1
Exhibit 1.1
Execution Copy
COLSTRIP PASS THROUGH TRUST
$338,000,000
Pass Through Certificates
PURCHASE AGREEMENT
July 13, 2000
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
UBS WARBURG LLC
TD SECURITIES (USA) INC.
c/o Chase Securities Inc.
270 Park Avenue, 8th floor
New York, New York 10017
Ladies and Gentlemen:
The Colstrip Pass Through Trust (the "Trust"), a newly formed
trust created by PPL Montana, LLC, a Delaware limited liability company ("PPL
Montana"), proposes to issue and sell $338,000,000 aggregate principal amount of
Pass Through Certificates, due 2020 (the "Certificates"). The Certificates will
be issued pursuant to a Pass Through Trust Agreement to be dated as of July 13,
2000 (the "Pass Through Trust Agreement") between PPL Montana and The Chase
Manhattan Bank, N.A., as trustee (the "Pass Through Trustee"). The assets of the
Trust will consist solely of notes (the "Lessor Notes") to be issued by four
owner lessors (the "Owner Lessors"), each pursuant to an indenture
(collectively, the "Lease Indentures") between an Owner Lessor and The Chase
Manhattan Bank, N.A., as trustee (the "Lease Indenture Trustee"), in connection
with the related sale-leaseback transaction (collectively, the "Lease
Transactions"). PPL Montana hereby confirms its agreement with Chase Securities
Inc. ("CSI"), Credit Suisse First Boston Corporation, UBS Warburg LLC and TD
Securities (USA) Inc. (collectively, the "Initial Purchasers") concerning the
purchase of the Certificates from the Trust by the several Initial Purchasers.
The Certificates will be offered and sold to the Initial
Purchasers without being registered under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance upon an exemption therefrom. PPL Montana has
prepared a preliminary offering memorandum dated July 5, 2000 (the "Preliminary
Offering Memorandum") and will prepare an offering memorandum dated the date
hereof (the "Offering Memorandum") setting forth information concerning PPL
Montana, the Trust, the Owner Lessors, the Lessor Notes and the Certificates.
Copies of the
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Preliminary Offering Memorandum have been, and copies of the Offering Memorandum
will be, delivered by PPL Montana to the Initial Purchasers pursuant to the
terms of this Agreement. Any references herein to the Preliminary Offering
Memorandum and the Offering Memorandum shall be deemed to include all amendments
and supplements thereto, unless otherwise noted. PPL Montana hereby confirms
that it has authorized the use of the Preliminary Offering Memorandum and the
Offering Memorandum in connection with the offering and resale of the
Certificates by the Initial Purchasers in accordance with Section 2.
Holders of the Certificates (including the Initial Purchasers
and their direct and indirect transferees) will be entitled to the benefits of
an Exchange and Registration Rights Agreement, substantially in the form
attached hereto as Annex A (the "Registration Rights Agreement"), pursuant to
which PPL Montana will agree to file with the Securities and Exchange Commission
(the "Commission") (i) a registration statement under the Securities Act (the
"Exchange Offer Registration Statement") registering an issue of Pass Through
Certificates of the Trust (the "Exchange Certificates") which are identical in
all material respects to the Certificates (except that the Exchange Certificates
will not contain terms with respect to transfer restrictions) and (ii) under
certain circumstances, a shelf registration statement pursuant to Rule 415 under
the Securities Act (the "Shelf Registration Statement").
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Participation Agreements (as defined in
Section 1).
1. Representations, Warranties and Agreements of PPL Montana.
Each of the representations and warranties made by PPL Montana
in Section 3.1 of each of the Participation Agreements, dated as of July 13,
2000 (the "Participation Agreements"), relating to the Lease Transactions is
hereby incorporated herein by reference as if fully set forth herein and shall
be deemed made as of the date hereof and the Closing Date (as defined in Section
3). In addition, PPL Montana further represents and warrants to, and agrees
with, the several Initial Purchasers on and as of the date hereof and the
Closing Date that:
(a) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its respective date, did not, and on the
Closing Date the Offering Memorandum will not, contain any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that
PPL Montana does not make a representation or warranty as to
information contained in or omitted from the Preliminary Offering
Memorandum or the Offering Memorandum in reliance upon and in
conformity with written information relating to the Initial Purchasers
furnished to PPL Montana by or on behalf of any Initial Purchaser
specifically for use therein (the "Initial Purchasers' Information").
(b) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its respective date, contains all of the
information that, if requested
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by a prospective purchaser of the Certificates, would be required to be
provided to such prospective purchaser pursuant to Rule 144A(d)(4)
under the Securities Act as in effect on the date hereof.
(c) Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in Section 2 and their
compliance with the agreements set forth therein, it is not necessary,
in connection with the issuance and sale of the Certificates to the
Initial Purchasers and the offer, resale and delivery of the
Certificates by the Initial Purchasers in the manner contemplated by
this Agreement and the Offering Memorandum, to register the
Certificates under the Securities Act or to qualify the Pass Through
Trust Agreement or the Lease Indentures under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act").
(d) PPL Montana and each of its subsidiaries have been duly
incorporated and are validly existing as limited liability companies in
good standing under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and are in good
standing as foreign limited liability companies or corporations in each
jurisdiction in which their respective ownership or lease of property
or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or
hold their respective properties and to conduct the businesses in which
they are engaged, except where the failure to so qualify or have such
power or authority would not, singularly or in the aggregate,
reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), results of operations, business or
prospects of PPL Montana and its subsidiaries taken as a whole (a
"Material Adverse Effect").
(e) PPL Montana has a capitalization as of March 31, 2000 as
set forth in the Offering Memorandum under the heading
"Capitalization." All of the outstanding membership interests of PPL
Montana have been duly and validly authorized and issued and are fully
paid and non-assessable; and all of the membership interests of PPL
Montana are owned by PPL Montana Holdings, LLC, an indirect wholly
owned subsidiary of PPL Corporation. All of the outstanding stock,
partnership, membership or other ownership interests of each subsidiary
of PPL Montana have been duly and validly authorized and issued, are
fully paid and non-assessable and are owned directly or indirectly by
PPL Montana, free and clear of any lien, charge, encumbrance, security
interest, restriction upon voting or transfer or any other claim of any
third party.
(f) PPL Montana has full right, power and authority to execute
and deliver this Agreement, the Pass Through Trust Agreement, the
Registration Rights Agreement and the Participation Agreements
(collectively, the "Transaction Documents") and to perform its
obligations hereunder and thereunder. All limited liability company
action required to be taken for the due and proper authorization,
execution and delivery of each
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of the Transaction Documents and the consummation of the transactions
contemplated thereby have been duly and validly taken.
(g) This Agreement has been duly authorized, executed and
delivered by PPL Montana and constitutes a valid and legally binding
agreement of PPL Montana enforceable against PPL Montana in accordance
with its terms, except (i) to the extent that such enforceability may
be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law) and (ii) that any
rights to indemnity or contribution hereunder may be limited by federal
and state securities laws and public policy considerations.
(h) The Pass Through Trust Agreement has been duly authorized
by PPL Montana and, when duly executed and delivered in accordance with
its terms by each of the parties thereto, will constitute a valid and
legally binding agreement of PPL Montana enforceable against PPL
Montana in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law). On
the Closing Date, the Pass Through Trust Agreement will conform in all
material respects to the requirements of the Trust Indenture Act and
the rules and regulations of the Commission applicable to an indenture
which is qualified thereunder.
(i) The Registration Rights Agreement has been duly authorized
by PPL Montana and, when duly executed and delivered in accordance with
its terms by each of the parties thereto, will constitute a valid and
legally binding agreement of PPL Montana enforceable against PPL
Montana in accordance with its terms, except (i) to the extent that
such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or
at law) and (ii) that any rights to indemnity or contribution hereunder
may be limited by federal and state securities laws and public policy
considerations.
(j) The Certificates have been duly authorized by the Trust
and, when duly executed, authenticated, issued and delivered as
provided in the Pass Through Trust Agreement and paid for as provided
herein, will be duly and validly issued and outstanding and will
constitute valid and legally binding obligations of the Trust entitled
to the benefits of the Pass Through Trust Agreement and enforceable
against the Trust in accordance with its terms, except to the extent
that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or
at law).
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(k) Each Transaction Document and Operative Document conforms
in all material respects to the description thereof contained in the
Offering Memorandum.
(l) The execution, delivery and performance by PPL Montana of
each of the Transaction Documents, the issuance, authentication, sale
and delivery of the Certificates and compliance by the Pass Through
Trustee with the terms thereof, the issuance, authentication, sale and
delivery of the Lessor Notes and compliance by the Owner Lessors with
the terms thereof, and the consummation of the transactions and the
granting of the liens contemplated by the Transaction Documents and the
Operative Documents by each of the parties thereto will not:
(i) conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any liens,
charge or encumbrance upon any property or assets of PPL
Montana or any of its subsidiaries pursuant to, any of the
Project Agreements;
(ii) conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of PPL
Montana or any of its subsidiaries pursuant to, any material
indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which PPL Montana or any
of its subsidiaries is a party or by which PPL Montana or any
of its subsidiaries is bound or to which any of the property
or assets of PPL Montana or any of its subsidiaries is
subject;
(iii) result in any violation of the provisions of
the organizational documents of PPL Montana or any of its
subsidiaries or any Applicable Law binding on PPL Montana, any
of its subsidiaries or any of their properties or assets.
No consent, approval, authorization or order of, or filing or
registration with, any court or arbitrator or governmental agency or
body under any Applicable Law, or any consent, approval, authorization
or order of, or filing or registration with, any other Person, is
required for the execution, delivery and performance by PPL Montana of
each of the Transaction Documents and the consummation of the
transactions contemplated by the Transaction Documents, except for such
consents, approvals, authorizations, filings, registrations or
qualifications (A) which shall have been obtained or made prior to the
Closing Date which are in full force and effect and not subject to
appeal, and (B) as may be required to be obtained or made under the
Securities Act and applicable state securities laws as provided in the
Registration Rights Agreement.
(m) PricewaterhouseCoopers LLP are independent certified
public accountants with respect to PPL Montana and its subsidiaries
within the meaning of Rule 101 of the Code of Professional Conduct of
the American Institute of Certified Public Accountants
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("AICPA") and its interpretations and rulings thereunder. The
historical financial statements (including the related notes) contained
in the Offering Memorandum comply in all material respects with the
requirements applicable to a registration statement on Form S-1 under
the Securities Act (except that certain supporting schedules are
omitted); and such financial statements have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods covered thereby and fairly present the
financial position of the entities purported to be covered thereby at
the respective dates indicated and the results of their operations and
their cash flows for the respective periods indicated. The historical
financial information contained in the Offering Memorandum under the
headings "Summary - Summary Consolidated Financial Information and
Operating Data," "Capitalization," "Selected Financial and Operating
Data," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Management - Compensation of Management"
are derived from the accounting records of PPL Montana and its
subsidiaries and fairly present the information purported to be shown
thereby.
(n) The financial projections included in Appendix A to the
Offering Memorandum (the "Projections") have been prepared by R.W. Beck
and are based upon assumptions which PPL Montana reasonably believes in
good faith to be consistent in all material respects with the Operative
Documents and the Transaction Documents and which, to the extent
material for purposes of consideration of the Projections taken as a
whole, are disclosed in the Offering Memorandum. PPL Montana believes
the Projections to be reasonable in light of the assumptions made
therein. It is agreed and understood that, despite PPL Montana's good
faith assumptions and reasonable beliefs:
(i) the assumptions on which the Projections are
based are subject to significant uncertainties and
contingencies, many of which are beyond the control of PPL
Montana;
(ii) there can be no assurance that the financial
results reflected in the Projections will be realized;
(iii) the actual results of PPL Montana will differ
from the Projections and such differences may be material; and
(iv) the Projections are not necessarily indicative
of current value or future performance.
(o) [Reserved]
(p) No action has been taken and no statute, rule, regulation
or order has been enacted, adopted or issued by any governmental agency
or body which prevents the issuance of the Certificates or suspends the
sale of the Certificates in any jurisdiction. No injunction,
restraining order or order of any nature by any federal or state court
of
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competent jurisdiction has been issued with respect to PPL Montana or
any of its subsidiaries which would prevent or suspend the issuance or
sale of the Certificates or the use of the Preliminary Offering
Memorandum or the Offering Memorandum in any jurisdiction. No action,
suit or proceeding is pending against or, to the best knowledge of PPL
Montana, threatened against or affecting PPL Montana or any of its
subsidiaries before any court or arbitrator or any governmental agency,
body or official, domestic or foreign, which could reasonably be
expected to interfere with or adversely affect the issuance of the
Certificates or in any manner draw into question the validity or
enforceability of any of the Transaction Documents or any action taken
or to be taken pursuant thereto. PPL Montana has complied with any and
all requests by any securities authority in any jurisdiction for
additional information to be included in the Preliminary Offering
Memorandum and the Offering Memorandum.
(q) Neither PPL Montana nor any of its subsidiaries is:
(i) in violation of its organizational documents;
(ii) in default in any material respect, and no event
has occurred which, with notice or lapse of time or both,
would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any
material indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument to which it is a party
or by which it is bound or to which any of its property or
assets is subject; or
(iii) in violation of any Applicable Law to which it
or its property or assets may be subject except where such
violation would not have a Material Adverse Effect.
(r) PPL Montana and each of its subsidiaries possess all
material licenses, certificates, authorizations and permits issued by,
and have made all declarations and filings with, the appropriate
federal, state or foreign regulatory agencies or bodies which are
necessary for the ownership of their respective properties or the
conduct of their respective businesses as described in the Offering
Memorandum, except where the failure to possess or make the same would
not, singularly or in the aggregate, have a Material Adverse Effect,
and neither PPL Montana nor any of its subsidiaries has received
notification of any revocation or modification of any such license,
certificate, authorization or permit or has any reason to believe that
any such license, certificate, authorization or permit will not be
renewed in the ordinary course.
(s) PPL Montana and each of its subsidiaries have filed all
federal, state, local and foreign income and franchise tax returns
required to be filed through the date hereof and have paid all taxes
due thereon, and PPL Montana has not received notice of any tax
deficiency determined adversely to PPL Montana or any of its
subsidiaries which has had (nor does PPL Montana or any of its
subsidiaries have any knowledge of any tax
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deficiency which, if determined adversely to PPL Montana or any of its
subsidiaries, could reasonably be expected to have) a Material Adverse
Effect.
(t) Neither PPL Montana nor any of its subsidiaries is
currently nor will it be, upon the sale of the Certificates in
accordance herewith and the application of the net proceeds therefrom
as described in the Offering Memorandum under the caption "Use of
Proceeds," an "investment company" or a company "controlled by" an
investment company within the meaning of the Investment Company Act of
1940, as amended (the "Investment Company Act"), and the rules and
regulations of the Commission thereunder.
(u) PPL Montana is a "subsidiary company" and an "affiliate"
of a "holding company" (within the meaning of the Holding Company Act)
that is exempt from all provisions of the Holding Company Act, except
Section 9(a)(2) thereof. The execution, delivery and performance of the
Transaction Documents by PPL Montana do not violate any provisions of
the Holding Company Act or any rule or regulation thereunder.
(v) PPL Montana and each of its subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable
assurance that:
(i) transactions are executed in accordance with
management's general or specific authorizations;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset
accountability;
(iii) access to assets is permitted only in
accordance with management's general or specific
authorization; and
(iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(w) PPL Montana and each of its subsidiaries have insurance
covering their respective properties, operations, personnel and
businesses, which insurance is in amounts and insures against such
losses and risks as are adequate to protect PPL Montana and its
subsidiaries and their respective businesses. Neither PPL Montana nor
any of its subsidiaries has received notice from any insurer or agent
of such insurer that capital improvements or other expenditures are
required or necessary to be made in order to continue such insurance.
(x) PPL Montana and each of its subsidiaries own or possess
adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names,
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trademark registrations, service mark registrations, copyrights,
licenses and know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures) necessary for the conduct of their respective businesses as
described in the Offering Memorandum; and the conduct of their
respective businesses does not conflict in any material respect with,
and neither PPL Montana nor any of its subsidiaries have received any
notice of any claim of conflict with, any such rights of others.
(y) Except as described in the Offering Memorandum, PPL
Montana and each of its subsidiaries have good and marketable title in
fee simple to, or have valid rights to lease or otherwise use, all
items of real and personal property which are material to the business
of PPL Montana and its subsidiaries, in each case free and clear of all
liens, encumbrances, claims and defects and imperfections of title
except such as:
(i) do not materially interfere with the use made and
proposed to be made of such property by PPL Montana and its
subsidiaries; or
(ii) could not reasonably be expected to have a
Material Adverse Effect.
(z) No labor disturbance by or dispute with the employees of
PPL Montana nor any of its subsidiaries exists or, to the best
knowledge of PPL Montana, is contemplated or threatened.
(aa) No "prohibited transaction" (as defined in Section 406 of
the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code")) or "accumulated funding
deficiency" (as defined in Section 302 of ERISA) or any of the events
set forth in Section 4043(b) of ERISA (other than events with respect
to which the 30-day notice requirement under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan of
PPL Montana or any of its subsidiaries which could reasonably be
expected to have a Material Adverse Effect. Each such employee benefit
plan is in compliance in all material respects with applicable law,
including ERISA and the Code. PPL Montana and each of its subsidiaries
have not incurred and do not expect to incur liability under Title IV
of ERISA with respect to the termination of, or withdrawal from, any
pension plan for which PPL Montana or any of its subsidiaries would
have any liability. Each such pension plan that is intended to be
qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by
failure to act, which could reasonably be expected to cause the loss of
such qualification.
(bb) Except as described in the Offering Memorandum, there has
been no storage, generation, transportation, handling, treatment,
disposal, discharge, emission or
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other release of any kind, and PPL Montana is not aware of any threat
of release, of toxic or other wastes or other Hazardous Substances by,
due to or caused by PPL Montana or any of its subsidiaries (or, to the
best knowledge of PPL Montana, any other entity (including any
predecessor) for whose acts or omissions PPL Montana or any of its
subsidiaries is or could reasonably be expected to be liable) upon any
of the property now or previously owned or leased by PPL Montana or any
of its subsidiaries, or upon any other property, in violation of any
statute or any ordinance, rule, regulation, order, judgment, decree or
permit or which would, under any statute or any ordinance, rule
(including rule of common law), regulation, order, judgment, decree or
permit, give rise to any liability (including with respect to any
personal injury or property damage claim), except for any violation or
liability which could not reasonably be expected to have, singularly or
in the aggregate with all such violations and liabilities, a Material
Adverse Effect. Except as described in the Offering Memorandum, there
has been no disposal, discharge, emission or other release of any kind
onto such property or into the environment surrounding such property of
any toxic or other wastes or other Hazardous Substances with respect to
which PPL Montana has knowledge, except for any such disposal,
discharge, emission or other release of any kind which could not
reasonably be expected to have, singularly or in the aggregate with all
such discharges and other releases, a Material Adverse Effect.
(cc) Neither PPL Montana, its subsidiaries nor, to the best
knowledge of PPL Montana, any member, manager, officer, agent, employee
or other person associated with or acting on its or their behalf has:
(i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense
relating to political activity;
(ii) made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from
corporate funds;
(iii) violated or is in violation of any provision of
the Foreign Corrupt Practices Act of 1977; or
(iv) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(dd) PPL Montana has no reason to believe that the information
provided by PPL Montana to the Independent Engineer, Independent Market
Consultant and the Independent Fuel Consultant, in the preparation of
their reports set forth at Appendices A, B and C, respectively, to the
Offering Memorandum is incomplete or incorrect in any material respect.
(ee) [Reserved]
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(ff) Except as described in the Offering Memorandum, there are
no outstanding subscriptions, rights, warrants, calls or options to
acquire, or instruments convertible into or exchangeable for, or
agreements or understandings with respect to the sale or issuance of,
any membership interests of or other equity or other ownership interest
in PPL Montana or any of its subsidiaries.
(gg) Neither PPL Montana nor any of its subsidiaries owns any
"margin securities" as that term is defined in Regulations G and U of
the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), and none of the proceeds of the sale of the
Certificates will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause
any of the Certificates to be considered a "purpose credit" within the
meanings of Regulation G, T, U or X of the Federal Reserve Board.
(hh) Except for any fees to be paid by PPL Montana to the
Initial Purchasers in connection with the offering of the Certificates,
neither PPL Montana nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person that would give
rise to a valid claim against PPL Montana or the Initial Purchasers for
a brokerage commission, finder's fee or like payment in connection with
the offering and sale of the Certificates.
(ii) The Certificates satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(jj) None of PPL Montana, any of its affiliates nor any person
acting on its or their behalf has engaged or will engage in any
directed selling efforts (as such term is defined in Regulation S under
the Securities Act ("Regulation S")), and all such persons have
complied and will comply with the offering restrictions requirement of
Regulation S to the extent applicable; provided that no representation
is made as to the activities of the Initial Purchasers or any of their
affiliates.
(kk) Neither PPL Montana nor any of its affiliates has,
directly or through any agent, sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of, any security (as such
term is defined in the Securities Act), which is or will be integrated
with the sale of the Certificates in a manner that would require
registration of the Certificates under the Securities Act; provided
that no representation is made as to the activities of the Initial
Purchasers or any of their affiliates.
(ll) None of PPL Montana, any of its affiliates nor any other
person acting on its or their behalf has engaged, in connection with
the offering of the Certificates, in any form of general solicitation
or general advertising within the meaning of Rule 502(c)
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under the Securities Act; provided that no representation is made as to
the activities of the Initial Purchasers or any of their affiliates.
(mm) There are no securities of PPL Montana or the Trust
registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or listed on a national securities exchange or quoted
in a U.S. automated inter-dealer quotation system.
(nn) PPL Montana has not taken and will not take, directly or
indirectly, any action prohibited by Regulation M under the Exchange
Act in connection with the offering of the Certificates; provided that
no representation is made as to the activities of the Initial
Purchasers or any of their affiliates.
(oo) No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act)
contained in the Preliminary Offering Memorandum or the Offering
Memorandum has been made or reaffirmed without a reasonable basis or
has been disclosed other than in good faith.
(pp) Neither PPL Montana nor any of its subsidiaries does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Florida Statutes Section 517.075.
(qq) Since the date as of which information is given in the
Offering Memorandum, except as otherwise stated therein:
(i) there has been no material adverse change or any
development involving a prospective material adverse change in
the condition, financial or otherwise, or in the earnings,
business affairs or management of PPL Montana, whether or not
arising in the ordinary course of business;
(ii) PPL Montana has not incurred any material
liability or obligation, direct or contingent, other than in
the ordinary course of business;
(iii) PPL Montana has not entered into any material
transaction other than in the ordinary course of business; and
(iv) there has not been any change in the member
interests or long-term debt of PPL Montana, or any dividend or
distribution of any kind declared, paid or made by PPL Montana
on member interests.
2. Purchase and Resale of the Certificates.
(a) On the basis of the representations, warranties and
agreements contained herein, and subject to the terms and conditions
set forth herein, PPL Montana agrees to cause the Trust to sell to each
of the Initial Purchasers, severally and not jointly, and each
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of the Initial Purchasers, severally and not jointly, agrees to
purchase from the Trust, the principal amount of Certificates set forth
opposite the name of such Initial Purchaser on Schedule 1 hereto at a
purchase price equal to 100% of the principal amount thereof and PPL
Montana agrees to pay, or cause to be paid, to CSI on the Closing Date
(as hereinafter defined) for the account of the Initial Purchasers a
fee in the amount of 0.875% of the principal amount of the
Certificates. The Trust shall not be obligated to deliver any of the
Certificates except upon payment for all of the Certificates to be
purchased as provided herein.
(b) The Initial Purchasers have advised PPL Montana that they
propose to offer the Certificates for resale upon the terms and subject
to the conditions set forth herein and in the Offering Memorandum. Each
Initial Purchaser, severally and not jointly, represents and warrants
to, and agrees with, PPL Montana that:
(i) it is purchasing the Certificates pursuant to a
private sale exempt from registration under the Securities
Act;
(ii) it has not solicited offers for, or offered or
sold, and will not solicit offers for, or offer or sell, the
Certificates by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of
Regulation D under the Securities Act ("Regulation D") or in
any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act; and
(iii) it has solicited and will solicit offers for
the Certificates only from, and has offered or sold and will
offer, sell or deliver the Certificates, as part of its
initial offering, only (x) to persons whom it reasonably
believes to be qualified institutional buyers ("Qualified
Institutional Buyers") as defined in Rule 144A under the
Securities Act, or if any such person is buying for one or
more institutional accounts for which such person is acting as
fiduciary or agent, only when such person has represented to
it that each such account is a Qualified Institutional Buyer
to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A and in each case, in
transactions in accordance with Rule 144A (y) in accordance
with Rule 903 under the Securities Act or (z) to a limited
number of Institutional Accredited Investors (as defined
below) in accordance with clause (c) below.
Accordingly, neither the Initial Purchasers nor their respective
affiliates, nor any persons acting on their behalf, have engaged or
will engage in any directed selling efforts with respect to the
Securities, and the Initial Purchasers, their respective affiliates and
all persons acting on their behalf have complied and will comply with
the offering restrictions requirement of Regulation S. Each Initial
Purchaser agrees that, at or prior to confirmation of sale of the
Securities, other than a sale pursuant to Rule 144A or a sale to an
Institutional Accredited Investor in accordance with clause (c) below,
such Initial Purchaser will have
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sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases the Securities
from it a confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Securities Act") and may
not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after
the later of the date of the commencement of the offering and
the closing date, except in either case in accordance with
Regulation S (or Rule 144A if available) under the Securities
Act. Terms used above have the meanings given to them by
Regulation S."
Terms used in this subsection (b) have the meanings given to them by
Regulations S.
Each Initial Purchaser, severally and not jointly, agrees that, prior
to or simultaneously with the confirmation of sale by such Initial
Purchaser to any purchaser of any of the Certificates purchased by such
Initial Purchaser from the Trust pursuant hereto, such Initial
Purchaser shall furnish to that purchaser a copy of the Offering
Memorandum (and any amendment or supplement thereto that PPL Montana
shall have furnished to such Initial Purchaser prior to the date of
such confirmation of sale). In addition to the foregoing, each Initial
Purchaser acknowledges and agrees that PPL Montana (and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to
Sections 5(e) and (f), counsel for PPL Montana and for the Initial
Purchasers) may rely upon the accuracy of the representations and
warranties of the Initial Purchasers and their compliance with their
agreements contained in this Section 2, and each Initial Purchaser
hereby consents to such reliance.
(c) The Initial Purchasers may offer and sell Certificates in
definitive, fully registered form to a limited number of institutions,
each of which is reasonably believed by such Initial Purchaser to be an
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or
(7) under the Securities Act or an entity in which all of the equity
owners are accredited investors within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act (each, an "Institutional
Accredited Investor"); provided that each such Institutional Accredited
Investor executes and delivers to the Initial Purchasers and PPL
Montana, prior to the consummation of any sale of Certificates to such
Institutional Accredited Investor, a Purchaser's Letter in
substantially the form attached hereto as Annex D (a "Purchaser's
Letter").
(d) PPL Montana acknowledges and agrees that the Initial
Purchasers may sell Certificates to any affiliate of an Initial
Purchaser and that any such affiliate may sell Certificates purchased
by it to an Initial Purchaser.
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3. Delivery of and Payment for the Certificates.
(a) Delivery of and payment for the Certificates shall be made
at the offices of Orrick, Herrington & Sutcliffe LLP, 666 Fifth Avenue,
New York, New York 10103, or at such other place as shall be agreed
upon by the Initial Purchasers and PPL Montana, at 10:00 A.M., New York
City time, on July 20, 2000, or at such other time or date, not later
than seven full business days thereafter, as shall be agreed upon by
the Initial Purchasers and PPL Montana (such date and time of payment
and delivery being referred to herein as the "Closing Date").
(b) On the Closing Date, payment of the purchase price for the
Certificates shall be made to the Trust by wire or book-entry transfer
of same-day funds to such account or accounts as PPL Montana and the
Pass Through Trustee shall specify prior to the Closing Date or by such
other means as the parties hereto shall agree prior to the Closing Date
against delivery to the Initial Purchasers of the certificates
evidencing the Certificates. Time shall be of the essence, and delivery
at the time and place specified pursuant to this Agreement is a further
condition of the obligations of the Initial Purchasers hereunder. Upon
delivery, the Certificates sold by the Initial Purchasers (i) to
Qualified Institutional Buyers and in reliance on Rule 903 under the
Securities Act shall be in global form, registered in such names and in
such denominations as CSI (on behalf of the Initial Purchasers) shall
have requested in writing not less than two full business days prior to
the Closing Date and (ii) to Institutional Accredited Investors shall
be in definitive form, registered in such names and in such
denominations as CSI (on behalf of the Initial Purchasers) shall have
requested in writing not less than two full business days prior to the
Closing Date. PPL Montana agrees to make one or more global and
definitive certificates evidencing the Certificates available for
inspection by CSI on behalf of the Initial Purchasers in New York, New
York at least 24 hours prior to the Closing Date.
4. Further Agreements of PPL Montana.
PPL Montana agrees with each of the several Initial
Purchasers:
(a) to advise the Initial Purchasers promptly and, if
requested, confirm such advice in writing, of the happening of any
event which makes any statement of a material fact made in the Offering
Memorandum untrue or which requires the making of any additions to or
changes in the Offering Memorandum (as amended or supplemented from
time to time) in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; to advise
the Initial Purchasers promptly of any order preventing or suspending
the use of the Preliminary Offering Memorandum or the Offering
Memorandum, of any suspension of the qualification of the Certificates
for offering or sale in any jurisdiction and of the initiation or
threatening of any proceeding for any such purpose; and to use its best
efforts to prevent the issuance of any such order preventing or
suspending the use of the Preliminary Offering Memorandum or the
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Offering Memorandum or suspending any such qualification and, if any
such suspension is issued, to obtain the lifting thereof at the
earliest possible time;
(b) to furnish promptly to each of the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of
the Preliminary Offering Memorandum and the Offering Memorandum (and
any amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the
Offering Memorandum, to furnish a copy thereof to each of the Initial
Purchasers and counsel for the Initial Purchasers and not to effect any
such amendment or supplement to which the Initial Purchasers shall
reasonably object by notice to PPL Montana after a reasonable period to
review;
(d) if, at any time prior to completion of the resale of the
Certificates by the Initial Purchasers, any event shall occur or
condition exist as a result of which it is necessary, in the opinion of
counsel for the Initial Purchasers or counsel for PPL Montana, to amend
or supplement the Offering Memorandum in order that the Offering
Memorandum will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time it is
delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Offering Memorandum to comply with applicable
law, to promptly prepare such amendment or supplement as may be
necessary to correct such untrue statement or omission or so that the
Offering Memorandum, as so amended or supplemented, will comply with
applicable law, and the Initial Purchasers' delivery to offerees or
investors of any such amendment or supplement shall not constitute a
waiver of any of the conditions set forth in Section 5 hereof;
(e) for so long as the Certificates are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of the Certificates and
prospective purchasers of the Certificates designated by such holders,
upon request of such holders or such prospective purchasers, the
information required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act, unless PPL Montana is then subject to and in
compliance with Section 13 or 15(d) of the Exchange Act (the foregoing
agreement being for the benefit of the holders from time to time of the
Certificates and prospective purchasers of the Certificates designated
by such holders);
(f) for so long as the Certificates are outstanding, to
furnish to the Initial Purchasers copies of any annual reports,
quarterly reports and current reports filed by PPL Montana with the
Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as
may be designated by the Commission, and such other documents, reports
and information as shall be furnished by PPL Montana to the Pass
Through Trustee or to the
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holders of the Certificates pursuant to the Pass Through Trust
Agreement or the Exchange Act or any rule or regulation of the
Commission thereunder;
(g) to promptly take from time to time such actions as the
Initial Purchasers may reasonably request to qualify the Certificates
for offering and sale under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchasers may designate and to continue
such qualifications in effect for so long as required for the resale of
the Certificates; and to arrange for the determination of the
eligibility for investment of the Certificates under the laws of such
jurisdictions as the Initial Purchasers may reasonably request;
provided that PPL Montana and its subsidiaries shall not be obligated
to qualify as foreign corporations in any jurisdiction in which they
are not so qualified or to file a general consent to service of process
in any jurisdiction;
(h) not to, and to cause its affiliates not to, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of
any security (as such term is defined in the Securities Act) which
could be integrated with the sale of the Certificates in a manner which
would require registration of the Certificates under the Securities
Act;
(i) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case
may be, not to, and to cause its affiliates not to, and not to
authorize or knowingly permit any person acting on its or their behalf
to, solicit any offer to buy or offer to sell the Certificates by means
of any form of general solicitation or general advertising within the
meaning of Regulation D or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act; and not to
offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, any securities under circumstances where such offer, sale,
contract or disposition would cause the exemption afforded by Section
4(2) of the Securities Act to cease to be applicable to the offering
and sale of the Certificates as contemplated by this Agreement and the
Offering Memorandum;
(j) for a period of 90 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement
for, or announce any offer, sale, contract for sale of or other
disposition of any debt securities issued or guaranteed by PPL Montana
or any of its subsidiaries (other than the Certificates) without the
prior written consent of CSI;
(k) during the period from the Closing Date until the earlier
to occur of (i) two years after the Closing Date and (ii) the
consummation of the exchange offer as contemplated under the
Registration Rights Agreement, without the prior written consent of the
Initial Purchasers, not to, and not permit any of its affiliates (as
defined in Rule 144 under the Securities Act) to, resell any of the
Certificates that have been reacquired by them, except for Certificates
purchased by PPL Montana or any of its affiliates and resold in a
transaction registered under the Securities Act;
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(l) for so long as the Certificates are outstanding, not to be
or become, or be or become owned by, an open-end investment company,
unit investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company
Act, and to not be or become, or be or become owned by, a closed-end
investment company required to be registered, but not registered
thereunder;
(m) in connection with the offering of the Certificates, until
CSI (on behalf of the Initial Purchasers) shall have notified PPL
Montana of the completion of the resale of the Certificates, not to,
and to cause its affiliated purchasers (as defined in Regulation M
under the Exchange Act) not to, either alone or with one or more other
persons, bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Certificates, or
attempt to induce any person to purchase any Certificates in violation
of Regulation M; and not to, and to cause its affiliated purchasers not
to, make bids or purchase for the purpose of creating actual, or
apparent, active trading in or of raising the price of the
Certificates;
(n) in connection with the offering of the Certificates, to
make its officers, employees, independent accountants and legal counsel
reasonably available upon request by the Initial Purchasers;
(o) to furnish to each of the Initial Purchasers on the date
hereof a copy of the independent accountants' report included in the
Offering Memorandum signed by the accountants rendering such report;
(p) to do and perform all things required to be done and
performed by it under this Agreement that are within its control prior
to or after the Closing Date, and to use its best efforts to satisfy
all conditions precedent on its part to the delivery of the
Certificates;
(q) not to take any action prior to the execution and delivery
of the Pass Through Trust Agreement which, if taken after such
execution and delivery, would have violated any of the covenants
contained therein;
(r) not to take any action prior to the Closing Date which
would require the Offering Memorandum to be amended or supplemented
pursuant to Section 4(d) except to the extent required by law;
(s) prior to the Closing Date, not to issue any press release
or other communication directly or indirectly or hold any press
conference with respect to PPL Montana, its condition, financial or
otherwise, or earnings, business affairs or business prospects (except
for routine oral marketing communications in the ordinary course of
business and consistent with the past practices of PPL Montana and of
which the Initial Purchasers are notified), without the prior written
consent of the Initial Purchasers, unless
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in the judgment of PPL Montana and its counsel, and after notification
to the Initial Purchasers, such press release or communication is
required by law;
(t) to cause the Trust to apply the net proceeds from the sale
of the Certificates as set forth in the Offering Memorandum under the
heading "Use of Proceeds."
5. Conditions of Initial Purchasers' Obligations.
The respective obligations of the several Initial Purchasers
hereunder are subject to the accuracy, on and as of the date hereof and the
Closing Date, of the representations and warranties of PPL Montana contained
herein, to the accuracy of the statements of PPL Montana and its officers made
in any certificates delivered pursuant hereto, to the performance by PPL Montana
of its obligations hereunder, and to each of the following additional terms and
conditions:
(a) Each of the conditions set forth in Section 4 of each of
the Participation Agreements shall have been satisfied in full. All
certificates and opinions to be delivered therein shall also be
delivered to the Initial Purchasers, Standard & Poor's Ratings Group
("S&P"), Moody's Investors Service Inc. ("Moody's") and Fitch IBCA Inc
("Fitch"). Each party to the Participation Agreement (other than PPL
Montana) shall furnish a letter to the Initial Purchasers indicating
that the Initial Purchasers may rely on the representations and
warranties contained in the Participation Agreement, as though the
Initial Purchasers were a party to the Participation Agreement. Each
legal counsel which is delivering an opinion pursuant to Section 4(s)
of the Participation Agreement shall address such opinion to the
Initial Purchasers or furnish a letter to the Initial Purchasers
indicating that the Initial Purchasers may rely on such opinions as
though such opinions were addressed to the Initial Purchasers.
(b) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial
Purchasers may agree; and no stop order suspending the sale of the
Certificates in any jurisdiction shall have been issued and no
proceeding for that purpose shall have been commenced or shall be
pending or threatened.
(c) None of the Initial Purchasers shall have discovered and
disclosed to PPL Montana on or prior to the Closing Date that the
Offering Memorandum or any amendment or supplement thereto contains an
untrue statement of a fact which is material or omits to state any fact
which is material and is required to be stated therein or is necessary
to make the statements therein not misleading.
(d) All limited liability company proceedings and other legal
matters incident to the authorization, form and validity of each of the
Transaction Documents and the Offering Memorandum, and all other legal
matters relating to the Transaction Documents
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and the transactions contemplated thereby, shall be satisfactory in all
material respects to the Initial Purchasers, and PPL Montana shall have
furnished to the Initial Purchasers all documents and information that
they or its counsel may reasonably request to enable them to pass upon
such matters.
(e) Winthrop, Stimson, Putnam & Roberts, Orrick, Herrington &
Sutcliffe and David Kinnard, Esq., General Counsel of PPL Montana,
shall have furnished to the Initial Purchasers their written opinion,
as transaction counsel to PPL Montana, addressed to the Initial
Purchasers and dated as of the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, substantially to the
aggregate effect set forth in Annex B hereto.
(f) The Initial Purchasers shall have received from Latham &
Watkins, counsel for the Initial Purchasers, such opinion or opinions,
dated as of the Closing Date, with respect to such matters as the
Initial Purchasers may reasonably require, and the Companies shall have
furnished to such counsel such documents and information as they
request for the purpose of enabling them to pass upon such matters.
(g) All of the transactions contemplated by the Lease
Transactions to be completed on or before the Closing Date shall have
been consummated or shall be consummated concurrently with the
transactions contemplated hereby, and the Initial Purchasers shall have
received counterparts, conformed as executed, of the Operative
Documents.
(h) PPL Montana shall have furnished to the Initial Purchasers
a letter (the "Initial Letter") of PricewaterhouseCoopers LLP,
addressed to the Initial Purchasers and dated the date hereof, in form
and substance satisfactory to the Initial Purchasers, substantially to
the effect set forth in Annex C hereto.
(i) PPL Montana shall have furnished to the Initial Purchasers
a letter (the "Bring-Down Letter") of PricewaterhouseCoopers LLP,
addressed to the Initial Purchasers and dated the Closing Date:
(i) confirming that they are independent public
accountants with respect to PPL Montana and its subsidiaries
within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings
thereunder;
(ii) stating, as of the date of the Bring-Down Letter
(or, with respect to matters involving changes or developments
since the respective dates as of which specified financial
information is given in the Offering Memorandum, as of a date
not more than three business days prior to the date of the
Bring-Down Letter), that the conclusions and findings of such
accountants with respect to the financial information and
other matters covered by the Initial Letter are accurate; and
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(iii) confirming in all material respects the
conclusions and findings set forth in the Initial Letter.
(j) PPL Montana shall have furnished to the Initial Purchasers
a certificate, dated the Closing Date, of its chief executive officer
and its chief financial officer stating that:
(i) such officers have carefully examined the
Offering Memorandum;
(ii) in their opinion, the Offering Memorandum, as of
its date, (excluding Appendices A, B and C thereto) did not
include any untrue statement of a material fact and did not
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading, and since the date of
the Offering Memorandum, no event has occurred which should
have been set forth in a supplement or amendment to the
Offering Memorandum so that the Offering Memorandum (as so
amended or supplemented) would not include any untrue
statement of a material fact and would not omit to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(iii) as of the Closing Date, the representations and
warranties of PPL Montana in this Agreement (including the
representations and warranties of PPL Montana in the
Participation Agreement which have been incorporated by
reference herein) are true and correct in all material
respects, PPL Montana has complied with all agreements and
satisfied all conditions on its part to be performed or
satisfied hereunder on or prior to the Closing Date, and
subsequent to the date as of which information is given in the
Offering Memorandum (exclusive of any amendment or supplement
thereto), there has been no material adverse change in the
financial position or results of operation of PPL Montana or
any of its subsidiaries, or any change, or any development
including a prospective change, in or affecting the condition
(financial or otherwise), results of operations or business of
PPL Montana and its subsidiaries taken as a whole, except as
set forth in the Offering Memorandum;
(iv) in their opinion, the Projections prepared by
R.W. Beck are based upon assumptions which are consistent in
all material respects with the Operative Documents and the
Transaction Documents and which, to the extent material for
purposes of consideration of the Projections taken as a whole,
are disclosed in the Offering Memorandum; in their opinion,
the Projections are reasonable in light of the assumptions
made therein; it is understood that, despite their good faith
assumptions and reasonable beliefs (A) the assumptions on
which the Projections are based are subject to significant
uncertainties and contingencies, many of which are beyond the
control of PPL Montana, (B) there can be no assurance that the
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financial results reflected in the Projections will be
realized, (C) the actual results of PPL Montana will differ
from the Projections and such differences may be material, and
(D) the Projections are not necessarily indicative of current
value or future performance;
(v) in their opinion, the information provided by PPL
Montana to the Independent Engineer, Independent Market
Consultant and the Independent Fuel Consultant, in the
preparation of their reports set forth at Appendices A, B and
C, respectively, to the Offering Memorandum is not incomplete
or incorrect in any material respect; and
(vi) the Tax Indemnity Agreement executed on the
Closing Date is substantially in the form of the Tax Indemnity
Agreement reviewed by counsel to the Initial Purchasers on
July 10, 2000 and any changes, additions or amendments made
thereto since July 10, 2000 will not result in a material
detrimental effect on the Initial Purchasers.
(k) The Initial Purchasers shall have received a counterpart
of the Registration Rights Agreement which shall have been executed and
delivered by a duly authorized officer of PPL Montana.
(l) The Pass Through Trust Agreement shall have been duly
executed and delivered by PPL Montana and the Pass Through Trustee, and
the Certificates shall have been duly executed, delivered and
authenticated in accordance with the Pass Through Trust Agreement.
(m) If any event shall have occurred prior to the Closing Date
that requires PPL Montana under Section 4(d) to prepare an amendment or
supplement to the Offering Memorandum, such amendment or supplement
shall have been prepared, the Initial Purchasers shall have been given
a reasonable opportunity to comment thereon, and copies thereof shall
have been delivered to the Initial Purchasers reasonably in advance of
the Closing Date.
(n) There shall not have occurred any invalidation of Rule
144A under the Securities Act by any court or any withdrawal or
proposed withdrawal of any rule or regulation under the Securities Act
or the Exchange Act by the Commission or any amendment or proposed
amendment thereof by the Commission which in the judgment of the
Initial Purchasers would materially impair the ability of the Initial
Purchasers to purchase, hold or effect resales of the Certificates as
contemplated hereby.
(o) Subsequent to the execution and delivery of this Agreement
or, if earlier, the dates as of which information is given in the
Offering Memorandum (exclusive of any amendment or supplement thereto),
there shall not have been any change in the member interests or
long-term debt or any change, or any development involving a
prospective
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change, in or affecting the condition (financial or otherwise), results
of operations or business of PPL Montana and its subsidiaries taken as
a whole, the effect of which, in any such case described above, is, in
the judgment of CSI as representative of the Initial Purchasers, so
material and adverse as to make it impracticable or inadvisable to
proceed with the sale or delivery of the Certificates on the terms and
in the manner contemplated by this Agreement and the Offering
Memorandum (exclusive of any amendment or supplement thereto).
(p) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date,
prevent the issuance or sale of the Certificates; and no injunction,
restraining order or order of any other nature by any federal or state
court of competent jurisdiction shall have been issued as of the
Closing Date which would prevent the issuance or sale of the
Certificates.
(q) The Equity Contribution Agreement related to each Lease
Transaction among PPL Corporation, PPL Montana and the applicable Lease
Indenture Trustee shall have been duly authorized, executed and
delivered by the parties thereto and shall be in full force and effect.
(r) Subsequent to the execution and delivery of this
Agreement:
(i) no downgrading shall have occurred in the rating
accorded the Certificates or PPL Montana's debt securities or
preferred stock by any "nationally recognized statistical
rating organization," as such term is defined by the
Commission for purposes of Rule 436(g)(2) of the rules and
regulations of the Commission under the Securities Act; and
(ii) no such organization shall have publicly
announced that it has under surveillance or review (other than
an announcement with positive implications of a possible
upgrading), its rating of the Certificates or PPL Montana's
debt securities or preferred stock.
(s) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following:
(i) trading in securities generally on the New York
Stock Exchange, the American Stock Exchange or the
over-the-counter market shall have been suspended or limited,
or minimum prices shall have been established on any such
exchange or market by the Commission, by any such exchange or
by any other regulatory body or governmental authority having
jurisdiction, or trading in any securities of PPL Montana on
any exchange or in the over-the-counter market shall have been
suspended;
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(ii) a declaration of any moratorium on commercial
banking activities by federal or New York state authorities;
(iii) an outbreak or escalation of hostilities or a
declaration by the United States of a national emergency or
war; or
(iv) a material adverse change in general economic,
political or financial conditions (or the effect of
international conditions on the financial markets in the
United States shall be such) the effect of which, in the case
of this clause (iv), is, in the judgment of the Initial
Purchasers, so material and adverse as to make it
impracticable or inadvisable to proceed with the sale or the
delivery of the Certificates on the terms and in the manner
contemplated by this Agreement and in the Offering Memorandum
(exclusive of any amendment or supplement thereto).
(t) There shall exist at and as of the Closing Date no
conditions that would constitute an event of default (or an event that
with notice or the lapse of time, or both, would constitute an event of
default) under the Facility Leases or, to PPL Montana's knowledge,
Lessor Notes or the Certificates.
(u) Subsequent to the execution and delivery of this
Agreement, S&P shall have delivered to PPL Montana (a copy of which
shall be delivered to the Initial Purchasers) a final rating letter,
setting forth a rating of not less than BBB with respect to the
Certificates, (B) Moody's shall have delivered to PPL Montana (a copy
of which shall be delivered to the Initial Purchasers) a final rating
letter, setting forth a rating of not less than Baa3 with respect to
the Certificates and (C) Fitch shall have delivered to PPL Montana (a
copy of which shall be delivered to the Initial Purchasers) a final
rating letter, setting forth a rating of not less than BBB with respect
to the Certificates.
(v) Each of the Independent Market Consultant, the Independent
Fuel Consultant and the Independent Engineer shall have delivered to
the Initial Purchasers a letter reaffirming the accuracy and
completeness, as of the Closing Date, of the conclusions and findings
of such firm contained in its final report in the Offering Memorandum.
(w) PPL Montana shall have furnished to the Initial
Purchasers:
(i) a copy of the resolutions, certified by the
Secretary or Assistant Secretary of PPL Montana as of the
Closing Date, duly authorizing the execution, delivery and
performance of the Transaction Documents and each other
Operative Document to which it is a party and any other
documents to be executed on or prior to the Closing Date by or
on behalf of it in connection with the transactions
contemplated thereby;
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(ii) certified copies of its organizational
documents; and
(iii) certified copies of powers-of-attorney, if any,
pursuant to which officers of PPL Montana shall execute the
Transaction Documents and each other document relating to the
Lease Transactions to which it is a party and any other
documents executed by or on behalf of it in connection with
the transactions contemplated thereby.
All conditions, agreements, opinions, letters, evidence, certificates
and other documents mentioned above or elsewhere in this Agreement
shall be deemed to be in compliance with the provisions hereof only if
they are in form and substance or otherwise reasonably satisfactory to
counsel for the Initial Purchasers.
6. Termination.
The obligations of the Initial Purchasers hereunder may be
terminated by the Initial Purchasers, in their absolute discretion, by notice
given to and received by PPL Montana prior to delivery of and payment for the
Certificates if, prior to that time, any of the events described in Section
5(n), (o), (p), (r) or (s) shall have occurred and be continuing.
7. Defaulting Initial Purchasers.
(a) If, on the Closing Date, any Initial Purchaser defaults in
the performance of its obligations under this Agreement, the
non-defaulting Initial Purchasers may make arrangements for the
purchase of the Certificates which such defaulting Initial Purchaser
agreed but failed to purchase by other persons satisfactory to PPL
Montana and the non-defaulting Initial Purchasers, but if no such
arrangements are made within 36 hours after such default, this
Agreement shall terminate without liability on the part of the
non-defaulting Initial Purchasers or PPL Montana, except that PPL
Montana will continue to be liable for the payment of expenses to the
extent set forth in Sections 8 and 12 and except that the provisions of
Sections 9 and 10 shall not terminate and shall remain in effect. As
used in this Agreement, the term "Initial Purchasers" includes, for all
purposes of this Agreement unless the context otherwise requires, any
party not listed in Schedule 1 hereto that, pursuant to this Section 7,
purchases Certificates which a defaulting Initial Purchaser agreed but
failed to purchase.
(b) Nothing contained herein shall relieve a defaulting
Initial Purchaser of any liability it may have to PPL Montana or any
non-defaulting Initial Purchaser for damages caused by its default. If
other persons are obligated or agree to purchase the Certificates of a
defaulting Initial Purchaser, either the non-defaulting Initial
Purchasers or PPL Montana may postpone the Closing Date for up to seven
full business days in order to effect any changes that in the opinion
of counsel for PPL Montana or counsel for the Initial Purchasers may be
necessary in the Offering Memorandum or in any other
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document or arrangement, and PPL Montana agrees to promptly prepare any
amendment or supplement to the Offering Memorandum that effects any
such changes.
8. Reimbursement of Initial Purchasers' Expenses.
If (a) this Agreement shall have been terminated pursuant to
Section 6 or 7, (b) PPL Montana shall fail to cause the Trust to tender the
Certificates for delivery to the Initial Purchasers for any reason or (c) the
Initial Purchasers shall decline to purchase the Certificates for any reason
permitted under this Agreement, PPL Montana shall reimburse the Initial
Purchasers for such out-of-pocket expenses (including reasonable fees and
disbursements of counsel) as shall have been reasonably incurred by the Initial
Purchasers in connection with this Agreement and the proposed purchase and
resale of the Certificates. If this Agreement is terminated pursuant to Section
7 by reason of the default of one or more of the Initial Purchasers, PPL Montana
shall not be obligated to reimburse any defaulting Initial Purchaser on account
of such expenses.
9. Indemnification.
(a) PPL Montana shall indemnify and hold harmless each Initial
Purchaser, its affiliates, their respective officers, directors,
employees, representatives and agents, and each person, if any, who
controls any Initial Purchaser within the meaning of the Securities Act
or the Exchange Act (collectively referred to for purposes of this
Section 9(a) and Section 10 as an Initial Purchaser), from and against
any loss, claim, damage or liability, joint or several, or any action
in respect thereof (including, without limitation, any loss, claim,
damage, liability or action relating to purchases and sales of the
Certificates), to which that Initial Purchaser may become subject,
whether commenced or threatened, under the Securities Act, the Exchange
Act, any other federal or state statutory law or regulation, at common
law or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon:
(i) any untrue statement or alleged untrue statement
of a material fact contained in the Preliminary Offering
Memorandum or the Offering Memorandum or in any amendment or
supplement thereto or in any information provided by PPL
Montana pursuant to Section 4(e); or
(ii) the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading,
and shall reimburse each Initial Purchaser promptly upon demand for any
legal or other expenses reasonably incurred by that Initial Purchaser
in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any
such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that PPL Montana shall not be liable in
any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, an untrue
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statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity
with any Initial Purchasers' Information; and provided, further, that
with respect to any such untrue statement in or omission from the
Preliminary Offering Memorandum, the indemnity agreement contained in
this Section 9(a) shall not inure to the benefit of any such Initial
Purchaser to the extent that the sale to the person asserting any such
loss, claim, damage, liability or action was an initial resale by such
Initial Purchaser and any such loss, claim, damage, liability or action
of or with respect to such Initial Purchaser results from the fact that
both (A) to the extent required by applicable law, a copy of the
Offering Memorandum was not sent or given to such person at or prior to
the written confirmation of the sale of such Certificates to such
person and (B) the untrue statement in or omission from the Preliminary
Offering Memorandum was corrected in the Offering Memorandum unless, in
either case, such failure to deliver the Offering Memorandum was a
result of non-compliance by PPL Montana with Section 4(b).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless PPL Montana and its officers, members,
managers, employees, representatives and agents, and each person, if
any, who controls PPL Montana within the meaning of the Securities Act
or the Exchange Act (collectively referred to for purposes of this
Section 9(b) and Section 10 as PPL Montana), from and against any loss,
claim, damage or liability, joint or several, or any action in respect
thereof, to which PPL Montana may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or
otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon:
(i) any untrue statement or alleged untrue statement
of a material fact contained in the Preliminary Offering
Memorandum or the Offering Memorandum or in any amendment or
supplement thereto; or
(ii) the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading,
but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with any Initial Purchasers'
Information furnished by such Initial Purchaser, and shall reimburse
PPL Montana for any legal or other expenses reasonably incurred by PPL
Montana in connection with investigating or defending or preparing to
defend against or appearing as a third party witness in connection with
any such loss, claim, damage, liability or action as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party pursuant to
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Section 9(a) or 9(b), notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the
failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 9 except to the extent
that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and, provided,
further, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have to an indemnified party
otherwise than under this Section 9. If any such claim or action shall
be brought against an indemnified party, and the indemnified party
shall notify the indemnifying party thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party,
to assume the defense thereof with counsel reasonably satisfactory to
the indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim
or action, the indemnifying party shall not be liable to the
indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided,
however, that an indemnified party shall have the right to employ its
own counsel in any such action, but the fees, expenses and other
charges of such counsel for the indemnified party will be at the
expense of such indemnified party unless:
(i) the employment of counsel by the indemnified
party has been authorized in writing by the indemnifying
party;
(ii) the indemnified party has reasonably concluded
(based upon advice of counsel to the indemnified party) that
there may be legal defenses available to it or other
indemnified parties that are different from or in addition to
those available to the indemnifying party;
(iii) a conflict or potential conflict exists (based
upon advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party (in which case
the indemnifying party will not have the right to direct the
defense of such action on behalf of the indemnified party); or
(iv) the indemnifying party has not in fact employed
counsel reasonably satisfactory to the indemnified party to
assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action;
in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or
parties. It is understood that the indemnifying party or parties shall
not, in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm of attorneys (in addition
to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity
agreements contained in Sections 9(a) and 9(b), shall use all
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reasonable efforts to cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall be
liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but
if settled with its written consent or if there be a final judgment for
the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld),
effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party
and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject
matter of such proceeding and does not include an admission of fault,
culpability or failure to act by or on behalf of any indemnified party.
The obligations of PPL Montana and the Initial Purchasers in
this Section 9 and in Section 10 are in addition to any other liability that PPL
Montana or the Initial Purchasers, as the case may be, may otherwise have,
including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
10. Contribution.
If the indemnification provided for in Section 9 is
unavailable or insufficient to hold harmless an indemnified party under Section
9(a) or 9(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof:
(i) in such proportion as shall be appropriate to
reflect the relative benefits received by PPL Montana, on the
one hand, and the Initial Purchasers, on the other, from the
offering of the Certificates; or
(ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of PPL
Montana, on the one hand, and the Initial Purchasers, on the
other, with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or action
in respect thereof, as well as any other relevant equitable
considerations.
The relative benefits received by PPL Montana, on the one hand, and the Initial
Purchasers, on the other, with respect to such offering shall be deemed to be in
the same proportion as (i) the difference of the aggregate principal amount of
the Certificates minus the fees paid to the Initial Purchasers pursuant to
Section 2(a) hereof with respect to the Certificates purchased under this
Agreement, on the one hand, and (ii) the fees paid to the Initial Purchasers
pursuant to Section 2(a) hereof with respect to the Certificates purchased under
this Agreement, on the other, bear to the aggregate principal amount of the
Certificates. The relative fault shall be determined by reference
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to, among other things, (A) whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to PPL Montana, the Trust or the Owner Lessors or information supplied
by PPL Montana, on the one hand, or relates to any Initial Purchasers'
Information, on the other, (B) the intent of the parties and (C) their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. PPL Montana and the Initial Purchasers agree that
it would not be just and equitable if contributions pursuant to this Section 10
were to be determined by pro rata allocation (even if the Initial Purchasers
were treated as one entity for such purpose) or by any other method of
allocation that does not take into account the equitable considerations referred
to herein.
The amount paid or payable by an indemnified party as a result
of the loss, claim, damage or liability, or action in respect thereof, referred
to above in this Section 10 shall be deemed to include, for purposes of this
Section 10, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending or preparing to defend any
such action or claim. Notwithstanding the provisions of this Section 10, no
Initial Purchaser shall be required to contribute any amount in excess of the
amount by which the fees received by such Initial Purchaser pursuant to Section
2(a) hereof with respect to the Certificates purchased by it under this
Agreement exceeds the amount of any damages which such Initial Purchaser has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
as provided in this Section 10 are several in proportion to their respective
purchase obligations and not joint.
11. Persons Entitled to Benefit of Agreement.
This Agreement shall inure to the benefit of and be binding
upon the Initial Purchasers, PPL Montana and their respective successors. This
Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except as provided in Sections 9 and 10 with respect to officers,
directors, members, managers, employees, representatives, agents and controlling
persons of PPL Montana and the Initial Purchasers and in Section 4(e) with
respect to holders and prospective purchasers of the Certificates. Nothing in
this Agreement is intended or shall be construed to give any person, other than
the persons referred to in this Section 11, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
12. Expenses.
PPL Montana agrees with the Initial Purchasers to pay:
(a) the costs incident to the authorization, issuance, sale,
preparation and delivery of the Certificates and any taxes payable in
that connection;
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(b) the costs incident to the preparation, printing and
distribution of the Preliminary Offering Memorandum, the Offering
Memorandum and any amendments or supplements thereto;
(c) the costs of reproducing and distributing each of the
Transaction Documents;
(d) the costs incident to the preparation, printing and
delivery of the certificates evidencing the Certificates, including
stamp duties and transfer taxes, if any, payable upon issuance of the
Certificates;
(e) the fees, disbursements and expenses of the Initial
Purchasers' counsel and the fees and expenses of PPL Montana's counsel
and independent accountants;
(f) the fees and expenses of qualifying the Certificates under
the securities laws of the several jurisdictions as provided in Section
4(g) and of preparing, printing and distributing Blue Sky Memoranda
(including related fees and expenses of counsel for the Initial
Purchasers);
(g) any fees charged by rating agencies for rating the
Certificates;
(h) the fees and expenses of the Pass Through Trustee, any
paying agent (including related fees and expenses of any counsel to
such parties) and their respective counsel;
(i) furnishing such copies of the Preliminary Offering
Memorandum and the Offering Memorandum, and all amendments and
supplements thereof, as may be reasonably requested by the Initial
Purchasers for use in connection with the resales of the Certificates
in accordance with Section 2;
(j) all "road show" fees and expenses incurred in connection
with the offering of the Certificates;
(k) the fees, disbursements and expenses of John T. Boyd
Company, R.W. Beck, Inc. and PHB Hagler Bailly, Inc. in connection with
the preparation of the reports of such parties included in the Offering
Memorandum;
(l) the fees, disbursements and expenses of the Initial
Purchasers relating to the Lease Transactions (including, without
limitation, travel and due diligence expenses);
(m) the financial advisory fees of Chase Securities Inc.; and
(n) all other costs and expenses incident to the performance
of the obligations of PPL Montana under this Agreement which are not
otherwise specifically provided for in this Section 12.
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13. Survival.
The respective indemnities, rights of contribution,
representations, warranties and agreements of PPL Montana and the Initial
Purchasers contained in this Agreement or made by or on behalf of PPL Montana or
the Initial Purchasers pursuant to this Agreement or any certificate delivered
pursuant hereto shall survive the delivery of and payment for the Certificates
and shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of any
of them or any of their respective affiliates, officers, directors, members,
managers, employees, representatives, agents or controlling persons.
14. Notices, etc.
All statements, requests, notices and agreements hereunder
shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent
by mail or telecopy transmission to Chase Securities Inc., 270 Park
Avenue, New York, New York 10017, Attention: Christopher Lowe,
(telecopier no.: (212) 834-6170); or
(b) if to PPL Montana, shall be delivered or sent by mail or
telecopy transmission to the address of PPL Montana set forth in the
Offering Memorandum, Attention: General Counsel (telecopier no.: (406)
869-5149);
provided that any notice to an Initial Purchaser pursuant to Section 9(c) shall
also be delivered or sent by mail to such Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. PPL Montana shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Initial Purchasers by CSI.
15. Definition of Terms.
For purposes of this Agreement, (a) the term "business day"
means any day on which the New York Stock Exchange, Inc. is open for trading,
(b) the term "subsidiary" has the meaning set forth in Rule 405 under the
Securities Act and (c) except where otherwise expressly provided, the term
"affiliate" has the meaning set forth in Rule 405 under the Securities Act.
16. Initial Purchasers' Information.
The parties hereto acknowledge and agree that, for all
purposes of this Agreement, the Initial Purchasers' Information consists solely
of the following information in the Preliminary Offering Memorandum and the
Offering Memorandum: the statements concerning the Initial Purchasers contained
the third paragraph, the fourth and fifth sentences of the eighth paragraph and
the ninth paragraph under the heading "Plan of Distribution."
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17. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
18. Counterparts.
This Agreement may be executed in one or more counterparts
(which may include counterparts delivered by telecopier) and, if executed in
more than one counterpart, the executed counterparts shall each be deemed to be
an original, but all such counterparts shall together constitute one and the
same instrument.
19. Amendments.
No amendment or waiver of any provision of this Agreement, nor
any consent or approval to any departure therefrom, shall in any event be
effective unless the same shall be in writing and signed by the parties hereto.
20. Headings.
The headings herein are inserted for convenience of reference
only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
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If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between PPL Montana and the several
Initial Purchasers in accordance with its terms.
Very truly yours,
PPL MONTANA, LLC
By /s/ Paul A. Farr
------------------------------
Name: Paul A. Farr
Title: Vice President
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Accepted:
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
UBS WARBURG LLC
TD SECURITIES (USA) INC.
By: CHASE SECURITIES INC.
By [signature illegible]
--------------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
1 Chase Manhattan Plaza, 26th floor
New York, New York 10081
Attention: Legal Department
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SCHEDULE 1
Principal
Amount
Initial Purchasers of Certificates
Chase Securities Inc. $
Credit Suisse First Boston Corporation
UBS Warburg LLC
TD Securities (USA) Inc.
----------
Total $
1
37
ANNEX A
[Form of Exchange and Registration Rights Agreement]
1
38
ANNEX B
[Form of Opinion of PPL Montana's Counsel]
Counsel to PPL Montana shall have furnished to the Initial Purchasers
their written opinion, as counsel to PPL Montana, addressed to the Initial
Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set forth
below:
(i) Each of PPL Montana and each of its subsidiaries has been duly
formed or incorporated and is validly existing as a limited liability company or
corporation in good standing under the laws of the jurisdiction of its
incorporation, is duly qualified to do business and is in good standing as a
foreign limited liability company or corporation in each jurisdiction in which
its respective ownership or lease of property or the conduct of its businesses
requires such qualification, and has all power and authority necessary to own or
hold its properties and to conduct the businesses in which it is engaged (except
where the failure to so qualify or have such power or authority would not,
singularly or in the aggregate, reasonably be expected to have a Material
Adverse Effect);
(ii) PPL Montana has a capitalization as of March 31, 2000 as set forth
in the Offering Memorandum under the heading "Capitalization", and all of the
outstanding membership interests in PPL Montana have been duly and validly
authorized and issued and are fully paid and non-assessable; and all of the
membership interests in PPL Montana are owned by PPL Montana Holdings, LLC, an
indirect wholly-owned subsidiary of PPL Corporation;
(iii) the descriptions in the Offering Memorandum of statutes, legal
and governmental proceedings and contracts and other documents are accurate in
all material respects; the statements in the Offering Memorandum under the
headings "Material U.S. Federal Income Tax Considerations" and "ERISA
Considerations," to the extent that they constitute summaries of matters of law
or regulation or legal conclusions, have been reviewed by such counsel and
fairly summarize the matters described therein in all material respects; and
such counsel does not have actual knowledge of any current or pending legal or
governmental actions, suits or proceedings which would be required to be
described in the Offering Memorandum if the Offering Memorandum were a
prospectus included in a registration statement on Form S-1 which are not
described as so required;
(iv) the Pass Through Trust Agreement conforms in all material respects
with the requirements of the Trust Indenture Act and the rules and regulations
of the Commission applicable to an indenture which is qualified thereunder;
(v) PPL Montana has full right, power and authority to execute and
deliver each of the Transaction Documents and to perform its obligations
thereunder; and all limited liability company action required to be taken for
the due and proper authorization, execution and delivery of
i
39
each of the Transaction Documents and the consummation of the transactions
contemplated thereby have been duly and validly taken;
(vi) each of the Purchase Agreement and the Registration Rights
Agreement has been duly authorized, executed and delivered by PPL Montana and
constitutes a valid and legally binding agreement of PPL Montana enforceable
against PPL Montana in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law) and except to the extent that
the indemnification provisions thereof may be unenforceable;
(vii) the Pass Through Trust Agreement has been duly authorized,
executed and delivered by PPL Montana and, assuming due authorization, execution
and delivery thereof by the Pass Through Trustee, constitutes a valid and
legally binding agreement of PPL Montana enforceable against PPL Montana in
accordance with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law);
(viii) the Certificates have been duly authorized and issued by the
Trust and, assuming due authentication thereof by the Pass Through Trustee and
upon payment and delivery in accordance with the Purchase Agreement, will
constitute valid and legally binding obligations of the Trust entitled to the
benefits of the Pass Through Trust Agreement and enforceable against the Trust
in accordance with their terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law);
(ix) each Transaction Document and Operative Document conforms in all
material respects to the description thereof contained in the Offering
Memorandum;
(x) the execution, delivery and performance by PPL Montana of each of
the Transaction Documents, the issuance, authentication, sale and delivery of
the Certificates and compliance by the Pass Through Trustee with the terms
thereof, the issuance, authentication, sale and delivery of the Lessor Notes and
compliance by the Owner Lessors with the terms thereof, and the consummation of
the transactions and the granting of the liens contemplated by the Transaction
Documents and the Operative Documents by each of the parties thereto:
(a) will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under, or result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of PPL Montana or any of its subsidiaries pursuant to, any of
the Project Agreements;
ii
40
(b) will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under, or result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of PPL Montana or any of its subsidiaries pursuant to, any
material indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which PPL Montana or any of its subsidiaries is a
party or by which PPL Montana or any of its subsidiaries is bound or to which
any of the property or assets of PPL Montana or any of its subsidiaries is
subject; and
(c) will not result in any violation of the provisions of the
organizational documents of PPL Montana or any of its subsidiaries or any
Applicable Law binding on PPL Montana, any of its subsidiaries or any of their
properties or assets;
(xi) no consent, approval, authorization or order of, or filing or
registration with, any such court or arbitrator or governmental agency or body
under any Applicable Law, or any consent, approval, authorization or order of,
or filing or registration with, any other Person, is required for the execution,
delivery and performance by PPL Montana of each of the Transaction Documents and
the consummation of the transactions contemplated by the Transaction Documents,
except for such consents, approvals, authorizations, filings, registrations or
qualifications (i) which have been obtained or made prior to the Closing Date
and which are in full force and effect and not subject to appeal, and (ii) as
may be required to be obtained or made under the Securities Act and applicable
state securities laws as provided in the Registration Rights Agreement;
(xii) to the best knowledge of such counsel, there are no pending
actions or suits or judicial, arbitral, rule-making, administrative or other
proceedings to which PPL Montana or any of its subsidiaries is a party or of
which any property or assets of PPL Montana or any of its subsidiaries is the
subject which (A) singularly or in the aggregate, if determined adversely to PPL
Montana or any of its subsidiaries, could reasonably be expected to have a
Material Adverse Effect, or (B) questions the validity or enforceability of any
of the Transaction Documents or any action taken or to be taken pursuant
thereto; and to the best knowledge of such counsel, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others;
(xiii) neither PPL Montana nor any of its subsidiaries is (A) in
violation of its organizational documents, (B) in default in any material
respect, and no event has occurred which, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any material indenture, mortgage, deed
of trust, loan agreement or other material agreement or instrument to which it
is a party or by which it is bound or to which any of its property or assets is
subject, or (C) in violation in any material respect of any Applicable Law to
which it or its property or assets may be subject;
(xiv) neither PPL Montana nor any of its subsidiaries is currently nor
will it be, upon the sale of the Certificates in accordance with the Purchase
Agreement and the application of the net proceeds therefrom as described in the
Offering Memorandum under the caption "Use of Proceeds," an "investment company"
or a company "controlled by" an investment company
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within the meaning of the Investment Company Act and the rules and regulations
of the Commission thereunder;
(xv) PPL Montana is a "subsidiary company" and an "affiliate" of a
"holding company" (within the meaning of the Holding Company Act) that is exempt
from all provisions of the Holding Company Act, except Section 9(a)(2) thereof,
and the execution, delivery and performance of the Transaction Documents by PPL
Montana do not violate any provisions of the Holding Company Act or any rule or
regulation thereunder;
(xvi) neither the issuance, execution, delivery and sale of the
Certificates nor the consummation of the other transactions contemplated by the
Transaction Documents will violate Regulation T, U or X of the Federal Reserve
Board; and
(xvii) assuming the accuracy of the representations and warranties of
PPL Montana and of the Initial Purchasers contained in the Purchase Agreement,
no registration of the Certificates under the Securities Act or qualification of
the Pass Through Trust Agreement under the Trust Indenture Act is required in
connection with the issuance and sale of the Certificates by the Trust and the
offer, resale and delivery of the Certificates by the Initial Purchasers in the
manner contemplated by the Purchase Agreement and the Offering Memorandum.
Such counsel shall also state that they have participated in
conferences with representatives of PPL Montana, representatives of its
independent accountants and counsel and representatives of the Initial
Purchasers and their counsel at which conferences the contents of the
Preliminary Offering Memorandum and the Offering Memorandum and any amendment or
supplement thereto and related matters were discussed and, although such counsel
assumes no responsibility for the accuracy, completeness or fairness of the
Offering Memorandum or any amendment or supplement thereto (except as expressly
provided above), nothing has come to the attention of such counsel to cause such
counsel to believe that the Offering Memorandum or any amendment or supplement
thereto (other than the financial statements and other financial and statistical
information contained therein, as to which such counsel may express no belief),
as of the date thereof and as of the Closing Date, contained or contains any
untrue statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters of fact,
to the extent such counsel deems proper, on certificates of responsible officers
of PPL Montana and public officials which are furnished to the Initial
Purchasers.
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ANNEX C
[Form of Initial Comfort Letter]
PPL Montana shall have furnished to the Initial Purchasers a letter of
PricewaterhouseCoopers LLP addressed to the Initial Purchasers and dated the
date of the Purchase Agreement, in form and substance satisfactory to the
Initial Purchasers, substantially to the effect set forth below:
(i) they are independent certified public accountants with respect to
PPL Montana within the meaning of Rule 101 of the Code of Professional Conduct
of the AICPA and its interpretations and rulings;
(ii) in their opinion, the audited financial statements and pro forma
financial information included in the Offering Memorandum and reported on by
them comply in form in all material respects with the accounting requirements of
the Exchange Act and the related published rules and regulations of the
Commission thereunder that would apply to the Offering Memorandum if the
Offering Memorandum were a prospectus included in a registration statement on
Form S-1 under the Securities Act (except that certain supporting schedules are
omitted);
(iii) based upon a reading of the latest unaudited financial statements
made available by PPL Montana, the procedures of the AICPA for a review of
interim financial information as described in Statement of Auditing Standards
No. 71, reading of minutes and inquiries of certain officials of PPL Montana who
have responsibility for financial and accounting matters and certain other
limited procedures requested by the Initial Purchasers and described in detail
in such letter, nothing has come to their attention that causes them to believe
that:
(A) any unaudited financial statements included in the
Offering Memorandum do not comply as to form in all material respects with
applicable accounting requirements;
(B) any material modifications should be made to the unaudited
financial statements included in the Offering Memorandum for them to be in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements included
in the Offering Memorandum; or
(C) the information included under the headings "Summary --
Summary Consolidated Financial Information and Operating Data,"
"Capitalization," "Selected Financial Data," "Discussion and Analysis of
Financial Condition" and "Management -- Compensation of Management" is not in
conformity with the disclosure requirements of Regulation S-K that would apply
to the Offering Memorandum if the Offering Memorandum were a prospectus included
in a registration statement on Form S-1 under the Securities Act;
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(iv) based upon the procedures detailed in such letter with respect to
the period subsequent to the date of the last available balance sheet, including
reading of minutes and inquiries of certain officials of PPL Montana who have
responsibility for financial and accounting matters, nothing has come to their
attention that causes them to believe that:
(A) at a specified date not more than three business days
prior to the date of such letter, there was any change in capital stock,
increase in long-term debt or decrease in net current assets as compared with
the amounts shown in the [_____], 2000 unaudited balance sheet included in the
Offering Memorandum or
(B) for the period from [_____], 2000 to a specified date not
more than three business days prior to the date of such letter, there were any
decreases, as compared with the corresponding period in the preceding year, in
net sales, income from operations, EBITDA or net income, except in all instances
for changes, increases or decreases that the Offering Memorandum discloses have
occurred or which are set forth in such letter, in which case the letter shall
be accompanied by an explanation by PPL Montana as to the significance thereof
unless said explanation is not deemed necessary by the Initial Purchasers;
(v) they have performed certain other specified procedures as a result
of which they determined that certain information of an accounting, financial or
statistical nature (which is limited to accounting, financial or statistical
information derived from the general accounting records of PPL Montana) set
forth in the Offering Memorandum agrees with the accounting records of PPL
Montana, excluding any questions of legal interpretation; and
(vi) on the basis of a reading of the unaudited pro forma financial
information included in the Offering Memorandum, carrying out certain specified
procedures, reading of minutes and inquiries of certain officials of PPL Montana
who have responsibility for financial and accounting matters and proving the
arithmetic accuracy of the application of the pro forma adjustments to the
historical amounts in the pro forma financial information, nothing came to their
attention which caused them to believe that the pro forma financial information
does not comply in form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X or that the pro forma adjustments
have not been properly applied to the historical amounts in the compilation of
such information.
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ANNEX D
FORM OF PURCHASER'S LETTER
Chase Securities Inc.
Credit Suisse First Boston Corporation
UBS Warburg LLC
TD Securities (USA) Inc.
as Initial Purchasers in connection
with the Offering Memorandum referred
to below
c/o Chase Securities Inc.
270 Park Avenue
New York, NY 10017
Ladies and Gentlemen:
In connection with our proposed purchase of Pass Through Certificates
(the "Certificates") evidencing a fractional undivided interest in a trust, the
property of which consists of certain notes secured by certain property leased
to PPL Montana, LLC ("PPL Montana"), we confirm that:
1. We have received a copy of the offering memorandum (the
"Offering Memorandum") relating to the Certificates and such other
information as we deem necessary in order to make our investment
decision. We acknowledge that we have read and agree to the matters
stated under the captions "Transfer Restrictions" and "Plan of
Distribution" in such Offering Memorandum, and the restrictions on
duplication and circulation of such Offering Memorandum.
2. We understand that any subsequent transfer of the
Certificates is subject to certain restrictions and conditions set
forth in the Pass Through Trust Agreement (the "Pass Through Trust
Agreement") relating to the Certificates and conditions set forth under
"Transfer Restrictions" and "Plan of Distribution" and we agree to be
bound by, and not to resell, pledge or otherwise transfer the
Certificates except in compliance with such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Certificates
has not been registered under the Securities Act, and that the
Certificates may not be offered or sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any
accounts for which we are acting as hereinafter stated, that if we
should sell any Certificates within the time period referred to in Rule
144(k) of the Securities Act, we will do so only (A) to PPL Montana or
any subsidiary thereof, (B) in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined
therein), (C) to an institutional "accredited investor" (as defined
below) that, prior to such transfer, furnishes to the Pass Through
Trustee a signed letter containing certain representations and
agreements relating to the restrictions on transfer of the Certificates
(the form of which letter can be obtained from the Pass Through
Trustee) and, if such transfer is in respect of an aggregate principal
amount at the time of transfer of Certificates of less than $100,000,
an opinion of counsel acceptable to PPL Montana that such transfer is
in compliance with the Securities Act, (D) outside the United States in
accordance with Rule 904 of Regulation S under the Securities Act, (E)
pursuant to the exemption from registration provided by Rule 144 under
the Securities Act (if available), or (F) pursuant to an effective
registration statement under the Securities Act, and we further agree
to provide to any person purchasing any of the Certificates from us a
notice advising such purchaser that resales of the Certificates are
restricted as stated herein.
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4. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Certificates, and we and any accounts for which we
are acting are each able to bear the economic risk of our or its
investment.
5. We are acquiring the Certificates purchased by us for our
own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise
sole investment discretion.
6. We are not acquiring the Certificates with a view to
distribution thereof or with any present intention of offering or
selling any Certificates, except as permitted above; provided, that the
disposition of our property and property of any accounts for which we
are acting as fiduciary will remain at all times within our control.
You, PPL Montana and the Pass Through Trustee are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby.
Very truly yours,
By:
--------------------------------------
Name:
Title:
Date:
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