactively or
prospectively) except by an instrument or instruments in writing executed by
each party hereto.
Section 23.2. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all communications and notices provided for
herein to a party hereto shall be in writing or by a telecommunications device
capable of creating a written record, and any such notice shall become effective
(a) upon personal delivery thereof, including by overnight mail or courier
service, (b) in the case of notice by United States mail, certified or
registered, postage prepaid, return receipt requested, upon receipt thereof, or
(c) in the case of notice by such a telecommunications device, upon transmission
thereof, provided such transmission is promptly confirmed by either of the
methods set forth in clauses (a) and (b) above, in each case addressed to such
party and copy party at its address set forth below or at such other address as
such party or copy party may from time to time designate by written notice to
the other party:
43
49
If to the Owner Lessor:
Montana OL3 LLC
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Telephone No.: 302-651-1000
Facsimile No.: 302-651-8882
Attention: Corporate Trust Administration
with a copy to the Owner Participant:
Montana OP3 LLC
c/o Bell Atlantic Credit Corporation
245 Park Avenue, 40th Floor
New York, New York 10167
Telephone No.: 212-557-4799
Facsimile No.: 212-557-4569
Attention: Asset Administrator
and to the Lease Indenture Trustee:
The Chase Manhattan Bank
Capital Markets Fiduciary Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Telephone No.: (212) 946-7557
Facsimile No.: (212) 946-8177/8
Attention: Annette M. Marsula
and to the Pass Through Trustee:
The Chase Manhattan Bank
Capital Markets Fiduciary Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Telephone No.: (212) 946-7557
Facsimile No.: (212) 946-8177/8
Attention: Annette M. Marsula
44
50
If to the Facility Lessee:
PPL Montana, LLC
303 North Broadway, Suite 400
Billings, MT 59101
Telephone No.: (406) 869-5100
Facsimile No. : (406) 869-5149
Attention: Vice President and General Counsel
Section 23.3. Survival. Except for the provisions of Sections 3.3(d),
3.4, 3.6, 5, 9 and 17, which shall survive, the warranties and covenants made by
each party hereto shall not survive the expiration or termination of this
Facility Lease in accordance with its terms.
Section 23.4. Successors and Assigns.
(a) This Facility Lease shall be binding upon and shall inure
to the benefit of, and shall be enforceable by, the parties hereto and their
respective successors and assigns as permitted by and in accordance with the
terms hereof.
(b) Except as expressly provided herein or in the other
Operative Documents, neither party hereto may assign its interests or transfer
its obligations herein without the consent of the other party hereto.
Section 23.5. "True Lease". This Facility Lease shall constitute an
agreement of lease and nothing herein shall be construed as conveying to the
Facility Lessee any right, title or interest in or to the Undivided Interest
except as lessee only.
Section 23.6. Business Day. Notwithstanding anything herein to the
contrary, if the date on which any payment or performance is to be made pursuant
to this Facility Lease is not a Business Day, the payment otherwise payable on
such date shall be payable on the next succeeding Business Day with the same
force and effect as if made on such scheduled date and (provided such payment is
made on such succeeding Business Day) no interest shall accrue on the amount of
such payment from and after such scheduled date to the time of such payment on
such next succeeding Business Day.
Section 23.7. Governing Law. This Facility Lease (other than Section
2.2) shall be in all respects governed by and construed in accordance with the
laws of the State of New York, including all matters of construction, validity
and performance (without giving effect to the conflicts of laws provisions
thereof, other than New York General Obligations Law Section 5-1401), except to
the extent the laws of the State of Montana are mandatorily applicable under the
laws of the State of Montana. Section 2.2 of this Facility Lease shall be
governed by and construed in accordance with the laws of the State of Montana
(without giving effect to the conflicts of laws provisions thereof).
Section 23.8. Severability. Any provision of this Facility Lease that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
45
51
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 23.9. Counterparts. This Facility Lease may be executed by the
parties hereto in separate counterparts, each of which, subject to Section 21,
when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 23.10. Headings and Table of Contents. The headings of the
sections of this Facility Lease and the Table of Contents are inserted for
purposes of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.
Section 23.11. Further Assurances. Each party hereto will promptly and
duly execute and deliver such further documents and assurances for and take such
further action reasonably requested by the other party, all as may be reasonably
necessary to carry out more effectively the intent and purpose of this Facility
Lease.
Section 23.12. Effectiveness. This Facility Lease has been dated as of
the date first above written for convenience only. This Facility Lease shall be
effective on July 20, 2000, the date of execution and delivery by the Facility
Lessee and the Owner Lessor.
Section 23.13. Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Facility Lease is executed and
delivered by Wilmington Trust Company ("Wilmington"), not individually or
personally but solely as manager of the Owner Lessor 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 Owner Lessor is made and intended not as personal
representations, undertakings and agreements by Wilmington but is made and
intended for the purpose for binding only the Owner Lessor, (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 Owner Lessor or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Owner Lessor under this Facility Lease.
Section 23.14. Measuring Life. If and to the extent that any of the
rights and privileges granted under this Facility Lease, would, in the absence
of the limitation imposed by this sentence, be invalid or unenforceable as being
in violation of the rule against perpetuities or any other rule or law relating
to the vesting of interests in property or the suspension of the power of
alienation of property, then it is agreed that notwithstanding any other
provision of this Facility Lease, such options, rights and privileges, subject
to the respective conditions hereof governing the exercise of such options,
rights and privileges, will be exercisable only during (a) the longer of (i) a
period which will end twenty-one (21) years after the death of the last survivor
of the descendants living on the date of the execution of this Facility Lease of
the following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W.
46
52
Reagan, George H.W. Bush and William J. Clinton or (ii) the period provided
under the Uniform Statutory Rule Against Perpetuities or (b) the specific
applicable period of time expressed in this Facility Lease, whichever of (a) and
(b) is shorter.
47
53
IN WITNESS WHEREOF, the Owner Lessor and the Facility Lessee have
caused this Facility Lease to be duly executed and delivered under seal by their
respective officers thereunto duly authorized.
MONTANA OL3 LLC
By: Wilmington Trust Company, not in its
individual capacity but solely as
Lessor Manager
By: /s/ James P. Lawler
--------------------------------------
Name: James P. Lawler
Title: Vice President
PPL MONTANA, LLC
By: /s/ Paul A. Farr
-----------------------------------------
Name: Paul A. Farr
Title: Vice President
54
*Receipt of the original counterpart of the foregoing Facility Lease is hereby
acknowledged on this ____ day of July, 2000.
THE CHASE MANHATTAN BANK,
as Lease Indenture Trustee
By:
-------------------------------------------
Name:
Title:
- -------------
* This acknowledgment executed in the original counterpart only.
55
EXHIBIT 4.7(a)
SCHEDULE 1
TO FACILITY LEASE
PERIODIC LEASE RENT PERCENTAGES
RENT PAYMENT DATES PERIODIC LEASE RENT PERCENTAGE
Oct 2 2000 0.000000000%
Jan 2 2001 5.348585366%
Jul 2 2001 5.188447202%
Jan 2 2002 3.623064993%
Jul 2 2002 8.378365359%
Jan 2 2003 3.411390739%
Jul 2 2003 8.041131021%
Jan 2 2004 3.205308004%
Jul 2 2004 7.407178071%
Jan 2 2005 3.018269002%
Jul 2 2005 6.270394045%
Jan 2 2006 2.873508394%
Jul 2 2006 6.375861578%
Jan 2 2007 2.717608178%
Jul 2 2007 6.019458787%
Jan 2 2008 2.570632677%
Jul 2 2008 6.688026884%
Jan 2 2009 2.387361165%
Jul 2 2009 7.306419080%
Jan 2 2010 2.168401651%
Jul 2 2010 7.968160951%
Jan 2 2011 1.910236366%
Jul 2 2011 8.357727905%
Jan 2 2012 1.623234046%
Jul 2 2012 8.741890724%
Jan 2 2013 1.357186349%
Jul 2 2013 9.832342973%
Jan 2 2014 0.979916295%
Jul 2 2014 10.601366256%
Jan 2 2015 0.574243500%
Jul 2 2015 9.506229857%
Jan 2 2016 0.196940874%
Jul 2 2016 3.599395122%
Jan 2 2017 0.130287805%
Jul 2 2017 0.861995122%
Jan 2 2018 0.097715854%
Jul 2 2018 0.829423171%
Jan 2 2019 0.065143902%
Jul 2 2019 0.796851220%
Jan 2 2020 0.032571951%
Jul 2 2020 0.764279268%
Jan 2 2021 0.574238447%
Jul 2 2021 0.813964974%
Jan 2 2022 0.850613103%
Jul 2 2022 0.850613103%
Jan 2 2023 0.888842103%
56
TO FACILITY LEASE
Jul 2 2023 0.888842103%
Jan 2 2024 0.928729273%
Jul 2 2024 0.928729273%
Jan 2 2025 0.970346535%
Jul 2 2025 0.970346535%
Jan 2 2026 1.013768931%
Jul 2 2026 1.013768931%
Jan 2 2027 1.059074758%
Jul 2 2027 1.059074758%
Jan 2 2028 0.968862341%
Jul 2 2028 0.914690317%
Jan 2 2029 0.892256545%
Jul 2 2029 0.892256545%
Jan 2 2030 0.892256545%
Jul 2 2030 0.892256545%
Jan 2 2031 0.892256545%
Jul 2 2031 0.892256545%
Jan 2 2032 0.892256545%
Jul 2 2032 0.385376175%
Jan 2 2033 0.024390244%
Jul 2 2033 0.024390244%
Jan 2 2034 0.024390244%
Jul 2 2034 0.024390244%
Jan 2 2035 0.024390244%
Jul 2 2035 0.024390244%
Jan 2 2036 0.024390244%
Jul 2 2036 0.024390244%
Jul 20 2036 0.024390244%
57
SCHEDULE 2
TO FACILITY LEASE
TERMINATION VALUE PERCENTAGES
TERMINATION GROSS TERMINATION SECTION 467 LOAN
DATE VALUE PERCENTAGE BALANCE PERCENTAGE
Jul 20 2000 0.00000000% 0.00000000%
Aug 20 2000 104.16702947% 0.00000000%
Sep 20 2000 105.07660605% 0.00000000%
Oct 20 2000 105.97409822% 0.00000000%
Nov 20 2000 106.87405525% 0.00000000%
Dec 20 2000 107.77649840% 0.00000000%
Jan 20 2001 106.86637857% 3.54816830%
Feb 20 2001 107.75047361% 3.56858822%
Mar 20 2001 108.63674194% 3.58900814%
Apr 20 2001 109.52520228% 3.60942805%
May 20 2001 110.40508632% 3.62984797%
Jun 20 2001 111.28710733% 3.65026789%
Jul 20 2001 112.17422821% 8.87753751%
Aug 20 2001 113.06592475% 8.92862826%
Sep 20 2001 113.95966277% 8.97971901%
Oct 20 2001 114.84467267% 9.03080976%
Nov 20 2001 115.73166640% 9.08190051%
Dec 20 2001 116.62066106% 9.13299126%
Jan 20 2002 110.21837970% 5.52463999%
Feb 20 2002 111.08125179% 5.55643462%
Mar 20 2002 111.94608322% 5.58822924%
Apr 20 2002 112.81289087% 5.62002387%
May 20 2002 113.67166401% 5.65181850%
Jun 20 2002 114.53236113% 5.68361313%
Jul 20 2002 115.39349568% 14.12346516%
Aug 20 2002 116.26218162% 14.20474653%
Sep 20 2002 117.13275451% 14.28602790%
Oct 20 2002 117.99520286% 14.36730927%
Nov 20 2002 118.85948437% 14.44859064%
Dec 20 2002 119.72561486% 14.52987201%
Jan 20 2003 113.32140669% 10.76036833%
Feb 20 2003 114.16181404% 10.82229488%
Mar 20 2003 115.00403139% 10.88422143%
Apr 20 2003 115.84807436% 10.94614798%
May 20 2003 116.68471315% 11.00807454%
Jun 20 2003 117.52312945% 11.07000109%
Jul 20 2003 118.28785186% 19.12742572%
Aug 20 2003 119.13434660% 19.23750518%
Sep 20 2003 119.98258480% 19.34758464%
Oct 20 2003 120.82333595% 19.45766410%
Nov 20 2003 121.66578104% 19.56774356%
Dec 20 2003 122.50993466% 19.67782301%
Jan 20 2004 116.15936138% 15.80600583%
Feb 20 2004 116.97853618% 15.89697032%
58
SCHEDULE 2
TO FACILITY LEASE
Mar 20 2004 117.79938369% 15.98793482%
Apr 20 2004 118.62191832% 16.07889931%
May 20 2004 119.43763499% 16.16986380%
Jun 20 2004 120.25499454% 16.26082829%
Jul 20 2004 120.98824050% 23.70042376%
Aug 20 2004 121.81459270% 23.83682109%
Sep 20 2004 122.64255653% 23.97321843%
Oct 20 2004 123.46362625% 24.10961576%
Nov 20 2004 124.28626206% 24.24601309%
Dec 20 2004 125.11047746% 24.38241042%
Jan 20 2005 118.75142582% 20.36073614%
Feb 20 2005 119.55102818% 20.47791337%
Mar 20 2005 120.35217725% 20.59509060%
Apr 20 2005 121.15488637% 20.71226783%
May 20 2005 121.95131921% 20.82944507%
Jun 20 2005 122.74927143% 20.94662230%
Jul 20 2005 123.34553459% 27.15329788%
Aug 20 2005 124.15360988% 27.30956670%
Sep 20 2005 124.96317591% 27.46583553%
Oct 20 2005 125.76639574% 27.62210435%
Nov 20 2005 126.57106444% 27.77837317%
Dec 20 2005 127.37719450% 27.93464200%
Jan 20 2006 121.12007757% 23.90754805%
Feb 20 2006 121.90257132% 24.04513739%
Mar 20 2006 122.68649629% 24.18272673%
Apr 20 2006 123.47186483% 24.32031607%
May 20 2006 124.25145823% 24.45790542%
Jun 20 2006 125.03245785% 24.59549476%
Jul 20 2006 125.53136077% 30.84825181%
Aug 20 2006 126.32187435% 31.02578531%
Sep 20 2006 127.11376792% 31.20331881%
Oct 20 2006 127.89982225% 31.38085231%
Nov 20 2006 128.68721813% 31.55838581%
Dec 20 2006 129.47596712% 31.73591931%
Jan 20 2007 123.28225075% 27.65446200%
Feb 20 2007 124.04806713% 27.81361505%
Mar 20 2007 124.81520904% 27.97276810%
Apr 20 2007 125.58368791% 28.13192115%
May 20 2007 126.34686875% 28.29107421%
Jun 20 2007 127.11135239% 28.45022726%
Jul 20 2007 127.48319388% 34.25622698%
Aug 20 2007 128.25710870% 34.45337358%
Sep 20 2007 129.03230249% 34.65052018%
Oct 20 2007 129.80213976% 34.84766678%
Nov 20 2007 130.57322085% 35.04481337%
Dec 20 2007 131.34555649% 35.24195997%
Jan 20 2008 125.24711392% 31.14434221%
Feb 20 2008 125.99737827% 31.32357973%
Mar 20 2008 126.74887209% 31.50281725%
Apr 20 2008 127.50160599% 31.68205476%
May 20 2008 128.24911643% 31.86129228%
Jun 20 2008 128.99783259% 32.04052980%
59
SCHEDULE 2
TO FACILITY LEASE
Jul 20 2008 129.29304696% 38.47787766%
Aug 20 2008 130.04933092% 38.69932011%
Sep 20 2008 130.80679572% 38.92076255%
Oct 20 2008 131.55897733% 39.14220500%
Nov 20 2008 132.31230439% 39.36364744%
Dec 20 2008 133.06678681% 39.58508989%
Jan 20 2009 127.01018551% 35.38811871%
Feb 20 2009 127.74269679% 35.59177941%
Mar 20 2009 128.47633725% 35.79544011%
Apr 20 2009 129.21111663% 35.99910081%
May 20 2009 129.94069294% 36.20276151%
Jun 20 2009 130.67137312% 36.40642222%
Jul 20 2009 130.79083800% 43.33242106%
Aug 20 2009 131.52657073% 43.58180169%
Sep 20 2009 132.26338086% 43.83118231%
Oct 20 2009 132.99492588% 44.08056294%
Nov 20 2009 133.72751218% 44.32994357%
Dec 20 2009 134.46114876% 44.57932420%
Jan 20 2010 128.54089734% 40.34851096%
Feb 20 2010 129.25308255% 40.58071901%
Mar 20 2010 129.96629020% 40.81292706%
Apr 20 2010 130.68052909% 41.04513511%
May 20 2010 131.38960652% 41.27734316%
Jun 20 2010 132.09967958% 41.50955121%
Jul 20 2010 132.13053522% 49.06171671%
Aug 20 2010 132.84348425% 49.34406977%
Sep 20 2010 133.55740093% 49.62642284%
Oct 20 2010 134.26609199% 49.90877590%
Nov 20 2010 134.97571399% 50.19112896%
Dec 20 2010 135.68627494% 50.47348202%
Jan 20 2011 129.80928104% 46.08377114%
Feb 20 2011 130.49835094% 46.34898595%
Mar 20 2011 131.18833036% 46.61420076%
Apr 20 2011 131.87922716% 46.87941556%
May 20 2011 132.56533997% 47.14463037%
Jun 20 2011 133.25233682% 47.40984518%
Jul 20 2011 126.70112724% 48.82809931%
Aug 20 2011 127.35211417% 49.10910789%
Sep 20 2011 128.00395851% 49.39011647%
Oct 20 2011 128.65095841% 49.67112505%
Nov 20 2011 129.29878136% 49.95213363%
Dec 20 2011 129.94743444% 50.23314221%
Jan 20 2012 130.60268224% 52.14885151%
Feb 20 2012 131.26636977% 52.44897121%
Mar 20 2012 131.93085945% 52.74909091%
Apr 20 2012 132.59615818% 53.04921062%
May 20 2012 133.25672554% 53.34933032%
Jun 20 2012 133.91806813% 53.64945002%
Jul 20 2012 127.30877096% 55.45219095%
Aug 20 2012 127.92455522% 55.77132156%
Sep 20 2012 128.54094699% 56.09045218%
Oct 20 2012 129.15240408% 56.40958279%
60
SCHEDULE 2
TO FACILITY LEASE
Nov 20 2012 129.76443137% 56.72871341%
Dec 20 2012 130.37703378% 57.04784402%
Jan 20 2013 130.99600621% 58.73549836%
Feb 20 2013 131.62307414% 59.07352460%
Mar 20 2013 132.25068394% 59.41155085%
Apr 20 2013 132.87884029% 59.74957709%
May 20 2013 133.50411472% 60.08760333%
Jun 20 2013 134.12991556% 60.42562957%
Jul 20 2013 126.14440437% 62.02531598%
Aug 20 2013 126.72386316% 62.38227532%
Sep 20 2013 127.30383225% 62.73923466%
Oct 20 2013 127.88088283% 63.09619399%
Nov 20 2013 128.45842293% 63.45315333%
Dec 20 2013 129.03645678% 63.81011266%
Jan 20 2014 129.62237203% 65.15780489%
Feb 20 2014 130.21597104% 65.53279188%
Mar 20 2014 130.81004681% 65.90777888%
Apr 20 2014 131.40460345% 66.28276587%
May 20 2014 131.99703923% 66.65775286%
Jun 20 2014 132.58994174% 67.03273986%
Jul 20 2014 124.29202754% 69.16097881%
Aug 20 2014 124.83146235% 69.55900430%
Sep 20 2014 125.37129123% 69.95702980%
Oct 20 2014 125.90891168% 70.35505529%
Nov 20 2014 126.44691056% 70.75308079%
Dec 20 2014 126.98529113% 71.15110628%
Jan 20 2015 127.53171549% 72.13363998%
Feb 20 2015 128.08534881% 72.54877331%
Mar 20 2015 128.63935112% 72.96390665%
Apr 20 2015 129.19372558% 73.37903998%
May 20 2015 129.74633139% 73.79417331%
Jun 20 2015 130.29929732% 74.20930665%
Jul 20 2015 121.96167788% 75.27959554%
Aug 20 2015 122.46196081% 75.71283403%
Sep 20 2015 122.96253881% 76.14607252%
Oct 20 2015 123.46127040% 76.57931102%
Nov 20 2015 123.96028367% 77.01254951%
Dec 20 2015 124.45958108% 77.44578800%
Jan 20 2016 124.96671045% 78.08565680%
Feb 20 2016 125.48056999% 78.53504434%
Mar 20 2016 125.99470243% 78.98443188%
Apr 20 2016 126.50911011% 79.43381942%
May 20 2016 127.02197447% 79.88320696%
Jun 20 2016 127.53510315% 80.33259450%
Jul 20 2016 119.16918283% 75.51054782%
Aug 20 2016 119.62805218% 75.94511546%
Sep 20 2016 120.08694384% 76.37968310%
Oct 20 2016 120.54403707% 76.81425073%
Nov 20 2016 121.00113728% 77.24881837%
Dec 20 2016 121.45824455% 77.68338601%
Jan 20 2017 121.92401293% 78.25772756%
Feb 20 2017 122.39610538% 78.70810538%
61
SCHEDULE 2
TO FACILITY LEASE
Mar 20 2017 122.86819783% 79.15848319%
Apr 20 2017 123.34029029% 79.60886101%
May 20 2017 123.81238274% 80.05923883%
Jun 20 2017 124.28447520% 80.50961665%
Jul 20 2017 115.87301660% 72.94169574%
Aug 20 2017 116.30908632% 73.36147949%
Sep 20 2017 116.74515604% 73.78126323%
Oct 20 2017 117.18122576% 74.20104697%
Nov 20 2017 117.61729548% 74.62083071%
Dec 20 2017 118.05336519% 75.04061446%
Jan 20 2018 118.49850080% 75.56717994%
Feb 20 2018 118.94968034% 76.00207350%
Mar 20 2018 119.40085987% 76.43696706%
Apr 20 2018 119.85203940% 76.87186062%
May 20 2018 120.30321894% 77.30675417%
Jun 20 2018 120.75439846% 77.74164773%
Jul 20 2018 112.32159219% 70.12523584%
Aug 20 2018 112.73602436% 70.52881069%
Sep 20 2018 113.15045652% 70.93238554%
Oct 20 2018 113.56488869% 71.33596039%
Nov 20 2018 113.97932086% 71.73953524%
Dec 20 2018 114.39375302% 72.14311009%
Jan 20 2019 114.81680124% 72.62044489%
Feb 20 2019 115.24559348% 73.03837981%
Mar 20 2019 115.67438572% 73.45631474%
Apr 20 2019 116.10317796% 73.87424966%
May 20 2019 116.53197020% 74.29218459%
Jun 20 2019 116.96076244% 74.71011951%
Jul 20 2019 108.50510344% 67.04371160%
Aug 20 2019 108.89637260% 67.42955210%
Sep 20 2019 109.28764175% 67.81539260%
Oct 20 2019 109.67891091% 68.20123309%
Nov 20 2019 110.07018006% 68.58707359%
Dec 20 2019 110.46144922% 68.97291409%
Jan 20 2020 110.86085286% 69.39946102%
Feb 20 2020 111.26567949% 69.79885900%
Mar 20 2020 111.67050612% 70.19825697%
Apr 20 2020 112.07533276% 70.59765494%
May 20 2020 112.48015939% 70.99705292%
Jun 20 2020 112.88498602% 71.39645089%
Jul 20 2020 104.40486316% 63.67843583%
Aug 20 2020 104.77133630% 64.04490897%
Sep 20 2020 105.13780943% 64.41138211%
Oct 20 2020 105.50428257% 64.77785525%
Nov 20 2020 105.87075571% 65.14432838%
Dec 20 2020 106.23722885% 65.51080152%
Jan 20 2021 106.61331070% 66.46112182%
Feb 20 2021 106.99579836% 66.84360948%
Mar 20 2021 107.37828601% 67.22609714%
Apr 20 2021 107.76077367% 67.60858480%
May 20 2021 108.14326133% 67.99107245%
Jun 20 2021 108.52574899% 68.37356011%
62
SCHEDULE 2
TO FACILITY LEASE
Jul 20 2021 100.02636495% 60.68814104%
Aug 20 2021 100.37562876% 61.03740486%
Sep 20 2021 100.72489258% 61.38666868%
Oct 20 2021 101.07415639% 61.73593249%
Nov 20 2021 101.42342021% 62.08519631%
Dec 20 2021 101.77268402% 62.43446012%
Jan 20 2022 102.13215641% 63.64454561%
Feb 20 2022 102.49843451% 64.01082371%
Mar 20 2022 102.86471260% 64.37710180%
Apr 20 2022 103.23099070% 64.74337990%
May 20 2022 103.59726880% 65.10965800%
Jun 20 2022 103.96354690% 65.47593610%
Jul 20 2022 95.44815916% 57.81074558%
Aug 20 2022 95.78086340% 58.14344982%
Sep 20 2022 96.11356763% 58.47615405%
Oct 20 2022 96.44627187% 58.80885829%
Nov 20 2022 96.77897610% 59.14156253%
Dec 20 2022 97.11168034% 59.47426676%
Jan 20 2023 97.45542749% 60.70580986%
Feb 20 2023 97.80479299% 61.05517536%
Mar 20 2023 98.15415850% 61.40454086%
Apr 20 2023 98.50352400% 61.75390636%
May 20 2023 98.85288950% 62.10327186%
Jun 20 2023 99.20225500% 62.45263736%
Jul 20 2023 90.67102989% 54.80854410%
Aug 20 2023 90.98645628% 55.12397049%
Sep 20 2023 91.30188267% 55.43939688%
Oct 20 2023 91.61730906% 55.75482327%
Nov 20 2023 91.93273545% 56.07024966%
Dec 20 2023 92.24816184% 56.38567605%
Jan 20 2024 92.57574406% 57.63960748%
Feb 20 2024 92.90746339% 57.97132680%
Mar 20 2024 93.23918271% 58.30304613%
Apr 20 2024 93.57090204% 58.63476545%
May 20 2024 93.90262136% 58.96648478%
Jun 20 2024 94.23434069% 59.29820410%
Jul 20 2024 85.68661577% 51.67612319%
Aug 20 2024 85.98401489% 51.97352231%
Sep 20 2024 86.28141401% 52.27092143%
Oct 20 2024 86.57881314% 52.56832056%
Nov 20 2024 86.87621226% 52.86571968%
Dec 20 2024 87.17361138% 53.16311880%
Jan 20 2025 87.48435223% 54.44040964%
Feb 20 2025 87.79765998% 54.75371739%
Mar 20 2025 88.11096774% 55.06702515%
Apr 20 2025 88.42427549% 55.38033290%
May 20 2025 88.73758325% 55.69364066%
Jun 20 2025 89.05089100% 56.00694841%
Jul 20 2025 80.48597551% 48.40783461%
Aug 20 2025 80.76456544% 48.68642454%
Sep 20 2025 81.04315538% 48.96501447%
Oct 20 2025 81.32174531% 49.24360440%
63
SCHEDULE 2
TO FACILITY LEASE
Nov 20 2025 81.60033524% 49.52219433%
Dec 20 2025 81.87892517% 49.80078426%
Jan 20 2026 82.17211929% 51.10244772%
Feb 20 2026 82.46621687% 51.39654531%
Mar 20 2026 82.76031446% 51.69064289%
Apr 20 2026 83.05441204% 51.98474048%
May 20 2026 83.34850964% 52.27883807%
Jun 20 2026 83.64260723% 52.57293566%
Jul 20 2026 75.05978089% 44.99778516%
Aug 20 2026 75.31874579% 45.25675006%
Sep 20 2026 75.57771068% 45.51571496%
Oct 20 2026 75.83667558% 45.77467985%
Nov 20 2026 76.09564048% 46.03364475%
Dec 20 2026 76.35460537% 46.29260964%
Jan 20 2027 76.62951726% 47.61970287%
Feb 20 2027 76.90357145% 47.89375706%
Mar 20 2027 77.17762563% 48.16781124%
Apr 20 2027 77.45167982% 48.44186543%
May 20 2027 77.72573401% 48.71591962%
Jun 20 2027 77.99978819% 48.98997380%
Jul 20 2027 69.39829993% 41.43982602%
Aug 20 2027 69.63678856% 41.67831465%
Sep 20 2027 69.87527719% 41.91680328%
Oct 20 2027 70.11444461% 42.15529192%
Nov 20 2027 70.35361788% 42.39378055%
Dec 20 2027 70.59279706% 42.63226918%
Jan 20 2028 70.84820107% 43.84793544%
Feb 20 2028 71.10054851% 44.10028288%
Mar 20 2028 71.35289595% 44.35263033%
Apr 20 2028 71.60524340% 44.60497777%
May 20 2028 71.85974938% 44.85732521%
Jun 20 2028 72.11427398% 45.10967266%
Jul 20 2028 64.22317097% 38.12383386%
Aug 20 2028 64.44257587% 38.34323877%
Sep 20 2028 64.66198077% 38.56264367%
Oct 20 2028 64.88514592% 38.78204857%
Nov 20 2028 65.10834348% 39.00145347%
Dec 20 2028 65.33157375% 39.22085838%
Jan 20 2029 65.56972027% 40.34017292%
Feb 20 2029 65.80188033% 40.57233298%
Mar 20 2029 66.03404040% 40.80449305%
Apr 20 2029 66.26620046% 41.03665311%
May 20 2029 66.50318966% 41.26881318%
Jun 20 2029 66.74022049% 41.50097324%
Jul 20 2029 59.71571598% 35.35750848%
Aug 20 2029 59.91920052% 35.56099302%
Sep 20 2029 60.12268505% 35.76447756%
Oct 20 2029 60.33112810% 35.96796209%
Nov 20 2029 60.53961390% 36.17144663%
Dec 20 2029 60.74814282% 36.37493117%
Jan 20 2030 60.97034137% 37.47799436%
Feb 20 2030 61.18602943% 37.69368242%
64
SCHEDULE 2
TO FACILITY LEASE
Mar 20 2030 61.40171749% 37.90937048%
Apr 20 2030 61.61740555% 38.12505854%
May 20 2030 61.83850845% 38.34074660%
Jun 20 2030 62.05965804% 38.55643466%
Jul 20 2030 55.01921465% 32.39615544%
Aug 20 2030 55.20565643% 32.58259722%
Sep 20 2030 55.39209820% 32.76903899%
Oct 20 2030 55.58466133% 32.95548077%
Nov 20 2030 55.77727724% 33.14192255%
Dec 20 2030 55.96994639% 33.32836432%
Jan 20 2031 56.17622076% 34.41403044%
Feb 20 2031 56.37459224% 34.61208521%
Mar 20 2031 56.57296644% 34.81013997%
Apr 20 2031 56.77134340% 35.00819474%
May 20 2031 56.97660632% 35.20624950%
Jun 20 2031 57.18193139% 35.40430427%
Jul 20 2031 50.12561191% 29.22602516%
Aug 20 2031 50.29548913% 29.39422265%
Sep 20 2031 50.46538083% 29.56242015%
Oct 20 2031 50.64217031% 29.73061764%
Nov 20 2031 50.81903388% 29.89881513%
Dec 20 2031 50.99597218% 30.06701262%
Jan 20 2032 51.18645751% 31.13405515%
Feb 20 2032 51.36881152% 31.31323347%
Mar 20 2032 51.55119291% 31.49241178%
Apr 20 2032 51.73360192% 31.67159010%
May 20 2032 51.92326681% 31.85076841%
Jun 20 2032 52.11302213% 32.02994673%
Jul 20 2032 45.03935747% 25.32376202%
Aug 20 2032 45.19768016% 25.46950176%
Sep 20 2032 45.35611135% 25.61524149%
Oct 20 2032 45.52508847% 25.76098123%
Nov 20 2032 45.70070221% 25.90672097%
Dec 20 2032 45.87655543% 26.05246071%
Jan 20 2033 46.06195189% 26.22570513%
Feb 20 2033 46.24940587% 26.37663560%
Mar 20 2033 46.43715263% 26.52756608%
Apr 20 2033 46.62519454% 26.67849655%
May 20 2033 46.82014658% 26.82942702%
Jun 20 2033 47.01545152% 26.98035750%
Jul 20 2033 39.94514754% 19.88310093%
Aug 20 2033 40.11101866% 19.99752934%
Sep 20 2033 40.27730217% 20.11195775%
Oct 20 2033 40.45061401% 20.22638617%
Nov 20 2033 40.62439788% 20.34081458%
Dec 20 2033 40.79865758% 20.45524299%
Jan 20 2034 40.98247304% 20.59652513%
Feb 20 2034 41.16815558% 20.71505934%
Mar 20 2034 41.35437643% 20.83359355%
Apr 20 2034 41.54113988% 20.95212776%
May 20 2034 41.73746587% 21.07066197%
Jun 20 2034 41.93441548% 21.18919619%
65
SCHEDULE 2
TO FACILITY LEASE
Jul 20 2034 33.29413787% 12.48524922%
Aug 20 2034 33.45444503% 12.55710256%
Sep 20 2034 33.61546128% 12.62895591%
Oct 20 2034 33.78620788% 12.70080925%
Nov 20 2034 33.95774726% 12.77266259%
Dec 20 2034 34.13008577% 12.84451593%
Jan 20 2035 34.31382375% 12.94233786%
Feb 20 2035 34.49918651% 13.01682178%
Mar 20 2035 34.68543813% 13.09130569%
Apr 20 2035 34.87258574% 13.16578961%
May 20 2035 35.07034550% 13.24027352%
Jun 20 2035 35.26909351% 13.31475743%
Jul 20 2035 26.58753569% 4.52262062%
Aug 20 2035 26.74930314% 4.54864856%
Sep 20 2035 26.91215875% 4.57467651%
Oct 20 2035 27.08582023% 4.60070446%
Nov 20 2035 27.26066521% 4.62673241%
Dec 20 2035 27.43670318% 4.65276035%
Jan 20 2036 27.62427833% 4.70380418%
Feb 20 2036 27.81324888% 4.73087485%
Mar 20 2036 28.00351729% 4.75794552%
Apr 20 2036 28.19509398% 4.78501618%
May 20 2036 28.42209127% 4.81208685%
Jun 20 2036 28.65069128% 4.83915752%
Jul 20 2036 24.00000000% -0.02439025%
66
SCHEDULE 3
TO FACILITY LEASE
ALLOCATION OF PERIODIC LEASE RENT
RENT PAYMENT PERIOD
- ------------------------------------
FROM AND TO BUT ALLOCATION PROPORTIONAL SECTION 467
INCLUDING EXCLUDING RENT PERCENTAGE RENT PERCENTAGE INTEREST PERCENTAGE
2-Oct-00 2-Jan-01 1.152476028% 1.812669013% 0.000000000%
2-Jan-01 2-Jul-01 0.000000000% 0.000000000% 0.122519502%
2-Jul-01 2-Jan-02 4.622780940% 7.270929336% 0.306544498%
2-Jan-02 2-Jul-02 0.000000000% 0.000000000% 0.190767765%
2-Jul-02 2-Jan-03 4.609832175% 7.250562904% 0.487688228%
2-Jan-03 2-Jul-03 0.047382013% 0.074524680% 0.371559310%
2-Jul-03 2-Jan-04 4.562257797% 7.175735664% 0.660476749%
2-Jan-04 2-Jul-04 0.054555063% 0.085806793% 0.545786950%
2-Jul-04 2-Jan-05 4.555310454% 7.164808552% 0.818383983%
2-Jan-05 2-Jul-05 0.129924010% 0.204350651% 0.703063393%
2-Jul-05 2-Jan-06 4.479559263% 7.045663483% 0.937612943%
2-Jan-06 2-Jul-06 0.180984089% 0.284660367% 0.825536057%
2-Jul-06 2-Jan-07 4.428637123% 6.965570724% 1.065201004%
2-Jan-07 2-Jul-07 0.251396432% 0.395408244% 0.954918316%
2-Jul-07 2-Jan-08 4.358115896% 6.854651590% 1.182879587%
2-Jan-08 2-Jul-08 0.289436518% 0.455239497% 1.075425109%
2-Jul-08 2-Jan-09 4.320257269% 6.795105744% 1.328654673%
2-Jan-09 2-Jul-09 0.388793511% 0.611512893% 1.221964207%
2-Jul-09 2-Jan-10 4.220556709% 6.638291970% 1.496283766%
2-Jan-10 2-Jul-10 0.431250018% 0.678290503% 1.393248299%
2-Jul-10 2-Jan-11 4.178420002% 6.572017356% 1.694118364%
2-Jan-11 2-Jul-11 4.586690668% 7.214164844% 1.591288854%
2-Jul-11 2-Jan-12 0.000000000% 0.000000000% 1.686051473%
2-Jan-12 2-Jul-12 4.609904113% 7.250676051% 1.800718216%
2-Jul-12 2-Jan-13 0.000000000% 0.000000000% 1.914783691%
2-Jan-13 2-Jul-13 5.456373098% 8.582042658% 2.028157453%
2-Jul-13 2-Jan-14 0.000000000% 0.000000000% 2.141756014%
2-Jan-14 2-Jul-14 5.634327249% 8.861937396% 2.249921960%
2-Jul-14 2-Jan-15 0.000000000% 0.000000000% 2.388152966%
2-Jan-15 2-Jul-15 5.634327249% 8.861937396% 2.490800003%
2-Jul-15 2-Jan-16 0.000000000% 0.000000000% 2.599430957%
2-Jan-16 2-Jul-16 5.634327249% 8.861937396% 2.696325241%
2-Jul-16 2-Jan-17 0.000000000% 0.000000000% 2.607405821%
2-Jan-17 2-Jul-17 5.634327249% 8.861937396% 2.702266905%
2-Jul-17 2-Jan-18 0.000000000% 0.000000000% 2.518702454%
2-Jan-18 2-Jul-18 5.634327249% 8.861937396% 2.609361348%
2-Jul-18 2-Jan-19 0.000000000% 0.000000000% 2.421449101%
2-Jan-19 2-Jul-19 5.634327249% 8.861937396% 2.507609548%
2-Jul-19 2-Jan-20 0.000000000% 0.000000000% 2.315042983%
2-Jan-20 2-Jul-20 5.634327249% 8.861937396% 2.396387841%
2-Jul-20 2-Jan-21 0.000000000% 0.000000000% 2.198838825%
2-Jan-21 2-Jul-21 5.634327249% 8.861937396% 2.294925953%
2-Jul-21 2-Jan-22 0.000000000% 0.000000000% 2.095582893%
2-Jan-22 2-Jul-22 5.634327249% 8.861937396% 2.197668584%
2-Jul-22 2-Jan-23 0.000000000% 0.000000000% 1.996225413%
2-Jan-23 2-Jul-23 5.634327249% 8.861937396% 2.096193003%
2-Jul-23 2-Jan-24 0.000000000% 0.000000000% 1.892558339%
2-Jan-24 2-Jul-24 5.634327249% 8.861937396% 1.990315954%
67
TO FACILITY LEASE
2-Jul-24 2-Jan-25 0.000000000% 0.000000000% 1.784394741%
2-Jan-25 2-Jul-25 5.634327249% 8.861937396% 1.879846526%
2-Jul-25 2-Jan-26 0.000000000% 0.000000000% 1.671539585%
2-Jan-26 2-Jul-26 5.634327249% 8.861937396% 1.764585525%
2-Jul-26 2-Jan-27 0.000000000% 0.000000000% 1.553789376%
2-Jan-27 2-Jul-27 5.634327249% 8.861937396% 1.644325118%
2-Jul-27 2-Jan-28 0.000000000% 0.000000000% 1.430931793%
2-Jan-28 2-Jul-28 5.170947056% 8.133111029% 1.514084660%
2-Jul-28 2-Jan-29 0.000000000% 0.000000000% 1.316429416%
2-Jan-29 2-Jul-29 4.609904113% 7.250676051% 1.392960384%
2-Jul-29 2-Jan-30 0.000000000% 0.000000000% 1.220907225%
2-Jan-30 2-Jul-30 4.609904113% 7.250676051% 1.294128350%
2-Jul-30 2-Jan-31 0.000000000% 0.000000000% 1.118650661%
2-Jan-31 2-Jul-31 4.609904113% 7.250676051% 1.188328596%
2-Jul-31 2-Jan-32 0.000000000% 0.000000000% 1.009184946%
2-Jan-32 2-Jul-32 4.609904113% 7.250676051% 1.075069894%
2-Jul-32 2-Jan-33 0.000000000% 0.000000000% 0.874438425%
2-Jan-33 2-Jul-33 4.609904113% 7.250676051% 0.905582838%
2-Jul-33 2-Jan-34 0.000000000% 0.000000000% 0.686570480%
2-Jan-34 2-Jul-34 5.606940934% 8.818862900% 0.711205270%
2-Jul-34 2-Jan-35 0.000000000% 0.000000000% 0.431120055%
2-Jan-35 2-Jul-35 5.634327249% 8.861937396% 0.446903486%
2-Jul-35 2-Jan-36 0.000000000% 0.000000000% 0.156167683%
2-Jan-36 2-Jul-36 3.114530896% 4.898682060% 0.162424016%
2-Jul-36 20-Jul-36 0.000000000% 0.000000000% -0.000084220%
183.371741374% 288.415780697041% 105.044039322810%
68
EXHIBIT A
TO
FACILITY LEASE
DESCRIPTION OF SITES
(A) Units 1 and 2 Site
Parcel 1 That portion of Section 34 in Township 2 North, Range 41 East,
PMM, described as Tracts 1-C and 1-B-3 of Certificate of
Survey No. 54257 amending Certificate of Survey No. 27875
(Tract 1), No. 27878, No. 34994 and Dedication of Tracts
1-A-2, 1-B-2, 1-B 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 Tract 1 of Certificate of Survey No. 27873
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 Tract 1 of Certificate of Survey No. 27877
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 A-1-A and Parcel A-1-B
of Certificate of Survey No. 85561 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 Tract 1 of
Certificate of Survey 58701 filed October 29, 1987 for record
in the office of the Clerk and Recorder of Rosebud County,
Montana as Document No. 58701.
69
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.
(B) 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
Corner No. 5 and Corner No. 7 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
Corner No. 8 and Corner No. 9 of Parcel 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.
(C) 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
70
record in the office of the Clerk and Recorder of Rosebud
County, Montana as Document No. 34153.
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 H-1, Tract H-2, Tract H-3 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 A-1 Amended of Certificate of Survey
No. 85561, 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 F-2
Amended of Certificate of Survey No. 85920 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 D-2 of Certificate of
Survey No. 42210 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 Tract 1-A-1, Tract 1-A-2 and Tract 1-A-3 of
Certificate of Survey No. 54257 amending Certificate of Survey
No. 27875 (Tract 1), Certificate of Survey No. 27878,
Certificate of Survey No. 34994 and Dedication of Tracts
1-A-2, 1-B-2, 1-B 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
71
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 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
72
EXHIBIT B
TO
FACILITY LEASE
DESCRIPTION OF UNITS
Unit 1
Unit 1 consists of 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, including, without limitation, the assets described in
Schedule B-1 hereto, but excluding the Common Facilities.
Unit 2
Unit 2 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.
73
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
74
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
75
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
76
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
77
EXHIBIT C
TO
FACILITY LEASE
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, other than
the Common Facilities 1-2.
78
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 Building
311-18 Station Building
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
79
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