UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-6986
PUBLIC SERVICE COMPANY OF NEW MEXICO
------------------------------------
(Exact name of registrant as specified in its charter)
New Mexico 85-0019030
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Alvarado Square, Albuquerque, New Mexico 87158
----------------------------------------------
(Address of principal executive offices)
(Zip Code)
(505) 241-2700
--------------
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock--$5.00 par value 41,774,083 shares
- ----------------------------- -----------------
Class Outstanding at August 1, 1996
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION:
Report of Independent Public Accountants......................... 3
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Earnings--
Three Months and Six Months Ended June 30, 1996 and 1995......... 4
Consolidated Balance Sheets--
June 30, 1996 and December 31, 1995.............................. 5
Consolidated Statements of Cash Flows--
Six Months Ended June 30, 1996 and 1995.......................... 6
Notes to Consolidated Financial Statements....................... 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................... 8
PART II. OTHER INFORMATION:
ITEM 1. LEGAL PROCEEDINGS............................................ 12
ITEM 5. OTHER INFORMATION............................................ 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................. 15
Signature................................................................ 16
2
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of Public Service Company of New Mexico:
We have reviewed the accompanying condensed consolidated balance sheet of Public
Service Company of New Mexico (a New Mexico corporation) and subsidiaries as of
June 30, 1996, and the related condensed consolidated statements of earnings for
the three-month and six-month periods ended June 30, 1996 and 1995, and the
condensed consolidated statements of cash flows for the six-month periods ended
June 30, 1996 and 1995. These financial statements are the responsibility of the
company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Public Service Company of New
Mexico and subsidiaries as of December 31, 1995 (not presented herein), and, in
our report dated February 13, 1996, we expressed an unqualified opinion on that
statement. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1995, is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.
ARTHUR ANDERSEN LLP
Albuquerque, New Mexico
August 2, 1996
3
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<TABLE>
ITEM 1. FINANCIAL STATEMENTS
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------- ---------------------
1996 1995 1996 1995
---- ---- ---- ----
(In thousands except per share amounts)
<S> <C> <C> <C> <C>
Operating revenues:
Electric $ 154,438 $ 136,698 $ 306,540 $ 278,306
Gas 43,159 51,126 132,961 137,326
Water -- 3,708 -- 6,135
--------- --------- --------- ---------
Total operating revenues 197,597 191,532 439,501 421,767
--------- --------- --------- ---------
Operating expenses:
Fuel and purchased power 40,848 32,923 80,573 64,789
Gas purchased for resale 19,214 20,414 65,703 63,996
Other operation and maintenance 78,582 78,037 151,482 159,248
Depreciation and amortization 18,555 20,737 38,585 41,252
Taxes, other than income taxes 8,598 8,869 17,828 18,538
Income taxes 6,454 5,528 21,509 15,189
--------- --------- --------- ---------
Total operating expenses 172,251 166,508 375,680 363,012
--------- --------- --------- ---------
Operating income 25,346 25,024 63,821 58,755
--------- --------- --------- ---------
Other income and deductions, net of taxes: 1,036 13,118 1,853 14,693
Income before interest charges 26,382 38,142 65,674 73,448
--------- --------- --------- ---------
Interest charges:
Interest on long-term debt 12,118 12,957 24,203 28,391
Other interest charges 722 1,766 1,481 3,454
Net interest charges 12,840 14,723 25,684 31,845
--------- --------- --------- ---------
Net earnings 13,542 23,419 39,990 41,603
Preferred stock dividend requirements 146 1,534 293 3,072
--------- --------- --------- ---------
Net earnings applicable to common stock $ 13,396 $ 21,885 $ 39,697 $ 38,531
========= ========= ========= =========
Average shares of common stock outstanding 41,774 41,774 41,774 41,774
========= ========= ========= =========
Net earnings per share of common stock $ 0.32 $ 0.52 $ 0.95 $ 0.92
========= ========= ========= =========
Dividends paid per share of common stock $ 0.12 $ -- $ 0.12 $ --
========= ========= ========= =========
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
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PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1996 1995
---------- -----------
(Unaudited)
(In thousands)
ASSETS
Utility plant $2,492,650 $2,467,161
Accumulated provision for depreciation
and amortization (921,468) (892,727)
---------- ----------
Net utility plant 1,571,182 1,574,434
---------- ----------
Other property and investments 35,390 33,433
---------- ----------
Current assets:
Cash 6,157 4,228
Temporary investments, at cost 129,131 95,972
Receivables 121,438 127,642
Income taxes receivable -- 4,792
Fuel, materials and supplies 43,696 44,660
Gas in underground storage 2,670 5,431
Other current assets 9,083 7,186
---------- ----------
Total current assets 312,175 289,911
---------- ----------
Deferred charges 132,927 137,891
---------- ----------
$2,051,674 $2,035,669
========== ==========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock equity:
Common stock $ 208,870 $ 208,870
Additional paid-in capital 470,358 470,358
Excess pension liability, net of tax (2,101) (1,623)
Retained earnings since January 1, 1989 54,914 25,243
---------- ----------
Total common stock equity 732,041 702,848
Cumulative preferred stock without mandatory
redemption requirements 12,800 12,800
Long-term debt, less current maturities 712,593 728,843
---------- ----------
Total capitalization 1,457,434 1,444,491
---------- ----------
Current liabilities:
Short-term debt -- --
Accounts payable 84,274 93,666
Dividends payable 5,453 147
Current maturities of long-term debt 16,250 146
Accrued interest and taxes 26,716 26,856
Other current liabilities 38,523 44,552
---------- ----------
Total current liabilities 171,216 165,367
---------- ----------
Deferred credits 423,024 425,811
---------- ----------
$2,051,674 $2,035,669
========== ==========
The accompanying notes are an integral part of these financial statements.
5
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PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30
------------------
1996 1995
-------- ---------
(In thousands)
Cash Flows From Operating Activities:
Net earnings $39,990 $ 41,603
Adjustments to reconcile net earnings to net cash flows
from operating activities:
Depreciation and amortization 47,219 49,621
Gain on sale of plant and property -- (28,126)
Accumulated deferred investment tax credit (2,332) (2,325)
Accumulated deferred income tax 20 (40,113)
Changes in certain assets and liabilities:
Receivables 10,996 36,734
Fuel, materials and supplies 3,726 (33,050)
1,895
Deferred charges 4,515 11,418
Accounts payable (9,436) (29,723)
Accrued interest and taxes (140) 46,975
9,075
Deferred credits (5,601) 22,415
Other (7,447) 5,542
Other, net 2,958 3,583
------- ---------
Net cash flows from operating activities 84,468 84,554
------- ---------
Cash Flows From Investing Activities:
Utility plant additions 40,655) (49,127)
Utility plant sales -- 154,087
Other property additions (3,089) (107)
Temporary investments, net 33,159) (85,564)
------- ---------
Net cash flows from investing activities 76,903) 19,289
------- ---------
Cash Flows From Financing Activities:
Redemptions of PV lease obligation bonds -- (132,663)
Redemptions and repurchases of preferred stock -- (208)
Bond redemption premium and costs (196) (253)
Proceeds from asset securitization -- 18,758
Repayments of other long-term debt (179) (28,007)
Net increase in short-term debt -- 35,550
Dividends paid (5,261) (3,076)
------- ---------
Net cash flows from financing activities (5,636) (109,899)
------- ---------
Increase (decrease) in cash 1,929 (6,056)
Cash at beginning of period 4,228 21,029
------- ---------
Cash at end of period $ 6,157 $ 14,973
======= =========
Supplemental Cash Flow Disclosures:
Interest paid $25,205 $ 36,972
======= =========
Income taxes paid, net $25,500 $ 15,200
======= =========
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) General Accounting Policy
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments necessary for a fair presentation of the
consolidated financial statements. The significant accounting policies followed
by Public Service Company of New Mexico (the "Company") are set forth in note
(1) of notes to the Company's consolidated financial statements in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995 (the "1995 Form
10-K") filed with the Securities and Exchange Commission.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company's 1995 Form 10-K PART II, ITEM 7.--"MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" discussed
management's assessment of the Company's financial condition, results of
operations and other issues facing the Company. The following discussion and
analysis by management focuses on those factors that had a material effect on
the Company's financial condition and results of operations during the three and
six months ended June 30, 1996 and 1995. It should be read in conjunction with
the Company's consolidated financial statements. Trends and contingencies of a
material nature are discussed to the extent known and considered relevant.
Liquidity and Capital Resources
The capital requirements for 1996 were originally projected at $207 million,
including a discretionary cash outlay for debt retirement of $90 million. Due to
the Company's proposed plan for the purchase of up to $300 million of the Palo
Verde Nuclear Generation Station ("PVNGS") lease obligation bonds and Eastern
Interconnection Project ("EIP") secured facility bonds over the next three years
(discussed below), total capital requirements for 1996 have been revised to $317
million. The revised capital requirements contemplate the purchase of $200
million of PVNGS lease obligation bonds during the remainder of 1996, which is
subject to the New Mexico Public Utility Commission ("NMPUC") approval. The
Company spent approximately $41 million for its utility construction
expenditures during the first half of 1996. For the second half of 1996, the
Company anticipates it will spend approximately $74 million for additional
utility construction expenditures.
The Company expects that such cash requirements are to be met primarily through
internally-generated cash. However, to cover differences in the amounts and
timing of cash generation and cash requirements, the Company intends to utilize
short-term borrowings under its liquidity arrangements. At June 30, 1996, the
Company had available liquidity arrangements of $211 million, consisting of a
$100 million secured revolving credit facility ("Facility"), a $100 million
credit facility collateralized by the Company's utility customer accounts
receivable and certain amounts being recovered from gas customers relating to
certain gas contract settlements ("Accounts Receivable Facility") and $11
million in local lines of credit. The Accounts Receivable Facility has a five
year term. The Facility will expire in June 1998 and includes a maximum allowed
debt to capitalization ratio of 70%. As of June 30, 1996, such ratio was 64.2 %.
In March 1996, the Company filed for the NMPUC approval to purchase up to $300
million of PVNGS lease obligation bonds and/or EIP secured facility bonds over
the next three years. Although these purchases will be accounted for as
investments in securities, the rating agencies will view the Company's debt
leverage as having been reduced. On July 12, 1996, the Company received a
recommended decision from the hearing examiner recommending that the NMPUC
approve the Company's request. The Company is awaiting final decision from the
NMPUC. The Company currently intends to use cash from temporary investments and
liquidity arrangements to fund these purchases.
8
<PAGE>
As of June 30, 1996, the Company had approximately $129 million in temporary
investments. On July 8, 1996, the Company requested NMPUC approval to refinance
$23 million of the 1984 series A Pollution Control Revenue Bonds and $77 million
of the 1977 series Pollution Control Revenue Refunding Bonds. The Company
continues to evaluate its investment and debt retirement options to optimize its
financing strategy and earnings potential.
Credit Rating and Dividends
Moody's Investors Service ("Moody's") has recently revised the rating outlook on
the Company to "positive" from "stable" based on planned debt repayments by the
Company over the course of the next three years. Moody's also stated that "to
the extent that management is able to maintain its current focus, Moody's
anticipates a material improvement in the Company's financial profile". In May
1996, the Company resumed the payment of cash dividends on common stock
beginning with a quarterly dividend of 12 cents per common share to stockholders
of record as of May 1, 1996. On June 11, 1996, the Company's board of directors
("Board") declared a quarterly cash dividend of 12 cents per common share,
payable August 23, 1996, to stockholders of record as of August 1, 1996. The
Company's Board reviews the Company's dividend policy on a continuing basis. The
declaration of a common dividend is dependent upon a number of factors including
earnings and financial condition of the Company and market conditions.
RESULTS OF OPERATIONS
Net earnings applicable to common stock decreased $8.5 million ($.20 per share)
for the quarter ended June 30, 1996 from the same quarter of last year due to a
gain, net of tax, of $13.1 million ($.31 per share) recognized from the sale of
certain of the Company's gas assets in June 1995. Net earnings applicable to
common stock for the six months ended June 30, 1996 increased $1.2 million ($.03
per share) from the same period of last year.
Electric gross margin (electric operating revenues less fuel and purchased power
expense) increased $9.8 million and $12.5 million for the quarter and six months
ended June 30, 1996, respectively, from the corresponding periods a year ago.
These increases were attributable to retail load growth and warmer than normal
weather in the second quarter of 1996 and increased off-system sales margin due
to the Company's aggressive marketing strategies aided by the warmer than normal
weather.
Gas gross margin (gas operating revenues less gas purchased for resale)
decreased $6.8 million and $6.1 million for the quarter and six months ended
June 30, 1996, respectively, from the corresponding periods a year ago. The main
contributor to these decreases was the effect of the sale of the gas assets in
1995, which was partially offset by increased off-system sales margin in the
current periods.
The sale of the Company's water division in July 1995 has reduced the current
year operating revenues by $3.7 million and $6.1 million for the quarter and the
six months ended June 30, 1996, respectively.
9
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Other operation and maintenance ("O&M") expenses increased $.5 million for the
quarter over the corresponding period a year ago due to increases in (i) labor
expense of $2.7 million and (ii) office supplies and expense and outside
services of $2.7 million. Such increases were offset by the O&M reduction of
$4.3 million resulting from the sales of the water division and certain gas
assets and decreased employee benefits expense of $1.2 million.
Other O&M expenses for the six months ended June 30, 1996 decreased $7.8 million
from the corresponding period last year due to (i) a reduction in O&M expense of
$8.8 million resulting from the sales of the water division and certain gas
assets in 1995, (ii) an adjustment of $3.4 million for retirees' health care
costs in 1996, and (iii) decreased other employee benefits expense of $2.0
million. Offsetting such decreases were (i) increased office supplies and
expense and outside service expense of $4.3 million and (ii) increased labor
expense of $2.7 million.
Depreciation and amortization expenses decreased $2.2 million and $2.7 million
for the quarter and six months ended June 30, 1996, respectively, from the
corresponding periods a year ago as a result of the sale of the Company's water
division and gas assets in 1995 and an adjustment recorded in the second quarter
of 1996 for the over amortization of certain intangible utility plant.
Operating income taxes for the quarter and six months ended June 30, 1996
increased $.9 million and $6.3 million, respectively, over the corresponding
periods a year ago due to increased pre-tax earnings for the current periods.
Other income and deductions, net of taxes, for the quarter and six months ended
June 30, 1996 decreased $12.1 million and $12.8 million, respectively, from the
corresponding periods a year ago. Significant items, net of taxes, for the 1995
quarter included the gain of $13.1 million from the gas assets sale in June 1995
and income of $1.4 million related to adjusting reclamation reserves for certain
mining operations. Offsetting such decreases was an additional 1995 regulatory
reserve of $1.5 million. In addition, year-to-date 1995 included an after-tax
accrual of $2.6 million of income pertaining to the carrying costs related to
gas take-or-pay settlement amounts, which was offset by an after-tax write off
of debt retirement costs of $.9 million.
Net interest charges decreased $1.9 million and $6.2 million for the quarter and
six months ended June 30, 1996, respectively, from the corresponding periods a
year ago. The quarter decrease was due to the higher short term borrowings
incurred for the retirement of the PVNGS lease obligation bonds of $132.7
million in 1995. The six month decrease also resulted from the retirement of the
PVNGS lease obligation bonds in March 1995.
Preferred stock dividend requirements decreased $1.4 million and $2.8 million
for the quarter and six months ended June 30, 1996, respectively, from the
corresponding periods a year ago due to the retirement of $64 million of
preferred stock in August 1995.
10
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OTHER ISSUES FACING THE COMPANY
Gas Rate Case
As previously reported, in August 1995, the Company filed a request for a $13.3
million increase for its retail natural gas sales and transportation rates. The
NMPUC Staff and intervenors in the case filed their testimony in January 1996.
The NMPUC Staff recommended a $2.5 million rate decrease and the New Mexico
Attorney General ("AG") recommended a $13.2 million rate decrease. (See PART II,
ITEM 7.--"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS--OTHER ISSUES FACING THE COMPANY--GAS RATE CASE" in the
1995 Form 10-K.)
In March 1996, a stipulated agreement was entered into by the Company, NMPUC
Staff, the AG and the Regents of the University of New Mexico, whereby the
Company agreed not to seek a rate increase in this case but would be allowed to
recover certain deferred costs incurred through July 1, 1996. It also imposed
certain conditions on the Company's transportation customers. Many of the
transportation customers opposed the stipulation. In April 1996, the NMPUC
issued an order, rejecting a hearing of the proposed settlement and adopting a
procedure for hearings on the Company's originally proposed $13.3 million rate
increase.
The hearings which began on May 6, 1996 have been completed. The Company is
currently awaiting the hearing examiner's recommended decision which is expected
before mid-August and the NMPUC's final order is expected before mid-September.
The Company is currently unable to predict the ultimate outcome of this
proceeding.
Santa Fe Station
As previously reported, the New Mexico Environment Department ("NMED") was
conducting an investigation of the groundwater contamination detected beneath
the former Santa Fe Generating Station ("Santa Fe Station") site to determine
the source of the contamination. The Company has been and is continuing to
cooperate with the NMED site investigation pursuant to a settlement agreement
between the Company and the NMED. In May 1995, the NMED notified the Company
that the NMED had determined that the Santa Fe Station was the source of
gasoline contaminated groundwater at the site and vicinity. The Company
contested the NMED's determination and believes insufficient data exists to
identify the sources of groundwater contamination. At the request of the NMED,
the Company conducted a minimum site assessment ("MSA") of the two former
underground storage tank sites at the Santa Fe Station under the settlement
agreement. The MSA report, which indicated that the Santa Fe Station did not
appear to have been a source of gasoline contamination, was submitted to the
NMED and is currently pending NMED review. (See PART II, ITEM 7.--"MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-- OTHER
ISSUES FACING THE COMPANY" in the 1995 Form 10-K.)
On June 24, 1996, the Company received a letter from the NMED, indicating that
the NMED believes that the Company is the source of gasoline contamination in a
municipal well supplying the City of Santa Fe and the groundwater underlying the
Santa Fe Station. Further, the letter stated that the Company was required to
proceed with interim remediation of the contamination pursuant to the New Mexico
Water Quality Control Commission ("NMWQCC") regulations. The Company intends to
vigorously contest and defend against this determination. In that respect, the
11
<PAGE>
Company has invoked the dispute resolution process of the settlement agreement
and filed an administrative appeal of this determination with the NMWQCC.
Concurrently with this appeal, the Company and the NMED have engaged in
settlement discussions for possible resolution of this dispute. These
discussions are ongoing and the Company is currently unable to predict the
ultimate outcome of the settlement discussions.
PART II- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Republic Savings Bank ("RSB") Litigation
On July 1, 1996, in a 7-2 decision in the case of United States v. Winstar
Corporation, the United States Supreme Court ruled that the federal government
had breached its contractual obligations with certain thrifts in refusing to
recognize the accounting practices of supervisory goodwill and capital credits.
Contracts had been negotiated with certain federal agencies providing for the
purchase of failing thrifts on the condition that supervisory goodwill and
capital credits be recognized for purposes of determining compliance with
regulatory capital requirements. When Congress enacted the Financial
Institutions Reform, Recovery and Enforcement Act ("FIRREA") in 1989, these
accounting practices were prohibited, thus driving otherwise healthy thrifts out
of compliance with the capital requirements. Many, including RSB, were taken
over and liquidated as a result.
Meadows owns indirectly a 50% ownership interest in Republic Holding Company
("RHC"), and RSB was a wholly-owned subsidiary of RHC. Meadows and RHC have
pending before the United States Court of Federal Claims, a lawsuit filed on
April 13, 1992, alleging similar contractual arrangements to those at issue in
the Winstar case. The federal government has filed a counterclaim alleging
breach by RHC of its obligation to maintain RSB's net worth and has moved to
dismiss Meadows' claim for lack of standing.
RSB was the thrift organized upon the acquisition of Citizens Federal Savings
and Loan Association and Fireside Federal Savings and Loan Association, both
Illinois corporations, in 1985. The plaintiffs invested $17 million of new
capital in the failing institutions. The federal regulators expressly promised
that approximately $23 million of supervisory goodwill created by the
transaction could be accounted for as an intangible asset to be counted toward
regulatory capital. Additionally, the regulators promised to allow a $3 million
cash contribution by the Federal Savings and Loan Insurance Corporation to be
recorded as a direct credit to regulatory capital. On June 5, 1992, the Office
of Thrift Supervision placed RSB in receivership and appointed the Resolution
Trust Corporation ("RTC") as receiver. On November 6, 1992, RTC sold RSB as a
going concern for a premium of nearly $1 million, with approximately $215.5
million in assets and $203.9 million in liabilities.
The RSB case has been held in abeyance pending the ruling by the Supreme Court.
The Company believes that the Winstar decision establishes the federal
government's liability to Meadows and RHC in the RSB litigation and the amount
of damages owed as a result will be vigorously litigated. It is premature to
estimate the amount of recovery, if any, by Meadows and RHC.
12
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PVNGS Property Taxes
As previously reported, in November 1995, the Arizona Court of Appeals held that
an Arizona state property tax law, effective December 31, 1989, is
unconstitutional and a lawsuit filed by the PVNGS participants, including the
Company, was returned to the Arizona Tax Court for determination of the
appropriate remedy consistent with that decision. (See PART I, ITEM 3.--"LEGAL
PROCEEDINGS--PVNGS PROPERTY TAXES" in the 1995 Form 10-K.) In April 1996, the
participants and the Arizona Department of Revenue reached an agreement to
settle the pending litigation. Pursuant to the tentative settlement, the Company
will relinquish its claims for relief with respect to prior years and the
defendants will not challenge the Court of Appeals' decision concerning
prospective relief (for tax years 1996 and thereafter).
On July 18, 1996, the Arizona legislature passed, and the Governor of Arizona
subsequently signed, a property tax reduction which codifies the terms of the
settlement. Final documents are currently being prepared for the signatures of
the parties to this action. The result of the legislation and the settlement
would be a reduction in the Company's Arizona property tax of approximately $3.5
million annually beginning in 1996 and extending at least three years, barring
any subsequent changes in the applicable tax law.
ITEM 5. OTHER INFORMATION
Energy and Utility Related Subsidiaries
As previously reported, in June 1995, the Company filed an application for
authorization for the creation of three wholly-owned subsidiaries and sought
approval to invest a maximum of $50 million in the three subsidiaries over time
and to enter into reciprocal loan agreements for up to $30 million with these
subsidiaries. In January 1996, the hearing examiner assigned to the case
recommended that the NMPUC deny the Staff's motion to have the case dismissed.
In February 1996, the NMPUC Staff filed a motion seeking to have the Company
report on its non-regulated activities, explain why NMPUC approval is not
required and why sanctions should not be considered if approval is required. The
Company filed its response describing its activities and presented legal
authority demonstrating its compliance with the New Mexico Public Utility Act.
(See PART 1, ITEM 1.--"BUSINESS--RATES AND REGULATION--Energy and Utility
Related Subsidiaries" in the 1995 10-K.)
In March 1996, the NMPUC issued an order adopting the hearing examiner's
recommendation and denied NMPUC Staff's motion to dismiss the case. On July 8,
1996, hearings in the case began and were concluded on July 19, 1996. The
Company currently cannot predict the ultimate outcome of this proceeding but
intends to vigorously defend against any allegation that it is in violation of
any legal requirements.
Proposed Rulemaking
On June 5, 1995, the NMPUC issued a Notice of Inquiry ("NOI") seeking comments
on whether and how NMPUC Rule 450, which governs affiliate transactions, should
be revised. On June 3, 1996, the NMPUC issued its Notice of Proposed Rulemaking
and Order on the NOI proposing certain amendments to NMPUC Rule 450 and seeking
comments and suggested language changes to its proposed amendments by August 5,
13
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1996. The proposed amendments would, in effect, limit the Company's non-utility
business ventures. The Company will vigorously oppose these limitations and
intends to file comments and suggested language changes. The Company contends
that many of the proposed amendments are unwarranted or prohibited under the New
Mexico Public Utility Act.
Gas Transmission Pipeline
As previously reported, in May 1996, the Company submitted a bid for acquiring a
gas transmission pipeline from the Department of Energy ("DOE") which had issued
a request for proposal for the sale of 130 miles of transmission pipeline and
associated right-of-way ("DOE pipeline"). The Company currently leases the DOE
pipeline from the DOE for transportation of natural gas to certain customers in
northern New Mexico, including the county of Los Alamos and Los Alamos National
Laboratory. (See PART I, ITEM 2.--"PROPERTIES--NATURAL GAS" in the 1995 Form
10-K.) On June 21, 1996, the DOE accepted the Company's proposal to purchase the
DOE pipeline for $3.1 million, subject to the successful negotiations of the
transfer and transitional transportation agreements. The acquisition by the
Company is subject to the approval of the NMPUC and the DOE providing
right-of-way satisfactory to the Company. The parties are working to close the
transaction by September 30, 1996.
Palo Verde Nuclear Generating Station
On July 5, 1996, the Nuclear Regulatory Commission ("NRC") issued a Systematic
Assessment of Licensee Performance ("SALP") for PVNGS. The SALP report evaluates
the station's performance as it relates to safe operation of nuclear power
generation for the period of December 1, 1994 through June 1, 1996. The SALP
reports rate nuclear plants in four functional areas--plant operations,
maintenance, engineering and plant support, and assign ratings of category 1, 2
or 3, reflecting "superior", "good" or "adequate" performance, respectively. The
NRC rated PVNGS "superior" in the areas of operations, maintenance and
engineering, and "good" in the area of plant support. In the previous SALP
report issued in December 1994, all four areas of PVNGS were rated as "good".
14
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
10.56.1 Amended and Restated Receivables Purchase Agreement dated
May 20, 1996, between Public Service Company of New Mexico,
Citibank and Citicorp North America, Inc., and Amended
Restated Collection Agent Agreement dated May 20, 1996,
between Public Service Company of New Mexico, Corporate
Receivables Corporation and Citibank, N.A.
15.0 Letter Re Unaudited Interim Financial Information
27 Financial Data Schedule
In addition to those exhibits listed above, the Company hereby
incorporates the following exhibits pursuant to Exchange Act Rule 126-32
and Regulation S-K, section iv, paragraph (d):
Description Filed as Exhibit
First Restated and Amended Public Service 99.1 of the Form S-8 Registration
Company of New Mexico Director Retainer Plan Statement No. 333-03303 filed May
8, 1996.
First Restated and Amended Public Service 99.1 of the Form S-8 Registration
Company of New Mexico Performance Stock Statement No. 333-03289 filed May
Plan 8, 1996.
b. Reports on Form 8-K:
None.
15
<PAGE>
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PUBLIC SERVICE COMPANY OF NEW MEXICO
(Registrant)
Date: August 2, 1996 /s/ Donna M. Burnett
------------------------------------
Donna M. Burnett
Corporate Controller and
Chief Accounting Officer
(Officer duly authorized to sign this report)
16
<PAGE>
AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
Dated as of May 20, 1996
PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation
(the "Seller"), CITIBANK, N.A. ("Citibank"), and CITICORP NORTH AMERICA, INC., a
Delaware corporation ("CNAI"), as agent (the "Agent") for the Banks (as defined
in Article I), agree as follows:
PRELIMINARY STATEMENTS. The Seller, Citibank and the Agent are
parties to that certain Receivables Purchase Agreement, dated as of December 21,
1993 (the "Original Agreement"), pursuant to which the Seller may from time to
time sell to the Banks undivided fractional ownership interests in its
Receivables (referred to herein as "Receivable Interests") on the terms set
forth in the Original Agreement. The parties now desire to amend and restate the
Original Agreement in accordance with the terms and conditions set forth below.
Accordingly, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to the singular and plural forms of the terms defined):
"APA" means the asset purchase agreement (that relates to the
Investor Agreement) entered into by a Bank concurrently with the Assignment and
Acceptance pursuant to which it became a party to this Agreement.
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[Parallel Purchase Commitment]
"Agent's Account" means the special account (account number
4063- 4833) of the Agent maintained at the office of Citibank, at 399 Park
Avenue, New York, New York.
"Assignment and Acceptance" means an assignment and acceptance
agreement entered into by a Bank, an Eligible Assignee and the Agent, pursuant
to which such Eligible Assignee may become a party to this Agreement.
"Bank Commitment" of any Bank means, (a) with respect to
Citibank, $100,000,000 or such amount as reduced by any Assignment and
Acceptance entered into between Citibank and other Banks; (b) with respect to a
Bank that has entered into an Assignment and Acceptance, the amount set forth
therein as such Bank's Bank Commitment or such amount as reduced by an
Assignment and Acceptance entered into between such Bank and an Eligible
Assignee, in each case as reduced (or terminated) pursuant to the next sentence.
Any reduction (or termination) of the Total Commitment pursuant to the terms of
this Agreement shall reduce ratably (or terminate) each Bank's Bank Commitment.
"Banks" means Citibank and each Eligible Assignee that shall
become a party to this Agreement pursuant to Section 7.04.
"Capital" of any Receivable Interest means the original amount
paid to the Seller for such Receivable Interest at the time of its purchase by
the Banks, pursuant to this Agreement, or such amount divided or combined in
accordance with Section 2.07, in each case reduced from time to time by
Collections distributed on account of such Capital pursuant to Section 2.04(d);
provided that if such Capital shall have been reduced by any distribution and
thereafter all or a portion of such distribution is rescinded or must otherwise
be returned for any reason, such Capital shall be increased by the amount of
such rescinded or returned distribution, as though it had not been made.
"Collection Agent" means at any time the Person then
authorized pursuant to the Collection Agent Agreement to administer and collect
Pool Receivables.
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[Parallel Purchase Commitment]
"Collection Agent Agreement" means an agreement between the
Seller and the Agent (and, if the Seller does not act as Collection Agent,
consented to by the Collection Agent), in form and substance satisfactory to
them, governing the appointment and responsibilities of the Collection Agent as
to administration and collection of the Pool Receivables, and requiring the
Collection Agent to perform its obligations set forth in this Agreement, as the
same may be amended, supplemented or restated from time to time.
"Commitment Termination Date" means the earliest of (a) May
15, 1997, unless, prior to such date (or the date so extended pursuant to this
clause) Citibank, in its sole discretion, shall consent to an extension of the
then Commitment Termination Date, (b) the Facility Termination Date under the
Investor Agreement, (c) the date determined pursuant to Section 6.01, and (d)
the date the Total Commitment reduces to zero.
"Eligible Assignee" means CNAI, any of its Affiliates, any
Person managed by Citibank, CNAI or any of their Affiliates, or any financial or
other institution acceptable to the Agent.
"Event of Termination" has the meaning specified in Article VI.
"Fee Agreement" means the agreement, of even date herewith,
between the Seller and the Agent relating to the fees payable by the Seller.
"Investor Agreement" means the Amended and Restated
Receivables Purchase Agreement, dated as of May 20, 1996, among the Seller,
Corporate Receivables Corporation and Citicorp North America, Inc., as Agent, as
the same may, from time to time, be further amended, supplemented or restated.
"Original Agreement" means the Receivables Purchase Agreement
among the Seller, Citibank and the Agent dated as of December 21, 1993.
"Percentage" of any Bank means, (a) with respect to Citibank,
the percentage set forth on the signature page to this Agreement, or such amount
as reduced by any Assignment and Acceptance entered into with an Eligible
Assignee, or (b) with respect to a Bank that has entered into an Assignment and
Acceptance, the amount set forth therein as such Bank's Percentage, or such
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[Parallel Purchase Commitment]
amount as reduced by an Assignment and Acceptance entered into between such Bank
and an Eligible Assignee.
"Termination Date" for any Receivable Interest means the
earlier of (i) that Business Day which the Seller so designates by notice to the
Agent at least one Business Day in advance for such Receivable Interest and (ii)
the Commitment Termination Date.
"Total Commitment" means $100,000,000, as such amount may be
reduced pursuant to Section 2.01. References to the unused portion of the Total
Commitment shall mean, at any time, the Total Commitment, as then reduced
pursuant to Section 2.01(b) or pursuant to the next sentence, minus the sum of
the then outstanding Capital of Receivable Interests under this Agreement and
the then outstanding "Capital" of "Receivable Interests" under the Investor
Agreement. Furthermore, on each day on which the Seller reduces the unused
portion of (or terminates) the "Purchase Limit" under the Investor Agreement,
the Total Commitment automatically shall reduce by the same amount (or so
terminate).
"Yield" means for each Receivable Interest for any Fixed
Period the result of:
AR x C x ED + LF
--
360
where:
AR = the Assignee Rate for such Receivable
Interest for such Fixed Period
C = the Capital of such Receivable Interest
during such Fixed Period
ED = the actual number of days elapsed during
such Fixed Period
LF = the Liquidation Fee, if any, for such
Receivable Interest for such Fixed Period;
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[Parallel Purchase Commitment]
provided that no provision of this Agreement shall require the payment or permit
the collection of Yield in excess of the maximum permitted by applicable law;
and provided, further, that Yield for any Receivable Interest shall not be
considered paid by any distribution to the extent that at any time all or a
portion of such distribution is rescinded or must otherwise be returned for any
reason.
Defined Terms Incorporated by Reference. Unless otherwise
defined in this Agreement and subject to the modifications herein set forth,
capitalized terms used in this Agreement or in any provisions of the Investor
Agreement incorporated in this Agreement by reference shall have the meanings
given to them in the Investor Agreement. Without limiting the foregoing, the
defined terms "Credit and Collection Policy" and "Seller Report" are hereby
incorporated by reference together with the related Schedule I and Annex A,
respectively, of the Investor Agreement. All references to the "Agent" and
"Agreement" in provisions of the Investor Agreement (including Schedules)
incorporated in this Agreement by reference shall, without further reference,
mean CNAI as Agent under this Agreement and this Agreement, respectively.
Furthermore, all references in such incorporated provisions to "Collections",
"Contract", "Net Receivables Pool Balance", "Pool Receivable", "Receivable
Interest", "Receivables Pool" and "Related Security" shall mean the Collections,
a Contract, the Net Receivables Pool Balance, a Pool Receivable, a Receivable
Interest, the Receivables Pool and the Related Security under this Agreement,
respectively. To the extent any word or phrase is defined in this Agreement, any
such word or phrase appearing in provisions so incorporated by reference from
the Investor Agreement shall have the meaning given to it in this Agreement. The
incorporation by reference into this Agreement from the Investor Agreement is
for convenience only, and this Agreement and the Investor Agreement shall at all
times be, and be treated as, separate and distinct facilities. Incorporations by
reference in this Agreement from the Investor Agreement shall not be affected or
impaired by any subsequent expiration or termination of the Investor Agreement,
nor by any amendment thereof or waiver thereunder unless the Agent, as Agent for
the Banks, shall have consented to such amendment or waiver in writing.
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<PAGE>
[Parallel Purchase Commitment]
SECTION 1.02. Accounting and Other Terms. All accounting terms
not specifically defined herein shall be construed in accordance with generally
accepted accounting principles. All terms used in Article 9 of the UCC in the
State of New York, and not specifically defined herein, are used herein as
defined in such Article 9.
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES;
CONDITIONS OF PURCHASES
SECTION 2.01. Commitment. (a) On the terms and conditions
hereinafter set forth, the Banks shall, ratably in accordance with their
respective Bank Commitments, purchase Receivable Interests from the Seller from
time to time during the period from the date hereof to the Commitment
Termination Date. Under no circumstances shall the Banks be obligated to make
any such purchase if, after giving effect to such purchase, the aggregate
outstanding Capital of Receivable Interests, together with the aggregate
outstanding "Capital" of all "Receivable Interests" under the Investor
Agreement, would exceed the Total Commitment.
(b) The Seller may, upon at least five Business Days' notice
to the Agent, terminate the facility in whole or, from time to time, reduce in
part the unused portion of the Total Commitment; provided that each partial
reduction shall be in the amount of at least $1,000,000 or an integral multiple
thereof.
(c) The Agent, on behalf of the Banks which own Receivable
Interests, shall have the Collections attributable to such Receivable Interests
automatically reinvested pursuant to Section 2.04 in additional undivided
percentage interests in the Pool Receivables by making an appropriate
readjustment of such Receivable Interests.
SECTION 2.02. Making Purchases. (a) Each purchase shall be
made on at least three Business Days' notice from the Seller to the Agent. Each
such notice of a purchase shall specify (i) the amount requested to be paid to
the Seller (such amount, which shall not be less than $5,000,000, being referred
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<PAGE>
[Parallel Purchase Commitment]
to herein as the initial "Capital" of the Receivable Interest then being
purchased), (ii) the date of such purchase (which shall be a Business Day) and
(iii) the desired duration of the initial Fixed Period for the Receivable
Interest to be purchased. The Agent shall notify the Seller whether the desired
duration of the initial Fixed Period for the Receivable Interest to be purchased
is acceptable, and the Agent shall promptly notify the Banks of the proposed
purchase. Such notice of purchase shall be sent by telecopier, telex or cable to
all Banks concurrently and shall specify the date of such purchase, each Bank's
Percentage multiplied by the aggregate amount of Capital of the Receivable
Interest being purchased, the Fixed Period for such Receivable Interest and
whether Yield for the Fixed Period for such Receivable Interest is calculated
based on the Eurodollar Rate (which may be selected only if such notice is given
at least two Business Days prior to the purchase date) or the Alternate Base
Rate.
(b) Prior to 2:00 P.M., New York City time, on the date of
each such purchase of a Receivable Interest, the Banks, ratably in accordance
with their respective Bank Commitments, shall, upon satisfaction of the
applicable conditions set forth in Sections 2.11 and 2.12, make available to the
Agent the amount of their respective purchases by deposit of the applicable
amount in immediately available funds to the Agent's Account and, after receipt
by the Agent of such funds, the Agent will cause such funds to be made available
to the Seller in immediately available funds at First Security Bank of New
Mexico, N.A., PNM General Fund, Account No. 651-53767-02, ABA 107000275 (or such
other account as the Seller may specify by notice to the Agent from time to
time).
(c) Effective on the date of each purchase pursuant to this
Section 2.02 and each reinvestment pursuant to Section 2.04, the Seller hereby
sells and assigns to the Agent, for the benefit of the Banks, an undivided
percentage ownership interest, to the extent of the Receivable Interest then
being purchased, in each Pool Receivable then existing and in the Related
Security and Collections with respect thereto.
(d) Notwithstanding the foregoing, a Bank shall not be
obligated to make purchases under this Section 2.02 at any time in an amount
which would exceed such Bank's Bank Commitment less (in the case of any Bank
other than Citibank) the amount of any purchases made by such Bank under the
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<PAGE>
[Parallel Purchase Commitment]
APA. Each Bank's obligation shall be several, such that the failure of any Bank
to make available to the Seller any funds in connection with any purchase shall
not relieve any other Bank of its obligation, if any, hereunder to make funds
available on the date of such purchase, but no Bank shall be responsible for the
failure of any other Bank to make funds available in connection with any
purchase.
SECTIONS 2.03 through 2.04. Incorporation by Reference. Each
of Sections 2.03 through 2.04 of the Investor Agreement is hereby incorporated
herein by this reference, except that each reference therein to the "Investor"
shall be deemed to be a reference to the Banks.
SECTION 2.05. Fees. The Seller shall pay to the Agent certain
fees in the amounts and on the dates set forth in the Fee Agreement.
SECTIONS 2.06 through 2.07. Incorporation by Reference. Each
of Sections 2.06 through 2.07 of the Investor Agreement is hereby incorporated
herein by this reference.
SECTION 2.08. Increased Costs. (a) If CNAI, any Bank or any
Affiliate thereof (each an "Affected Person") determines that compliance with
any law or regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such
Affected Person and such Affected Person determines that the amount of such
capital is increased by or based upon the existence of any commitment to make
purchases of or otherwise to maintain the investment in Pool Receivables or
interests therein related to this Agreement or to the funding thereof, other
commitments of the same type or under any commitments to the Investors, then,
upon demand by such Affected Person (with a copy to the Agent), the Seller shall
immediately pay to the Agent, for the account of such Affected Person (as a
third-party beneficiary), from time to time as specified by such Affected
Person, additional amounts sufficient to compensate such Affected Person in the
light of such circumstances, to the extent that such Affected Person reasonably
determines such increase in capital to be allocable to the existence of any of
such commitments. A certificate as to such amounts submitted to the Seller and
the Agent by such Affected Person shall be conclusive and binding for all
purposes, absent manifest error.
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[Parallel Purchase Commitment]
(b) If, due to either (i) the introduction of or any change
(other than any change by way of imposition or increase of reserve requirements
referred to in Section 2.09) in or in the interpretation of any law or
regulation or (ii) compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to any Bank of agreeing to purchase or
purchasing, or maintaining the ownership of Receivable Interests in respect of
which Yield is computed by reference to the Eurodollar Rate, then, upon demand
by such Bank (with a copy to the Agent), the Seller shall immediately pay to the
Agent, for the account of such Bank (as a third-party beneficiary), from time to
time as specified by such Bank, additional amounts sufficient to compensate such
Bank for such increased costs, to the extent that such Investor reasonably
determines such increase in costs to be allocable to such agreement to purchase
such Receivable Interests. A certificate as to such amounts submitted to the
Seller and the Agent by such Bank shall be conclusive and binding for all
purposes, absent manifest error.
SECTION 2.09. Additional Yield on Receivable Interests Bearing
a Eurodollar Rate. The Seller shall pay to any Bank, so long as such Bank shall
be required under regulations of the Board of Governors of the Federal Reserve
System to maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency Liabilities, additional Yield on the unpaid Capital of
each Receivable Interest of such Bank during each Fixed Period in respect of
which Yield is computed by reference to the Eurodollar Rate, for such Fixed
Period, at a rate per annum equal at all times during such Fixed Period to the
remainder obtained by subtracting (i) the Eurodollar Rate for such Fixed Period
from (ii) the rate obtained by dividing such Eurodollar Rate referred to in
clause (i) above by that percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage of such Bank for such Fixed Period, payable on each date on
which Yield is payable on such Receivable Interest. Such additional Yield shall
be determined by such Bank and notice thereof given to the Seller through the
Agent within 30 days after any Yield payment is made with respect to which such
additional Yield is requested. A certificate as to such additional Yield
submitted to the Seller and the Agent by such Bank shall be conclusive and
binding for all purposes, absent manifest error.
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[Parallel Purchase Commitment]
SECTION 2.10. Incorporation by Reference. Section 2.10 of the
Investor Agreement is hereby incorporated herein by this reference, except each
reference therein to the "Investor" shall be deemed to be a reference to the
Banks.
SECTION 2.11. Conditions Precedent. The effectiveness of the
amendment and restatement of the Original Agreement is subject to the conditions
precedent that the Agent shall have received the following, each in form and
substance satisfactory to the Agent:
(a) Certified copies of the resolutions of the Board of
Directors of the Seller approving this Agreement and certified copies of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement.
(b) A certificate of the Secretary or Assistant Secretary of
the Seller certifying the names and true signatures of the officers of the
Seller authorized to sign this Agreement and the other documents to be delivered
by it hereunder.
(c) Acknowledgment copies, or time-stamped receipt copies, of
this Agreement, duly filed as a public utility filing with the Secretary of
State of the State of New Mexico, and proper amendments to existing financing
statements, duly filed on or before the date of this Agreement under the UCC of
all jurisdictions that the Agent may deem necessary or desirable in order to
perfect the ownership interests contemplated by this Agreement in the
Receivables, Related Security and Collections.
(d) Acknowledgment copies, or time-stamped receipt copies, of
proper financing statements, if any, necessary to release all security interests
and other rights of any Person in the Receivables, Related Security or
Collections previously granted by the Seller other than pursuant to the Original
Agreement.
(e) Completed requests for information or reports of chattel
searches, dated on or before the date of any purchase hereunder, listing the
amendments to financing statements referred to in subsection (c) above and all
other effective financing statements filed in the jurisdictions referred to in
subsec tion (c) above that name the Seller as debtor, together with copies of
such other financing statements (none of which shall cover any Receivables,
Contracts or Related Security or Collections).
(f) Copies of the Order, the Rate Rider, the Tariffs and the
orders, if any, of the Commission in cases Nos. 2445, 2503 and 2353, certified
as true and correct by an authorized officer of the Seller, together with a copy
of the order of the Commission authorizing the Seller to consummate the
transactions contemplated by this Agreement.
(g) A favorable opinion of Keleher & McLeod, P.A., counsel for
the Seller, substantially in the form of Annex B to the Investor Agreement and
as to such other matters as the Agent may reasonably request.
(h) The Collection Agent Agreement.
(i) The Fee Agreement.
(j) A favorable opinion of Kaye, Scholer, Fierman, Hays &
Handler, counsel for the Agent, as to such matters as the Agent may reasonably
request.
SECTION 2.12. Conditions Precedent to All Purchases and Rein
vestments. Each purchase and each reinvestment shall be subject to the further
conditions precedent that
(a) in the case of each purchase, the Collection Agent shall
have delivered to the Agent on or prior to such purchase, in form and substance
satisfactory to the Agent, a completed Seller Report, dated as of the last day
of the preceding calendar month, together with such additional information as
may reasonably be requested by the Agent,
(b) on the date of such purchase or reinvestment the following
statements shall be true (and acceptance of the proceeds of such purchase or
reinvestment shall be deemed a representation and warranty by the Seller that
such statements are then true):
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[Parallel Purchase Commitment]
(i) The representations and warranties contained in Article
III are correct on and as of the date of such purchase or reinvestment
as though made on and as of such date, and
(ii) No event has occurred and is continuing, or would result
from such purchase or reinvestment, that constitutes an Event of
Termination or that would constitute an Event of Termination but for
the requirement that notice be given or time elapse or both, and
(c) the Agent shall have received such other approvals,
opinions or documents as it may reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties. Article III of
the Investor Agreement is hereby incorporated herein by reference, except that
each reference therein to the "Parallel Purchase Commitment" or to the
"Investor," respectively, shall be deemed to be a reference to the Investor
Agreement or to the owner of the relevant Receivable Interest, respectively.
ARTICLE IV
COVENANTS
SECTION 4.01. Covenants. Article IV of the Investor Agreement
is hereby incorporated herein by reference, except that each reference therein
to the "Facility Termination Date" shall be deemed to be a reference to the
Commitment Termination Date.
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[Parallel Purchase Commitment]
ARTICLE V
INDEMNIFICATION
SECTION 5.01. Indemnities by the Seller. Without limiting any
other rights that the Banks or the Agent or any of their respective Affiliates
(each, an "Indemnified Party") may have hereunder or under applicable law, the
Seller hereby agrees to indemnify each Indemnified Party from and against any
and all claims, losses and liabilities (including reasonable attorneys' fees)
(all of the foregoing being collectively referred to as "Indemnified Amounts")
arising out of or resulting from this Agreement or the use of proceeds of
purchases or reinvestments or the ownership of Receivable Interests or in
respect of any Receivable or any Contract, excluding, however, (a) Indemnified
Amounts to the extent resulting from gross negligence or willful misconduct on
the part of such Indemnified Party, (b) recourse (except as otherwise
specifically provided in this Agreement) for uncollectible Receivables or (c)
any income taxes incurred by such Indemnified Party arising out of or as a
result of this Agreement or the ownership of Receivable Interests or in respect
of any Receivable or any Contract. Without limiting or being limited by the
foregoing, the Seller shall pay on demand to each Indemnified Party any and all
amounts necessary to indemnify such Indemnified Party from and against any and
all Indemnified Amounts relating to or resulting from any of the following:
(i) failure of the Seller to receive all approvals from the
Commission necessary for billing and collection of the
Recoverable Amounts; any revocation, modification or challenge
to or invalidity of the Order or the Rate Rider, or any other
inability of the Seller to collect the Receivables (other than
by reason of the financial inability of an Obligor to pay) in
accordance with the provisions of the Rate Rider or any
inability of the Banks to receive Collections as a result of
the bankruptcy of the Seller;
(ii) the creation of an undivided percentage interest in any
Receivable which purports to be part of the Net Receivables
Pool Balance but which is not at the date of the creation of
such interest an Eligible Receivable or which thereafter
ceases to be an Eligible Receivable;
(iii) reliance on any representation or warranty or statement made
or deemed made by the Seller (or any of its officers) under or
in connection with this Agreement which was incorrect in any
material respect when made;
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[Parallel Purchase Commitment]
(iv) the failure by the Seller to comply with any law, rule or
regulation applicable to the Seller with respect to any Pool
Receivable or the related Contract; or the failure of any Pool
Receivable or the related Contract to conform to any such
applicable law, rule or regulation;
(v) the failure to vest in any Bank or any other owner of a
Receivable Interest a perfected undivided percentage ownership
interest, to the extent of such Receivable Interest, in the
Receivables in, or purporting to be in, the Receivables Pool
and the Related Security and Collections in respect thereof,
free and clear of any Adverse Claim;
(vi) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the
UCC of any applicable jurisdiction or other applicable laws
with respect to any Receivables in, or purporting to be in,
the Receivables Pool and the Related Security and Collections
in respect thereof, whether at the time of any purchase or
reinvestment or at any subsequent time;
(vii) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of
any Receivable in, or purporting to be in, the Receivables
Pool (including, without limitation, a defense based on such
Receivable or the related Contract not being a legal, valid
and binding obligation of such Obligor enforceable against it
in accordance with its terms), or any other claim resulting
from the sale of the merchandise or services related to such
Receivable or the furnishing or failure to furnish such
merchandise or services or relating to collection activities
with respect to such Receivable (if such collection activities
were performed by the Seller or any of its Affiliates acting
as Collection Agent). Without in any manner limiting the
Seller's indemnity obligations under this Section 5.01(vii),
the Seller shall be entitled, at its election, to assume the
defense of, or otherwise to contest, any such dispute, claim,
offset or defense. The Indemnified Party will cooperate with
the Seller, at the Seller's sole cost, in any such defense or
contest undertaken by the Seller. In the event the Seller
assumes such defense, or undertakes such contest, the
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[Parallel Purchase Commitment]
Indemnified Party shall be permitted, at its sole cost, to
participate therein;
(viii) any failure of the Seller, as Collection Agent or otherwise,
to perform its duties or obligations in accordance with the
provisions hereof or of the Collection Agent Agreement or to
perform its duties or obligations under the Contracts;
(ix) any products liability or other claim arising out of or in
connection with services which are the subject of any
Contract;
(x) the commingling of Collections of Pool Receivables at any time
with other funds; or
(xi) any investigation, litigation or proceeding related to this
Agreement or the use of proceeds of purchases or reinvestments
or the ownership of Receivable Interests or in respect of any
Receivable, Related Security, Contract or Collections.
ARTICLE VI
EVENTS OF TERMINATION
SECTION 6.01. Events of Termination. If any of the following
events (each an "Event of Termination") shall occur and be continuing:
(a) The Collection Agent (if the Seller or any of its
Affiliates) (i) shall fail in any material respect to perform or observe any
term, covenant or agreement under this Agreement or under the Collection Agent
Agreement (other than as referred to in clause (ii) of this paragraph (a)) and
such failure shall remain unremedied for three Business Days or (ii) shall fail
to make when due any payment or deposit to be made by it under this Agreement or
the Collection Agent Agreement; or
(b) The Seller shall fail (i) to transfer to the Agent when
requested any rights, pursuant to this Agreement or the Collection Agent
Agreement, which the Seller then has as Collection Agent, or (ii) to make any
payment required under Section 2.04; or
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[Parallel Purchase Commitment]
(c) Any representation or warranty made or deemed made by the
Seller (or any of its officers) under or in connection with this Agreement or
any information or report delivered by the Seller pursuant to this Agreement
shall prove to have been incorrect or untrue in any material respect when made
or deemed made or delivered; or
(d) The Seller shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement on its part to be
performed or observed and any such failure shall remain unremedied for ten days
after written notice thereof shall have been given to the Seller by the Agent;
or
(e) The Seller or any of its Significant Subsidiaries shall
fail to pay any principal of or premium or interest on any of its Debt which is
outstanding in a principal amount of at least $5,000,000 in the aggregate when
the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur or condition
shall exist under any agreement or instrument relating to any such Debt and
shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), redeemed, purchased
or defeased, or an offer to repay, redeem, purchase or defease such Debt shall
be required to be made, in each case prior to the stated maturity thereof; or
(f) Any purchase or any reinvestment pursuant to this
Agreement shall for any reason (other than pursuant to the terms hereof) cease
to create, or any Receivable Interest shall for any reason cease to be, a valid
and perfected first priority undivided percentage interest to the extent of the
pertinent Receivable Interest in each applicable Pool Receivable and the Related
Security and Collections with respect thereto; or
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[Parallel Purchase Commitment]
(g) The Seller or any of its Significant Subsidiaries shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against
the Seller or any of its Significant Subsidiaries seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding shall
remain undismissed or unstayed for a period of 30 days, or any of the actions
sought in such proceeding (including, without limitation, the entry of an order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial part of its property)
shall occur; or the Seller or any of its Significant Subsidiaries shall take any
corporate action to authorize any of the actions set forth above in this
paragraph (g); or
(h) As of the last day of any calendar month, either the
Default Ratio shall exceed 2.0% or the Delinquency Ratio shall exceed 5.0% or
the Loss-to-Liquidation Ratio shall exceed 1.5%; or
(i) The sum of the Receivable Interests plus the "Receivable
Interests" under the Investor Agreement shall for a period of five consecutive
Business Days be greater than 100%; or
(j) There shall have occurred any event which may materially
adversely affect the collectibility of the Receivables Pool or the ability of
the Seller to collect Pool Receivables or otherwise perform its obligations
under this Agreement or the Collection Agent Agreement; or
(k) The Seller's long-term public senior debt securities are
not rated at least B by Standard & Poor's or B2 by Moody's Investors Service,
Inc.
the Agent may, by notice to the Seller, take either or both of the following
actions: (x) declare the Commitment Termination Date to have occurred (in which
case the Commitment Termination Date shall be deemed to have oc curred), and (y)
without limiting any right under the Collection Agent Agreement to replace the
Collection Agent, designate another Person to succeed the Seller as the
Collection Agent; provided that, automatically upon the occurrence of any event
(without any requirement for the passage of time or the giving of notice)
described in paragraph (g) above, the Commitment Termination Date shall occur,
the Seller (if it is then serving as the Collection Agent) shall cease to be the
Collection Agent, and the Agent or its designee shall become the Collection
Agent. Upon any such declaration or designation or upon any such automatic
termination, the Banks and the Agent shall have, in addition to the rights and
remedies which they may have under this Agreement or otherwise, all other rights
and remedies provided after default under the UCC and under other applicable
law, which rights and remedies shall be cumulative.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement (including, without limitation any provision of the
Investor Agreement which is incorporated herein by reference) or consent to any
departure by the Seller therefrom shall be effective unless in a writing signed
by the Agent, as agent for the Banks (and, in the case of any amendment, also
signed by the Seller), and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No failure on the part of the Banks or the Agent to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right.
SECTION 7.02. Notices, Etc. All notices and other
communications hereunder shall, unless otherwise stated herein, be in writing
(which shall include facsimile communication) and faxed or delivered to each
party hereto at its address set forth under its name on the signature pages
hereof, and if to any Bank (other than Citibank), to such Bank at its address
specified in the Assignment and Acceptance pursuant to which it became a Bank,
or, as to each party, at such other address as shall be designated by such party
DOC #1178917/6.1
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[Parallel Purchase Commitment]
in a written notice to the other parties hereto. Notices and communications by
facsimile shall be effective when sent (and shall be followed by hard copy sent
by regular mail), and notices and communications sent by other means shall be
effective when received.
SECTION 7.03. CNAI and Affiliates. Citibank's obligation to
purchase Receivable Interests under this Agreement may be satisfied by CNAI or
any of its Affiliates. With respect to any Receivable Interest or interest
therein owned by it, CNAI shall have the same rights and powers under this
Agreement as any Bank and may exercise the same as though it were not the Agent.
CNAI and its Affiliates may generally engage in any kind of business with the
Seller or any Obligor, any of their respective Affiliates and any Person who may
do business with or own securities of the Seller or any Obligor or any of their
respective Affiliates, all as if CNAI were not the Agent and without any duty to
account therefor to the Banks.
SECTION 7.04. Assignability. (a) Rights and Limitations of
Banks. Each Bank may assign to any Eligible Assignee or to any other Bank all or
a portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Bank Commitment and any Receivable Interests
or interests therein owned by it).
(b) Assignment of Rights. Citibank or any of its Affiliates
may assign any of its rights (including, without limitation, rights to payment
of Capital and Yield) under this Agreement to any Federal Reserve Bank without
notice to or consent of the Seller or the Agent.
(c) The Agent. This Agreement and the rights and obligations
of the Agent herein shall be assignable by the Agent and its successors and
assigns.
(d) The Seller. The Seller may not assign its rights or
obligations hereunder or any interest herein without the prior written consent
of the Agent.
SECTION 7.05. Costs, Expenses and Taxes. (a) In addition to
the rights of indemnification granted under Section 5.01 hereof, the Seller
agrees to pay on demand all costs and expenses in connection with the
preparation, execution, delivery and administration (including periodic auditing
DOC #1178917/6.1
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[Parallel Purchase Commitment]
of Receivables) of this Agreement and the other documents and agreements to be
delivered hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Agent, Citibank and their respective
Affiliates with respect thereto and with respect to advising the Agent, Citibank
and their respective Affiliates as to their rights and remedies under this
Agreement, and all costs and expenses, if any (including reasonable counsel fees
and expenses), of the Agent, the Banks, or any of their respective Affiliates in
connection with the enforcement of this Agreement and the other documents and
agreements to be delivered hereunder.
(b) In addition, the Seller shall pay any and all stamp and
other taxes and fees payable in connection with the execution, delivery, filing
and recording of this Agreement or the other documents or agreements to be
delivered hereunder, and agrees to save each Indemnified Party harmless from and
against any liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.
SECTION 7.06. Confidentiality. (a) Unless otherwise required
by applicable law or regulation, the Seller agrees to maintain the
confidentiality of this Agreement (and all drafts thereof) in communications
with third parties and otherwise; provided that this Agreement may be disclosed
to (i) third parties to the extent such disclosure is made pursuant to a written
agreement of confidentiality in form and substance reasonably satisfactory to
the Agent, and (ii) the Seller's legal counsel and auditors if they agree (which
they may do orally) to hold it confidential.
(b) The Agent and the Banks agree to maintain the
confidentiality of any information each receives from the Seller, its agents,
affiliates or representatives in connection with this Agreement or any audit or
otherwise (the "Confidential Information"); provided, however, that each may, in
connection with an assignment or participation, disclose to the assignee or
participant any information relating to the Seller, including the Receivables,
furnished to such assignor by or on behalf of the Seller or by the Agent;
provided that, prior to any such disclosure, the assignee or participant agrees,
in a form reasonably satisfactory to the Seller, to preserve the confidentiality
of any Confidential Information; and provided further that there shall be no
obligation of confidentiality in respect of any Confidential Information which
may be generally available to the public.
DOC #1178917/6.1
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<PAGE>
[Parallel Purchase Commitment]
SECTION 7.07. Execution of Documents by Agent. Promptly
following request therefor by the Seller, the Agent will execute and deliver to
the Seller such amendments and supplements to, and such releases with respect
to, UCC financing statements, and such other instruments and documents, as the
Seller may from time to time request for the purpose of (a) stating the extent
of the Banks' undivided interest in the Receivables Pool as of a stated date,
(b) identifying Receivables that are not included in, or have been excluded
from, the Receivables Pool, or (c) releasing any Receivable referred to in the
immediately preceding clause (b) hereof, or repurchased pursuant to Section
2.10, from any security interest or other lien created by or in connection with
the transactions contemplated by this Agreement.
SECTION 7.08. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the law of the State of New York (without
giving effect to the conflict of laws principles thereof), except to the extent
that the perfection of the interests of the Banks in the Receivables or remedies
hereunder, in respect thereof, are governed by the laws of a jurisdiction other
than the State of New York.
SECTION 7.09. Execution In Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement.
SECTION 7.10. Survival of Termination. The provisions of
Sections 2.08, 2.09, 5.01, 7.05 and 7.06 shall survive any termination of this
Agreement.
DOC #1178917/6.1
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[Parallel Purchase Commitment]
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
SELLER: PUBLIC SERVICE COMPANY OF NEW MEXICO
By
--------------------------------------
Name:
Title: Treasurer
Alvarado Square
Albuquerque, NM 87158
Attention: Treasurer
Facsimile No. (505) 848-2369
CITIBANK: CITIBANK, N.A.
By
--------------------------------------
Name: Paul T. Pureka
Title: Attorney-in-Fact
Commitment: $100,000,000
Percentage Interest: 100%
450 Mamaroneck Avenue
Harrison, NY 10528
Attention: Corporate Asset Funding
Facsimile No. (914) 899-7890
DOC #1178917/6.1
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<PAGE>
[Parallel Purchase Commitment]
AGENT: CITICORP NORTH AMERICA, INC.,
as Agent
By
--------------------------------------
Name: Kathy S. Simmons
Title: Vice President
450 Mamaroneck Avenue
Harrison, NY 10528
Attention: Corporate Asset Funding
Facsimile No. (914) 899-7890
DOC #1178917/6.1
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<PAGE>
[Parallel Purchase Commitment]
ACKNOWLEDGMENT
STATE OF NEW MEXICO )
) SS.
COUNTY OF BERNALILLO )
This instrument was acknowledged before me on May __, 1996 by
________________ (name of officer), ________________ (title of officer) of
PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation.
--------------------------
Notary Public
My Commission Expires:
- ---------------------
DOC #1178917/6.1
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[Parallel Purchase Commitment]
ACKNOWLEDGMENT
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
This instrument was acknowledged before me on May 17, 1996 by
Paul T. Pureka, as Attorney-in-Fact for CITIBANK, N.A.
Notary Public
Renee E. Ring
Notary Public of the State of New York
No. 02-R14985371
Qualified in New York County
Commission Expires 8/12/97
DOC #1178917/6.1
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[Parallel Purchase Commitment]
ACKNOWLEDGMENT
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
This instrument was acknowledged before me on May 17, 1996 by
Kathy S. Simmons, Vice President of CITICORP NORTH AMERICA, INC., a Delaware
corporation.
Notary Public
Renee E. Ring
Notary Public of the State of New York
No. 02-R14985371
Qualified in New York County
Commission Expires 8/12/97
DOC #1178917/6.1
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<PAGE>
[Parallel Purchase Commitment]
U.S. $100,000,000
AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
Dated as of May 20, 1996
Among
PUBLIC SERVICE COMPANY OF NEW MEXICO
as the Seller,
CITIBANK, N.A.
as a Bank
and
CITICORP NORTH AMERICA, INC.
as the Agent
DOC #1178917/6.1
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[Parallel Purchase Commitment]
TABLE OF CONTENTS
Section Page
------- ----
ARTICLE I
DEFINITIONS.............................................................. 1
SECTION 1.01. Certain Defined Terms............................ 1
SECTION 1.02. Accounting and Other Terms....................... 6
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES;
CONDITIONS OF PURCHASES..................................................19
SECTION 2.01. Commitment....................................... 6
SECTION 2.02. Making Purchases................................. 7
SECTION 2.03. through
SECTION 2.04. Incorporation by Reference....................... 8
SECTION 2.05. Fees............................................. 8
SECTION 2.06. through
SECTION 2.07. Incorporation by Reference........................ 8
SECTION 2.08. Increased Costs.................................. 8
SECTION 2.09. Additional Yield on Receivable Interests
Bearing a Eurodollar Rate.............................. 9
SECTION 2.10. Incorporation by Reference.......................10
SECTION 2.11. Conditions Precedent.............................10
SECTION 2.12. Conditions Precedent to All Purchases and
Reinvestments........................11
ARTICLE III
REPRESENTATIONS AND WARRANTIES...........................................12
SECTION 3.01. Representations and Warranties...................12
DOC #1178917/6.1
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[Parallel Purchase Commitment]
ARTICLE IV
COVENANTS................................................................12
SECTION 4.01. Covenants of the Seller..........................12
ARTICLE V
INDEMNIFICATION..........................................................13
SECTION 5.01. Indemnities by the Seller........................13
ARTICLE VI
EVENTS OF TERMINATION....................................................15
SECTION 6.01. Events of Termination............................15
ARTICLE VII
MISCELLANEOUS............................................................18
SECTION 7.01. Amendments, Etc..................................18
SECTION 7.02. Notices, Etc.....................................19
SECTION 7.03. CNAI and Affiliates..............................19
SECTION 7.04. Assignability....................................19
SECTION 7.05. Costs, Expenses and Taxes........................20
SECTION 7.06. Confidentiality..................................20
SECTION 7.07. Execution of Documents by Agent..................21
SECTION 7.08. Governing Law....................................21
SECTION 7.09. Execution in Counterparts........................21
SECTION 7.10. Survival of Termination..........................22
DOC #1178917/6.1
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<PAGE>
AMENDED AND RESTATED
COLLECTION AGENT AGREEMENT
COLLECTION AGENT AGREEMENT, dated as of May 20, 1996, between
Public Service Company of New Mexico, a New Mexico corporation, individually
(the "Seller") and as collection agent (the "Collection Agent"), and Citicorp
North America, Inc., a Delaware corporation (the "Agent").
W I T N E S S E T H:
WHEREAS, the Seller and the Agent are parties to (i) the
Amended and Restated Receivables Purchase Agreement, dated as of May 20, 1996,
with Corporate Receivables Corporation, a California corporation (an "Investor")
and (ii) the Amended and Restated Receivables Purchase Agreement, dated as of
May 20, 1996, with Citibank, N.A., a national banking association ("Citibank")
(collectively, the "Agreements").
WHEREAS, the Seller and the Agent are parties to that certain
Collection Agent Agreement, dated as of December 21, 1993 (the "Original
Collection Agent Agreement"), pursuant to which Seller agreed to serve as
Collection Agent on the terms set forth in the Original Collection Agent
Agreement.
WHEREAS, it is a condition precedent to the execution and
delivery of the Agreements that the parties hereto enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, and for other consideration, the receipt of
which is hereby acknowledged, the parties agree as follows:
1
DOC #1180048.NY
<PAGE>
SECTION 1. Definitions. Unless otherwise defined herein,
capitalized terms shall have the meanings assigned to such terms in the
Agreements.
SECTION 2. Designation of Collection Agent. The servicing,
administration and collection of the Pool Receivables shall be conducted by the
Collection Agent so designated hereunder from time to time. Until the Agent
gives notice to the Seller of the designation of a new Collection Agent, the
Seller is hereby designated as, and hereby agrees to perform the duties and
obligations of, the Collection Agent pursuant to the terms hereof and of each
Agreement. The Agent at any time may designate as Collection Agent any Person
(including itself) to succeed the Seller or any successor Collection Agent, if
such Person shall consent and agree to the terms hereof. The Collection Agent
may, with the prior consent of the Agent, subcontract with any other Person for
the servicing, administration or collection of the Pool Receivables. Any such
subcontract shall not affect the Collection Agent's liability for performance of
its duties and obligations pursuant to the terms hereof.
SECTION 3. Duties of Collection Agent. (a) The Collection
Agent shall take or cause to be taken all such actions as may be necessary or
advisable to collect each Pool Receivable from time to time, all in accordance
with applicable laws, rules and regulations, with reasonable care and diligence,
and in accordance with the Credit and Collection Policy. The Seller and the
Agent hereby appoint the Collection Agent, from time to time designated pursuant
to Section 2 hereof, as agent for themselves and for the Investors and the Banks
to enforce their respective rights and interests in the Pool Receivables, the
Related Security and the related Contracts.
(b) The Collection Agent shall administer the Collections in
accordance with the procedures described in Section 2.04 of each Agreement. The
Collection Agent also shall perform the other obligations of the "Collection
Agent" set forth in each Agreement.
2
DOC #1180048.NY
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(c) If no Event of Termination or event that but for notice or
lapse of time or both would constitute an Event of Termination shall have
occurred and be continuing, the Seller, while it is the Collection Agent, may,
in accordance with the Credit and Collection Policy, extend the maturity or
adjust the Outstanding Balance of any Defaulted Receivable as the Seller deems
appropriate to maximize Collections thereof.
(d) The Collection Agent shall hold in trust and, upon request
of the Agent, shall legend appropriately for the Seller and each Investor and
each Bank, in accordance with their respective interests, all computer tapes or
disks and other documents or instruments that evidence or relate to Pool
Receivables.
(e) The Collection Agent shall, as soon as practicable
following receipt, turn over to the Seller any cash collections or other cash
proceeds received with respect to Receivables not constituting Pool Receivables.
(f) The Collection Agent shall, from time to time at the
request of the Agent, furnish to the Agent (promptly after any such request) a
calculation of the amounts set aside for the Investor and the Banks pursuant to
Section 2.04 of the Agreements.
(g) Prior to the 20th day of each month, the Collection Agent
shall prepare and forward to the Agent a Seller Report relating to the
Receivable Interests outstanding as of the last day of the immediately preceding
month, together with an analysis of the aging of Pool Receivables.
(h) As soon as available and in any event within 120 days
after the end of each fiscal year of the Seller, the Collection Agent shall
deliver to the Agent a written report describing certain agreed upon procedures
conducted by the Seller's independent public accountants with respect to the
Pool Receivables and the Credit and Collection Policy on a scope and in a form
reasonably requested by the Agent.
3
DOC #1180048.NY
<PAGE>
SECTION 4. Certain Rights of the Agent. (a) The Agent may
notify the Obligors of Receivables, at any time and at the Seller's expense, of
the ownership of such Receivables under the Agreements.
(b) At any time following the designation of a Collection
Agent other than the Seller pursuant to Section 2:
(i) The Agent may direct the Obligors of Pool
Receivables that all payments thereunder be made directly to
the Agent or its designee.
(ii) The Seller shall, at the Agent's request and at
the Seller's expense, notify each Obligor of Pool Receivables
of the ownership of Receivable Interests under the Agreements
and direct that payments be made directly to the Agent or its
designee.
(iii) The Seller shall, at the Agent's request and at
the Seller's expense, (A) assemble all of the documents,
instruments and other records (including, without limitation,
computer tapes and disks) that evidence or relate to the Pool
Receivables, and the related Contracts and Related Security,
or that are otherwise necessary or desirable to collect the
Pool Receivables, and shall make the same available to the
Agent at a place selected by the Agent or its designee, and
(B) segregate all cash, checks and other instruments received
by it from time to time constituting Collections of Pool
Receivables in a manner acceptable to the Agent and, promptly
upon receipt, remit all such cash, checks and instruments,
duly endorsed or with duly executed instruments of transfer,
to the Agent or its designee.
(iv) Subject to applicable law and regulation, the
Seller authorizes the Agent to take any and all steps in the
Seller's name and on behalf of the Seller that are necessary
or desirable, in the determination of the Agent, to collect
4
DOC #1180048.NY
<PAGE>
amounts due under the Pool Receivables, including, without
limitation, endorsing the Seller's name on checks and other
instruments representing Collections of Pool Receivables and
enforcing the Pool Receivables and the Related Security and
related Contracts.
SECTION 5. Further Assurances. (a) The Seller agrees from time
to time, at its expense, promptly to execute and deliver all further instruments
and documents, and to take all further actions, that may be necessary or
desirable, or that the Agent may reasonably request, to perfect, protect or more
fully evidence the Receivable Interests purchased under the Agreements, or to
enable the Investor and the Banks or the Agent to exercise and enforce their
respective rights and remedies hereunder or under the Agreements. Without
limiting the foregoing, the Seller will, upon the request of the Agent, (i)
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments and documents, that may be necessary or
desirable, or that the Agent may reasonably request, to perfect, protect or
evidence such Receivable Interests; (ii) mark conspicuously each invoice
evidencing each Pool Receivable and the related Contract with a legend,
acceptable to the Agent, evidencing that Receivable Interests therein have been
sold; and (iii) mark its master data processing records evidencing such Pool
Receivables and related Contracts with such a legend.
(b) The Seller authorizes the Agent to file financing or
continuation statements, and amendments thereto and assignments thereof,
relating to the Pool Receivables and the Related Security, the related Contracts
and the Collections with respect thereto without the signature of the Seller
where permitted by law. A photocopy or other reproduction of the applicable
Agreement and this Amended and Restated Collection Agent Agreement shall be
sufficient as a financing statement where permitted by law.
SECTION 6. Collection Agent Fee. The Collection Agent shall be
paid a collection agent fee of 1% per annum on the average daily Capital of each
Receivable Interest, from the date of purchase of such Receivable Interest until
5
DOC #1180048.NY
<PAGE>
the later of the Termination Date for such Receivable Interest or the date on
which such Capital is reduced to zero, payable on the last day of each
Settlement Period for such Receivable Interest. Upon three Business Days' notice
to the Agent, the Collection Agent (if not the Seller or its designee) may elect
to be paid, as such fee, another percentage per annum on the average daily
Capital of such Receivable Interest, but in no event in excess for all
Receivable Interests relating to a single Receivables Pool of 110% of the
reasonable costs and expenses of the Collection Agent in administering and
collecting the Receivables in such Receivables Pool. The collection agent fee
shall be payable only from Collections pursuant to, and subject to the priority
of payment set forth in, Section 2.04 of each Agreement.
SECTION 7. Confidentiality. (a) Unless otherwise required by
applicable law or regulation, the Collection Agent agrees to maintain the
confidentiality of the Agreements and this Amended and Restated Collection Agent
Agreement (and all drafts thereof) in communications with third parties and
otherwise; provided that they may be disclosed to (i) third parties to the
extent such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to the Agent, and
(ii) the Collection Agent's legal counsel and auditors if they agree (which they
may do orally) to hold it confidential.
(b) The Collection Agent also agrees to maintain the
confidentiality of any information it receives from the Seller, its agents,
affiliates or representatives in connection with the Agreements and this Amended
and Restated Collection Agent Agreement or any audit or otherwise (the
"Confidential Information"); provided, however, that there shall be no
obligation of confidentiality in respect of any Confidential Information which
may be generally available to the public.
SECTION 8. Rights and Remedies. (a) If the Collection Agent
fails to perform any of its obligations hereunder or under the Agreements, the
6
DOC #1180048.NY
<PAGE>
Agent may (but shall not be required to) itself perform, or cause performance
of, such obligation; and the Agent's costs and expenses incurred in connection
therewith shall be payable by the Seller (if the Collection Agent that fails to
perform is the Seller or its designee).
(b) The exercise by the Agent on behalf of the Investor and
the Banks of their rights hereunder and under the Agreements shall not release
the Collection Agent or the Seller from any of their duties or obligations with
respect to any Pool Receivables or under the related Contracts. Neither the
Agent, the Banks nor the Investor shall have any obligation or liability with
respect to any Pool Receivables or related Contracts, nor shall any of them be
obligated to perform the obligations of the Seller thereunder.
(c) The Seller shall perform its obligations under the
Contracts related to the Pool Receivables to the same extent as if Receivable
Interests had not been sold.
(d) The Investor and the Banks shall be third party
beneficiaries of this Amended and Restated Collection Agent Agreement.
SECTION 9. Term of Agreement. The term of this Amended and
Restated Collection Agent Agreement shall be coterminous with the Agreements
unless earlier terminated upon notice by any party hereto. Upon termination of
this Amended and Restated Collection Agent Agreement, the Collection Agent shall
remit all funds then held by it to the parties as required by Section 2.04 of
the Agreements.
SECTION 10. Execution in Counterparts. This Amended and
Restated Collection Agent Agreement may be executed by the parties hereto in
separate counterparts, each of which shall be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
7
DOC #1180048.NY
<PAGE>
SECTION 11. Amendments. The provisions of this Amended and
Restated Collection Agent Agreement may be supplemented, modified or amended
only by written instrument signed on behalf of the parties hereto by their duly
authorized officers.
SECTION 12. Waivers, Consents and Approvals. No party hereto
shall be deemed to have consented to, approved or waived any matter under this
Amended and Restated Collection Agent Agreement, unless any purported consent,
approval or waiver is expressly set forth in writing and signed by the party
giving the consent, approval or waiver. No failure on the part of any party
hereto to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right or be construed as a waiver to or of any other breach of the
same or any other covenant, condition or duty.
SECTION 13. Notices, Etc. (a) Except when telephone
communications are expressly authorized in this Agreement, all demands, notices
and communications hereunder shall be in writing (which shall include electronic
transmission), shall be personally delivered, express couriered, electronically
transmitted (in which case a hard copy shall also be sent by regular mail) or
mailed by registered or certified mail and shall, unless otherwise expressly
provided herein, be effective when received at the address specified on the
signature page hereof or at such other address as shall be specified in a notice
furnished hereunder.
SECTION 14. Headings. Section headings used in this Agreement
are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
SECTION 15. No Third Party Rights. Nothing expressed or
implied herein is intended or shall be construed to confer upon or to give to
any person, firm or corporation, other than the parties hereto or as specified
8
DOC #1180048.NY
<PAGE>
in Section 8(d), any right, remedy or claim under or by reason of this Agreement
or of any term, covenant or condition hereof, and all the terms, covenants,
conditions, promises and agreements contained herein shall be for the sole and
exclusive benefit of the parties hereto and their successors and permitted
assigns.
SECTION 16. Assignability. This Agreement and the rights and
obligations hereunder may not be assigned by either party without the prior
written consent of the other party hereto.
SECTION 17. Severability. If any provision of this Agreement
is invalid or unenforceable, the balance of this Agreement shall remain in
effect and, if any provision is inapplicable to any person or circumstance, it
shall nevertheless remain applicable to all other persons and circumstances.
SECTION 18. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the law of the State of New York, without
giving effect to the conflict of laws principles thereof.
9
DOC #1180048.NY
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
SELLER: PUBLIC SERVICE COMPANY OF NEW MEXICO,
Individually and as Collection Agent
By _______________________________
Name:
Title:
Alvarado Square
Albuquerque, NM 87158
Attn: Treasurer
Facsimile No: (505)848-2369
AGENT: CITICORP NORTH AMERICA, INC.
By________________________________
Name: Kathy S. Simmons
Title: Vice President
450 Mamaroneck Avenue
Harrison, NY 10528
Attention: Corporate Asset Funding
Facsimile No: (914) 899-7890
10
DOC #1180048.NY
<PAGE>
ARTHUR
ANDERSEN
ARTHUR ANDERSEN LLP
August 2, 1996 Arthur Andersen LLP
Suite 400
6501 Americas Parkway NE
Albuquerque, NM 87110-5372
(505) 889-4700
Public Service Company of New Mexico:
We are aware that Public Service Company of New Mexico has incorporated by
reference in its Registration Statement No. 33-65418, 333-03303 and 333-03289
its Form 10-Q for the quarter ended June 30, 1996, which includes our report
dated August 2, 1996, covering the unaudited interim financial information
contained therein. Pursuant to Regulation C of the Securities Act of 1933, that
report is not considered a part of the registration statement prepared or
certified by our firm or a report prepared or certified by our firm within the
meaning of Sections 7 and 11 of the Act.
Very truly yours,
Arthur Andersen LLP
<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Consolidated Statement of Earnings, Consolidated Balance Sheets and
Consolidated Statement of Cash Flows for the period ended June 30, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,571,182
<OTHER-PROPERTY-AND-INVEST> 35,390
<TOTAL-CURRENT-ASSETS> 312,175
<TOTAL-DEFERRED-CHARGES> 132,927
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,051,674
<COMMON> 208,870
<CAPITAL-SURPLUS-PAID-IN> 468,257
<RETAINED-EARNINGS> 54,914
<TOTAL-COMMON-STOCKHOLDERS-EQ> 732,041
0
12,800
<LONG-TERM-DEBT-NET> 712,593
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 16,250
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 577,990
<TOT-CAPITALIZATION-AND-LIAB> 2,051,674
<GROSS-OPERATING-REVENUE> 439,501
<INCOME-TAX-EXPENSE> 22,723
<OTHER-OPERATING-EXPENSES> 354,171
<TOTAL-OPERATING-EXPENSES> 375,680
<OPERATING-INCOME-LOSS> 63,821
<OTHER-INCOME-NET> 1,853
<INCOME-BEFORE-INTEREST-EXPEN> 65,674
<TOTAL-INTEREST-EXPENSE> 25,684
<NET-INCOME> 39,990
293
<EARNINGS-AVAILABLE-FOR-COMM> 39,697
<COMMON-STOCK-DIVIDENDS> 5,013
<TOTAL-INTEREST-ON-BONDS> 24,203
<CASH-FLOW-OPERATIONS> 84,468
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
