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 March 31, 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 May 5, 1996
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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 Ended March 31, 1996 and 1995....................... 4
Consolidated Balance Sheets--
March 31, 1996 and December 31, 1995............................. 5
Consolidated Statements of Cash Flows--
Three Months Ended March 31, 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............................................ 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......... 12
ITEM 5. OTHER INFORMATION............................................ 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................. 16
Signature................................................................ 17
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
March 31, 1996, and the related condensed consolidated statements of earnings
and cash flows for the three-month periods ended March 31, 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
May 8, 1996
3
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ITEM 1. FINANCIAL STATEMENTS
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended
March 31
----------------------------
1996 1995
---- ----
(In thousands except per share
amounts)
Operating revenues:
Electric $ 152,102 $ 141,608
Gas 89,802 86,200
Water -- 2,427
---------- ----------
Total operating revenues 241,904 230,235
---------- ----------
Operating expenses:
Fuel and purchased power 39,725 31,866
Gas purchased for resale 46,489 43,582
Other operation and maintenance 72,900 81,211
Depreciation and amortization 20,030 20,515
Taxes, other than income taxes 9,230 9,669
Income taxes 15,055 9,661
---------- ----------
Total operating expenses 203,429 196,504
---------- ----------
Operating income 38,475 33,731
---------- ----------
Other income and deductions, net of taxes: 817 1,575
Income before interest charges 39,292 35,306
---------- ----------
Interest charges:
Interest on long-term debt 12,085 15,434
Other interest charges 759 1,688
Allowance for borrowed funds used
during construction -- --
Net interest charges 12,844 17,122
---------- ----------
Net earnings 26,448 18,184
Preferred stock dividend requirements 147 1,538
---------- ----------
Net earnings applicable to common stock $ 26,301 $ 16,646
========== ==========
Average shares of common stock outstanding 41,774 41,774
========== ==========
Net earnings per share of common stock $ 0.63 $ 0.40
========== ==========
Dividends paid per share of common stock $ -- $ --
========== ==========
The accompanying notes are an integral part of these financial statements.
4
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PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1996 1995
-------- -----------
(Unaudited)
(In thousands)
ASSETS
Utility plant $2,485,569 $2,467,161
Accumulated provision for depreciation
and amortization (912,478) (892,727)
---------- ----------
Net utility plant 1,573,091 1,574,434
---------- ----------
Other property and investments 35,190 33,433
---------- ----------
Current assets:
Cash 6,261 4,228
Temporary investments, at cost 114,064 95,972
Receivables 121,403 127,642
Income taxes receivable -- 4,792
Fuel, materials and supplies 42,780 44,660
Gas in underground storage 2,343 5,431
Other current assets 8,723 7,186
---------- ----------
Total current assets 295,574 289,911
---------- ----------
Deferred charges 136,596 137,891
---------- ----------
$2,040,451 $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 46,531 25,243
---------- ----------
Total common stock equity 723,658 702,848
Cumulative preferred stock without mandatory
redemption requirements 12,800 12,800
Long-term debt, less current maturities 728,860 728,843
---------- ----------
Total capitalization 1,465,318 1,444,491
---------- ----------
Current liabilities:
Short-term debt -- --
Accounts payable 71,077 93,666
93,666
Current maturities of long-term debt 41 146
Accrued interest and taxes 36,179 26,856
Other current liabilities 45,331 44,699
---------- ----------
Total current liabilities 152,628 165,367
---------- ----------
Deferred credits 422,505 425,811
---------- ----------
$2,040,451 $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)
Three Months Ended
March 31
--------------------
1996 1995
-------- --------
(In thousands)
Cash Flows From Operating Activities:
Net earnings $ 26,448 $ 18,184
Adjustments to reconcile net earnings to net cash flows
from operating activities:
Depreciation and amortization 23,954 25,001
Accumulated deferred investment tax credit (1,166) (1,162)
Accumulated deferred income tax (690) 249
Changes in certain assets and liabilities:
Receivables 11,032 20,111
Fuel, materials and supplies 4,968 1,895
1,895
Deferred charges 1,009 6,727
Accounts payable (22,583) (47,059)
Accrued interest and taxes 9,323 9,075
9,075
Deferred credits (3,453) (1,714)
Other (5,825) 1,805
Other, net 1,197 1,864
-------- ---------
Net cash flows from operating activities 44,214 34,976
-------- ---------
Cash Flows From Investing Activities:
Utility plant additions (22,005) (22,779)
(Increase) decrease in other property (1,805) 299
Temporary investments, net (18,092) 44,011
-------- ---------
Net cash flows from investing activities (41,902) 21,531
-------- ---------
Cash Flows From Financing Activities:
Redemptions of PV lease obligation bonds -- (132,663)
Bond redemption premium and costs (21) (85)
Proceeds from asset securitization -- 18,758
Repayments of other long-term debt (105) (4,000)
Net increase in short-term debt -- 65,000
Dividends paid (153) (1,531)
-------- ---------
Net cash flows from financing activities (279) (54,521)
-------- ---------
Increase in cash 2,033 1,986
Cash at beginning of period 4,228 21,029
-------- ---------
Cash at end of period $ 6,261 $ 23,015
======== =========
Supplemental Cash Flow Disclosures:
Interest paid $ 17,502 $ 26,986
======== =========
Income taxes paid, net $ 4,000 $ --
======== =========
The accompanying notes are an integral part of these financial statements.
6
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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.
(2) Accounts Receivable Facility
The Company has a $40 million credit facility collateralized by the Company's
electric customer accounts receivable. In March 1996, the New Mexico Public
Utility Commission ("NMPUC") approved the Company's request to increase the
capacity of the accounts receivable facility up to $100 million by including in
the collateral pool the Company's gas accounts receivable and certain amounts
being recovered from gas customers relating to certain gas contract settlements.
The amended accounts receivable facility will have a five year term.
7
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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 first
quarter of 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 original capital requirements for 1996 included a discretionary cash outlay
for debt retirement of $90 million. Due to the Company's proposed plan for the
purchases of the Palo Verde Nuclear Generation Station ("PVNGS") lease
obligation bonds and Eastern Interconnect Project ("EIP") secured facility bonds
over the next three years (discussed below), total capital requirements for 1996
have been reduced to $117 million. The Company spent approximately $22 million
for its utility construction expenditures during the first quarter of 1996. For
the remainder of 1996, the Company anticipates that it will spend approximately
$93 million for additional 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 March 31, 1996, the
Company had available liquidity arrangements of $151 million, consisting of a
$100 million secured revolving credit facility ("Facility"), $40 million credit
facility collateralized by the Company's electric customer accounts receivable
("Accounts Receivable Facility") and $11 million in local lines of credit. The
Facility will expire in June 1998 and includes a maximum allowed debt to
capitalization ratio of 70%. As of March 31, 1996, such ratio was 64.6%. In
addition, in March 1996, the NMPUC approved the Company's request to increase
the capacity of the Accounts Receivable Facility up to $100 million by including
in the collateral pool the Company's gas accounts receivable and certain amounts
being recovered from gas customers relating to certain gas contract settlements.
The amended Accounts Receivable Facility will have a five year term.
On March 21, 1996, the Company filed for NMPUC approval to buy up to $300
million of PVNGS lease obligation bonds and/or EIP secured facility bonds over
the next three years. Hearings on the Company's application are scheduled to
begin in May 1996 and may be continued until June 1996 if the intervenors in the
NMPUC case raise significant contested issues. Although these purchases will be
accounted for as investments in securities, the rating agencies should view the
Company's debt leverage as having been reduced. The Company currently intends to
use cash from temporary investments and future internal cash generation in
excess of capital requirements to fund these purchases. As of March 31, 1996,
the Company had approximately $114 million in temporary investments. The Company
continues to evaluate its investment and debt retirement options to optimize its
financing strategy and earnings potential.
8
<PAGE>
On March 12, 1996, the Company's Board of Directors ("Board"), at its regular
meeting, declared a cash dividend of 12 cents per common share payable on May
24, 1996, to stockholders of record as of May 1, 1996. The Company has not
declared dividends on its common stock since January 1989. The Company's Board
reviews the Company's dividend policy on a continuing basis. The declaration of
common dividends is dependent upon a number of factors including earnings and
financial condition of the Company and market conditions.
RESULTS OF OPERATIONS
Net earnings available for common stockholders for the first quarter of 1996
were $26.3 million, an increase of $9.7 million from a year ago. The increase in
earnings was attributable to increased wholesale energy sales, decreased
non-fuel operation and maintenance ("O&M") expenses and decreased interest
charges.
Operating margin for the current quarter increased $.9 million from a year ago
due to (i) an increase in gas off-system sales margin, (ii) an 8.5% increase in
retail Kwh sales and (iii) a 40.9% increase in Kwh sales to electric wholesale
customers. Offsetting such increases was the loss of water revenues of $2.4
million due to the sale of the water division in July 1995.
Non-fuel O&M expenses decreased $8.3 million from a year ago due to (i) an
adjustment of $3.4 million for retirees' health care costs, (ii) a reduction in
O&M expenses of $4.0 million from the 1995 sales of the water division and gas
processing and gathering assets and (iii) decreased PVNGS O&M expense of $2.2
million resulting from the 1995 Unit 2 refueling outage. Offsetting such
decrease was increased maintenance expenses of $2.0 million at the San Juan
Generating Station ("SJGS") Unit 3 and Four Corners Power Plant Unit 5.
Interest charges and preferred stock dividend requirements for the current
quarter decreased $4.3 million and $1.4 million, respectively, from a year ago
due to the retirement of the PVNGS lease obligation bonds of $132.7 million in
March 1995, repayment of other long-term debt of $57.8 million in 1995 and the
redemption of $64.2 million of preferred stock in 1995.
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.
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 $14.7 million (subsequently revised to
$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 Company's 1995 Form 10-K.)
9
<PAGE>
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. In the
stipulation, 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.
On April 9, 1996, the NMPUC issued an order, declining to set the proposed
settlement of the Company's pending rate case for hearing. In its order, the
NMPUC ruled that "the nature and extent of the opposition to the stipulation is
such that hearing the stipulation will not materially conserve the NMPUC, NMPUC
Staff and party resources". The Company filed a request for NMPUC to reconsider
its denial of a hearing on the settlement. The Company anticipates that the
request for reconsideration will be disposed of by May 13, 1996. Hearings on the
Company's originally proposed $13.3 million rate increase began on May 6, 1996.
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Federal Deposit Insurance Corporation ("FDIC") Litigation, formerly Resolution
Trust Corporation ("RTC") Litigation("MDL-995")
As previously reported, in April 1993, the Company and certain current and
former employees of the Company or Meadows Resources, Inc., a wholly-owned
subsidiary of the Company ("Meadows"), were named as defendants in an action
filed in the United States District Court for the District of Arizona by the
RTC. Three of the individuals sued by the RTC have indemnity agreements with the
Company. The claims related to alleged actions of the Company's or Meadows'
employees in 1987 in connection with a loan procured by Bellamah Community
Development ("BCD") (BCD's general partners include Meadows) from Western
Savings and Loan Association ("Western") and the purchase by that partnership of
property owned by Western. The FDIC (the FDIC was substituted for the RTC as
plaintiff in MDL-995 in early 1996) apparently claims that the Company's
liability stems from the actions of a former employee who allegedly acted on
behalf of the Company for the Company's benefit. The FDIC is claiming in excess
of $40 million in actual damages from the BCD/Western transactions and is also
claiming damages substantially exceeding that amount on Arizona racketeering,
civil conspiracy and aiding and abetting theories. (See PART I, ITEM 3.--"LEGAL
PROCEEDINGS--OTHER PROCEEDINGS" in the Company's 1995 Form 10-K.)
On April 11, 1996, representatives of the Company, certain current and former
employees of the Company or Meadows ("BCD parties") and the FDIC met with a
mediator to continue settlement discussions. The mediation session resulted in
an agreement to settle the case for $5.75 million, $3.125 million of which would
be paid by the Company and the remainder to be paid by insurance covering the
BCD parties. Settlement documents are being drafted for submission to the Court
for approval. After consideration of established reserves, the Company believes
that there will be no material adverse effect on the Company's financial
condition or results of operations.
10
<PAGE>
The Company continues to believe that all of the claims made by the FDIC in this
case are without merit but, for business reasons, believes that the settlement
is in the best interest of the Company.
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 1, ITEM 3.--"LEGAL
PROCEEDINGS--PVNGS PROPERTY TAXES" in the Company's 1995 Form 10- K.) On April
23, 1996, the Arizona Department of Revenue and the PVNGS participants 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).
Negotiations of the final settlement are continuing.
11
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Annual Meeting
At the meeting of shareholders held on April 30, 1996, the shareholders
reelected the following three nominees to serve as directors until the annual
meeting of shareholders in 1999, or until their successors are duly elected and
qualified, as follows:
Votes
Against Broker
Director Votes For or Withheld Abstentions Non-Votes
-------- --------- ----------- ----------- ---------
L. H. Lattman 37,621,204 313,511 * *
B. F. Montoya 37,660,865 273,850 * *
R. M. Price 37,639,262 295,453 * *
The approval of the selection by the Company's board of directors of Arthur
Andersen LLP as independent auditors for the fiscal year ending December 31,
1996, was voted on, as follows:
Votes
Against Broker
Votes for or Withheld Abstentions Non-Votes
--------- ----------- ----------- ---------
37,729,817 100,296 104,602 *
The approval of the First Restated and Amended Director Retainer Plan was voted
on, as follows:
Votes
Against Broker
Votes for or Withheld Abstentions Non-Votes
--------- ----------- ----------- ---------
27,961,014 3,203,253 1,325,994 *
The approval of the First Restated and Amended Performance Stock Plan was voted
on, as follows:
Votes
Against Broker
Votes for or Withheld Abstentions Non-Votes
--------- ----------- ----------- ---------
27,766,298 3,427,505 1,296,208 *
* Not applicable or not readily available.
12
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ITEM 5. OTHER INFORMATION
Rulings from Federal Energy Regulatory Commission ("FERC")
On April 24, 1996, the FERC issued several orders and a Notice of Proposed
Rulemaking ("NOPR"), related to the provision of transmission service by public
utilities.
FERC Order 888 addresses both open transmission access and stranded costs. Order
888 requires all public utilities that own, operate or control interstate
transmission facilities to file open access transmission tariffs, offering other
users the same services the public utility provides to itself, under comparable
terms and conditions. In addition, such transmission owning public utilities
will be required to "purchase" transmission services from themselves in order to
engage in wholesale generation transactions. On April 10, 1996, the Company
filed an open access transmission tariff. As a result of Order 888, the Company
will be required to make a compliance filing, making the appropriate changes to
the filed open access tariff to bring its terms and conditions into compliance
with Order 888. The Company's April 10 filing was generally in compliance with
the terms and conditions of Order 888. As a result, the Company does not
anticipate any material changes being required to comply with Order 888.
Order 888 also addresses conditions required for public utilities to be granted
the right to market-based rates for wholesale power sales. On April 10, the
Company also filed a market-based rate tariff that would enable the Company to
sell in the wholesale power market at market-based rates rather than rates
limited by cost of service. The Company believes that it meets the criteria
established in Order 888 for such a tariff.
Both the open access tariff filing and the market-based tariff filing by the
Company await FERC action. The Company has requested June 1, 1996 as an
effective date for both tariffs, but will require a short extension of time to
bring the open access tariff into compliance. The FERC has also required power
pools to file open access tariffs. The Company is a member of the Inland Power
Pool and the Western Systems Power Pool. The membership of both pools is
evaluating Order 888 and will take the appropriate steps to address compliance
with the order.
Order 888 also establishes federal rules for the recovery of stranded costs by
public utilities. The FERC will allow recovery of stranded costs under certain
circumstances. Wholesale stranded cost recovery will be determined based on
expected revenues loss from a departing wholesale requirements customer, net of
transmission revenues that would be received by the public utility (if such
service is provided) and net of mitigation efforts by the public utility.
Mitigation efforts include the public utility marketing the stranded assets it
holds that had previously been used to serve the departing customer.
The open access and stranded asset rules will be effective on July 1, 1996.
On April 24, FERC also issued Order 889, requiring public utilities to install
and operate an Open Access Same-time Information System ("OASIS") and comply
with certain standards of conduct among its employees in transmission operations
and wholesale power marketing. The standards of conduct are designed to prevent
employees of a public utility or its affiliates engaged in marketing functions
from obtaining preferential access to OASIS-related information or from engaging
in unduly discriminatory business practices.
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Public utilities will be required to separate transmission operations and
reliability functions from the marketing and merchant functions and prevent
system operation personnel from providing information to marketing personnel
that is not available to all customers at the same time through public posting
on the OASIS. Order 889 requires implementation of the standards of conduct on
July 1, 1996, and implementation of an OASIS no later than November 1, 1996. The
FERC anticipates that the OASIS will be made available to the public via the
Internet.
The NOPR seeks further comments and input from the industry regarding further
changes to the method by which customers access and use the transmission systems
of public utilities. The FERC proposes replacement of the network and
point-to-point transmission service concepts embodied in Order 888 with a single
capacity reservation system that would further enhance the provision of
"comparable" transmission service among all transmission users. Comments are due
to the FERC no later than August 1, 1996.
The Company continues to assess these rules and the NOPR and the effects
thereof.
FERC Rate Filings
On April 1, 1996, the Company filed a notice of change in rates for its firm
transmission service for all point-to-point and network customers on the
Company's transmission system. The Company also requested changes for services
provided to two customers who receive integration and transmission service for
power purchased from a third party. The rates proposed under the request would
increase projected 1996 transmission revenues by approximately $10.5 million.
The request would also bring certain pricing and service terms into compliance
with FERC Order 888 and current FERC policy. In particular, the Company seeks to
have transmission service provided to Plains Electric Generation and
Transmission Cooperative, Inc., ("Plains") designated by the FERC as network
transmission service.
The Company has also requested that this filing be consolidated with four
Section 206 complaint proceedings submitted by four of the affected customers
filed in 1995, as well as a proceeding related to the Company's provision of
firm transmission service to El Paso Electric Company. (See PART II, ITEM
7.--"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--OTHER ISSUES FACING THE COMPANY--Transmission Disputes" in the
Company's 1995 Form 10-K.)
The Company has requested an effective date of June 1, 1996, for the rates
requested in this filing, with the exception of one service agreement with
Plains, which would have an effective date of July 1, 1996. The Company has
filed the same cost support in the open access tariff filing and anticipates
that the FERC will determine rates for the open access tariff based on the
results of the rate change proceeding.
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 NMPUC Staff's motion to have the case
14
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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 Form 10-K.)
On March 5, 1996, the NMPUC issued an order adopting the hearing examiner's
recommendation and denied NMPUC Staff's motion to dismiss the case. The NMPUC
has not acted on the NMPUC Staff's subsequent motion. On April 3, 1996, the
hearing examiner issued a second procedural order and a hearing in the case has
been scheduled for July 8, 1996. The Company is currently having discussions
with the NMPUC Staff and other intervenors regarding their concerns on the
Company's request. 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.
Gas Transmission Pipeline
As previously reported, the Company leases approximately 130 miles of
transmission pipeline from the Department of Energy ("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 March 15, 1996, the DOE
issued a request for proposal ("RFP") for the sale of the pipeline. The RFP
provides that proposals for purchase of the line be received by May 30, 1996 and
the closing be completed by September 30, 1996. The Company plans to submit a
bid. If the Company is the successful bidder, transfer of the property would be
completed by the end of 1996, subject to resolution of outstanding right-of-way
issues.
Department of Labor Matter (PVNGS)
In 1993, a Department of Labor ("DOL") Administrative Law Judge ("ALJ") issued a
Recommended Decision and Order finding that Arizona Public Service Company
("APS"), as the operating agent of PVNGS, discriminated against a former
contract employee who worked at PVNGS because he engaged in protected activities
(as defined under Federal regulations). APS and the former contract employee who
had raised the DOL claim entered into a settlement agreement which was approved
by the Secretary of Labor in June 1995. By letter dated March 7, 1996, the
Nuclear Regulatory Commission ("NRC") sent a Notice of Violation and Proposed
Imposition of Civil Penalty notifying APS that the NRC proposes to impose a
$100,000 civil penalty for a "Severity Level III" violation of NRC requirements
relating to the circumstances surrounding this matter. The NRC also concluded in
its March 7, 1996 letter that APS's actions taken and planned to correct the
violation have already been addressed and therefore APS is not required to
respond to the Notice of Violation. APS paid the associated penalty in April
1996.
15
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
10.68 Master Decommissioning Trust Agreement for Palo Verde Nuclear
Generating Station dated March 15, 1996, between Public Service
Company of New Mexico and Mellon Bank, N.A.
15.0 Letter Re Unaudited Interim Financial Information
27 Financial Data Schedule
99.3 Trust Indenture, Mortgage, Security Agreement and Assignment of
Rents dated as of December 16, 1985, between the First National
Bank of Boston, as Owner Trustee, and Chemical Bank, as
Indenture Trustee together with Supplemental Indentures Nos. 1
and 2 (refiled).
b. Reports on Form 8-K:
Report dated March 13, 1996 and filed March 13, 1996, relating to the
Declaration of Cash Dividends on Common Stock.
16
<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: May 8, 1996 /s/ Donna M. Burnett
------------------------------------
Donna M. Burnett
Corporate Controller and
Chief Accounting Officer
(Officer duly authorized to
sign this report)
17
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO
MASTER DECOMMISSIONING TRUST AGREEMENT
FOR
PALO VERDE NUCLEAR GENERATING STATION
Dated: March ___, 1996
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TABLE OF CONTENTS
ARTICLE TITLE PAGE
I DEFINITIONS AND PURPOSE............................................ 4
1.01 Definitions............................................... 4
1.02 Authorization............................................. 11
1.03 Purposes.................................................. 11
1.04 Establishment of the Fund................................. 11
1.05 Acceptance of Appointment................................. 12
1.06 Name of Master Trust...................................... 12
1.07 Segregation of Master Trust............................... 12
II DISPOSITIVE PROVISIONS............................................. 13
2.01 Payment of Nuclear Decommissioning Costs.................. 13
2.02 Additions to the Funds.................................... 15
2.03 Adjustments for Excess Contributions...................... 15
2.04 Transfers Between Funds................................... 16
2.05 Designation of Funds...................................... 16
2.06 Distribution of Income.................................... 16
2.07 No Transferability of Interest in Trust................... 17
2.08 Revocation and Termination of Agreement................... 18
2.09 Termination of Qualified Funds............................ 19
2.10 Distribution of Assets Upon Termination................... 19
2.11 Alterations and Amendments................................ 20
2.12 No Authority to Conduct Business.......................... 20
III TRUSTEES........................................................... 21
3.01 Designation and Qualification of Successor
Trustee(s)................................................ 21
3.02 Resignation............................................... 22
3.03 Compensation.............................................. 22
3.04 Accounts.................................................. 22
3.05 Tax Returns and Other Reports............................. 23
3.06 Liability................................................. 24
3.07 Indemnity of Trustee...................................... 26
IV INVESTMENTS........................................................ 26
4.01 Appointment of Investment Manager(s)...................... 26
4.02 Direction by Investment Managers.......................... 27
V TRUSTEE'S GENERAL POWERS........................................... 29
5.01 Payment of Expenses of Administration..................... 29
5.02 Extension of Obligations and Negotiation of
Claims.................................................... 30
5.03 Registration of Securities................................ 30
5.04 Location of Assets........................................ 30
5.05 Retention of Professional Services........................ 30
5.06 Delegation of Ministerial Powers.......................... 30
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5.07 Powers of Trustee to Continue Until Final
Distribution.............................................. 31
5.08 Voting.................................................... 31
5.09 Power to Join in or Dissent From Certain Events........... 31
5.10 Prohibition Against Real Estate Investment................ 32
5.11 Discretion in Exercise of Powers.......................... 32
VI TRUSTEE'S INVESTMENT POWERS........................................ 33
6.01 Investment Standards...................................... 33
6.02 Investment of Funds....................................... 34
6.03 Management of Master Trust................................ 34
6.04 Disposition of Investments................................ 35
6.05 Power to Hold Uninvested Cash............................. 35
6.06 Cash Sweep Provision...................................... 35
VII MISCELLANEOUS...................................................... 36
7.01 Headings.................................................. 36
7.02 Particular Words.......................................... 36
7.03 Parties Interested Herein................................. 36
7.04 Severability of Provisions................................ 36
7.05 Form and Content of Communications........................ 37
7.06 Delivery of Notices Under Agreement....................... 37
7.07 Successors and Assigns.................................... 38
7.08 Governing Jurisdiction.................................... 38
7.09 Accounting Year........................................... 38
7.10 Counterparts.............................................. 39
7.11 Disbursement Withdrawal Certificate....................... 39
ii
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PUBLIC SERVICE COMPANY OF NEW MEXICO
MASTER DECOMMISSIONING TRUST AGREEMENT
FOR
PALO VERDE NUCLEAR GENERATING STATION
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PUBLIC SERVICE COMPANY OF NEW MEXICO
MASTER DECOMMISSIONING TRUST AGREEMENT
FOR
PALO VERDE NUCLEAR GENERATING STATION
AGREEMENT made the 15th day of March, 1996, by and between Public
Service Company of New Mexico, a New Mexico corporation ("Company"), and Mellon
Bank, N.A., a national banking association,
having trust powers ("Trustee").
WHEREAS, the Company is the: (1) lessee of a 10.2 percent undivided
interest in Unit One of the Palo Verde Nuclear Generating Station; (2) lessee of
a 10.2 percent undivided interest in Unit Two of the Palo Verde Nuclear
Generating Station; and (3) owner of a 10.2 percent undivided interest in Unit
Three of the Palo Verde Nuclear Generating Station; and
WHEREAS, an affiliate of the Trustee is an owner participant with
respect to: (1) the Company's leasehold interest in 1.36 percent of Unit One of
the Palo Verde Nuclear Generating Station; and (2) the Company's leasehold
interest in approximately 2.49 percent of Unit Two of the Palo Verde Nuclear
Generating Station;
WHEREAS, the Company is subject to regulation by the New Mexico Public
Utility Commission ("NMPUC"), an agency of the State of New Mexico, the Nuclear
Regulatory Commission ("NRC"), an agency of the United States government created
and existing pursuant to 42 U.S.C. ss. 5841, and the Federal Energy Regulatory
Commission ("FERC"), an agency of the United States government created and
existing pursuant to 42 U.S.C. ss.ss.7134 and 7171; and
1
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WHEREAS, the Company has elected to satisfy certain regulations of the
NRC found at 10 C.F.R. ss.50.75(e) by the establishment of an external sinking
fund, consisting of the Funds described herein, to provide financial assurance
for the decommissioning of Palo Verde Unit 1, Palo Verde Unit 2 and Palo Verde
Unit 3; and
WHEREAS, the NMPUC has permitted the Company to include in its cost of
service for ratemaking purposes certain amounts in order to provide monies for
the Company's share of decommissioning costs with respect to the Palo Verde
Nuclear Generating Station ("Station"); and
WHEREAS, the Funds established herein are intended to satisfy the
Company's obligation to accumulate funds for the payment of its share of
Termination Costs for Palo Verde Unit 1, Palo Verde Unit 2 and Palo Verde Unit
3, in accordance with the requirements of Section 8A.7.2 of the ANPP
Participation Agreement; and
WHEREAS, pursuant to Section 468A of the Internal Revenue Code of 1986,
26 U.S.C. ss. 1 et seq., certain Federal income tax benefits are available to
the Company by creating and contributing monies to qualified nuclear
decommissioning reserve funds associated with the Station; and
WHEREAS, the Company wishes to establish both qualified nuclear
decommissioning reserve funds and nonqualified nuclear decommissioning reserve
funds to hold monies for decommissioning the Station; and
2
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WHEREAS, the Company wishes to establish a Master Trust for the
collective investment of the assets of the qualified and nonqualified nuclear
decommissioning reserve funds for the Station, wherein each Fund shall
constitute a separate trust under the Master Trust; and
WHEREAS, the assets of each of the qualified and nonqualified nuclear
decommissioning reserve funds shall be deemed to have been transferred to a
Master Trust to be held hereunder for the benefit of such Funds; and
WHEREAS, pursuant to the ANPP Participation Agreement, any trustee
hereunder shall be: (1) a corporation organized and existing under and by virtue
of the laws of the United States or of any State; (2) authorized under such laws
to exercise corporate trust powers; and (3) subject to supervision or
examination by federal or state banking or trust authorities and shall not be
owned by or subject to the control, except as provided therein, of the Company
or any other direct or indirect participant in the Station or any parent or any
other subsidiary of any parent of the Company or any other participant in the
Station.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the Company hereby agrees to deliver to the Trustee and the Trustee
3
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hereby agrees to receive the initial contribution of assets pursuant to this
Agreement on or before March 15, 1996; and
TO HAVE AND HOLD, such assets and such assets as may from time to time
be added thereto as provided herein, together with the proceeds and
reinvestments thereof unto the Trustee;
IN TRUST NEVERTHELESS, for the uses and purposes and upon the terms and
conditions hereinafter set forth:
I
DEFINITIONS AND PURPOSE
1.01 Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(1) "Agreement" shall mean and include this Master Decommissioning
Trust Agreement, as the same may from time to time be amended,
modified, or supplemented.
(2) "ANPP Participation Agreement" shall mean the Arizona Nuclear
Power Project Participation Agreement, dated as of August 23,
1973, among the Company, Arizona Public Service Company, Salt
River Project, Southern California Edison Company, El Paso
Electric Company, the Los Angeles Department of Water and Power
and the Southern California Public Power Authority, as
heretofore and hereafter amended pursuant to the terms thereof.
4
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<PAGE>
(3) "Authorized Representative" shall mean the Chief Executive
Officer, President, Treasurer, or any Vice President of the
Company, or any other person designated as an Authorized
Representative of the Company.
(4) "Board of Directors" shall mean the Board of Directors of the
Company, or the Executive Committee thereof, as duly elected
from time to time.
(5) "Certificate" or "Certification" shall mean a written
certificate signed by two Authorized Representatives of the
Company for a certificate of the Company.
(6) "Code" shall mean the Internal Revenue Code of 1986, as the same
may be amended from time to time.
(7) "Company" shall have the meaning set forth in the first
paragraph of this Agreement.
(8) "Decommissioning Costs" shall mean the costs incurred in
decommissioning the Plants and shall include Termination Costs
as defined in the ANPP Participation Agreement.
(9) "Disbursement Certificate" shall mean a document properly
completed and executed by two Authorized Representatives of the
Company and substantially in the form of Exhibit A hereto.
5
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<PAGE>
(10) "Excess Contribution" shall have the meaning set forth in
Section 2.03 hereof.
(11) "Fund" shall mean any one of the Qualified or Nonqualified
Funds.
(12) "Funds" shall mean the Qualified Funds and the Nonqualified
Funds, collectively.
(13) "Investment Manager(s)" shall mean the fiduciary specified in
the Investment Manager Agreement(s):
(a) Which has been retained by the Company to manage, acquire,
or dispose of any asset belonging to any Fund; and
(b) Which is:
(i) registered as an investment adviser under the
Investment Advisers Act of 1940, or
(ii) a bank, as defined in that Act, or
6
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<PAGE>
(iii) an insurance company qualified to perform, as
described in subsection (a) above, under the laws of
more than one state, and
(c) Which has acknowledged, in writing, that it is a fiduciary
with respect to the Funds, that it is qualified to act
under subsection (b) above, and has agreed to be bound by
all of the terms, provisions, and covenants of this
Agreement.
(14) "Investment Manager Agreement(s)" shall mean the agreement(s)
between the Company and an investment manager(s) selected by the
Company which agreement governs the management of the assets of
the Funds.
(15) "Master Trust" shall be used merely to refer to the Funds in the
aggregate and is not intended nor should it be construed to
constitute a separate entity.
(16) "Nonqualified Funds" shall mean the Palo Verde Unit 1
Nonqualified Fund, Palo Verde Unit 2 Nonqualified Fund and Palo
Verde Unit 3 Nonqualified Fund, collectively.
(17) "NMPUC" shall mean the New Mexico Public Utility Commission, as
defined and set forth in the New Mexico Public Utility Act,
Sections 62-3-1 et seq., New Mexico Statutes Annotated (1978).
7
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<PAGE>
(18) "Palo Verde Unit 1" shall mean Unit One of the Palo Verde
Nuclear Generating Station.
(19) "Palo Verde Unit 1 Qualified Fund" shall mean the Fund
established and maintained under this Agreement for
decommissioning Palo Verde Unit 1 to which monies are
contributed subject to the conditions and limitations of Section
468A of the Code, plus earnings and appreciation thereon.
(20) "Palo Verde Unit 1 Nonqualified Fund" shall consist of
contributions by the Company for decommissioning Palo Verde Unit
1 (but only to the extent such Contributions are not deposited
and maintained in the Palo Verde Unit 1 Qualified Fund) plus
earnings and appreciation thereon.
(21) "Palo Verde Unit 2" shall mean Unit Two of the Palo Verde
Nuclear Generating Station.
(22) "Palo Verde Unit 2 Qualified Fund" shall mean the Fund
established and maintained under this Agreement for
decommissioning Palo Verde Unit 2 to which monies are
contributed subject to the conditions and limitations of Section
468A of the Code, plus earnings and appreciation thereon.
8
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<PAGE>
(23) "Palo Verde Unit 2 Nonqualified Fund" shall consist of
contributions by the Company for decommissioning Palo Verde Unit
2 (but only to the extent such Contributions are not deposited
and maintained in the Palo Verde Unit 2 Qualified Fund) plus
earnings and appreciation thereon.
(24) "Palo Verde Unit 3" shall mean Unit Three of the Palo Verde
Nuclear Generating Station.
(25) "Palo Verde Unit 3 Qualified Fund" shall mean the Fund
established and maintained under this Agreement for
decommissioning Palo Verde Unit 3 to which monies are
contributed subject to the conditions and limitations of Section
468A of the Code, plus earnings and appreciation thereon.
(26) "Palo Verde Unit 3 Nonqualified Fund" shall consist of
contributions by the Company for decommissioning Palo Verde Unit
3 (but only to the extent such contributions are not deposited
and maintained in the Palo Verde Unit 3 Qualified Fund) plus
earnings and appreciation thereon.
9
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<PAGE>
(27) "Qualified Fund" shall mean a nuclear decommissioning reserve
fund as defined in section 468A(e) of the Code.
(28) "Service" shall mean the Internal Revenue Service.
(29) "Station" shall mean the Palo Verde Nuclear Generating Station
Units 1, 2 and 3, collectively.
(30) "Termination Costs" shall have the meaning set forth in the ANPP
Participation Agreement.
(31) "Trustee" shall have the meaning set forth in the first
paragraph of this Agreement.
(32) "Withdrawal Certificate" shall mean a document properly
completed and executed by two Authorized Representatives of the
Company and substantially in the form of Exhibit B hereto.
1.02 Authorization. The Trustee and the Company hereby represent and
warrant that each has full legal authority and is duly empowered to enter into
this Agreement, and has taken all action necessary to authorize the execution of
this Agreement by the officers and persons signing it.
1.03 Purposes. The exclusive purposes of this Agreement are to provide
assets for the decommissioning of the Station that are sufficient in the
aggregate: (1) to pay the Company's share (determined pursuant to Sections
10
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<PAGE>
8A.7.2 and 23.5.1 of the ANPP Participation Agreement) of Termination Costs of
Palo Verde Unit 1, Palo Verde Unit 2 and Palo Verde Unit 3; (2) to pay the costs
of managing, investing and administering the Funds, including, without
limitation, legal, accounting, actuarial and trustee expenses, and taxes, if
any, levied on the Funds or on any investment income derived therefrom; and (3)
to constitute qualified and nonqualified nuclear decommissioning funds for the
Units (the Qualified Funds being established pursuant to Section 468A of the
Code and any applicable successor provisions and the regulations thereunder).
The assets of the Qualified Funds may be used only in a manner authorized by
Code section 468A and the regulations thereunder.
1.04 Establishment of the Funds. By execution of this Agreement,
the Company:
(a) establishes the Funds, each of which shall
constitute a trust consisting of such
contributions as may be delivered to the
Trustee by the Company designated for such
Fund. Each Fund also shall include additional
contributions (or other contributions as
described in Section 2.02) designated for such
Fund, together with investments and
reinvestments thereon; and
(b) appoints Mellon Bank as Trustee of each of the
Funds.
11
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<PAGE>
1.05 Acceptance of Appointment. Upon the terms and conditions herein
set forth, Mellon Bank, N.A. accepts the appointment as Trustee of the Funds.
The Trustee shall receive any contributions deposited with it by the Company and
shall hold, manage, invest and administer such contributions, together with
earnings and appreciation thereon, in accordance with this Agreement.
1.06 Name of Master Trust. The contributions received by the Trustee
from the Company together with the proceeds, reinvestments and appreciation
thereof shall constitute the "Public Service Company of New Mexico Master
Decommissioning Trust."
1.07 Segregation of Master Trust. The Master Trust shall be divided by
the Trustee into the Funds as follows:
(a) Palo Verde Unit 1 Qualified Fund;
(b) Palo Verde Unit 1 Nonqualified Fund;
(c) Palo Verde Unit 2 Qualified Fund;
(d) Palo Verde Unit 2 Nonqualified Fund;
(e) Palo Verde Unit 3 Qualified Fund;
(f) Palo Verde Unit 3 Nonqualified Fund.
The Trustee shall maintain such records as are necessary to reflect
each Fund separately on its books from each other Fund and shall create and
maintain such subaccounts (including any subaccounts required to satisfy Federal
Energy Regulatory Commission requirements) within each Fund as the Company shall
direct.
12
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<PAGE>
II
DISPOSITIVE PROVISIONS
After payment of the expenses described in Section 5.01 hereof, the
Trustee shall distribute the assets of the Funds as follows:
2.01 Payment of Nuclear Decommissioning Costs. The Trustee shall make
payments of the Decommissioning Costs in accordance with the following
procedures:
(1) Authorized Representative. The Company shall promptly
notify the Trustee of the selection and appointment of any
Authorized Representative of the Company. The Trustee shall
have no duty to inquire into or investigate the continued
authority of such person to act as the Authorized
Representative. The Company shall provide the Trustee with
written notice of the termination of any Authorized
Representative's authority.
(2) Disbursements to Third Parties. Requests for payments of
Decommissioning Costs to any person (other than the
Company) for goods provided or labor or other services
rendered to the Company in connection with the
decommissioning of the Plants shall be submitted by the
Company to the Trustee on a Disbursement Certificate.
13
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(3) Reimbursement to the Company. Requests for payments to the
Company in reimbursement of Decommissioning Costs actually
incurred by the Company and paid by the Company to any
other person shall be submitted by the Company to the
Trustee on a Withdrawal Certificate.
(4) Payment of Decommissioning Costs. The Trustee shall pay
Decommissioning Costs when a Disbursement Certificate or
Withdrawal Certificate is filed with the Trustee, showing
with respect to each withdrawal of money:
(a) the name and address of the person or entity to whom
payment is due (which may be the Company);
(b) the amount of money to be paid; and
(c) the purpose for which the obligation to be paid was
incurred.
Each Disbursement Certificate or Withdrawal Certificate
must certify that the expenses paid constitute
Decommissioning Costs and shall provide satisfactory
evidence to the Trustee that such expenses have been
incurred.
14
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<PAGE>
2.02 Additions to the Funds. From time to time after the initial
contribution and prior to the termination of this Agreement, the Company may
make, and the Trustee shall accept, additional contributions of assets to
satisfy the purposes of this Agreement as set forth in Section 1.03, which
contributions shall be made to the applicable Fund(s).
2.03 Adjustments for Excess Contributions. The Trustee and the Company
understand and agree that the contributions made by the Company to any of the
Qualified Funds from time to time may exceed the amount permitted to be paid
into such fund(s) pursuant to Section 468A of the Code and any regulations
thereunder based upon changes in estimates, subsequent developments, or any
other event or occurrence which could not reasonably have been foreseen by the
Company at the time such contribution was made (Excess Contribution). Upon
Certification of the Company, setting forth the amount of the Excess
Contribution, the amount of any Excess Contribution (together with any income
accrued thereon) shall be paid to the person or persons specified by the Company
in a Certification to the Trustee.
2.04 Transfers Between Funds. The Trustee shall transfer assets between
Funds only upon written instructions from the Company.
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2.05 Designation of Funds. Upon: (a) the initial contribution; (b) any
withdrawal from any Fund for Decommissioning Costs pursuant to Section 2.01 or
for administrative expense pursuant to Section 5.01; (c) any addition to any
Fund pursuant to Section 2.02; or (d) any adjustment to any Fund pursuant to
section 2.03, the Company shall designate, by Certificate, the appropriate Funds
which are to be credited or debited by such contribution, withdrawal, addition,
or adjustment, and the Trustee shall credit or debit the appropriate Funds in
accordance with such designation.
2.06 Distribution of Income. Upon written consent of the Company,
assets of a Qualified Fund established pursuant to this Agreement may be pooled,
but only with the assets of another Qualified Fund established pursuant to this
Agreement, and assets of a Nonqualified Fund established pursuant to this
Agreement may be pooled, but only with the assets of another Nonqualified Fund
established pursuant to this Agreement, provided that the following conditions
are satisfied: (i) the Trustee must separately account for the contributions,
earnings, expenses, and distributions of such Fund; (ii) the earnings and
expenses must be reasonably apportioned among such Funds; (iii) the books and
records of such Funds must enable the Service to verify that the requirements of
Code section 468A and the regulations thereunder are satisfied. Any pooling
arrangement undertaken as permitted in this Section 2.06 can be terminated at
any time by any Fund. No Fund in such a pooling arrangement may substitute for
itself in such arrangement any person that is not a member of the pooling
arrangement. Notwithstanding the foregoing, the provisions of this Section 2.06
16
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<PAGE>
shall not limit the Trustee's authority to invest in permissible common or
collective trust funds.
2.07 No Transferability of Interest in Trust. The interest of the
Company in the Funds is not transferable by the Company, whether voluntarily or
involuntarily, nor subject to the claims of creditors of the Company, provided,
however, that any creditor of the Company as to which a Disbursement Certificate
has been properly completed and submitted to the Trustee may claim directly
against the appropriate Fund in an amount not to exceed the amount specified on
such Disbursement Certificate. Nothing herein shall be construed to prohibit a
transfer of the Company's interest in a Fund upon sale of all or part of the
Company's ownership or leasehold interest in any plant or plants.
2.08 Revocation and Termination of Agreement. The Company reserves the
power to revoke this Agreement, in whole or in part, by instrument or
instruments in writing delivered to the Trustee ninety (90) days in advance of
the proposed revocation; provided, however, that the assets of the Funds are
transferred to another decommissioning trust or otherwise dedicated to payment
of Decommissioning Costs and other expenses permitted hereunder; provided
further, however, that absent revocation by the Company, this Agreement will
terminate (in whole or in part) upon the earlier of:
(1) Receipt by the Trustee of a Certificate from the Company
stating that substantial completion of the nuclear
decommissioning of the Plants has occurred (as defined in
Treasury Regulations promulgated under Code Section 468A
and consistent with the requirements of the ANPP
Participation Agreement);
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(2) The twentieth anniversary of the date of the death of the
survivor from among a class consisting of all of the
descendants of John D. Rockefeller, late of New York, New
York, born on or prior to January 1, 1996; or
(3) At such earlier time as the Company may terminate all or a
portion of the Funds.
2.09 Termination of Qualified Funds. One or more of the Qualified
Funds shall terminate upon the earlier of:
(1) Its disqualification from the application of Section 468A
of the Code, whether pursuant to an administrative action
on the part of the Service or the decision of any court of
competent jurisdiction, but in no event earlier than the
date on which all available appeals have been either
prosecuted or abandoned and the period of time for taking
any further appeals has elapsed; or
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(2) The disposition by the Company of any interest in the
Plants, to the extent provided in regulations by the
Service promulgated under Code Section 468A.
2.10 Distribution of Assets Upon Termination. Upon termination of any
one or more of the Fund(s), the Trustee shall assist the Investment Manager in
liquidating the assets of the Fund(s), and thereupon distributing the
then-existing assets of the Fund(s) (including accrued, accumulated, and
undistributed net income) less final administrative expense (including accrued
taxes) to the Company.
2.11 Alterations and Amendments. The Trustee and the Company understand
and agree that modifications or amendments may be required to this Agreement
from time to time consistent with the purposes of this Agreement.
Notwithstanding anything herein to the contrary, no amendment which affects the
specific rights, duties, responsibilities, or liabilities of the Trustee, shall
be made without its consent and no amendment shall be effective prior to the
Trustee receiving reasonable notice thereof. No amendment or modification to the
Agreement is permitted that would cause the assets of the Qualified Funds to be
used in a manner contrary to that authorized by Code section 468A and the
regulations thereunder.
2.12 No Authority to Conduct Business. The purpose of this Agreement is
limited to the matters set forth in Section 1.03 above, specifically, and there
is no objective to carry on any business unrelated to the purposes set forth in
Section 1.03 hereof, or to divide the gains therefrom.
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<PAGE>
III
TRUSTEES
3.01 Designation and Qualification of Successor Trustee(s). The Company
by this Agreement has appointed the Trustee named herein having all requisite
corporate power and authority to act as the sole Trustee. The Trustee shall act
in accordance with the directions provided to it by the Company under the terms
of this Agreement. At any time during the term of this Trust, the Company shall
have the right to remove the Trustee acting hereunder and appoint another
qualified corporation, pursuant to the requirements of the ANPP Participation
Agreement, as a Successor Trustee upon sixty (60) days' notice in writing to the
Trustee, or upon such shorter notice as may be acceptable to the Trustee. In the
event that the Trustee or any Successor Trustee shall: (a) become insolvent or
admit in writing its insolvency; (b) be unable or admit in writing its inability
to pay its debts as such debts mature; (c) make a general assignment for the
benefit of creditors; (d) have an involuntary petition in bankruptcy filed
against it; (e) commence or otherwise seek to take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or liquidation
law, statute, or proceeding; or (f) resign, the Trustees or Successor Trustee
shall cease to act as a fiduciary of the Funds established pursuant to this
Agreement and the Company shall appoint a Successor Trustee. In the event of any
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<PAGE>
such removal or resignation, the Trustee or Successor Trustee shall have the
right to have its accounts settled as provided in Section 3.04 hereof. Any
successor to the Company, as provided herein, shall have the same right to
remove and to appoint any Trustee or Successor Trustee.
Any Successor Trustee shall qualify by a duly acknowledged acceptance
of this Master Trust, delivered to the Company. Upon acceptance of such
appointment by the Successor Trustee, the Trustee shall assign, transfer and pay
over to such Successor Trustee the monies and properties then constituting the
Funds. Any Successor Trustee shall have all the rights, powers, duties and
obligation herein granted to the original Trustee.
3.02 Resignation. The Trustee or any Successor Trustee hereof may
resign and be relieved as Trustee at any time without prior application to or
approval by or order of any court by a duly acknowledged instrument, which shall
be delivered to the Company by the Trustee not less than sixty (60) days prior
to the effective date of the Trustee's resignation or upon such shorter notice
as may be acceptable to the Company.
3.03 Compensation. The Trustee shall be entitled to compensation as may
be agreed from time to time by the Company and the Trustee. Such compensation
shall be payable by the Company, shall constitute administrative costs and shall
be reimbursable by the Master Trust.
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<PAGE>
3.04 Accounts. The Trustee shall present financial statements to the
Company on a quarterly basis (within forty-five (45) days following the close of
each quarter), or at such other frequency as the Company shall from time to time
require. The financial statements shall show the financial condition of each of
the Funds, including, without limitation, income and expenses of each of the
Funds for the period. The Trustee shall assume responsibility for employing
independent public accountants to audit the financial statements not less
frequently than annually, subject to the provisions contained in Section 5.05.
The Company shall have the right to object to any of the Trustee's audited
financial statements. If the Company desires to object to the Trustee's audited
financial statements it shall deliver notice of its objection to the Trustee in
writing within one hundred and eighty (180) days from the day the Trustee shall
mail or deliver such audited financial statements to the Company. If no written
objection is made within that time, the presentation of the audited financial
statements to the Company shall release and discharge the Trustee with respect
to all acts or omissions; provided, however, that nothing contained herein shall
be deemed to relieve the Trustee of any liability which may be imposed pursuant
to Section 3.06 hereof.
3.05 Tax Returns and Other Reports. The Trustee and the Company shall
cooperate in the preparation of income or franchise tax returns or other reports
as may be required from time to time, including reports required pursuant to the
ANPP Participation Agreement, and, subject to the limitations contained in
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<PAGE>
Section 5.05, may employ independent certified public accountants or other tax
counsel to prepare or review such returns and reports. The Trustee shall present
to the Company on a monthly basis a report setting forth all investments
purchased by the Investment Manager(s) during the previous month.
3.06 Liability. The Trustee shall be liable for the acts, omissions or
defaults of its own officers and employees. The Trustee shall not be liable for
the acts, omissions or defaults of its agents, provided any such agents were
selected with reasonable care and the performance and status of the agent is
monitored with reasonable care throughout the duration of the agency
relationship. The Trustee shall not be liable for the failure or default of any
bank or depositary, provided any such bank or depositary was selected with
reasonable care and its performance and status is monitored with reasonable
care. Except where the Trustee exercises its investment discretion as provided
in this Agreement, the Trustee shall not be liable for the acts or omissions of
any Investment Manager(s) acting hereunder. Except as provided in Section 3.04,
the Trustee shall not be liable in regard to the exercise or nonexercise of any
powers and discretion properly delegated pursuant to the provisions of this
Agreement.
Notwithstanding the foregoing, the Trustee (and not the Funds), to the
extent of its investment discretion provided under Article VI, shall be liable
for any consequences resulting from investing assets of the Qualified Funds in
other than permissible assets or from self-dealing as defined in Code section
468A(e)(5) and Treasury Regulations section 1.468A-5(b).
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<PAGE>
The Trustee is prohibited from doing any act or knowingly engaging in
any transaction that would violate the terms and conditions of any instructions
provided by written Certificate of the Company that are consistent with this
Agreement, or contravening any provision of this Agreement. Upon receipt of a
Certificate of the Company giving the Trustee notice of either (a) instructions
of the Company to the Trustee, or (b) acts or transactions the Company believes
constitute a violation by the Trustee of the provisions of this Agreement, the
Trustee shall follow the instructions of the Company, and/or cease and desist
from the acts identified in the Certificate as violating the provisions of this
Agreement. To the extent the Trustee fails to follow the instructions of the
Company, or continues with any act identified in the Certificate as violating
the provisions of this Agreement, from the date of receipt of the Certificate
providing the instructions and/or notice of violation of the provisions of this
Agreement, the Trustee (and not any Fund) shall be liable for all consequences
flowing from any failure to follow the Company's instructions, and/or flowing
from any violation by the Trustee of the provisions of this Agreement.
Notwithstanding the foregoing, the Trustee (and not any Fund) shall be liable
for all consequences flowing from any violation by the Trustee of the provisions
of this Agreement, regardless of whether notice thereof was provided by the
Company.
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<PAGE>
3.07 Indemnity of Trustee. The Company hereby agrees to indemnify the
Trustee for, and to hold it harmless against, any loss, liability or expense
incurred without gross negligence, willful recklessness or bad faith on the part
of the Trustee, arising out of or in connection with its entering into this
Agreement and carrying out its duties hereunder, including the costs and
expenses of defending itself against any claim of liability, provided such loss,
liability or expense does not result from self-dealing under Section 3.06
hereof, and provided further that no such costs or expenses shall be paid if the
payment of such costs or expenses is prohibited by section 468A of the Code or
regulations thereunder.
IV
INVESTMENTS
4.01 Appointment of Investment Manager(s). The Company may appoint one
or more Investment Managers to direct the investment of all or part of the
assets of the Funds. The Company shall also have the right to remove any such
Investment Manager. The appointment of the Investment Manager(s) shall be made
in accordance with any procedure specified by the Company. The Company shall
provide notice of any such appointment by Certification to the Trustee which
shall specify the portion of the Funds with respect to which the Investment
Manager(s) has been designated. The Investment Manager(s) shall certify in
writing to the Trustee that it is qualified to act in the capacity provided
under the Investment Manager Agreement, shall accept its appointment as such
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<PAGE>
Investment Manager(s), shall certify the identity of the person or persons
authorized to give instructions or directions to the Trustee on its behalf,
including specimen signatures, and shall undertake to perform the duties imposed
on it under the Investment Manager Agreement. The Trustee may continue to rely
upon all such certifications unless otherwise notified in writing by the Company
or the Investment Manager(s), as the case may be.
4.02 Direction by Investment Managers. Notwithstanding Article VI, the
Investment Manager(s) designated by the Company to manage any portion of the
assets of the Funds shall have authority to manage, acquire, and dispose of the
assets of the Funds, or a portion thereof as the case may be. The Investment
Manager(s) is authorized to invest in securities specified in Section 6.02. The
Investment Manager(s) shall have the power and authority, exercisable in its
sole discretion at any time, and from time to time, to issue and place orders
for the purchase or sale of portfolio securities directly with qualified brokers
or dealers. The Trustee, upon proper notification from an Investment Manager,
shall execute and deliver in accordance with the appropriate trading
authorizations. Written notification of the issuance of each such authorization
shall be given promptly to the Trustee by the Investment Manager(s), and the
Investment Manager(s) shall cause the execution of such order to be confirmed in
writing to the Trustee by the broker or dealer. Such notification shall be
proper authority for the Trustee to pay for portfolio securities purchased
against receipt thereof and to deliver portfolio securities sold against payment
therefor, as the case may be.
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<PAGE>
The authority of the Investment Manager(s) and the terms and conditions
of the appointment and retention of the Investment Manager(s) shall be the
responsibility solely of the Company, and the Trustee shall not be deemed to be
a party to or to have any obligations under any agreement with the Investment
Manager(s). Any duty of supervision or review of the acts, omissions or overall
performance of the Investment Manager(s), shall be the exclusive responsibility
of the Company, and, except as provided in Section 3.06, the Trustee shall have
no duty to review any securities or other assets purchased by the Investment
Manager(s) or to the Company with respect to the exercise or nonexercise of any
power by the Investment Manager(s).
Unless the Trustee participates knowingly in, or knowingly undertakes
to conceal an act or omission of an Investment Manager(s) knowing such act or
omission to be a breach of the fiduciary responsibility of the Investment
Manager(s), the Trustee shall be under no liability of any kind which may result
by reason of any action taken by it in accordance with any direction of the
Investment Manager(s). In any event, the Trustee shall be under no liability for
any loss of any kind by reason of changes in value of the investments purchased,
sold, or retained by the Investment Manager(s), nor for the risk or
diversification of the portfolio, nor for the turnover of the investments, nor
for any other aspect of a portfolio for which an Investment Manager(s) has been
appointed.
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<PAGE>
V
TRUSTEE'S GENERAL POWERS
The Trustee Shall have, with respect to the Funds, the following
powers, all of which powers are fiduciary powers to be exercised in a fiduciary
capacity and in the best interests of the Funds and the beneficiaries thereof,
and which are to be exercised as the Trustee, acting in Such fiduciary capacity,
in its discretion, shall determine and, which, except as otherwise provided, are
intended in no way to limit the powers of the office, namely:
5.01 Payment of Expenses of Administration. To pay all ordinary and
necessary expense and other incidental costs including, but not limited to,
Investment Manager(s) fees and the fees and/or compensation of any professional
advisors, legal counsel or administrative support hired by the Company, expenses
and insurance policy premiums incurred in connection with this Agreement or the
Funds in the discharge of the Trustee's fiduciary obligations under this
Agreement, but only to the extent that such amount(s): (1) may be incurred and
paid from the Funds without causing the Funds to become disqualified from the
application of Section 468A of the Code or any applicable successor provisions;
and (2) are permissible under the ANPP Participation Agreement.
5.02 Extension of Obligations and Negotiation of Claims. To renew or
extend the time of payment of any obligation, secured or unsecured, payable to
or by this Trust, for as long a period or periods of time and on such terms as
the Trustee shall determine, and to adjust, settle, compromise, and arbitrate
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<PAGE>
claims or demands in favor of or against this Trust, including claims for taxes,
upon such terms as the Trustee may deem advisable, subject to the limitations
contained in Section 6.03 (regarding self-dealing), and the procedures contained
in Section 2.01.
5.03 Registration of Securities. To hold any stocks, bonds, securities,
and/or other property in the name of a nominee, in a street name, or by other
title-holding device, without indication of trust.
5.04 Location of Assets. To keep any property belonging to any Fund at
any place in the United States.
5.05 Retention of Professional Services. To execute any of the powers
hereof and perform the duties required of it hereunder by or through its
employees, agents, attorneys, contractors or receivers.
5.06 Delegation of Ministerial Powers. To delegate to other persons
such ministerial powers and duties as the Trustee may deem to be advisable.
5.07 Powers of Trustee to Continue Until Final Distribution. To
exercise any of such powers after the date on which the principal and income of
the Funds shall have become distributable and until such time as the entire
principal of, and income from, the Funds shall have been actually distributed by
the Trustee. It is intended that distribution of the assets of the Funds will
occur as soon as possible upon termination of the Agreement, subject, however,
to the limitations contained in Sections 2.08, 2.09 and 2.10 hereof.
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<PAGE>
5.08 Voting. To vote in person or by proxy (at the direction of an
Investment Manager to the extent an asset is being managed by an Investment
Manager) any stocks, bonds or other securities held by the Funds.
5.09 Power to Join in or Dissent From Certain Events. To join in,
dissent or oppose the reorganization, recapitalization, consolidation, sale or
merger of corporations or properties in which the Funds may hold stocks, bonds
or other securities or in which the Funds may be interested, upon such terms and
conditions as deemed wise; to pay any assessments or subscriptions in connection
therewith, and to accept any securities or property, whether or not the Trustee
would be authorized to invest in such securities or property, which may be
issued upon any such reorganization, recapitalization, consolidation, sale or
merger and thereafter to hold the same, without any duty to sell.
5.10 Prohibition Against Real Estate Investment. Notwithstanding
anything else in this Agreement to the contrary, including, without limitation,
any specific or general power granted to the Trustee and the Investment
Manager(s), no portion of the Funds shall be invested in real estate. For
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<PAGE>
purposes of this section 5.10, "real estate" includes, but is not limited to,
real property, leaseholds or mineral interests.
5.11 Discretion in Exercise of Powers. To do any and all other acts
which the Trustee shall deem proper to effectuate the powers specifically
conferred upon it by this Agreement, provided, however, that the Trustee may
not, in its discretionary exercise of powers, do any act or knowingly engage in
any transaction which would:
(1) Disqualify the Qualified Funds from the application of
Section 468A (or any applicable successor provision) of the
Code; or
(2) Contravene any provision of this Agreement; or
(3) Violate any terms or conditions of applicable law.
VI
TRUSTEE'S INVESTMENT POWERS
The Trustee recognizes the authority of the Investment Manager(s) to
manage, invest, and reinvest the assets of the Funds pursuant to the Investment
Manager Agreement and as provided in Section 4.02 of this Agreement, and the
Trustee agrees to cooperate with the Investment Manager(s) as deemed necessary
to accomplish these tasks; provided, however, that to the extent an Investment
Manager is not otherwise appointed by the Company, or to the extent that an
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<PAGE>
Investment Manager has not invested Fund monies, the Trustee shall act in the
capacity of the Investment Manager as provided in Article IV. Upon the written
authorization of the Company from time to time, the Trustee shall have the
following investment powers, all of which are fiduciary powers to be executed in
a fiduciary capacity and in the best interest of the Funds and the beneficiaries
thereof, and which are to be exercised by the Trustee, acting in such fiduciary
capacity, in its discretion, shall determine and, except as otherwise provided,
which are intended in no way to limit the powers of the office, namely:
6.01 Investment Standards. The Trustee in its exercise of investment
discretion as authorized by the Company and consistent with any investment
standards of the NMPUC, any other relevant regulatory agency and the ANPP
Participation Agreement, shall hold, manage, and invest the assets of the Funds,
except as provided in Section 6.02;
6.02 Investment of Funds. To invest and reinvest all or part of the
Funds, including any undistributed income therefrom; provided, however, that no
such investment or reinvestment of the Funds may be made by the Trustee which
would contravene any instructions issued by the Company or any applicable
investment standards. In all cases, however, the total investments by the
Trustee must be sufficiently liquid to enable the Master Trust to fulfill the
purposes of the Master Trust and to satisfy obligations of the Master Trust as
such obligations become due. Nothing in this Section 6.02 shall be construed as
authorizing the Trustee to carry on any business or to divide the gains
therefrom.
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<PAGE>
6.03 Management of Master Trust. To sell, exchange, partition, or
otherwise dispose of all or any part of the Master Trust at public or private
sale, without prior application to, or approval by, or order of any court, upon
such terms and in such manner and at such prices as the Trustee shall determine;
to modify, renew or extend bonds, notes or other obligations or any installment
of principal thereof or any interest due thereon and to waive any defaults in
the performance of the terms and conditions thereof; and to execute and deliver
any and all bills of sale, assignments, bonds or other instruments in connection
with these powers, all at such times, in such manner and upon such terms and
conditions as the Trustee may deem expedient to accomplish the purposes of this
Master Trust as set forth in Section 1.03.
Notwithstanding anything contained in this Agreement to the contrary,
the Trustee may not authorize or carry out any sale, exchange or other
transaction which would constitute an act of "self-dealing" within the meaning
of Section 4951 of the Code, as such section is made applicable to the Qualified
Funds by Section 468A(e)(5) of the Code, any regulations thereunder, and any
applicable successor provision.
6.04 Disposition of Investments. When required to make any payments
under Section 2.01 or 5.01 hereof, from monies over which the Trustee has
discretion, the Trustee shall sell investments at the best price reasonably
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<PAGE>
obtainable, or present investments for prepayment, but only upon written
direction from the Company. The Trustee shall have no liability, except for its
own negligence or willful misconduct, with respect to any sale or prepayment of
an investment directed by the Company or an Investment Manager or made by an
Investment Manager through a broker-dealer.
6.05 Power to Hold Uninvested Cash. To hold uninvested cash in a
commercial bank of the Trustee or that of an affiliate, as it shall deem
necessary.
6.06 Cash Sweep Provision. To invest in any collective, common or
pooled trust fund operated or maintained exclusively for the commingling of and
collective investment of monies or other assets including any such funds
operated or maintained by the Trustee or an affiliate.
VII
MISCELLANEOUS
7.01 Headings. The section headings set forth in this Agreement and the
Table of Contents are inserted for convenience of reference only and shall be
disregarded in the construction or interpretation of any of the provisions of
this Agreement.
7.02 Particular Words. Any word contained in the text of this Agreement
shall be read as the singular or plural and as the masculine, feminine, or
neuter as may be applicable or permissible in the particular context. Unless
otherwise specifically stated, the word "person" shall be taken to mean and
include an individual, partnership, association, trust, company, or corporation.
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<PAGE>
7.03 Parties Interested Herein. Nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon, or to give to, any
person or corporation, other than the Company and the Trustee any right, remedy
or claim under or by reason of this Agreement, or any covenant, condition or
stipulation contained herein. The Company shall be entitled to receive payments
for Decommissioning Costs and administrative expenses of the Funds which the
Company may incur in carrying out the purposes set forth in Section 1.03 of this
Agreement.
7.04 Severability of Provisions. If any provision of this Agreement or
its application to any person or entity or in any circumstances shall be invalid
and unenforceable, the application of such provision to persons and in
circumstances other than those as to which it is invalid or unenforceable and
the other provisions of this Agreement, shall not be affected by such invalidity
or unenforceability.
7.05 Form and Content of Communications. The names of any person
authorized to act on behalf of the Company shall be certified, with the specimen
signature of such person, to the Trustee by the Company. Until it receives
appropriate written evidence to the contrary, the Trustee shall be fully
protected in relying upon or acting in accordance with any written notice,
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<PAGE>
instruction, direction, certificate, resolution, or other communication believed
by it to be genuine and to be signed and/or certified by any proper person, and
the Trustee shall be under no duty to make any investigation or inquiry as to
the truth or accuracy of any statement contained therein. Until notified in
writing to the contrary, the Trustee shall have the right to assume that there
has been no change in the identity or authority of any person previously
certified to it hereunder.
7.06 Delivery of Notices Under Agreement. Any notice required by this
Agreement to be given to the Company or the Trustee shall be deemed to have been
properly given when mailed, postage prepaid, by registered or certified mail, to
the person to be notified as set forth below:
If to the Company:
PUBLIC SERVICE COMPANY OF NEW MEXICO Alvarado Square Albuquerque, New Mexico
87158
Attention: Robert G. McMahon
If to the Trustee:
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258-0001
Attention: Denise A. Fuhrer
The Company or the Trustee may change that address by delivering notice thereof
in writing to the other party.
7.07 Successors and Assigns. Subject to the provisions of Sections 2.07
and 3.01, this Agreement shall be binding upon and inure to the benefit of the
Company, the Trustee and their respective successors, assigns, personal
representatives, executors and heirs.
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<PAGE>
7.08 Governing Jurisdiction. Each Fund is a Pennsylvania trust and all
questions pertaining to its validity, construction, and administration shall be
determined in accordance with the laws of the Commonwealth of Pennsylvania to
the extent not preempted by Federal law.
7.09 Accounting Year. Each Fund shall operate on an accounting year
which coincides with the calendar year, January 1 through December 31.
7.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
7.11 Disbursement Withdrawal Certificate. No provision of this
Agreement shall be construed or applied so as to require the preparation of a
Disbursement Certificate or a Withdrawal Certificate to authorize the payment of
compensation to the Trustee under Section 3.03 or of the expenses of
administration under Section 5.01.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Trustee have set their hands
and seals to this Agreement as of the day and year first above written.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By: ________________________________
Title
Attest: ____________________________
Title
MELLON BANK, N.A.
By: ________________________________
Title
Attest: ____________________________
Title
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<PAGE>
Exhibit A
DISBURSEMENT CERTIFICATE
The undersigned, being Authorized Representatives of Public
Service Company of New Mexico ("Company"), a New Mexico corporation, and, in
such capacity, being authorized and empowered to execute and deliver this
certificate, hereby certify to the Trustee pursuant to Section 2.01 of the
Public Service Company of New Mexico Master Decommissioning Trust Agreement for
Palo Verde Nuclear Generating Station ("Palo Verde"), dated March ___, 1995:
(1) there is due and owing to each payee ("Payee") [all/a
portion] of the invoiced cost to the Company for goods or
services provided in connection with the decommissioning of
Unit [One/Two/Three] of Palo Verde as evidenced by the
Invoice Schedule (with supporting exhibits) attached as
Exhibit 1 hereto;
(2) all such amounts due and owing to the Payees constitute
Decommissioning Costs; and
(3) all conditions precedent to the making of this withdrawal
and disbursement set forth in any agreement between such
Payee and the Company have been fulfilled.
Accordingly, you are hereby authorized to withdraw $__________
from the [Palo Verde Unit 1/Palo Verde Unit 2/Palo Verde Unit 3]
[Qualified/Nonqualified] Fund in order to permit payment of such sum to be made
to Payees for such purpose. You are further authorized to disburse such sum,
once withdrawn, directly to such Payees in the following manner: [DESCRIBE:
JOINT PAYEE CHECK, WIRE TRANSFER, ETC.] on or before , 19__.
Executed this day of , 19__.
By:
--------------------------------
Authorized Representative
--------------------------------
Authorized Representative
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<PAGE>
Exhibit B
WITHDRAWAL CERTIFICATE
The undersigned, being Authorized Representatives of Public
Service Company of New Mexico ("Company"), a New Mexico corporation, and in such
capacity, being duly authorized and empowered to execute and deliver this
certificate, hereby certify to the Trustee pursuant to Section 2.01 of the
Public Service Company of New Mexico Master Decommissioning Trust Agreement for
Palo Verde Nuclear Generating Station dated March __, 1995:
(1) there is due and owing to the Company [all/a portion] of
the invoiced cost to the Company for goods or services
provided in connection with the decommissioning of Palo
Verde as evidenced by the Invoice Schedule with supporting
exhibits attached as Exhibit 1 hereto;
(2) all such amounts have been paid by the Company and
constitute Decommissioning Costs; and
(3) all conditions precedent to the making of this withdrawal
and disbursement and the payment by the Company of the
Decommissioning Costs set forth in any agreement between
such payee of the Companies and the Company have been
fulfilled.
Accordingly, you are hereby authorized to withdraw $__________
from the [Palo Verde Unit 1/Palo Verde Unit 2/Palo Verde Unit 3]
[Qualified/Nonqualified] Fund in order to permit payment of such sum to be made
to the Company for such purpose. You are further authorized to disburse such
sum, once withdrawn, directly to such Payees in the following manner: [DESCRIBE:
JOINT PAYEE CHECK, WIRE TRANSFER, ETC.] on or before , 19__.
Executed this day of , 19__.
By:
--------------------------------
Authorized Representative
---------------------------------
Authorized Representative
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<PAGE>
ARTHUR
ANDERSEN
ARTHUR ANDERSEN LLP
May 8, 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 its Form 10-Q for the
quarter ended March 31, 1996, which includes our report dated May 8, 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 March 31, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,573,091
<OTHER-PROPERTY-AND-INVEST> 35,190
<TOTAL-CURRENT-ASSETS> 295,574
<TOTAL-DEFERRED-CHARGES> 136,596
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,040,451
<COMMON> 208,870
<CAPITAL-SURPLUS-PAID-IN> 468,257
<RETAINED-EARNINGS> 46,531
<TOTAL-COMMON-STOCKHOLDERS-EQ> 723,658
0
12,800
<LONG-TERM-DEBT-NET> 728,860
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 41
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 575,092
<TOT-CAPITALIZATION-AND-LIAB> 2,040,451
<GROSS-OPERATING-REVENUE> 241,904
<INCOME-TAX-EXPENSE> 15,590
<OTHER-OPERATING-EXPENSES> 188,374
<TOTAL-OPERATING-EXPENSES> 203,429
<OPERATING-INCOME-LOSS> 38,475
<OTHER-INCOME-NET> 817
<INCOME-BEFORE-INTEREST-EXPEN> 39,292
<TOTAL-INTEREST-EXPENSE> 12,844
<NET-INCOME> 26,448
147
<EARNINGS-AVAILABLE-FOR-COMM> 26,301
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 12,085
<CASH-FLOW-OPERATIONS> 44,214
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
EXHIBIT 99.3
================================================================================
TRUST INDENTURE, MORTGAGE, SECURITY AGREEMENT AND
ASSIGNMENT OF RENTS
Dated as of December 16, 1985
between
THE FIRST NATIONAL BANK OF BOSTON, not
in its individual capacity, but solely
as Owner Trustee under a Trust
Agreement dated as of December 16,
1985, with BURNHAM LEASING
CORPORATION
and
CHEMICAL BANK,
as Indenture Trustee
================================================================================
Sale and Leaseback of an Undivided Interest in
Palo Verde Nuclear Generating Station Unit 1
and Certain Common Facilities
================================================================================
6091.BURNHAM.2898.51:1
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
CONSTRUCTION, GOVERNING LAW, INTERPRETATION
AND DEFINITIONS
SECTION 1.1 Governing Law......................................... 2
SECTION 1.2 Headings and Table of Contents ....................... 2
SECTION 1.3 Definitions; Construction of
References ........................................... 3
SECTION 1.4 Disclosure of Beneficiaries .......................... 3
ARTICLE II
SECURITY
SECTION 2.1 Grant of Security Interest;
Mortgage ............................................ 4
SECTION 2.2 Payments Under the Facility Lease ................... 6
SECTION 2.3 Release of Lien on Lease Indenture
Estate .............................................. 6
SECTION 2.4 Power of Attorney ................................... 9
6091.20.2898.51:1
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<PAGE>
TABLE OF CONTENTS (Continued)
Page
ARTICLE III
ISSUE, EXECUTION, AUTHENTICATION, FORM AND
REGISTRATION OF NOTES
SECTION 3.1 Limitation on Notes ................................ 9
SECTION 3.2 Execution of Notes of .............................. 10
SECTION 3.3 Effect of Certificate of
Authentication ..................................... 10
SECTION 3.4 Creation of the Initial Series
Note; Aggregate Principal Amount,
Dating and Terms; Prerequisites to
Authentication and Delivery of
Initial Series Note; Application
of Proceeds ........................................ 11
SECTION 3.5 Additional Notes ................................... 12
SECTION 3.6 Security for and Parity of Notes ................... 14
SECTION 3.7 Source of Payments Limited ......................... 15
SECTION 3.8 Place and Medium of Payment ........................ 15
SECTION 3.9 Prepayment and Notes; Assumption by
Lessee; Notice of Assumption or
Prepayment ......................................... 16
SECTION 3.10 Mutilated, Destroyed, Lost or
Stolen Notes ....................................... 18
SECTION 3.11 Allocation of Principal and
Interest ........................................... 19
6091.20.2898.51:1
- ii -
<PAGE>
TABLE OF CONTENTS (Continued)
Page
ARTICLE IV
REGISTRATION, TRANSFER, EXCHANGE,
CANCELLATION AND OWNERSHIP OF NOTES
SECTION 4.1 Register of Notes .................................. 19
SECTION 4.2 Registration of Transfer or
Exchange of Notes .................................. 19
SECTION 4.3 Cancellation of Notes .............................. 20
SECTION 4.4 Limitation on Timing of
Registration of Notes .............................. 20
SECTION 4.5 Restrictions on Transfer Resulting
from Federal Securities Laws;
Legend ............................................. 21
SECTION 4.6 Charges upon Transfer or Exchange
of Notes ........................................... 21
SECTION 4.7 Inspection of Register of Notes .................... 21
SECTION 4.8 Ownership of Notes ................................. 22
6091.20.2898.51:1
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<PAGE>
TABLE OF CONTENTS (Continued)
Page
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME AND PROCEEDS FROM THE LEASE INDENTURE
ESTATE
SECTION 5.1 Basic Rent, Interest on Overdue
Installments of Basic Rent and
Prepayments of Interest ............................ 22
SECTION 5.2 Amounts Received as Result of
Event of Loss, Deemed Loss Event,
Exercise of Option to Terminate or
Exercise of Cure or Special
Purchase Option .................................... 24
SECTION 5.3 Amounts Received After, or Held at
Time of, Indenture Event of
Default under Section 6.2 .......................... 24
SECTION 5.4 Amounts Received for Which
Provision Is Made in a Transaction
Document ........................................... 26
SECTION 5.5 Amounts Received for Which No
Provision Is Made .................................. 26
SECTION 5.6 Payments to Owner Trustee .......................... 27
SECTION 5.7 Excepted Payments .................................. 27
6091.20.2898.51:1
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<PAGE>
TABLE OF CONTENTS (Continued)
Page
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS OF
OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES
OF THE INDENTURE TRUSTEE
SECTION 6.1 Representations, Warranties and
Covenants of Owner Trustee ......................... 27
SECTION 6.2 Indenture Events of Default ........................ 28
SECTION 6.3 Enforcement of Remedies ............................ 29
SECTION 6.4 Specific Remedies; Enforcement of
Claims without Possession of
Notes .............................................. 30
SECTION 6.5 Rights and Remedies Cumulative ..................... 31
SECTION 6.6 Restoration of Rights and
Remedies ........................................... 32
SECTION 6.7 Waiver of Past Defaults ............................ 32
SECTION 6.8 Right of Owner Trustee to Pay
Rent; Note Purchase; Substitute
Lessee ............................................. 33
SECTION 6.9 Further Assurances ................................. 35
SECTION 6.10 Right of Indenture Trustee To
Perform Covenants, etc ............................. 35
SECTION 6.11 Certain Other Rights of the Owner
Trustee ............................................ 35
6091.20.2898.51:1
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<PAGE>
TABLE OF CONTENTS (Continued)
Page
ARTICLE VII
CERTAIN DUTIES OF THE OWNER TRUSTEE AND THE
INDENTURE TRUSTEE
SECTION 7.1 Duties in Respect of Events of
Default, Deemed Loss Events and
Events of Loss; Acceleration of
Maturity ........................................... 36
SECTION 7.2 Duties in Respect of Matters
Specified in Directive ............................. 37
SECTION 7.3 Indemnification .................................... 38
SECTION 7.4 Limitations on Duties; Discharge
of Certain Liens Resulting from
Claims Against Indenture Trustee ................... 38
SECTION 7.5 Restrictions on Dealing with Lease
Indenture Estate ................................... 39
SECTION 7.6 Filing of Financing Statements and
Continuation Statements ............................ 39
ARTICLE VIII
CONCERNING THE OWNER TRUSTEE AND THE
INDENTURE TRUSTEE
SECTION 8.1 Acceptance of Trusts; Standard of
Care ............................................... 40
SECTION 8.2 No Duties of Maintenance, Etc ...................... 41
6091.20.2898.51:1
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<PAGE>
TABLE OF CONTENTS (Continued)
Page
SECTION 8.3 Representations and Warranties of
Indenture Trustee and the Owner
Trustee ............................................ 41
SECTION 8.4 Moneys Held in Trust;
Non-Segregation of Moneys .......................... 41
SECTION 8.5 Reliance on Writings, Use of
Agents, Etc ........................................ 42
SECTION 8.6 Indenture Trustee to Act Solely as
Trustee ............................................ 43
SECTION 8.7 Limitation on Rights Against ....................... 43
SECTION 8.8 Investment of Certain Payments
Held by the Indenture Trustee ...................... 43
SECTION 8.9 No Responsibility for Recitals,
etc ................................................ 44
SECTION 8.10 Indenture Trustee May Engage in
Certain Transactions ............................... 45
SECTION 8.11 Construction of Ambiguous .......................... 45
ARTICLE IX
SUCCESSOR TRUSTEES
SECTION 9.1 Resignation and Removal of
Indenture Trustee; Appointment of
Successor .......................................... 45
6091.20.2898.51:1
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<PAGE>
TABLE OF CONTENTS (Continued)
Page
ARTICLE X
SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE
AND OTHER DOCUMENTS
SECTION 10.1 Supplements, Amendments and
Modifications to This Indenture
Without Consent of Holders of
Notes .............................................. 47
SECTION 10.2 Supplements and Amendments to this
Indenture and the Facility Lease
With Consent of Holders of Notes ................... 48
SECTION 10.3 Certain Limitations on Supplements
and Amendments ..................................... 49
SECTION 10.4 Directive Need Not Specify
Particular Form of Supplement or
Amendment .......................................... 49
SECTION 10.5 Trustee to Furnish Copies of
Supplement or Amendment ............................ 50
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Moneys for Payments in Respect of
Notes to be Held in Trust .......................... 50
SECTION 11.2 Disposition of Moneys Held for
Payments of Notes .................................. 50
6091.20.2898.51:1
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<PAGE>
TABLE OF CONTENTS (Continued)
Page
SECTION 11.3 Transfers Not to Affect Indenture
or Trusts .......................................... 51
SECTION 11.4 Binding Effect of Sale of Lease
Indenture Estate ................................... 51
SECTION 11.5 Limitation as to Enforcement of
Rights, Remedies and Claims ........................ 51
SECTION 11.6 Notices ............................................ 52
SECTION 11.7 Separability of Provisions ......................... 52
SECTION 11.8 Benefit of Parties, Successors and
Assigns ............................................ 52
SECTION 11.9 Survival of Representations and
Warranties ......................................... 53
SECTION 11.10 Bankruptcy of the Owner Trustee .................... 53
SECTION 11.11 Bankruptcy of the Owner
Participant ........................................ 53
SECTION 11.12 Counterpart Execution .............................. 53
SECTION 11.13 Dating of Indenture ................................ 54
Schedule I - Owner Participant
Exhibit A - Form of Initial Series Note
Exhibit B - Form of Assumption Agreement
Exhibit C - Form of Undivided Interest
Indenture Supplement
Appendix A - Definitions
6091.20.2898.51:1
- ix -
<PAGE>
TRUST INDENTURE, MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
dated as of December 16, 1985, between THE FIRST NATIONAL BANK OF BOSTON, a
national banking association (FNB), not in its individual capacity, but solely
as trustee (the Owner Trustee) under a Trust Agreement dated as of December 16,
1985 between FNB, whose address is 100 Federal Street, Boston, Massachusetts
02110, with Burnham Leasing Corporation, and CHEMICAL BANK, a New York banking
corporation (the Indenture Trustee), whose address is 55 Water Street, New York,
New York 10041.
W I T N E S S E T H:
WHEREAS, the Owner Trustee has entered into a Participation Agreement,
dated as of December 16, 1985 among the Owner Participant, First PV Funding
Corporation, a Delaware corporation, Public Service Company of New Mexico, a New
Mexico corporation, and the Indenture Trustee;
WHEREAS, the Owner Trustee, acting on behalf of the Owner Participant,
pursuant to the Trust Agreement and the Participation Agreement, intends to
purchase the Undivided Interest and the Real Property Interest from Public
Service Company of New Mexico and lease the Undivided Interest and the Real
Property Interest to Public Service Company of New Mexico pursuant to the
Facility Lease;
WHEREAS, in order to finance a portion of the Purchase Price of the
Undivided Interest, the Owner Trustee desires to issue its promissory note
hereunder with such promissory note to be substantially in the form of Exhibit A
hereto;
WHEREAS, in the circumstances contemplated by Sections 2(c) and 2(d) of
the Participation Agreement, the Owner Trustee may desire to finance a greater
portion of the Purchase Price of the Undivided Interest than the portion
financed from the proceeds of the Initial Series Note (but in no event in an
amount in excess of 80% of said Purchase Price) and in connection with such
releveraging to issue its promissory note (in connection with Section 2(c) of
the Participation Agreement) or to increase the principal amount of the Fixed
Rate Note otherwise issuable in connection with a refunding of the Initial
Series Note (and the Releveraging Note if theretofore issued);
6091.BURNHAM.2898.51:1
- 1 -
<PAGE>
WHEREAS, in order to finance the Supplemental Financing Amount of Capital
Improvements and to refund notes of any series previously issued, the Owner
Trustee may desire to issue additional promissory notes hereunder (together with
the Releveraging Note and the Fixed Rate Note, the Additional Notes) secured on
a pari passu basis with other Notes Outstanding from time to time;
WHEREAS, in order to secure the obligations referred to herein, the Owner
Trustee desires to grant to the Indenture Trustee the security interest herein
provided and the parties hereto desire that this Indenture be regarded as a
"security agreement" and as a "financing statement" for such security agreement
under the Uniform Commercial Code;
NOW THEREFORE, in consideration of the premises, of the acceptance by the
Indenture Trustee of the trusts hereby created and of other good and valuable
consideration, receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
CONSTRUCTION, GOVERNING LAW,
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Governing Law.
This Indenture (i) is being executed and delivered in the
State of New York, (ii) shall be deemed to be a contract made in such State and
(iii) for all purposes shall be construed in accordance with and governed by the
laws of the State of New York, except to the extent to which the laws of the
State of Arizona are mandatorily applicable hereto.
SECTION 1.2 Headings and Table of Contents.
The division of this Indenture into articles and sections, the
provision of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Indenture.
6091.20.2898.51:1
- 2 -
<PAGE>
SECTION 1.3. Definitions; Construction of
References.
In this Indenture, unless the context otherwise requires:
(a) the term this Indenture means this instrument together
with all exhibits, appendices and schedules hereto as originally executed and as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto pursuant to the provisions hereof;
(b) all references in this instrument to designated Articles,
Sections and other subdivisions are to designated Articles, Sections and other
subdivisions of this instrument unless otherwise indicated;
(c) all accounting terms not otherwise defined herein shall
have the meanings assigned to them in accordance with generally accepted
accounting principles; and
(d) capitalized terms used herein which are not otherwise
defined herein shall have the meanings set forth in Appendix A hereto, and the
rules of construction set forth in Appendix A hereto shall be applicable hereto.
SECTION 1.4. Disclosure of Beneficiaries.
Pursuant to Arizona Revised Statutes Section 33-401, (i) the
beneficiary of the Trust Agreement is Burnham Leasing Corporation, a New York
corporation, whose address is 60 Broad Street, New York, New York 10004,
Attention: Chief Financial Officer and (ii) the beneficiary if this Indenture is
the Holder of the Notes, First PV Funding Corporation whose address is
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 and, by
pledge and assignment, Chemical Bank, as trustee under the Collateral Trust
Indenture, whose address is 55 Water Street, New York, New York 1004: Attention
of Corporate Trustee Administration. Copies of the Trust Agreement and this
Indenture are available for inspection at the Indenture Trustee's office.
6091.20.2898.51:1
- 3 -
<PAGE>
ARTICLE II
SECURITY
SECTION 2.1. Grant of Security Interests;
Mortgage.
As security for the due and punctual payment of the principal
of and premium, if any, and interest on the Notes according to their respective
terms and effect and the performance and observance by the Owner Trustee of all
the covenants and agreements made by it or on its behalf in the Notes, the
Participation Agreement and this Indenture, the Owner Trustee does by its
execution and delivery hereof grant a security interest in and grant, bargain,
convey, warrant, assign, transfer, mortgage, pledge and set over unto the
Indenture Trustee, and to its successors and assigns in trust, the following
(the Lease Indenture Estate):
(1) all right, title and interest of the Owner Trustee in, to
and under the Facility Lease to the extent, and only to the extent,
constituting Rent (including, but without limitation, Basic Rent,
payments of Casualty Value, Termination Value and Special Casualty Value,
and payments under and pursuant to Sections 13(c) and 16 of the Facility
Lease) (the Assigned Payments), together with all rights, powers and
remedies on the part of the Owner Trustee arising under the Facility
Lease to demand, collect or receive the Assigned Payments;
(2) all moneys and securities deposited or required to be
deposited with the Indenture Trustee pursuant to any term of this
Indenture and held or required to be held by the Indenture Trustee
hereunder;
(3) all profits, revenues and other income of all property
from time to time subjected to the lien of this Indenture, and all right,
title and interest of every nature whatsoever of the Owner Trustee in and
to the same and every part thereof;
(4) all right, title and interest of the Owner Trustee in and
to any right to restitution from the Lessee in respect of any
determination of invalidity of the Facility Lease; and
(5) all proceeds of the foregoing,
6091.20.2898.51:1
- 4 -
<PAGE>
but excluding, however, from the Lease Indenture Estate any and all Expected
Payments; and subject, however, to (i) the terms and provisions of this
Indenture and (ii) the rights of the Lessee under the Facility Lease.
To the extent that any portion of the Lease Indenture Estate
constitutes fixtures or real property, this Indenture constitutes a realty
mortgage and an assignment of rents with respect to all such items of real
property and in addition to all other rights or remedies set forth in this
Indenture, or otherwise available under Applicable Law, the Indenture Trustee
shall have all of the rights, remedies and benefits of a mortgagee of real
property under Applicable Law, including, without limitation, the rights and
remedies pursuant to Arizona Revised Statutes ss. 33-702.B and Owner Trustee
shall be deemed a mortgagor with respect to such items.
TO HAVE AND TO HOLD all the aforesaid properties, rights and
interests unto the Indenture Trustee, its successors and assigns forever, but in
trust, nevertheless, for the use and purposes and with the power and authority
and subject to the terms and conditions mentioned and set forth in this
Indenture.
UPON CONDITION that, unless and until an Indenture Event of
Default shall have occurred and be continuing, the Owner Trustee shall be
permitted, to the exclusion of the Indenture Trustee, to possess and use the
Lease Indenture Estate and exercise all rights with respect thereto and, without
limitation of the foregoing, the Owner Trustee may exercise all of its rights
under the Facility Lease to the same extent as if its right, title and interest
therein had not been assigned to the Indenture Trustee to the extent set forth
above, except that the Indenture Trustee shall receive all payments of Assigned
Payments and all moneys and securities required to be held by or deposited with
the Indenture Trustee hereunder.
It is expressly agreed that, anything herein contained to the
contrary notwithstanding, the Owner Trustee shall remain obligated to the Lessee
under the Facility Lease to perform all of the Owner Trustee's obligations
thereunder in accordance with and pursuant to the terms and provisions thereof,
and the Indenture Trustee shall not be required or obligated in any manner,
except as expressly provided herein, to perform or fulfill any obligations of
the Owner Trustee under the Facility Lease or to make any payment, or to make
any inquiry as to the nature or sufficiency of any payments
6091.20.2898.51:1
- 5 -
<PAGE>
received by it, or to present or file any claim, or to take any action to
collect or enforce the payment of any amounts which may have been assigned to it
or to which it may be entitled at any time or times.
The Owner Trustee hereby warrants and represents that it has
not assigned or pledged any of its right, title or interest in and to the Lease
Indenture Estate to anyone other than the Indenture Trustee.
SECTION 2.2. Payments Under the Facility
Lease.
The Facility Lease provides that (i) all payments constituting
Assigning Payments shall be made to the Indenture Trustee at the Indenture
Trustee's Office, (ii) all other payments other than Expected Payments shall be
made to the Lessor at such address as the Lessor may direct by notice in writing
to the Lessee, and (iii) all Expected Payments shall be made to the Person
entitled to receive such payments. The Owner Trustee agrees that, so long as any
Notes shall be Outstanding hereunder, all payments described in clause (i) above
shall be directed to be made to the Indenture Trustee or in accordance with the
Indenture Trustee's instruction and that if it should receive any such payments
or any proceeds for or with respect to the Lease Indenture Estate or otherwise
constituting part of the Lease Indenture Estate, it will promptly forward such
payments to the Indenture Trustee or in accordance with the Indenture Trustee's
instructions. The Indenture Trustee agrees to apply payments from time to time
received by it (from the Lessee, the Owner Trustee or otherwise) with respect to
the Lease Indenture Estate in the manner provided in Section 3.11 and Article V
hereof.
SECTION 2.3 Release of Lien on Lease Indenture
Estate.
(a) Upon receiving evidence satisfactory to the Indenture
Trustee that (i) it has received, or provision has been made in accordance with
paragraph (c) hereof for, full payment of all principal of and premium, if any,
and interest on the Notes and any other sums payable to the Indenture Trustee
and the Holders of the Notes under this Indenture or the Facility Lease, and
(ii) all Trustee's Expenses shall have been paid in full or provision
satisfactory to the Indenture Trustee shall have been made for such payment,
6091.20.2898.51:1
- 6 -
<PAGE>
(A) the security interest and all other estate and rights
granted by this Indenture shall cease and become null and void and all of
the property, rights and interests included in the Lease Indenture Estate
shall revert to and revest in the Owner Trustee without any other act or
formality whatsoever, and
(B) the Indenture Trustee shall, at the request of the Owner
Trustee, execute and deliver to the Owner Trustee such termination
statements, releases or other instruments presented to the Indenture
Trustee by or at the direction of the Owner Trustee as shall be requisite
to evidence the satisfaction and discharge of this Indenture and the lien
created with respect to the Lease Indenture Estate, to release or
reconvey to the Owner Trustee or as directed by the Owner Trustee all the
Lease Indenture Estate, freed and discharged from the provisions herein
contained with respect thereto, and to release the Owner Trustee from its
covenants herein contained.
(b) Upon receipt by the Indenture Trustee of the Assumption
Agreement and other documents and opinions described in Section 3.9(b) hereof,
(i) the security interest and all other estate and rights granted by this
Indenture by or on behalf of the Owner Trustee shall cease and become null and
void and all of the property, rights and interests included in the Lease
Indenture Estate shall revert to and revest in the Owner Trustee without any
other act or formality whatsoever and (ii) the Indenture Trustee shall, at the
request of the Owner Trustee, execute and deliver to the Owner Trustee, execute
and deliver to the Owner Trustee such termination statements, releases or other
instruments presented to the Indenture Trustee by or at the direction of the
Owner Trustee as shall be requisite to evidence the satisfaction and discharge
of this Indenture as to the Owner Trustee and the lien hereby created with
respect to the Lease Indenture Estate, to release or reconvey to the Owner
Trustee or as directed by the Owner Trustee all the Lease Indenture Estate,
freed and discharged from the provisions herein contained with respect thereto,
and to release the Owner Trustee from its covenants herein contained.
(c) Any Note shall, prior to the maturity or redemption date
thereof, be deemed to have been paid within the meaning and with the effect
expressed in this Section 2.3(c) if (i) there shall have been deposited with the
Indenture Trustee either moneys in an amount which shall be sufficient, or
6091.20.2898.51:1
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<PAGE>
direct obligations of or obligations the principal of and interest on which are
unconditionally guaranteed by the United States of America or certificates of an
ownership interest in the principal of or interest on obligations of or
guaranteed as to principal and interest by the United States of America (Federal
Securities), in each case which shall not contain provisions permitting the
redemption thereof at the option of the issuer, the principal of and the
interest on which when due, and without any reinvestment thereof, will provide
moneys in an amount which shall be sufficient, together with the moneys, if any,
deposited with or held by the Indenture Trustee at the same time (such
sufficiency to be established by the delivery to the Indenture Trustee of a
certificate of an independent public accountant), to pay when due the principal
of and premium, if any, and interest due and to become due on said Note on and
prior to the redemption date or maturity date thereof, as the case may be, and
(ii) in the event said Note does not mature or is not to be redeemed within the
next 45 days, the Indenture Trustee shall have been given irrevocable
instructions to give, as soon as practicable, a notice to the registered Holder
of such Note that the deposit required by subclause (i) above has been made with
the Indenture Trustee and that said Note is deemed to have been paid in
accordance with this Section 2.3(c) and stating such maturity or redemption date
upon which moneys are to be available for the payment of the principal of and
premium, if any, and interest on said Note. Neither the Federal Securities nor
moneys deposited with the Indenture Trustee pursuant to this Section 2.3(c) or
principal or interest payments on any such Federal Securities shall be withdrawn
or used for any purpose other than, and shall be held in trust for, the payment
of the principal of and premium, if any, and interest on said Note; provided,
however, that any cash received from such principal or interest payments on such
Federal Securities deposited with the Indenture Trustee, shall be reinvested
pursuant to Section 8.8 hereof in Federal Securities. At such time as any Note
shall be deemed paid as aforesaid, it shall no longer be secured by or entitled
to the benefits of the Lease Indenture Estate or this Indenture, except that
such Note shall be entitled to the benefits of the portions of the Lease
Indenture Estate described in Granting Clauses (2), (3) and (5), to the extent
such portions relate to such moneys or Federal Securities deposited with the
Indenture Trustee.
6091.20.2898.51:1
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<PAGE>
(d) So long as any Note as to which this Indenture has been
discharged remains unpaid, this Indenture shall continue in effect with respect
to such Note solely with respect to rights of registration of transfer, exchange
or replacement of such Note, rights to receive payment of the principal thereof
and premium, if any, and interest thereon in accordance with the terms of this
Indenture from such deposited funds or the proceeds of or interest on such
Federal Securities and the correlative rights and responsibilities of the
Indenture Trustee; provided, however, that, following such discharge, no claim
for payment of principal of or premium, if any, or interest on such Note shall
be made against the Owner Trustee or the Lease Indenture Estate other than as
provided in this Section; provided, further, that the Owner Trustee, following
such discharge, shall be released from any further duties or obligations under
this Indenture and, except as expressly provided therein, any other Transaction
Document.
SECTION 2.4. Power of Attorney.
Subject to the other terms of this Indenture, the Owner
Trustee hereby appoints the Indenture Trustee the Owner Trustee's
attorney-in-fact, irrevocably, with full power of substitution, to collect, ask,
require, demand, receive and give acquittance for any and all moneys and claims
for moneys due and to become due to the Owner Trustee under or arising out of
the Lease Indenture Estate, to endorse any checks or other instruments or orders
in connection therewith, and to take any action (including the filing of
financing statements or other documents) or institute any proceedings which the
Indenture Trustee may deem to be necessary or appropriate to protect and
preserve the interest of the Indenture Trustee in the Lease Indenture Estate.
ARTICLE III
ISSUE, EXECUTION, AUTHENTICATION,
FORM AND REGISTRATION OF NOTES
SECTION 3.1. Limitation on Notes.
No Notes may be issued under the provisions of, or become
secured by, this Indenture except in accordance with the provisions of this
Article III. No Note shall be issued in an original principal amount of less
than $25,000.
6091.20.2898.51:1
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<PAGE>
SECTION 3.2. Execution of Notes.
All Notes shall be manually executed on behalf of the Owner
Trustee by one of its Responsible Officers. In case any Responsible Officer of
the Owner Trustee who shall have executed any of the Notes shall cease to be
such a Responsible Officer before such Notes so executed shall have been
authenticated by the Indenture Trustee and delivered or disposed of by the Owner
Trustee, such Notes nevertheless may be authenticated and delivered or disposed
of as though the person who executed such Notes had not ceased to be such a
Responsible Officer of the Owner Trustee; and any Note may be executed on behalf
of the Owner Trustee by such person as, at the actual time of execution of such
Note, shall be a Responsible Officer of the Owner Trustee, although at the date
of such Note any such person was not such a Responsible Officer.
SECTION 3.3 Effect of Certificates of
Authentication.
Only such Notes as shall bear thereon a certificate of
authentication substantially in the following form manually executed by the
Indenture Trustee shall be entitled to the benefits of this Indenture or be
valid or obligatory for any purpose. Such certificate of authentication of the
Indenture Trustee upon any Note executed by the Owner Trustee shall be
conclusive evidence that the Note so authenticated was duly issued,
authenticated and delivered under this Indenture:
This Note is one of the series of Notes referred to therein
and in the within-mentioned Indenture.
[NAME OF INDENTURE TRUSTEE]
as Indenture Trustee,
By________________
Authorized Officer
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SECTION 3.4 Creation of the Initial Series Note; Aggregate
Principal Amount, Dating and Terms; Prerequisites to Authentication and Delivery
of Initial Series Note; Application of Proceeds.
(a) There is hereby created and established a separate series
of Notes of the Owner Trustee designated: "Nonrecourse Promissory Note, Initial
Series", which will be substantially in the form of Exhibit A hereto, and is
herein referred to as the "Initial Series Note".
(b) Subject to the provisions of Section 3.10 hereof, the
aggregate principal amount of the Initial Series Note issued by the Owner
Trustee and authenticated and delivered by the Indenture Trustee hereunder shall
not exceed the Maximum Principal Amount set forth in Schedule I hereto.
(c) The Initial Series Note, subject to paragraph (e) of this
Section 3.4, shall be executed and issued by the Owner Trustee and authenticated
and delivered by the Indenture Trustee on the date and to the Person specified
by the Owner Trustee in its request and authorization for issuance, shall be
dated the date specified by the Owner Trustee in its request and authorization
for issuance, and shall be in the form of a registered Note payable to the
Person designated in the Owner Trustee's request and authorization for issuance
or its registered assigns.
(d) The Initial Series Note shall bear interest on the
principal amount thereof from time to time Outstanding from the date thereof
until paid at the rates of interest set forth in the form of the Initial Series
Note. The principal amount of the Initial Series Note shall be payable as set
forth in the Schedule of Principal Payments attached thereto. Installments of
interest on and principal of the Initial Series Note shall be due and payable on
the dates specified in the form of Initial Series Note.
(e) The Indenture Trustee shall authenticate the Initial
Series Note and deliver the Initial Series Note to the Person designated by the
Owner Trustee in the request and authorization for issuance in respect of the
Initial Series Note in accordance with the provisions of this Section 3.4.
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(f) Upon receipt of the proceeds of the Initial Series Note,
the Indenture Trustee shall immediately transfer the same to, or pursuant to the
direction of, the Owner Trustee, all as set forth in the request and
authorization for issuance submitted by the Owner Trustee
to the Indenture Trustee.
SECTION 3.5. Additional Notes.
(1) Subject to Section 3.6 hereof, Additional Notes of the
Owner Trustee may be issued under and secured by this Indenture, at any time or
from time to time, in addition to the Initial Series Note and subject to the
conditions hereinafter provided in this Section, for cash in the original
principal amount of such Additional Notes, for the purpose of (i) refunding any
previously issued series of Notes, in whole or in part, and/or (ii) providing
funds for the payment of all or any portion of the Supplemental Financing Amount
relating to Capital Improvements made or installed from time to time pursuant to
the Facility Lease and/or (iii) providing funds to be paid to the Owner Trustee
in the event of a partial return of the Investment to the Owner Trustee as
contemplated by Sections 2(c) and 2(d) of the Participation Agreement; provided,
however, that (x) in the case of Notes issued for the purposes set forth in
clause (ii) or (iii) of this Section 3.5, no Note shall be issued by the Owner
Trustee pursuant to this Section 3.5 unless such Notes may be pledged in
accordance with Section 2.15(b) of the Collateral Trust Indenture and serve as
the basis for Additional Bonds and (y) in the case of Notes issued for the
purposes set forth in clause (i) or (iii) of this Section 3.5, no Note shall be
issued by the Owner Trustee pursuant to this Section 3.5 unless Section 2(c)
and/or 2(d) of the Participation Agreement shall have been complied with.
(2) Before any Additional Notes shall be issued under the
provisions of this Section 3.5, the Owner Trustee shall have received from the
Owner Participant, and delivered to the Indenture Trustee not less than 10 nor
more than 30 days prior to the proposed date of issuance of such Additional
Notes as set forth in the below mentioned request and authorization, a request
and authorization to issue Additional Notes, which request and authorization
shall include the amount of such Additional Notes, the date of issuance of such
Additional Notes and details with respect thereto which are not inconsistent
with this Section. Additional Notes shall have a designation so as to
distinguish such Additional Notes from the Initial Series Note but otherwise
shall be substantially similar in terms to the Initial Series
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Note, shall specify maturity dates, rank part passu with all Notes then
Outstanding, be dated their respective dates of authentication, bear interest at
such rates (which may be fixed for floating) as shall be indicated in the
aforementioned request and authorization, and shall be stated to be payable by
their terms not later than the last day of the Basic Term.
(3) Except as to any differences in the maturity dates and
amortization schedules of the Additional Notes or the rate or rates of interest
thereon and the date or dates such interest is payable or the provisions for
redemption with respect thereto, if any, such Additional Notes shall be on a
parity with, and shall be entitled to the same benefits and security of this
Indenture as, other Notes issued pursuant to the terms hereof.
(4) The terms, conditions and designations of such Additional
Notes (which shall be consistent with this Indenture) shall be set forth in an
indenture supplemental to this Indenture executed by the Owner Trustee and the
Indenture Trustee. Such Additional Notes shall be executed as provided in
Section 3.2 and deposited with the Indenture Trustee for authentication, but
before such Additional Notes shall be authenticated and delivered by the
Indenture Trustee there shall be filed with the Indenture Trustee, in addition
to the other documents and certificates required by this Section 3.5, the
following, all of which shall be dated as of the date of the supplemental
indenture:
(a) a copy of such supplemental indenture (which shall include
the form of such series of Notes in respect thereof);
(b) a certificate of a Responsible Officer of the Owner
Trustee (i) stating that to the best of his knowledge, no Default or Event of
Default or Indenture Event of Default has occurred and is continuing, (ii)
stating that the conditions in respect of the issuance of such additional series
of Notes contained in this Section 3.5 have been satisfied, (iii) specifying the
amount of the costs and expenses relating to the issuance and sale of such
additional series of Notes contained in this Section 3.5 have been satisfied,
(iii) specifying the amount of the costs and expenses relating to the issuance
and sale of such additional series of Notes, (iv) stating that payments pursuant
to the Facility Lease of Basic Rent, Casualty Value, Special Casualty Value and
Termination Value and of amounts in respect of the exercise of the Cure Option
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and the Special Purchase Option are sufficient to pay all the Outstanding Notes,
after taking into account the issuance of such Additional Notes and any related
redemption, and (v), in the case of Notes issued for the purpose set forth in
clause (ii) of Section 3.5(1), stating that all conditions to the related
Supplemental Financing as set forth in Section 8(f) of the Facility Lease have
been satisfied;
(c) such additional documents, certificates and opinions as
shall be reasonably requested by, and acceptable to, the Owner Trustee and the
Indenture Trustee.
(d) a request and authorization to the Indenture Trustee by or
on behalf of the Owner Trustee to authenticate and deliver such Additional Notes
to or upon the order of the Person or Persons noted in such request at the
address set forth therein, and in such principal amounts as are stated therein,
upon payment to the Indenture Trustee, but for the account of the Owner Trustee,
of the sum or sums specified in such request and authorization; and
(e) an opinion of counsel to the effect that the conditions
precedent required under this Indenture for the issuance of such Additional
Notes have been complied with.
When the documents referred to in the foregoing clauses (a)
through (e) above shall have been filed with the Indenture Trustee and when the
Additional Notes described in the above-mentioned order and authorization shall
have been executed and authenticated as required by this Indenture, the
Indenture Trustee shall deliver such Additional Notes in the manner described in
clause (d) above, but only upon payment to the Indenture Trustee of the sum or
sums specified in such request and authorization.
SECTION 3.6. Security for and Parity of Notes.
All Notes issued and Outstanding hereunder shall rank on a
parity with each other and shall as to each other be secured equally and ratably
by this Indenture, without preference, priority or distinction of any thereof
over any other by reason of difference in time of issuance or otherwise. The
maximum principal amount of Notes Outstanding and secured by this Indenture
shall be the Maximum Outstanding Amount set forth in Schedule I hereto.
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SECTION 3.7. Source of Payments Limited.
All payments to be made by the Owner Trustee under this
Indenture or on the Notes shall be made only from the Lease Indenture Estate and
the Trust Estate. Each Holder of a Note, by its acceptance of such Note, and the
Indenture Trustee agree that they will look solely to the Trust Estate and the
income and proceeds from the Lease Indenture Estate to the extent available for
distribution to such Holder or the Indenture Trustee as herein provided and that
neither the Owner Participant nor, except as expressly provided in this
Indenture, the Owner Trustee nor the Indenture Trustee, shall be personally
liable to such Holder of a Note or the Indenture Trustee, as the case may be,
for any amounts payable hereunder or under such Note; provided, however, that in
the event that the Lessee shall assume all the obligations and liabilities of
the Owner Trustee hereunder and under the Notes pursuant to Section 3.9(b), then
all payments to be made under this Indenture and the Notes shall be made only
from payments made by the Lessee under the Notes in accordance with the
Assumption Agreement referred to in Section 3.9(b) and each Holder of a Note and
the Indenture Trustee agree that in such event they will look solely to the
Lessee for such payment. Nothing herein contained shall be interpreted as
affecting the duties and obligations of the Indenture Trustee set forth in
Section 7.4 hereof.
In furtherance of the foregoing, to the fullest extent
permitted by law, each Holder of a Note (and each assignee of such Person), by
its acceptance thereof, and the Indenture Trustee agree, as a condition to the
Notes being secured under this Indenture, that neither such Holder nor the
Indenture Trustee will exercise any statutory right to negate the agreements set
forth in this Section 3.7.
SECTION 3.8. Place and Medium of Payment.
The principal of and premium, if any, and interest on each
Note shall be payable at the Indenture Trustee's Office immediately available
funds in such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts.
Notwithstanding the foregoing or any provision in any Note to the contrary, if
so requested by the Holder of any Note, by written notice to the Indenture
Trustee, all amounts (other than the final payment) payable with respect to such
obligation shall be paid by crediting the amount to be distributed to such
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Holder to an account maintained by such Holder with the Indenture Trustee or by
the Indenture Trustee's transferring such amount by wire, with such wire
transfer to be initiated by such time as to permit, to the extent practicable,
oral confirmation thereof (specifying the wire number) to be given no later than
12:00 noon New York City time on the date scheduled for payment, but only to the
extent of funds available for such wire transfer, to such other bank in the
United States having wire transfer facilities, including a Federal Reserve Bank,
as shall have been specified in such notice, for credit to the account of such
Holder maintained at such bank, any such credit or transfer pursuant to this
Section 3.8 to be in immediately available funds, without any presentment or
surrender of such Note. Final payment of any such Note shall be made only
against surrender of such Note at the Indenture Trustee's Office.
SECTION 3.9. Prepayment of Notes; Assumption
by Lessee; Notice of Assumption or Prepayment.
(a) Notes shall be subject to prepayment (other than through
application of the installment payments on such Notes) from time to time only as
provided in this Indenture and as otherwise specifically provided, with respect
to Notes of a particular series, in such Notes.
(b) In the event of the occurrence of a Deemed Loss Event,
Event of Loss or Cure Option, and upon receipt by the Indenture Trustee of the
documents listed below, all the obligations and liabilities of the Owner Trustee
hereunder and under the Notes shall be assumed by the Lessee and the Owner
Trustee shall be released and discharged without further act or formality
whatsoever from all obligations and liabilities hereunder and under the Notes:
(1) a duly executed Assumption Agreement substantially in the
form of Exhibit B to this Indenture;
(2) an opinion of counsel to the Lessee, addressed to the
Indenture Trustee and the Holders of the Outstanding Notes, to the effect
that the conditions precedent required by this Indenture for such
assumption have been complied with, that the Assumption Agreement has
been duly authorized, executed and delivered on behalf of the Lessee,
that no Governmental Action is necessary or required in connection
therewith (or if any such Governmental Action is necessary or required,
that the same has been duly obtained and is in full force and effect),
and that the Assumption Agreement is a legal, valid
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and binding agreement and obligation of the Lessee, enforceable in
accordance with its terms (except as limited by bankruptcy, insolvency or
similar laws of general application affecting the enforcement of
creditors' rights generally and equitable principles);
(3) copies of all Governmental Actions referred to in such
opinion;
(4) an indenture supplemental to this Indenture which shall,
among other things, confirm the release of the Owner Trustee and the
Lease Indenture Estate thereby effected and contain provisions
appropriately amending references to the Facility Lease in this
Indenture;
(5) a certificate of a Responsible Officer of the Lessee
stating that, to the best of his knowledge, (i) the conditions precedent
required by this Indenture for such assumption have been complied with,
(ii) no Indenture Event of Default has occurred and is continuing, (iii)
such assumption is permitted by the provisions of the Lessee's Articles
of Incorporation and By-Laws and (iv) the Lessee is not insolvent within
the meaning of any applicable preferential transfer, fraudulent
conveyance or bankruptcy law; and
(6) a certificate of a Responsible Officer of the Owner
Trustee stating that, to the best of his knowledge, no Indenture Event of
Default has occurred and is continuing.
(c) Notice of any assumption or prepayment of Notes shall be
given as promptly as practicable after the Indenture Trustee is notified
thereof, and, in the case of prepayment, in no event less than (i) 30 days
before the date fixed for prepayment (provided the Indenture Trustee receives
such notification at least three Business Days before such 30th day), in the
event of the exercise by the Lessee or the Owner Trustee, as the case may be, of
its option to terminate the Facility Lease pursuant to Section 14 thereof or in
the event of the exercise by the Lessee of the Cure Option or (ii) one day
before the date fixed for prepayment, in the event of the exercise by the Lessee
of the Special Purchase Option pursuant to Section 13(c) of the Facility Lease
to the registered Holders of the Notes which have been assumed or are to be
prepaid (and any assignee of a registered Holder which has given the Indenture
Trustee written notice of such assignment).
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(d) If the assumption described in paragraph (b) above has not
occurred, then, as required by Section 9(j) of the Facility Lease, not less than
2 Business Days prior to any transfer referred to in Section 7 (b) (4) of the
Participation Agreement, the Owner Trustee will cause the Undivided Interest and
the Real Property Interest to be subjected to the lien of this Indenture by
executing and delivering to the Indenture Trustee an Undivided Interest
Indenture Supplement substantially in the form of Exhibit C to this Indenture.
SECTION 3.10. Mutilated, Destroyed, Lost or
Stolen Notes.
If any Note shall become mutilated or shall be destroyed, lost
or stolen, the Owner Trustee shall, upon the written request of the Holder of
such Note, execute, and the Indenture Trustee shall authenticate and deliver in
replacement thereof, a new Note, payable in the same original principal amount
and dated the same date and of the same series as the Note so mutilated,
destroyed, lost or stolen. The Indenture Trustee shall make a notation on each
new Note of the amount of all payments of principal theretofore made on the Note
so mutilated, destroyed, lost or stolen and the date to which interest on such
old Note has been paid. If the Note being replaced has been mutilated, such Note
shall be delivered to the Indenture Trustee who shall then deliver a certificate
of destruction of the type required by Section 4.3 hereof. If the Note being
replaced has been destroyed, lost or stolen, the Holder of such Note shall
furnish to the Lessee, the Owner Trustee and the Indenture Trustee a bond or
surety agreement of such Holder as shall be satisfactory to them to save the
Lessee, the Owner Trustee, the Indenture Trustee, the Trust Estate and the Lease
Indenture Estate harmless from any loss, however remote, including claims for
principal of, and premium, if any, and interest on the purportedly destroyed,
lost or stolen Note, together with evidence satisfactory to the Lessee, the
Owner Trustee and the Indenture Trustee of the destruction, loss or theft of
such Note and of the ownership thereof; provided, however, that if the Holder of
such Note is the Collateral Trust Trustee, the unsecured written undertaking of
the Collateral Trust Trustee, in its individual capacity, shall be sufficient
indemnity for purposes of this Section.
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SECTION 3.11. Allocation of Principal and
Interest.
In the case of each Note, each payment of principal thereof
and interest thereon shall be applied, first, to the payment of accrued but
unpaid interest on such Note (as well as any interest on overdue principal or,
to the extent permitted by law, interest) to the date of such payment, second,
to the payment of the principal amount of, and premium, if any, on such Note
then due (including any overdue installment of principal) thereunder and third,
the balance, if any, remaining thereafter, to the balance of the payment of the
principal amount of, and premium, if any, on such Note.
ARTICLE IV
REGISTRATION, TRANSFER, EXCHANGE,
CANCELLATION AND OWNERSHIP OF
NOTES
SECTION 4.1. Register of Notes.
The Indenture Trustee on behalf of the Owner Trustee shall
maintain at the Indenture Trustee's Office a register for the purpose of
registration, and registration of transfer and exchange, of the Notes by series
and in which shall be entered the names and addresses of the owners of such
Notes and the principal amounts of the Notes owned by them, respectively. For
these purposes, the Indenture Trustee is hereby appointed transfer agent and
registrar for the Notes.
SECTION 4.2 Registration of transfer or
Exchange of Notes.
A Holder of a Note intending to register the transfer of any
Outstanding Note held by such Holder (including any transfer in the form of a
pledge or assignment) or to exchange any Outstanding Note held by such Holder
for a new Note or Notes of the same series may surrender such Outstanding Note
at the Indenture Trustee's Office, together with the written request of such
Holder, or of its attorney duly authorized in writing, in each case with
signatures guaranteed, for the registration of such Note in the name of any
pledgee or assignee (in the case of a transfer in the form of a pledge or
assignment) or for the issuance of a new Note or Notes of the same series,
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specifying the authorized denomination or denominations of any new Note or Notes
to be issued and the name and address of the Person or Persons in whose name or
names the Note or Notes are to be registered (either as pledgee or assignee or
as owner). Promptly upon receipt by the Indenture Trustee of the foregoing and
satisfaction of the requirements of Sections 4.5 and 4.6 hereof, the Indenture
Trustee shall register such Note or Notes in the name or names of the Person or
Persons as shall be specified in the written request and, in the case in which a
new Note or Notes are to be issued, the Owner Trustee shall execute and the
Indenture Trustee shall authenticate and deliver such new Note or Notes of the
same series, in the same aggregate principal amount and dated the same date as
the Outstanding Note surrendered, in such authorized denomination or
denominations as shall be specified in the written request. The Indenture
Trustee shall make a notation on each new Note of the amount of all payments of
principal theretofore made on the old Note or Notes in exchange or transfer for
which any new Note has been issued and the date to which interest on such old
Note or Notes has been paid.
SECTION 4.3. Cancellation of Notes.
All Notes surrendered to the Indenture Trustee for payment in
full, prepayment in full or registration of transfer or exchange shall be
cancelled by it; and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. The Indenture
Trustee shall destroy cancelled Notes held by it in a manner satisfactory to the
Owner Trustee and deliver a certificate of destruction to the Owner Trustee. If
the Owner Trustee shall acquire any of the Notes, such acquisition shall not
operate as a redemption of or the satisfaction of the indebtedness represented
by such Notes unless and until the same shall be delivered to the Indenture
Trustee for cancellation.
SECTION 4.4. Limitation on Timing of
Registration of Notes.
The Indenture Trustee shall not be required to register
transfers or exchanges of Notes on any date fixed for the payment or prepayment
of principal of or interest on the Notes or during the fifteen days preceding
any such date.
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SECTION 4.5. Restrictions on Transfer Resulting from
Federal Securities Laws; Legend.
If not prohibited by the Securities Act, each Note shall be
delivered to the initial Holder thereof without registration of such Note under
the Securities Act and without qualification of this Indenture under the Trust
Indenture Act. Prior to any transfer of any Note, in whole or in part, to any
Person transfer of any Note, in whole or in part, to any Person other than the
Collateral Trust Trustee, the Holder thereof shall furnish to the Lessee, the
Indenture Trustee and the Owner Trustee an opinion of counsel, which opinion and
which counsel shall be reasonably satisfactory to the Indenture Trustee, the
Owner Trustee and the Lessee, to the effect that such transfer will not violate
the registration provisions of the Securities Act or require qualification of
this Indenture under the Trust Indenture Act, and all Notes issued hereunder
shall be endorsed with a legend which shall read substantially as follows:
This Note has not been registered under the Securities Act of
1933 and may not be transferred, sold or offered for sale in
violation of such Act.
SECTION 4.6. Charges upon Transfer or Exchange
of Notes.
As a further condition to registration of transfer or exchange
of any Note, the Indenture Trustee and the Owner Trustee may charge the Holder
thereof for any stamp taxes or governmental charges required to be paid with
respect to such registration of transfer or exchange.
SECTION 4.7. Inspection of Register of Notes.
The register of the Holders of the Notes referred to in
Section 4.1 shall at all reasonable times be open for inspection by any Holder
of a Note. Upon request by any Holder of a Note, or the Owner Trustee or the
Lessee, the Indenture Trustee shall furnish such Person, at the expense of such
Person, with a list of the names and addresses of all Holders of Notes entered
on the register kept by the Indenture Trustee indicating the series, principal
amount and number of each Note held by each such Holder.
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SECTION 4.8. Ownership of Notes.
(a) Prior to due presentment for registration of transfer of
any Note, the Owner Trustee and the Indenture Trustee may deem and treat the
Holder of record of such Note as the absolute owner of such Note for the purpose
of receiving payment of all amounts payable with respect to such Note and for
all other purposes, and neither the Owner Trustee nor the Indenture Trustee
shall be affected by any notice to the contrary.
(b) The Owner Trustee and the Indenture Trustee may, in their
discretion, treat the Holder of record of any Note as the owner thereof without
actual production of such Note for any purpose hereunder, except as provided in
the last sentence of Section 3.8 hereof.
(c) Neither the Owner Trustee nor the Indenture Trustee shall
be bound to take notice of or carry out the execution of any trust in respect of
any Note, and may register the transfer of the same on the direction of the
Holder of record thereof, whether named as trustee or otherwise, as though such
Holder were the beneficial owner thereof.
(d) The receipt by the Holder of record of any Note of any
payment of principal, premium or interest shall be a good discharge to the Owner
Trustee and the Indenture Trustee for the same and neither the Owner Trustee nor
the Indenture Trustee shall be bound to inquire into the title of any such
Holder.
ARTICLE V
RECEIPT, DISTRIBUTION AND
APPLICATION OF INCOME AND PROCEEDS
FROM THE LEASE INDENTURE ESTATE
SECTION 5.1. Basic Rent, Interest on Overdue
Installments of Basic Rent and Prepayments of Interest.
Except as otherwise provided in Section 5.3 or 5.7 hereof,
each payment of Basic Rent, as well as any payment of Supplemental Rent
representing interest on overdue installments of Basic Rent, received by the
Indenture Trustee at any time, shall be distributed by the Indenture in the
following order of priority: first, so much of such payment as shall be required
to pay in full the aggregate amount of the payment or payments of principal
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and/or interest (as well as any interest on overdue principal or, to the extent
permitted by law, interest) then due and unpaid on all Notes shall be
distributed to the Holders of the Notes ratably, without priority of one over
the other, in the proportion that the aggregate amount of such payment or
payments then due and unpaid on all Notes held by each such Holder on such date
bears to the aggregate amount of such payment or payments then due and unpaid on
all Notes Outstanding on such date, without priority of interest over the
principal or principal over interest; and second, the balance, if any, of such
payment remaining thereafter shall be distributed, concurrently with any
distribution pursuant to clause first hereof, to the Owner Trustee or as the
Owner Trustee may direct. If there shall not otherwise have been distributed on
any date (or within any applicable period of grace), pursuant this Section 5.1,
the full amount then distributable pursuant to clause first of this Section 5.1,
the Indenture Trustee shall distribute other payments of the character referred
to in Sections 5.4 and 5.5 then held by it or thereafter received by it, except
as otherwise provided in Section 5.3, to the Holders of all Notes to the extent
necessary to enable it to make all the distributions then due pursuant to such
clause first; provided that to the extent any distribution is made from amounts
held pursuant to Section 5.4 hereof and the Lessee subsequently makes the
payment of Basic Rent or Supplemental Rent in respect of which such distribution
was made, such payment of Basic Rent or Supplemental Rent shall, unless a
Default or Event of Default shall have occurred and be continuing, be applied to
the purpose for which such amount held pursuant to Section 5.4 had been held,
subject, in all cases, to the terms of Section 5.4. The portion of each such
payment made to the Indenture Trustee which is to be distributed by the
Indenture Trustee in payment of Notes shall be applied in accordance with
Section 3.11. Any payment received by the Indenture Trustee pursuant to Section
6.8 shall be distributed to the Holders of the Notes, ratably, without priority
of one over the other, in the proportion that the amount of such payment or
payments then due and unpaid on all Notes held by each such Holder bears to the
aggregate amount of the payments then due and unpaid on all Notes Outstanding.
Amounts distributed by the Indenture Trustee pursuant to this Section 5.1 shall
be distributed as promptly as practicable after such amounts are actually
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received by the Indenture Trustee; provided, however, that in the event the
Indenture Trustee shall be directed to make payments to the Holder of any Note
by wire transfer in accordance with Section 3.8 hereof, any amounts received by
the Indenture Trustee after 11:00 A.M., New York City time, may be distributed
on the following Business Day.
SECTION 5.2. Amounts Received as Result of Event of Loss,
Deemed Loss Event, Exercise of Option to Terminate or Exercise of
Cure or Special Purchase Option.
If an Event of Loss or Deemed Loss Event shall occur or the
Lessee shall exercise the Cure or Special Purchase Option, and if either the
Assumption Agreement or the Undivided Interest Indenture Supplement shall have
been executed and delivered, any amounts of Casualty Value, Special Casualty
Value or Fair Market Sales Value received or held by the Indenture Trustee in
respect of such Event of Loss or Deemed Loss Event or exercise of the Cure or
the Special Purchase Option shall be distributed forthwith to the Owner
Participant. If the Lessee or Owner Trustee, as the case may be, shall exercise
its option to terminate the Facility Lease pursuant to Section 14 thereof, or
the Lessee shall exercise the Special Purchase Option pursuant to Section 13(c)
thereof, then there shall be prepaid, on the date payments or proceeds with
respect thereto are received by the Indenture Trustee (or as soon thereafter as
practicable) under Section 14 of the Facility Lease, the unpaid principal amount
of all Notes, together with the premium, if any, and all accrued but unpaid
interest thereon to the date of such prepayment. Notice of such prepayment shall
be given as provided in Section 3.9(c) and may provide that it is subject to
receipt of funds for such prepayment. Except as otherwise provided in Section
5.3 or 5.7, any payments received and amounts realized by the Indenture Trustee
upon exercise of the Lessee's or the Owner Trustee's option to terminate the
Facility Lease under Section 14 thereof shall in each case be distributed on the
date of prepayment as provided in clauses first, second and fifth of Section
5.3.
SECTION 5.3. Amounts Received After, or Held at Time of,
Indenture Event of Default under Section 6.2.
Except as otherwise provided in Section 5.7, all payments
received and amounts realized by the Indenture Trustee in respect of the Lease
Indenture Estate (including any amounts realized by the Indenture Trustee from
the exercise of any remedies pursuant to the Facility Lease or Article VI of
this Indenture) after an Indenture Event of Default referred to in Section 6.2
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shall have occurred and be continuing and the Notes have been accelerated
pursuant to Section 7.1, as well as all payments thereafter received or amounts
then held by the Indenture Trustee as part of the Lease Indenture Estate, shall
be distributed by the Indenture Trustee in the following order of priority:
first, so much of such payments or amounts as shall be
required to reimburse the Indenture Trustee for any Trustee's Expenses
(to the extent not previously reimbursed) and to pay the reasonable
remuneration of the Indenture Trustee, shall be applied by the Indenture
Trustee to such reimbursement and payment;
second, so much of such payments or amounts remaining as shall
be required to pay in full the aggregate unpaid principal amount of all
Notes, together with premium, if any, plus accrued but unpaid interest
(as well as interest on overdue principal and, to the extent permitted by
law, on overdue interest) thereon to the date of distribution, shall be
distributed to the Holders of such Notes and in case the aggregate amount
so to be distributed shall be insufficient to pay all such Notes in full
as aforesaid, then ratably, without priority of one over the other, in
the proportion that the aggregate unpaid principal amount of all such
Notes held by each such Holder, together with premium, if any, plus
accrued but unpaid interest thereon to the date of distribution bears to
the aggregate unpaid principal amount of all Notes, together with
premium, if any, plus accrued but unpaid interest thereon to the date of
distribution;
third, so much of such payments or amounts remaining as shall
be required to pay the present or former Holders of the Notes the amounts
payable to them as Indemnitees (to the extent not previously reimbursed)
shall be distributed to such Holders; and in case the aggregate amount so
to be paid to all such Holders in accordance with this clause third shall
be insufficient to pay all such amounts as aforesaid, then ratably,
without priority of one over the other, in the proportion that the amount
of such indemnity or other payments to which such Person is entitled
bears to the aggregate amount of such indemnity or other payments to
which all such Persons are entitled;
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fourth, the balance, if any, of such payments or amounts
remaining shall be applied to the payment of any other indebtedness at
the time due and owing to the Indenture Trustee or the Holders of the
Notes which this Indenture by its terms secures; and
fifth, the balance, if any, of such payments or amounts
remaining thereafter shall be distributed to or upon the direction of the
Owner Trustee.
SECTION 5.4. Amounts Received for Which Provision Is Made
in a Transaction Document.
Except as otherwise provided in Section 5.1, 5.3 or 5.7
hereof, any payments received by the Indenture Trustee in respect of the Lease
Indenture Estate for which provision as to the application thereof is made in a
Transaction Document shall be applied to the purpose for which payment was made
in accordance with the terms of such Transaction Document, as determined, in the
first instance from instructions or other information accompanying such payment,
or, otherwise, in accordance with instructions form the payor of such payments.
SECTION 5.5. Amounts Received for Which No Provision
Is Made.
Except as otherwise provided in Section 5.1, 5.3 or 5.7, any
payments received and any amounts realized by the Indenture Trustee in
respect of the Lease Indenture Estate
(a) for which no provision as to the application thereof is made in a
Transaction Document or elsewhere in this Article V shall be held by the
Indenture Trustee as part of the Lease Indenture Estate, and
(b) to the extent received or realized at any time after payment in full
of the principal of and premium, if any, and interest on all the Notes,
as well as any other amounts remaining as part of the Lease Indenture
Estate after payment in full of the principal of and premium, if any, and
interest on all the Notes, shall be distributed by the Indenture Trustee
in the order of priority set forth in Section 5.3 (omitting clause second
thereof).
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SECTION 5.6. Payments to Owner Trustee.
Unless otherwise directed by the Owner Trustee, all payments
to be made to the Owner Trustee hereunder shall be made to the Owner Participant
by wire transfer of immediately available funds as soon as practicable but in
any event no later than the close of business on the date of receipt (assuming
the Indenture Trustee has received such funds prior to 11:00 a.m. New York City
time on the same day), to such account at such bank or trust company as the
Owner Participant shall from time to time designate in writing to the Indenture
Trustee.
SECTION 5.7. Excepted Payments.
Anything in this Article V or elsewhere in this Indenture to
the contrary notwithstanding, any Excepted Payment received at any time by the
Indenture Trustee shall be distributed as promptly as practicable to the Person
entitled to receive such Payment (such entitlement to be conclusively determined
by reference to payment instructions from such Person).
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF OWNER TRUSTEE; EVENTS
OF DEFAULT; REMEDIES OF THE
INDENTURE TRUSTEE
SECTION 6.1. Representations, Warranties and Provision
of Owner Trustee.
The Owner Trustee hereby covenants and agrees that (i) it will
duly and punctually pay the principal of, and premium, if any, and interest on,
the Notes in accordance with the terms thereof and this Indenture, (ii) it will
not pledge, create a security interest in or mortgage, so long as this Indenture
shall remain in effect, any of its estate, right, title or interest in and to
the Lease Indenture Estate or otherwise constituting part of the Trust Estate,
to anyone other than the Indenture Trustee, (iii) so long as this Indenture
shall remain in effect, it will not purchase or agree to purchase any property
or asset other than the Undivided Interest and the Real Property Interest and
other than as contemplated by the Transaction Documents, (iv) it will not,
except with the prior written concurrence of the Indenture Trustee or as
expressly provided in or permitted by this Indenture or with
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respect to the Trust Agreement or any property not constituting part of the
Lease Indenture Estate, take any action which would result in an impairment of
any Note or the obligation of the Lessee to pay any amount under the Facility
Lease which is part of the Lease Indenture Estate (not in any event including in
respect of Excepted Payments) or any of the other rights or security created or
effected thereby, or (v) issue, or incur any obligation in respect of,
indebtedness for borrowed money except for its obligations in respect of Notes.
A signed copy of any amendment or supplement to the Trust
Agreement shall be delivered by the Owner Trustee to the Indenture Trustee and
the Lessee. This Indenture and the Lease Indenture Estate shall not be affected
by an action under or in respect of the Trust Agreement except as otherwise
provided in or permitted by this Indenture. The Trust Agreement may not in any
event be terminated by the Owner Participant or the Owner Trustee or revoked by
the Owner Participant so long as any of the Notes or any unpaid obligations
under this Indenture remain Outstanding. The Owner Trustee may resign as Owner
Trustee, appoint a successor Owner Trustee and take all necessary and proper
action to constitute one or more Persons as co-trustee(s) jointly with the Owner
Trustee or as separate trustee(s), all in accordance with the terms and
conditions of Article IX of the Trust Agreement.
SECTION 6.2. Indenture Events of Default.
The term Indenture Event of Default, wherever used herein,
shall mean any of the following events (whatever the reason for such Indenture
Event of Default and whether it shall be voluntary or involuntary or come about
or be effected by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) any of the Events of Default specified in the following
clauses of Section 15 of the Facility Lease: (1) clause (i)(y), except a failure
of the Lessee to pay any amount which shall constitute an Excepted Payment; (2)
clause (i)(x), except a failure of the Lessee to pay any amount which shall
constitute an Excepted Payment or except where the Owner Trustee shall not have
rescinded or terminated the Facility Lease pursuant to Section 16(a)(i) of the
Facility Lease; or (3) clause (vii); or
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(b) the rescission or termination of, or the taking of action
by the Owner Trustee or the Owner Participant the effect of which would be to
rescind or terminate, the Facility Lease, whether pursuant to Section 16(a)(i)
of the Facility Lease or otherwise; or
(c) any failure by the Lessee to perform and observe Section
10(b)(3)(iii) of the Participation Agreement; or
(d) the Owner Trustee shall fail to make any payment in
respect of the principal of, or premium, if any, or interest on, the Notes
within then (10) Business Days after the same shall have become due (other than
by virtue of any failure by the Lessee to make any payment of Rent therefor); or
(e) the Owner Trustee shall fail to perform or observe any
covenant or agreement to be performed or observed by it under Section 6.1 of
this Indenture, or the Owner Participant shall fail to perform or observe any
covenant or agreement to be performed or observed by it under Section 7(b)(1) of
the Participation Agreement and, in any such case, such failure shall continue
for a period of 30 days after notice thereof shall have been given to the Owner
Trustee and the Owner Participant and the Lessee by the Indenture Trustee,
specifying such failure and requiring it to be remedied.
SECTION 6.3. Enforcement of Remedies.
(a) In the event that an Indenture Event of Default shall have
occurred and be continuing, then and in every such case the Indenture Trustee,
subject to paragraph (b) of this Section 6.3 and Section 6.11, may, and when
required pursuant to the provisions of Article VII hereof shall, exercise any or
all of the rights and powers and pursue, subject to the rights of the Lessee
under the Facility Lease, (x) in the event such Indenture Event of Default is
referred to in paragraph (d) or (e) of Section 6.2, any or all of the remedies
then available pursuant to this Article VI and Article VII, or (y) in the event
such Indenture Event of Default is referred to in paragraph (a), (b) or (c) of
Section 6.2, any or all of such remedies concurrently with the exercise and
pursuit by the Owner Trustee of any or all of the remedies then available to the
Owner Trustee under the Facility Lease.
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(b) Any provisions of the Facility Lease or this Indenture to
the contrary notwithstanding, if the Lessee shall fail to pay any Excepted
Payment to any Person entitled thereto as and when due, such Person shall have
the right at all times, to the exclusion of the Indenture Trustee, to demand,
collect, sue for, enforce performance of obligations relating to, or otherwise
obtain all amounts due in respect of such Excepted Payment.
SECTION 6.4. Specific Remedies; Enforcement of Claims
without Possession of Notes.
Subject to Sections 6.2, 6.3 and 6.11 hereof and the terms of
the documents constituting a part of the Lease Indenture Estate, upon the
occurrence and during the continuance of an Indenture Event of Default:
(a) The Indenture Trustee may, in order to enforce the rights
of the Indenture Trustee and of the Holders of the Notes, direct payment to it
of all moneys and enforce any agreement or undertaking constituting a part of
the Lease Indenture Estate by any action, suit, remedy or proceeding authorized
or permitted by this Indenture or by law or by equity, and whether for the
specific performance of any agreement contained herein, or for an injunction
against the violation of any of the terms hereof, or in aid of the exercise of
any power granted hereby or by Applicable Law, and in addition may sell, assign,
transfer and deliver, from time to time to the extent permitted by Applicable
Law, all or any part of the Lease Indenture Estate or any interest therein, at
any private sale or public auction with or without demand, advertisement or
notice (except as herein required by Applicable Law) of the date, time and place
of sale and any adjournment thereof, for cash or credit or other property, for
immediate or future delivery and for such price or prices and on such terms as
the Indenture Trustee, in its uncontrolled discretion, may determine, or as may
be required by Applicable Law, so long as the Owner Participant and the Owner
Trustee are afforded a commercially reasonable opportunity to bid for all or
such part of the Lease Indenture Estate in connection therewith. It is agreed
that 90 days' notice to the Owner Participant, the Owner Trustee and the Lessee
of the date, time and place of any proposed sale by the Indenture Trustee of all
or any part of the Lease Indenture Estate or interest therein is reasonable. The
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Indenture Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee and of the Holders of the Notes asserted or upheld in any bankruptcy,
receivership or other judicial proceedings.
(b) Without limiting the foregoing, the Indenture Trustee, its
assigns and its legal representatives, subject to the rights of the Lessee under
the Facility Lease, shall have as to such of the Lease Indenture Estate as is
subject to the Uniform Commercial Code or similar law in each relevant
jurisdiction all the remedies of a secured party under the Uniform Commercial
Code or similar law in such jurisdiction and such further remedies as from time
to time may hereafter be provided in such jurisdiction for a secured party.
(c) All rights of action and rights to assert claims under
this Indenture or under any of the Notes may be enforced by the Indenture
Trustee without the possession of the Notes at any trial or other proceedings
instituted by the Indenture Trustee, and any such trial or other proceedings
shall be brought in its own name as trustee of an express trust, and any
recovery or judgment shall be for the ratable benefit of the Holders of the
Notes as herein provided. In any proceedings brought by the Indenture Trustee
(and also any proceedings involving the interpretation of any provision of this
Indenture to which the Indenture Trustee shall be a party) the Indenture Trustee
shall be held to represent all the Holders of the Notes, and it shall not be
necessary to make any such Holders parties to such proceedings.
(d) The Indenture Trustee may exercise any other right or
remedy that may be available to it under Applicable Law or proceed by
appropriate court action to enforce the terms hereof or to recover damages for
the breach hereof.
SECTION 6.5. Rights and Remedies Cumulative.
Subject to Sections 6.2, 6.3 and 6.11 hereof, (a) each and
every right, power and remedy herein specifically given to the Indenture Trustee
under this Indenture shall be cumulative and shall be in addition to every other
right, power and remedy herein specifically given or now or hereafter existing
at law, in equity or by statute, and each and every right, power and remedy
whether specifically herein given or otherwise existing may be exercised from
time to time and as often and in such order as may be deemed expedient by the
Indenture
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Indenture Trustee and the exercise or the beginning of the exercise of any
right, power or remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or remedy, and
(b) no delay or omission by the Indenture Trustee in the exercise of any right,
power or remedy or in the pursuance of any remedy shall impair any such right,
power or remedy or be construed to be a waiver of any default on the part of the
Owner Participant, the Owner Trustee or the Lessee or to be an acquiescence
therein.
SECTION 6.6. Restoration of Rights and
Remedies.
In case the Indenture Trustee shall have proceeded to enforce
any right, power or remedy under this Indenture by foreclosure, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Indenture Trustee,
then and in every such case the Owner Trustee, the Owner Participant, the
Indenture Trustee and the Lessee shall be restored to their former positions and
rights hereunder with respect to the Lease Indenture Estate, and all rights,
powers and remedies of the Indenture Trustee shall continue as if no such
proceedings had been taken.
SECTION 6.7. Waiver of Past Defaults.
Any past Indenture Default or Indenture Event of Default and
its consequences may be waived by the Indenture Trustee, except an Indenture
Default or an Indenture Event of Default (i) in the payment of the principal of
or interest on any Note, subject to the provisions of Section 7.1 hereof, or
(ii) in respect of a covenant or provision hereof which, under Section 10.2
hereof, cannot be modified or amended without the consent of each Holder of a
Note then Outstanding. Upon any such waiver, such Indenture Default or Indenture
Event of Default shall cease to exist, and any other Indenture Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Indenture
Default or Indenture Event of Default or impair any right consequent thereon.
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SECTION 6.8. Right of Owner Trustee to Pay Rent; Note
Purchase; Substitute Lessee.
Anything in this Article VI or Article VII to the contrary
notwithstanding:
(a) an Indenture Event of Default shall be deemed cured if
such Indenture Event of Default results from non-payment of Basic Rent or
Supplemental Rent under the Facility Lease, and the Owner Trustee or the Owner
Participant shall have paid all principal of an interest on the Notes due (other
than by acceleration) on the date such Basic Rent was payable (plus interest on
such amount as required hereby) within 15 days after the receipt by the Owner
Trustee in accordance with the notice provisions of the Participation Agreement.
The Trustee or the Owner Participant, upon exercising cure rights under this
paragraph (a), shall not obtain any Lien on any part of the Lease Indenture
Estate on account of such payment for the costs and expenses incurred in
connection therewith nor, except as expressly provided in the succeeding
sentence, shall any claims of the Owner Trustee or the Owner Participant against
the Lessee or any other Person for the repayment thereof impair the prior right
and security interest of the Indenture Trustee in and to the Lease Indenture
Estate. Upon any payment by the Owner Trustee or the Owner Participant pursuant
to this Section 6.8, the Owner Trustee or the Owner Participant, as the case may
be, shall (to the extent of such payment made by it) be subrogated to the rights
of the Indenture Trustee and the Holders of the Notes to receive the payment of
Rent with respect to which the Owner Trustee or the Owner Participant made such
payment and interest on account of such Rent payment being overdue in the manner
set forth in the next sentence. If the Indenture Trustee shall thereafter
receive such payment of Rent or such interest, the Indenture Trustee shall,
notwithstanding the requirements of Section 5.1, on the date such payment is
received by the Indenture Trustee, remit such payment of Rent (to the extent of
the payment made by the Owner Trustee or the Owner Participant pursuant to this
Section 6.8) and such interest to the Owner Trustee or the Owner Participant, as
the case may be, in reimbursement for the funds so advanced by it.
(b) Each Holder of a Note agrees, by acceptance thereof, that
if the Notes have been accelerated pursuant to Section 7.1, and the Owner
Trustee, within 30 days after receiving notice from the Indenture Trustee
pursuant to Section 7.1 hereof, shall give written notice to the Indenture
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Trustee of the Owner Trustee's intention to purchase all of the Notes in
accordance with this paragraph, accompanied by assurances of the Owner Trustee
to purchase the Notes, then, upon receipt within 10 Business Days after such
notice from the Owner Trustee of an amount equal to the aggregate unpaid
principal amount of and any premium with respect to any unpaid Notes then held
by such Holder, together with accrued but unpaid interest thereon to the date of
such receipt (as well as any interest on overdue principal and, to the extent
permitted by law, interest), such Holder will forthwith sell, assign, transfer
and convey to the Owner Trustee (without recourse or warranty of any kind other
than of title to the Notes so conveyed) all of the right, title and interest of
such Holder in and to the Lease Indenture Estate, this Indenture and all Notes
held by such Holder; provided, that no such Holder shall be required so to
convey unless (1) the Owner Trustee shall have simultaneously tendered payment
for all other Notes issued by the Owner Trustee at the time Outstanding pursuant
to this paragraph and (2) such conveyance is not in violation of any Applicable
Law.
(c) Each Holder of a Note further agrees by its acceptance
thereof that the Owner Trustee shall have the right, pursuant to Section 16 of
the Facility Lease, to terminate the Facility Lease and, in connection
therewith, to arrange for the substitution of another Person as lessee under a
new lease substantially similar to the Facility Lease (hereinafter the
Substituted Lessee) and, subject to: (i) any Indenture Event of Default under
paragraphs (d) and (e) of Section 6.2 having been cured by the Owner Trustee,
(ii) the Substituted Lessee's assuming all of the obligations under the Facility
Lease and (iii) the Substituted Lessee's having an assigned credit rating by
Standard & Poors's Corporation and Moody's Investors Service, Inc. (or, if
either of such organizations shall not rate securities issued by such
Substituted Lessee, by any other nationally recognized rating organization in
the United States of America) with respect to at least one series of its debt
obligations or preferred stock of the Substituted Lessee equal to or better than
the ratings assigned, immediately prior to such substitution, by such
organizations to comparable securities of the Lessee immediately prior to such
substitution but in no event less than "investment grade" rating assigned by
such organizations, then the Facility Lease between the Owner Trustee and such
Substituted Lessee shall, for all purposes of this Indenture, be deemed to be
the Facility Lease subject to the lien of this Indenture.
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SECTION 6.9. Further Assurances.
Subject to Section 7.6 hereof, the Owner Trustee covenants and
agrees from time to time to do all such acts and execute all such instruments of
further assurance as shall be reasonably requested by the Indenture Trustee for
the purpose of fully carrying out and effectuating this Indenture and the intent
hereof.
SECTION 6.10. Right of Indenture Trustee To
Perform Covenants, etc.
If the Owner Trustee shall fail to make any payment or perform
any act required to be made or performed by it hereunder or under the Facility
Lease or if the Owner Trustee shall fail to release any Lien affecting the Lease
Indenture Estate which it is required to release by the terms of this Indenture,
the Indenture Trustee, without notice to or demand upon the Owner Trustee and
without waiving or releasing any obligation or default, may (but shall be under
no obligation to) at any time thereafter make such payment or perform such act
for the account and at the expense of the Lease Indenture Estate. All sums so
paid by the Indenture Trustee and all costs and expenses (including without
limitation reasonable fees and expenses of legal counsel and other
professionals) so incurred, together with interest thereon from the date of
payment or occurrence, shall constitute additional indebtedness secured by this
Indenture and shall be paid from the Lease Indenture Estate to the Indenture
Trustee on demand. The Indenture Trustee shall not be liable for any damages
resulting from any such payment or action unless such damages shall be a
consequence of willful misconduct or gross negligence on the part of the
Indenture Trustee.
SECTION 6.11. Certain Other Rights of the Owner
Trustee.
Notwithstanding any provision to the contrary in this
Indenture, the Owner Trustee shall at all times retain, to the exclusion of the
Indenture Trustee, all rights of the Owner Trustee to exercise any election or
option to make any decision or determination or to give or receive any notice,
consent, waiver or approval or to take any other action under or in respect of
the Facility Lease, as well as all rights, powers and remedies on the part of
the Owner Trustee, whether arising under the Facility Lease or by statute or at
law or in equity or otherwise, arising out of any Default or Event of Default
subject, however, to Section 10.2. Without the prior written consent of the
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Indenture Trustee, the exercise of any of the aforesaid rights so retained by
the Owner Trustee shall not be exercised in such a manner as to (i) reduce the
amounts payable by the Lessee under the Facility Lease below the amounts
necessary to provide the Owner Trustee with sufficient monies to make timely
payments in full of amounts due with respect to the principal of and premium, if
any, and interest on all Notes or (ii) rescind or terminate the Facility Lease
pursuant to Section 16(a)(i) thereof. Nor shall the Owner Trustee exercise any
other right or remedy under the Facility Lease the effect of which would be to
effect such rescission or termination.
ARTICLE VII
CERTAIN DUTIES OF THE OWNER
TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 7.1. Duties in Respect of Events of Default, Deemed
Loss Events and Events of Loss; Acceleration of Maturity.
In the event the Owner Trustee shall have actual knowledge of
an Indenture Event of Default, an Event of Default, a Deemed Loss Event or an
Event of Loss, the Owner Trustee shall give prompt written notice thereof to the
Owner Participant, the Lessee and the Indenture Trustee. In the event the
Indenture Trustee shall have actual knowledge of an Event of Default, an
Indenture Event of Default, a Deemed Loss Event or an Event of Loss, the
Indenture Trustee shall give prompt written notice thereof to the Owner
Participant, the Owner Trustee, the Lessee and each Holder of a Note. Subject to
the terms of Sections 6.2, 6.3, 6.4, 6.8, 6.11 and 7.3 hereof, (a) the Indenture
Trustee shall take such action (including the waiver of past Defaults in
accordance with Section 6.7 hereof), or refrain from taking such action, with
respect to any such Indenture Event of Default, Event of Default, Deemed Loss
Event or Event of Loss as the Indenture Trustee shall be instructed by a
Directive, (b) if the Indenture Trustee shall not have received instructions as
above provided within 20 days after mailing by the Indenture Trustee of notice
of such Indenture Event of Default, Event of Default, Deemed Loss Event or Event
of Loss to the Persons referred to above, the Indenture Trustee may, subject to
instructions thereafter received pursuant to the preceding sentence, take such
action, or refrain from taking such action, but shall be under no duty to take
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or refrain from taking any action, with respect to such Indenture Event of
Default, Event of Default, Deemed Loss Event or Event of Loss as it shall
determine advisable in the best interests of the Holders of the Notes of all
series and (c) in the event that an Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee in its discretion may, or upon
receipt of a Directive shall, by written notice to the Owner Trustee, declare
the unpaid principal amount of all Notes with accrued interest thereon to be
immediately due and payable, upon which declaration such principal amount and
such accrued interest shall immediately become due and payable without further
act or notice of any kind. For all purposes of this Indenture, in the absence of
actual knowledge, neither the Owner Trustee nor the Indenture Trustee shall be
deemed to have knowledge of an Indenture Event of Default or Event of Default
except that the Indenture Trustee shall be deemed to have knowledge of the
failure of the Lessee to pay any installment of Basic Rent within 10 Business
Days after the same shall become due. For purposes of this Section 7.1, neither
the Owner Trustee nor the Indenture Trustee shall be deemed to have actual
knowledge of any Indenture Event of Default, Event of Default, Deemed Loss Event
or Event of Loss unless it shall have received notice thereof pursuant to
Section 11.6 hereof or such Indenture Event of Default or Event of Default shall
actually be known by an officer in the corporate trust department of the Owner
Trustee or by an officer in the Corporate Trustee Administration Department of
the Indenture Trustee, as the case may be.
SECTION 7.2. Duties in Respect of Matters
Specified in Directive.
Subject to the terms of Sections 6.2, 6.3, 6.4, 6.8, 6.11, 7.1
and 7.3 hereof, upon receipt of a Directive, the Indenture Trustee shall take
such of the following action as may be specified in such Directive: (i) give
such notice or direction or exercise such right, remedy or power permitted
hereunder or permitted with respect to the Facility Lease or in respect of any
part or all of the Lease Indenture Estate as shall be specified in such
Directive; and (ii) take such action to preserve or protect the Lease Indenture
Estate as shall be specified in such Directive, it being agreed that without
such a Directive, the Indenture Trustee shall not waive, consent to or approve
any such matter as satisfactory to it.
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SECTION 7.3. Indemnification.
The Indenture Trustee shall not be required to take or refrain
from taking any action under Section 7.1 or 7.2 or Article VI hereof which shall
require the Indenture Trustee to expend or risk its own funds or otherwise incur
any financial liability unless the Indenture Trustee shall have been indemnified
by the Holders of the Notes against liability, cost or expense (including
counsel fees) which may be incurred in connection therewith, or unless, in the
reasonable judgment of the Indenture Trustee, the indemnities of the Lessee
shall be adequate for such purpose; provided, however, that if the Holder of
such Note is the Collateral Trust Trustee, the unsecured written undertaking of
the Collateral Trust Trustee, in its individual capacity, shall be sufficient
indemnity for purposes of this Section. The Indenture Trustee shall not be
required to take any action under Section 7.1 or 7.2 or Article VI hereof nor
shall any other provision of this Indenture be deemed to impose a duty on the
Indenture Trustee to take any action, if the Indenture Trustee shall reasonably
determine, or shall have been advised by counsel, that such action is likely to
result in personal liability or is contrary to the terms hereof or of the
Facility Lease or is otherwise contrary to law.
SECTION 7.4. Limitations on Duties; Discharge of Certain
Liens Resulting from Claims Against Indenture Trustee.
The Indenture Trustee shall have no duty or obligation to take
or refrain from taking any action under, or in connection with, this Indenture
or the Facility Lease, except as expressly provided by the terms of this
Indenture. The Indenture Trustee nevertheless agrees that it will, in its
individual capacity and at its own cost and expense, promptly take such action
as may be necessary duly to discharge all Liens on any part of the Lease
Indenture Estate which result from acts by or claims against it arising out of
events or conditions not related to its rights in the Lease Indenture Estate or
the administration of the Lease Indenture Estate or the transactions
contemplated hereby.
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SECTION 7.5. Restrictions on Dealing with Lease
Indenture Estate.
Except as provided in the Transaction Documents, the Owner
Trustee shall not use, operate, store, lease, control, manage, sell, dispose of
or otherwise deal with any part of the Lease Indenture Estate.
SECTION 7.6. Filing of Financing Statements
and Continuation Statements.
Pursuant to Section 10(b)(2) of the Participation Agreement,
the Lessee has covenanted to maintain the priority of the lien of this Indenture
on the Lease Indenture Estate. The Indenture Trustee shall, at the request and
expense of the Lessee as provided in the Participation Agreement, execute and
deliver to the Lessee and the Lessee will file, if not already filed, such
financing statements or other documents and such continuation statements or
other documents with respect to financing or other documents previously filed
relating to the lien created under this Indenture in the Lease Indenture Estate
as may be necessary to protect, perfect and preserve the lien created under this
Indenture. At any time and from time to time, upon the request of the Lessee or
the Indenture Trustee, at the expense of the Lessee as provided in the
Participation Agreement (and upon receipt of the form of document so to be
executed), the Owner Trustee shall promptly and duly execute and deliver any and
all such further instruments and documents as the Lessee or the Indenture
Trustee may request in order for the Indenture Trustee to obtain the full
benefits of the security interest and assignment created or intended to be
created hereby and of the rights and powers herein granted. Upon the reasonable
instructions (which instructions shall be accompanied by the form of document to
be filed) at any time and from time to time of the Lessee or the Indenture
Trustee, the Owner Trustee shall execute and file any financing statement (and
any continuation statement with respect to any such financing statement), any
certificate of title or any other document, in each case relating to the
security interest and assignment created by this Indenture as may be specified
in such instructions. In addition, the Indenture Trustee and the Owner Trustee
will execute such continuation statements with respect to financing statements
and other documents relating to the lien created under this Indenture in the
Lease Indenture Estate as may be reasonably specified from time to time in
written instructions of any Holder of a Note (which instructions may, by their
terms, be operative only at a future date and which shall be accompanied by the
form of such continuation statement or other document so to be filed).
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ARTICLE VIII
CONCERNING THE OWNER TRUSTEE AND
THE INDENTURE TRUSTEE
SECTION 8.1. Acceptance of Trusts; Standard of Care.
The Indenture Trustee accepts the trusts hereby created and
applicable to it and agrees to perform the same but only upon the terms of this
Indenture and the Participation Agreement and agrees to receive and disburse all
moneys constituting part of the Lease Indenture Estate in accordance with the
provisions hereof, provided that no implied duties or obligations shall be read
into this Indenture or the Participation Agreement against the Indenture
Trustee. The Indenture Trustee shall enter into and perform its obligations
under the Participation Agreement, and, at the request of the Owner Trustee, any
other agreement relating to any transfer of the Undivided Interest or the Real
Property Interest or the assignment of rights under the Assignment and
Assumption or, at the request of the Owner Trustee, the purchase by any Person
of Notes or Additional Notes issued hereunder, all as contemplated hereby. The
Indenture Trustee shall not be liable under any circumstances, except for its
own willful misconduct or gross negligence. If any Indenture Event of Default
shall have occurred and be continuing, the Indenture Trustee shall exercise such
of the rights and remedies vested in it by this Indenture, subject to the
provisions hereof, and shall use the same degree of care in their exercise as a
prudent man would exercise or use in the circumstances in the conduct of his own
affairs; provided that if in the opinion of the Indenture Trustee such action
may tend to involve expense or liability, it shall not be obligated to take such
action unless it is furnished with indemnity satisfactory to it.
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SECTION 8.2. No Duties of Maintenance, Etc.
Except pursuant to Section 7.2 hereof and except as provided
in, and without limiting the generality of, Sections 7.1 and 7.4 hereof, the
Indenture Trustee shall have no duty (i) to see to any recording or filing of
any Transaction Document, or to see to the maintenance of any such recording or
filing, or (ii) to see to the payment or discharge of any tax, assessment or
other governmental charge or any lien or encumbrance of any kind owing with
respect to, or assessed or levied against, any part of the Lease Indenture
Estate (except such as are required to be paid or discharged by it pursuant to
this Indenture or any of the other Transaction Documents) or to make or file any
reports or returns related thereto.
SECTION 8.3. Representations and Warranties of Indenture
Trustee and the Owner Trustee.
NEITHER THE OWNER TRUSTEE NOR THE INDENTURE TRUSTEE MAKES ANY
REPRESENTATION OR WARRANTY AS TO the VALUE, CONDITION, MERCHANTABILITY OR
FITNESS FOR USE OF UNIT 1, THE UNDIVIDED INTEREST OR ANY PART OF THE LEASE
INDENTURE ESTATE OR AS TO ITS INTEREST THEREIN, OR ANY OTHER REPRESENTATION OR
WARRANTY WITH RESPECT TO UNIT 1, THE UNDIVIDED INTEREST OR ANY PART OF THE LEASE
INDENTURE ESTATE WHATSOEVER. The Owner Trustee and the Indenture Trustee each
represents and warrants, in its individual capacity, as to itself that this
Indenture has been executed and delivered by one or more of its officers who are
duly authorized to execute and deliver this Indenture on its behalf.
SECTION 8.4. Moneys Held in Trust; Non-Segregation of Moneys.
All moneys and securities deposited with and held by the
Indenture Trustee under this Indenture for the purpose of paying, or securing
the payment of, the principal of or premium or interest on the Notes shall be
held in trust. Except as provided in Sections 2.3(c), 8.8 and 11.1 hereof,
moneys received by the Indenture Trustee under this Indenture need not be
segregated in any manner except to the extent required by law, and may be
deposited under such general conditions as may be prescribed by law; provided,
however, that any payments received or applied hereunder by the Indenture
Trustee shall be accounted for by the Indenture Trustee so that any portion
thereof paid or applied pursuant hereto shall be identifiable as to the source
thereof. Except as otherwise expressly provided herein, the Indenture Trustee
shall not be liable for any interest on any money held pursuant to this
Indenture.
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SECTION 8.5. Reliance on Writings, Use of Agents, Etc.
The Indenture Trustee shall incur no liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
telegram, order, certificate, report, opinion, bond or other document or paper
believed by it to be genuine and believed by it to be signed by the proper party
or parties. In the case of the Lessee, the Indenture Trustee may accept a copy
of a resolution of the Board of Directors or any duly constituted and authorized
committee of the Board of Directors of the Lessee, certified by the Secretary or
an Assistant Secretary of the Lessee as duly adopted and in full force an
effect, as conclusive evidence that such resolution has been duly adopted by
such Board or Committee and that the same is in full force and effect. As to the
aggregate unpaid principal amount of the Notes Outstanding as of any date, the
Owner Trustee may for all purposes hereof rely on a certificate signed by an
Authorized Officer of the Indenture Trustee. As to any fact or matter the manner
of ascertainment of which is not specifically described herein, the Indenture
Trustee may for all purposes hereof rely on a certificate, signed by the
Chairman of the Board, the President, any Vice President and the Treasurer or
the Secretary or any Assistant Treasurer or Assistant Secretary of the Lessee,
or a Holder of a Note or any Responsible Officer of the Owner Trustee, as the
case may be, as to such fact or matter, and such certificate shall constitute
full protection to the Indenture trustee for any action taken or omitted to be
taken by it in good faith in reliance thereon. The Indenture Trustee shall
furnish to the Owner Trustee upon request such information and copies of such
documents as the Indenture Trustee may have and as are necessary for the Owner
Trustee to perform its duties under Article III hereof. In the administration of
the trusts hereunder, the Indenture Trustee may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys selected by it in good faith and with reasonable care, and,
with respect to matters relating to the Notes, the Lease Indenture Estate and
its rights and duties under this Indenture and the other Transaction Documents,
may, at the expense of the Lessee, or, if the Lessee shall have failed to pay or
provide for the payment thereof, at the expense of the Lease Indenture Estate,
consult with counsel, accountants and other skilled persons to be selected and
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employed by it in good faith and with reasonable care, and the Indenture Trustee
shall not be liable for anything done, suffered or omitted in good faith by it
in accordance with the advice or opinion of any such counsel, accountants or
other skilled persons so selected. Unless otherwise specified herein or in any
other Transaction Document, any opinion of counsel referred to in this Indenture
or in such other Transaction Document may be relied on by the Indenture Trustee
to the extent it is rendered by an attorney or firm of attorneys satisfactory to
the Indenture Trustee (which may be counsel to the Owner Participant, the Owner
Trustee, the Lessee or any party to any Transaction Document).
SECTION 8.6. Indenture Trustee to Act Solely
as Trustee.
The Indenture Trustee acts hereunder solely as trustee as
herein provided and not in any individual capacity, except as otherwise
expressly provided herein; and except as provided in Sections 9(a) and 9(b) of
the Participation Agreement or Section 7.4 or 8.1 hereof, all Persons having any
claim against the Indenture Trustee arising from matters relating to the Notes
by reason of the transactions contemplated hereby shall, subject to the lien and
priorities of payment as herein provided and to Sections 3.6 and 5.7, look only
to the Lease Indenture Estate for payment or satisfaction thereof.
SECTION 8.7. Limitation on Rights Against Registered Holders,
the Owner Trustee or Lease Indenture Estate.
The Indenture Trustee shall be entitled to be paid for
reimbursed for Trustee's Expenses as provided herein and in the other
Transaction Documents. Nonetheless, the Indenture Trustee agrees that it shall
have no right against the Holders of the Notes, the Owner Trustee (except to the
extent included in Transaction Expenses payable by the Owner Participant) or,
except as provided in Article V and Section 6.4 or this Article VIII, the Lease
Indenture Estate for any fee as compensation for its services hereunder.
SECTION 8.8. Investment of Certain Payments Held by the
Indenture Trustee.
Any amounts held by the Indenture Trustee hereunder other than
pursuant to Section 2.3(c) or 11.1 hereof shall be invested by the Indenture
Trustee from time to time as directed in writing by the Owner Trustee or by the
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Owner Participant as agent of the Owner Trustee and at the expense and risk of
the Owner Participant in (i) obligations of, or guaranteed as to interest and
principal by, the United States Government maturing not more than 90 days after
such investment, (ii) open market commercial paper of any corporation
incorporated under the laws of the United States of America or any State thereof
rated "prime-1" or its equivalent by Moody's Investors Service, Inc. or "A-1" or
its equivalent by Standard & Poor's Corporation or (iii) certificates of deposit
maturing within 90 days after such investment issued by commercial banks
organized under the laws of the United States of America or of any political
subdivision thereof having a combined capital and surplus in excess of
$500,000,000; provided, however, that the aggregate amount at any one time so
invested (a) in open market commercial paper of any corporation shall not exceed
$2,000,000 and (b) in certificates of deposit issued by any one bank shall not
exceed $10,000,000. Any income or gain realized as a result of any such
investment shall be applied to make up any losses resulting from any such
investment to the extent such losses shall not have been paid by the Owner
Trustee or the Owner Participant pursuant to this Section 8.8. Any further
income or gain so realized shall be promptly distributed (in no event later than
the next Business Day) to the Owner Trustee or the Owner Participant, except
after the occurrence and during the continuance of an Indenture Event of
Default. The Indenture Trustee shall have no liability for any loss resulting
from any investment made in accordance with this Section. Any such investment
may be sold (without regard to maturity date) by the Indenture Trustee whenever
necessary to make any distribution required by Article V hereof.
SECTION 8.9. No Responsibility for Recitals, etc.
The Indenture Trustee makes no representation or warranty as
to the correctness of any statement, recital or representation made by any
Person other than the Indenture Trustee in this Indenture, any other Transaction
Document or the Notes.
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SECTION 8.10. Indenture Trustee May Engage in
Certain Transactions.
The Indenture Trustee may engage in or be interested in any
financial or other transaction with the Lessee, the Owner Participant, the Owner
Trustee and any other party to a Transaction Document, provided that if the
Indenture Trustee determines that any such relation is in conflict with its
duties under this Indenture, it shall eliminate the conflict or resign as
Indenture Trustee.
SECTION 8.11. Construction of Ambiguous Provisions.
The Indenture Trustee, subject to Section 8.1 hereof, may
construe any ambiguous or inconsistent provisions of this Indenture, and any
such construction by the Indenture Trustee shall be binding upon the
Noteholders. In construing any such provision, the Indenture Trustee will be
entitled to rely upon opinions of counsel and will not be responsible for any
loss or damage resulting from reliance in good faith thereon, except for its own
gross negligence or willful misconduct.
ARTICLE IX
SUCCESSOR TRUSTEES
SECTION 9.1. Resignation and Removal of Indenture Trustee;
Appointment of Successor.
(a) The Indenture Trustee may resign at any time without cause
by giving at least 30 days' prior written notice to the Owner Participant, the
Owner Trustee, the Lessee and to each Holder of a Note, such resignation to be
effective upon the acceptance of such trusteeship by a successor. In addition,
the Indenture Trustee may be removed without cause by a Directive delivered to
the Owner Participant, the Owner Trustee, the Lessee and the Indenture Trustee,
and the Indenture Trustee shall promptly give notice thereof in writing to each
Holder of a Note. In the case of the resignation or removal of the Indenture
Trustee, a successor trustee may be appointed by such a Directive. If a
successor trustee shall not have been appointed within 30 days after such notice
of resignation or removal, the Indenture Trustee, the Owner Trustee or any
Holder of a Note may apply to any court of competent jurisdiction to appoint a
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successor to act until such time, if any, as a successor shall have been
appointed as above provided. The successor so appointed by such court shall
immediately and without further act be superseded by any successor appointed as
above provided within one year from the date of the appointment by such court.
(b) Any successor trustee, however appointed, shall execute
and deliver to its predecessor and to the Owner Trustee an instrument accepting
such appointment, and thereupon such successor, without further act, shall
become vested with all the estates, properties, rights, powers and duties of its
predecessor hereunder in the trusts under this Indenture applicable to it with
like effect as if originally named the Indenture Trustee; but, nevertheless,
upon the written request of such successor trustee or receipt of a Directive,
its predecessor shall execute and deliver an instrument transferring to such
successor trustee, upon the trusts herein expressly applicable to it, all the
estates, properties, rights and powers of such predecessor under this Indenture,
and such predecessor shall duly assign, transfer, deliver and pay over to such
successor trustee all moneys or other property then held by such predecessor
under this Indenture.
(c) Any successor trustee, however appointed, shall be a bank
or trust company organized under the laws of the United States or any
jurisdiction thereof having a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 9.1, be the Indenture
Trustee under this Indenture without further act.
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ARTICLE X
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 10.1. Supplements, Amendments and Modifications to
This Indenture Without Consent of Holders of Notes.
The Indenture Trustee may, with the written consent of the
Owner Trustee, from time to time and at any time execute a supplement to this
Indenture without the consent of the Holders of Notes Outstanding in order to
(i) cure any defect, omission or ambiguity in this Indenture or for any other
purpose if such action does not adversely affect the interests of such Holders,
(ii) grant or confer upon the Indenture Trustee for the benefit of such Holders
any additional rights, remedies, powers, authority or security which may be
lawfully granted or conferred and which are not contrary to or inconsistent with
this Indenture, (iii) add to the covenants or agreements to be observed by the
Owner Trustee and which are not contrary to this Indenture or surrender any
right or power of the Owner Trustee, (iv) confirm or amplify, as further
assurance, any pledge under, and the subjection to any lien or pledge created or
to be created by, this Indenture, of the properties covered hereby, or subject
to the lien or pledge of this Indenture additional revenues, properties or other
collateral, including pursuant to an Undivided Interest Indenture Supplement,
(v) qualify this Indenture under the provisions of the Trust Indenture Act, (vi)
evidence the appointment of any successor Indenture Trustee pursuant to the
terms hereof, (vii) evidence the assumption and release affected by the
Assumption Agreement, or (viii) execute supplemental indentures to evidence the
issuance of and to provide the terms of, Additional Notes to be issued hereunder
in accordance with the terms hereof.
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SECTION 10.2. Supplements and Amendments to this Indenture and
the Facility Lease With Consent of Holders of Notes.
Except as provided in Section 10.1 hereof, at any time and
from time to time, (i) upon receipt of a Directive, the Indenture Trustee shall
execute a supplement to this Indenture for the purpose of adding provisions to,
or changing or eliminating provisions of, this Indenture, but only as specified
in such Directive and, (ii) upon receipt of a written instruction from the
Lessee and the Owner Trustee, the Indenture Trustee shall consent to any
amendment of or supplement to the Facility Lease or execute and deliver such
written waiver or modification of the terms of the Facility Lease to which the
Owner Trustee may agree; provided, however, that, without the consent of the
Holders of all the Notes then Outstanding no such supplement or amendment to
this Indenture or the Facility Lease, or waiver or modification of the terms of
either thereof, shall (x) modify any of the provisions of this Section or of
Section 7.1 or 7.2 hereof or Section 4 of the Facility Lease or of the
definition of Directive contained in Appendix A hereto or the definition of
Indenture Event of Default herein, reduce the amount of the Basic Rent, Casualty
Value, Termination Value or any payment under or pursuant to Section 16 of the
Facility Lease as set forth in the Facility Lease below such amount as is
required to pay the full principal of, and premium, if any, and interest on, the
Notes when due, or extend the time of payment thereof, (y) except as permitted
by clause (x) above, modify, amend or supplement the Facility Lease or consent
to the termination or any assignment thereof, in any case reducing the Lessee's
obligations in respect of the payment of the Basic Rent, Casualty Value,
Termination Value or any payment under or pursuant to Section 16 of the Facility
Lease below the amount referred to in clause (x) above, or (z) deprive the
Holders of any Note of the lien of this Indenture on the Lease Indenture Estate
(except as contemplated by Section 3.9(b)) or materially adversely affect the
rights and remedies for the benefit of such Holders provided in Article VI of
this Indenture; and, provided, further, that, without the consent of the Holders
of all the Notes then Outstanding and affected thereby no such supplement or
amendment to this Indenture or the Facility Lease, or waiver or modification of
the terms of either thereof, shall reduce the amount or extend the time of
payment of any amount payable under any Note, reduce or modify the provisions
for the computation of the rate of interest owing or payable thereon, adversely
alter or modify the provisions of Article V with respect to the order of
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priorities in which distributions thereunder with respect to the Notes shall be
made, or reduce, modify or amend any indemnities in favor of the Holders of the
Notes. Anything to the contrary contained herein notwithstanding, without the
necessity of the consent of the Holders of Notes or the Indenture Trustee, (a)
any indemnities in favor of the Owner Trustee or the Owner Participant may be
modified, amended or changed and (b) the Owner Trustee may enter into any
agreement with respect to the Lease Indenture Estate which by its terms does not
become effective prior to the satisfaction and discharge of this Indenture,
provided, however, that any agreement entered into by the Owner Trustee pursuant
to this clause (b) shall not materially adversely affect the Indenture Trustee
or the Holder of any Note.
SECTION 10.3. Certain Limitations on Supplements and
Amendments.
If in the opinion of the Owner Trustee or the Indenture
Trustee, each of which shall be entitled to rely on counsel for purposes of this
Section 10.3, any document required to be executed by either of them pursuant to
the terms of Section 10.1 or 10.2 does not comply with the provisions of this
Indenture or adversely affects any right, immunity or indemnity in favor of, or
increases any duty of, the Owner Trustee or the Indenture Trustee under this
Indenture, the Facility Lease or the Participation Agreement, the Owner Trustee
or the Indenture Trustee, as the case may be, may in its discretion decline to
execute such document.
SECTION 10.4. Directive Need Not Specify Particular Form of
Supplement or Amendment.
It shall not be necessary for any Directive furnished pursuant
to Section 10.2 hereof to specify the particular form of the proposed documents
to be executed pursuant to such Section, but it shall be sufficient if such
request shall indicate the substance thereof.
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SECTION 10.5. Trustee to Furnish Copies of Supplement or
Amendment.
Promptly after the execution by the Owner Trustee or the
Indenture Trustee of any document entered into pursuant to Section 10.2, the
Indenture Trustee shall mail, by first-class mail, postage prepaid, a conformed
copy thereof to each Holder of an Outstanding Note at the address of such Person
set forth in the register kept pursuant to Section 4.1 but the failure of the
Indenture Trustee to mail such conformed copies shall not impair or affect the
validity of such document.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Moneys for Payments in Respect of Notes to be
Held in Trust.
In case the Holder of any Note shall fail to present the same
for payment on any date on which the principal thereof or interest thereon
becomes payable, the Indenture Trustee may set aside in trust the moneys then
due thereon uninvested and shall pay such moneys to the Holder of such Note or
such Person upon due presentation or surrender thereof in accordance with the
provisions of this Indenture, subject always, however, to the provisions of
Sections 3.8 and 11.2.
SECTION 11.2. Disposition of Moneys Held for Payments of
Notes.
Any moneys set aside under Section 11.1 and not paid to
Holders of Notes as provided in Section 11.2 shall be held by the Indenture
Trustee in trust until the latest of (i) the date three years after the date of
such setting aside, (ii) the date all other Holders of the Notes shall have
received full payment of all principal of and interest and other sums payable to
them on such Notes or the Indenture Trustee shall hold (and shall have notified
such Persons that it holds) in trust for that purpose an amount sufficient to
make full payment thereof when due and (iii) the date the Owner Trustee shall
have fully performed and observed all its covenants and obligations contained in
this Indenture with respect to the Notes; and thereafter shall be paid to the
Owner Trustee by the Indenture Trustee on demand; and thereupon the Indenture
Trustee shall be released from all further liability with respect to such
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moneys; and thereafter the Holders of the Notes in respect of which such moneys
were so paid to the Owner Trustee shall have no rights in respect thereof except
to obtain payment of such moneys from the Owner Trustee. Upon the setting aside
of such moneys, interest thereon shall cease to accrue on the Notes.
SECTION 11.3. Transfers Not to Affect Indenture or Trusts.
No Holder of a Note shall have legal title to any part of the
Lease Indenture Estate. No transfer, by operation of law or otherwise, of any
Note or other right, title and interest of any Holder of a Note in and to the
Lease Indenture Estate or hereunder shall operate to terminate this Indenture or
the trusts hereunder with respect to such Note or entitle any successor or
transferee of such Holder to an accounting or to the transfer to it of legal
title to any part of the Lease Indenture Estate.
SECTION 11.4. Binding Effect of Sale of Lease
Indenture Estate.
Any sale or other conveyance of the Lease Indenture Estate or
any part thereof by the Indenture Trustee made pursuant to the terms of this
Indenture or the Facility Lease shall bind the Holder of the Notes and shall be
effective to transfer or convey all right, title and interest of the Indenture
Trustee, the Owner Trustee and such Holders in and to the same. No purchaser or
other grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such sale or conveyance or as to the application of
any sale or other proceeds with respect thereto by the Indenture Trustee.
SECTION 11.5. Limitation as to Enforcement of
Rights, Remedies and Claims.
Nothing in this Indenture, whether express or implied, shall
be construed to give to any Person, other than the Owner Trustee, the Owner
Participant, the Lessee (to the extent Lessee's consent or other action by the
Lessee is expressly provided for), the Indenture Trustee and the Holders of the
Notes, any legal or equitable right, remedy or claim under or in respect of this
Indenture or any Note.
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SECTION 11.6. Notices.
Unless otherwise expressly specified or permitted by the terms
hereof, all communications and notices given hereunder to the Lessee, the Owner
Trustee, the Owner Participant or the Indenture Trustee shall be given in the
manner provided in Section 18 of the Participation Agreement. Notices by the
Indenture Trustee to any Holder of a Note shall be in writing and shall be given
in person or by means of telex, telecopy or other wire transmission (with
request for assurance of receipt in a manner typical with respect to
communications of that type), or mailed by registered or certified mail,
addressed to such Holder at the address set forth in the register kept pursuant
to Section 4.1. Whenever any notice in writing is required to be given by the
Indenture Trustee to any Holder of a Note such notice shall be effective (x) if
sent by telex, telecopy or other wire transmission, on the date of transmission
thereof, or (y) if sent by mail, three Business Days after being mailed.
SECTION 11.7. Separability of Provisions
In case any one or more of the provisions of this Indenture or
any application thereof shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
hereof and any other application hereof shall not in any way be affected or
impaired.
SECTION 11.8. Benefit of Parties, Successors
and Assigns.
All representations, warranties, covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee, the Indenture Trustee and their respective successors and assigns and
each Holder of a Note, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by any Holder of a Note shall bind
the successors and assigns of such Holder and any Holder of a Note issued in
transfer or exchange of such Note.
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SECTION 11.9. Survival of Representations and Warranties.
All representations and warranties made with respect to the
Notes shall survive the execution and delivery of this Indenture and the issue,
sale and delivery of any Notes and shall continue in effect so long as any Note
issued hereunder is Outstanding and unpaid.
SECTION 11.10. Bankruptcy of the Owner Trustee.
If (a) the Owner Trustee becomes a debtor subject to the
reorganization provisions of the Bankruptcy Code, or any successor provision,
(b) pursuant to such reorganization provisions the Owner Trustee is required, by
reason of the Owner Trustee being held to have recourse liability directly or
indirectly to the Holder of any Note or the Indenture Trustee, to make payment
on account or any amount payable as principal or interest on such Note and (c)
such Holder or the Indenture Trustee actually receives any Excess Amount (as
hereinafter defined) which reflects any payment by the Owner Trustee on account
of clause (b) of this Section, then such Holder or the Indenture Trustee, as the
case may be, shall promptly refund to the Owner Trustee such Excess Amount. For
purposes of this Section, "Excess Amount" means the amount by which such payment
exceeds the amount which would have been received on or prior to the date of
such payment by such Holder or the Indenture Trustee if the Owner Trustee had
not become subject to the recourse liability referred to in clause (b) of this
Section. Nothing contained in this Section shall prevent such Holder or the
Indenture Trustee from enforcing any recourse obligation (and retaining the
proceeds thereof) of the Owner Trustee expressly provided for under this
Indenture or in the Notes.
SECTION 11.11. Bankruptcy of the Owner Participant.
The Indenture Trustee and the Holders of the Notes shall be
bound by the provisions of Section 19(f) of the Participation Agreement.
SECTION 11.12. Counterpart Execution.
This Indenture and any amendment or supplement to this
Indenture may be executed in any number of counterparts and by the different
parties hereto and thereto on separate counterparts, each of which, when so
6091.20.2898.51:1
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<PAGE>
executed and delivered, shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 11.13. Dating of Indenture.
Although this Indenture is dated for convenience and for the
purpose of reference as of the date mentioned, the actual date or dates of
execution by the Owner Trustee and the Indenture Trustee are as indicated by
their respective acknowledgements hereto annexed.
6091.20.2898.51:1
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<PAGE>
IN WITNESS WHEREOF, the Owner Trustee and the Indenture
Trustee have each caused this Indenture to be duly executed by their respective
officers thereunto duly authorized, all as of the date first set forth above.
THE FIRST NATIONAL BANK OF BOSTON, not in
its individual capacity, but solely as
Owner Trustee under the Trust Agreement
dated as of December 16, 1985, with the
Owner Participant identified on Schedule 1
hereto
By /S/
--------------------------------------
Vice President
CHEMICAL BANK,
By /S/
------------------------------------
Vice President
6091.20.2898.51:1
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<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 31st day of December, 1985, before me personally came CLARK M.
WHITCOMB, to me known, who, being by me duly sworn, did acknowledge, depose and
say that he resides at Boston, Massachusetts; that he is Vice President of THE
FIRST NATIONAL BANK OF BOSTON, a national banking association, described in and
which executed the foregoing instrument; that it by authority of the by-laws of
said association; and that he signed his name thereto on behalf of said
association by like order.
/S/ David Kaufman
--------------------------
Notary Public
[NOTARIAL SEAL] Term Expires: 3/30/87
6091.20.2898.51:1
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<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 31st day of December, 1985, before me personally came T.J.
FOLEY, to me known, who, being by me duly sworn, did acknowledge, depose and say
that he resides at Bethpage, New York; that he is Vice President of CHEMICAL
BANK, a New York banking corporation, described in and which executed the
foregoing instrument; that it was authority of the by-laws of said association;
and that he signed his name thereto on behalf of said corporation by like order.
/S/ David Kaufman
------------------------
Notary Public
[NOTARIAL SEAL] Term Expires: 3/30/87
6091.20.2898.51:1
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<PAGE>
SCHEDULE I
Owner Participant
1. The Owner Participant is Burnham Leasing Corporation, a New York
corporation.
2. For purposes of Section 3.4(b) of the Indenture, the Maximum
Principal Amount is $77,000,000.
3. For purposes of Section 3.6 of the Indenture, the Maximum
Outstanding Amount is $200,000,000.
6091.20.2898.51:1
<PAGE>
EXHIBIT A
FORM OF INITIAL SERIES NOTE
The Initial Series Note shall be substantially in the
following form, with such omissions, insertions and variations as the Owner
Trustee may determine with the approval of the Indenture Trustee and are not
inconsistent with the provisions of the Indenture or as may be provided for in
the Indenture:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT
NONRECOURSE PROMISSORY NOTE, INITIAL SERIES
Issued at: New York, New York
Issue Date: December 31, 1985
THE FIRST NATIONAL BANK OF BOSTON, not in its individual
capacity, but solely as owner trustee (Owner Trustee) under a Trust Agreement
dated as of December 16, 1985 with Burnham Leasing Corporation (the Owner
Participant), hereby promises to pay to FIRST PV FUNDING CORPORATION, or
registered assigns, the principal sum of
($ ) on __________ 15, 20__, and to pay interest on the
remaining unpaid principal amount hereof from the date hereof, or from the most
recent interest payment date to which interest has been paid or duly provided
for, semiannually on January 15 and July 15 in each year, commencing January 15,
1986, at the rate equal to the Variable Rate (as defined below) per annum, until
the principal hereof is paid in full or made available for payment.
6091.BURNHAM.2898.51:1
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<PAGE>
Said principal shall be payable in installments consisting of
_____ installments of principal commencing on July 15, 198_, and on each January
15 and July 31 thereafter, to and including __________ 15, 20 __, each such
principal installment to be equal to the percentage of the original principal
amount hereof set forth in Schedule X hereto for the date such installment is
due.
The "Variable Rate" shall mean the Applicable Percentage (as
defined below) of the rate publicly announced from time to time by Chemical Bank
at its principal office in New York City as its prime or base lending rate (any
change in the Variable Rate being effective on the date such change in the
Variable Rate is so announced). The "Applicable Percentage" shall equal (i) 100%
for the period from December 31, 1985 through June 30, 1986, (ii) 125% for the
period from July 1, 1986 through September 30, 1986, (iii) 150% for the period
from October 1, 1986 through December 31, 1986, and (iv) 200% thereafter. All
payments of interest shall be computed on the basis of the actual number of days
elapsed in a year of 365 or 366 days, as the case may be.
Capitalized terms used in this Initial Series Note which are
not other otherwise defined herein shall have the meanings ascribed thereto in
the Indenture (as hereinafter defined).
In the event any date on which a payment is due under this
Initial Series Note is not a Business Day, then payment thereof may be made on
the next succeeding Business Day with the same force and effect as if made on
the date on which such payment was due.
All payments of principal, premium, if any, and interest to be
made by the Owner Trustee hereunder and under the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of December 16, 1985, as at
any time amended or supplemented in accordance with the provisions thereof (the
Indenture), between the First National Bank of Boston, not in its individual
6091.20.2898.51:1
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<PAGE>
capacity, but solely as Owner Trustee (the Owner Trustee) under a Trust
Agreement dated as of December 16, 1985 with the Owner Participant and CHEMICAL
BANK, as Trustee (the Indenture Trustee), shall be made only from the Lease
Indenture Estate and the Indenture Trustee shall have no obligation for the
payment thereof except to the extent that the Indenture Trustee shall have
sufficient income or proceeds from the Lease Indenture Estate to make such
payments in accordance with the terms of Article V of the Indenture. The Holder
hereof, by its acceptance of this Initial Series Note, agrees that such Holder
will look solely to the income and proceeds from the Lease Indenture Estate to
the extent available for distribution to the Holder hereof as above provided,
and that neither the Owner Participant, the Owner Trustee nor the Indenture
Trustee is or shall be personally liable to the Holder hereof for any amounts
payable under this Initial Series Note or for any performance to be rendered
under the Indenture or any other Transaction Document or for any liability
thereunder.
Principal, premium, if any, and interest shall be payable, in
the manner provided in the Indenture, on presentment of this Initial Series Note
at the Indenture Trustee Office, or as otherwise provided in the Indenture.
The Holder hereof, by its acceptance of this Initial Series
Note, agrees that each payment received by it hereunder shall be applied in the
manner set forth in Section 3.11 of the Indenture. The Holder of this Initial
Series Note agrees, by its acceptance hereof, that it will duly note by
appropriate means all payments of principal or interest made hereon and that it
will not in any event transfer or otherwise dispose of this Initial Series Note
unless and until all such notations have been duly made.
This Initial Series Note is the Initial Series Note referred
to in the Indenture. The Indenture permits the issuance of additional series of
Notes, as provided in Section 3.5 of the Indenture, and the several series may
be for varying aggregate principal amounts and may have different maturity
6091.20.2898.51:1
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<PAGE>
dates, interest rates, redemption provisions and other terms. The properties of
the Owner Trustee included in the Lease Indenture Estate are pledged to the
Indenture Trustee to the extent provided in the Indenture as security for the
payment of the principal of and premium, if any, and interest on this Initial
Series Note and all other Notes issued and outstanding from time to time under
the Indenture. Reference is hereby made to the Indenture for a statement of the
rights of the Holders of, and the nature and extent of the security for, this
Initial Series Note and of the rights of, and the nature and extent of the
security for, the Holders of the other Notes and of certain rights of the Owner
Trustee, as well as for a statement of the terms and conditions of the trust
created by the Indenture, to all of which terms and conditions the Holder hereof
agrees by its acceptance of the Initial Series Note.
This Initial Series Note is subject to mandatory prepayment in
full as provided in Section 5.2 of the Indenture, such prepayment being without
premium but including accrued interest to the date of prepayment. In addition
this Initial Series Note is subject to special prepayment, in whole only, on the
date on which the Fixed Rate Note is issued in accordance with Section 3.5 of
the Indenture, by giving written notice to the Indenture Trustee and the Holder
of this Initial Series Note at least on Business Day prior to such date, such
prepayment being with the following premiums (expressed as a percentage of
principal amount of this Initial Series Note), together with accrued interest to
the date of prepayment:
Period Premium
------ -------
January 1-10, 1986 .096%
January 11-17, 1986 .072%
January 18-24, 1986 .048%
January 25-31, 1986 .024%
and thereafter without premium.
6091.20.2898.51:1
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<PAGE>
In case an Indenture Event of Default shall occur and be continuing the
unpaid balance of the principal of this Initial Series Note and any other Notes
together with all accrued but unpaid interest thereon may, subject to certain
rights of the Owner Trustee or the Owner Participant contained or referred to in
the Indenture, be declared or may become due and payable in the manner and with
the effect provided in the Indenture.
The lien upon the Lease Indenture Estate is subject to being legally
discharged prior to the maturity of this Initial Series Note upon the deposit
with the Indenture Trustee of cash or certain securities sufficient to pay this
Initial Series Note when due or an assumption of the obligation of the Owner
Trustee under this Initial Series Note and the Indenture, in each case in
accordance with the terms of the Indenture.
There shall be maintained at the Indenture Trustee's office a register
for the purpose of registering transfers and exchanges of Notes in the manner
provided in the Indenture. The transfer of this Initial Series Note is
registrable, as provided in the Indenture, upon surrender of this Initial Series
Note for registration of transfer duly accompanied by a written instrument of
transfer duly executed by or on behalf of the registered Holder hereof with
signature guaranteed, together with the amount of any applicable transfer taxes.
Prior to due presentment for registration of transfer of this Initial Series
Note, the Owner Trustee and the Indenture Trustee may treat the person in whose
name this Initial Series Note is registered as the Owner hereof for the purpose
of receiving payments of principal of, and premium if any, and interest on this
Initial Series Note and for all other purposes whatsoever, whether or not this
Initial Series Note be overdue, and neither the Owner Trustee nor the Indenture
Trustee shall be affected by notice to the contrary.
This Initial Series Note shall be governed by the laws of the State of
New York.
6091.20.2898.51:1
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<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Initial Series
Note to be duly executed as of the date hereof.
THE FIRST NATIONAL BANK OF BOSTON, not in
its individual capacity, but solely as
Owner Trustee under a Trust Agreement
dated as of December 16, 1985, with
BURNHAM Leasing Corporation
By
------------------------------
Vice President
6091.BURNHAM.2898.51:1
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<PAGE>
ASSIGNMENT
Date: December 31, 1985
For value received, the undersigned hereby sells, assigns and
transfers to CHEMICAL BANK, as Trustee pursuant to the Collateral Trust
Indenture dated as of December 16, 1985, as amended and supplemented, among the
undersigned, Public Service Company of New Mexico and said Trustee, without
recourse, the within Initial Series Note and all rights thereunder.
FIRST PV FUNDING CORPORATION
By____________________________
President
6091.BURNHAM.2898.51:1
A-7
<PAGE>
EXHIBIT B
ASSUMPTION AGREEMENT
TO: The Holders (as defined below) from time
to time of the Notes (as defined below)
of The First National Bank of Boston, not
in its individual capacity, but solely as
owner trustee under a Trust Agreement
dated as of December 16, 1985 with [name
of owner participant] (in such capacity,
the "issuer") under the Trust Indenture,
Mortgage, Security Agreement, and
Assignment of Rents (the "Indenture")
dated as of December 16, 1985 among the
Issuer and Chemical Bank, as trustee (the
"Trustee").
The undersigned, PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico
corporation (the "Obligor"), for the purpose of satisfying in part its
obligation to make certain payments under that certain Facility Lease dated as
of December 16, 1985 between the Issuer and the Obligor (the "Facility Lease"),
does hereby covenant and agree with the Holders (as defined in the Indenture)
from time to time of the Notes (as defined in the Indenture) as follows:
SECTION 1. The Obligor does hereby agree to, and does hereby,
assume unconditionally the payment of the principal of the Notes and of the
interest and premium (if any) thereon, at the rates provided in the Notes, when
and as the same shall become due and payable, whether at maturity or upon
mandatory prepayment or upon declaration or otherwise, according to the terms of
the Notes and of the Indenture.
6091.BURNHAM.2898.51:1
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<PAGE>
SECTION 2. The assumption herein contained shall be binding
upon the Obligor, its successors and assigns and shall remain in full force and
effect irrespective of the power or authority of the Issuer to issue the Notes
or to execute, acknowledge and deliver the Indenture or the validity of the
Notes, or the Indenture, or of any defense whatsoever that the Issuer may or
might have to the payment of the Notes (principal, interest or premium), or to
the performance or observance of any of the provisions or conditions of the
Indenture or any Note, or of the existence or continuance of the Issuer as a
legal entity; nor shall said assumption be affected by the merger,
consolidation, or other dissolution of the Issuer or the sale or other transfer
of the property the Issuer or by of the Issuer as an entirety, or substantially
so, to any other person; nor shall the assumption be discharged or impaired by
any act, failure or omission whatsoever on the part of any Holder of any Notes
or the Trustee, including, among other such acts, failures and omissions, the
following:
(a) any failure to present any Note for payment or to demand
thereof, or to give to the Obligor notice of dishonor and non-payment
of any Note when and as the same may become due and payable, or notice
of any failure on the part of the Issuer to do any act or thing or to
perform or keep any covenant or agreement by it to be done, kept or
performed under the terms of Notes or the Indenture;
(b) any extension of the obligation of any Note, either
indefinitely or for any period of time, or any other modification in
the obligations under any Note or the Indenture or of the Issuer
thereon or in connection therewith;
(c) any act or failure to act with regard to any Note or the
Indenture or anything which might vary the risk of the Obligor; and
(d) any action taken under the Indenture and the Notes in the
exercise of any right or power thereby conferred or any failure or
omission on the part of the Trustee or the Holder of any Note to
enforce any right or security given under the Indenture or any Note, or
any waiver of any right or any failure or omission on the part of the
Trustee or any Holder of any Note to enforce any right of any Holder of
any Note against the Issuer;
6091.20.2898.51:1
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<PAGE>
provided, always, that the specific enumeration of the above mentioned acts,
failures, waivers or omissions shall not be deemed to exclude any other acts,
failures, waivers or omissions though not specifically mentioned herein, it
being the purpose and intent of this Assumption Agreement that the obligation of
the Obligor shall be absolute and unconditional to the extent herein specified
and shall not be discharged, impaired or varied except by the payment of the
principal of and interest on any Note and any premium thereon in case of
prepayment, and then only to the extent of such payments.
SECTION 3. (a) Subject to the requirements of Sections
10(b)(3)(iii) and (b)(3)(iv) of the Participation Agreement and to the
provisions of paragraph (b) of this Section, nothing contained in this
Assumption Agreement shall prevent any consolidation or merger of the Obligor
with or into any other corporation or corporations (whether or not affiliated
with the Obligor), or successive consolidations or mergers in which the Obligor
or its successors shall be a party or parties, or shall prevent any sale,
conveyance or lease of all or substantially all the property of the Obligor, to
any other corporation authorized to acquire and operate the same; provided,
however, and the Obligor hereby covenants and agrees, that upon any such
consolidation, merger, sale, conveyance or lease, all obligations of the Obligor
under this Assumption Agreement on or in respect of any Note, and the due and
punctual performance and observance of all of the covenants and conditions of
this Assumption Agreement to be performed by the Obligor, shall be expressly and
duly assumed, by an agreement reasonably satisfactory in form and substance to
the Trustee, executed and delivered by the corporation (if other than the
Obligor) formed by such consolidation, or into which the Obligor shall have been
merged, or by the corporation which shall have acquired such property.
(b) the Indenture Trustee (as defined in the Indenture),
subject to applicable provisions of the Indenture, may rely upon an opinion of
counsel to the Obligor as conclusive evidence that any such merger,
consolidation, sale or conveyance complies with the provisions of this Section.
SECTION 4. The Obligor does hereby consent to all of the terms
and conditions of each Note Series and of the Indenture, and hereby waives any
and all rights of notice of any fact or facts or circumstance or circumstances
whatsoever and consents to any extension or extensions of time of any payment or
6091.20.2898.51:1
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<PAGE>
payments, or of any other act or thing which any Holder or Holders of any Note
or the Issuer may agree to consent to, either expressly, by acquiescence or
otherwise, and hereby agrees not to claim or enforce any rights of subrogation
or any other right or privilege which might otherwise arise on account of any
payment made by it or act or thing done by it on account of or in accordance
with its assumption herein contained, unless and until all of the Notes have
been fully paid and discharged.
SECTION 5. The assumption herein expressed may be transferred
or assigned at any time or from time to time and shall be considered to be
transferred and assigned upon the transfer of any Note, whether with or without
the consent of or notice to the Obligor or the Issuer. The Obligor hereby agrees
to execute and deliver such instruments and to do such acts and things requested
by the Trustee as shall be reasonably necessary to carry out and effectuate the
purposes and intents of this Assumption Agreement. This Assumption Agreement may
not be amended or modified in any respect without the prior written consent
(evidenced as provided in the Indenture) of the Holders of not less than a
majority in principal amount of the Notes Outstanding (as defined in the
Indenture); provided, however, that without the written consent of the Holders
of all of the Notes Outstanding, no such amendment or modification shall be
effective which will change any of the provisions of Sections 1, 2, 4 or 5 of
this Assumption Agreement. The Obligor agrees to file with the Indenture Trustee
a duplicate original of each such consent.
PUBLIC SERVICE COMPANY OF NEW
MEXICO
By __________________________
Title:
ATTEST:
- --------------------
Title:
6091.20.2898.51:1
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<PAGE>
EXHIBIT C
UNDIVIDED INTEREST SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE NO. _____ dated as of __________,
_____, to the TRUST INDENTURE, MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF
RENTS (hereinafter, together with supplements thereto, the Indenture) dated as
of December 16, 1985, between THE FIRST NATIONAL BANK OF BOSTON (FNB), not in
its individual capacity, but solely as trustee (the Owner Trustee) under a Trust
Agreement, dated as of December 16, 1985, between FNB, whose address is 100
Federal Street, Boston, Massachusetts 02110, and BURNHAM LEASING CORPORATION,
and CHEMICAL BANK, a New York banking corporation (the Indenture Trustee), whose
address is 55 Water Street, New York, New York 10041.
W I T N E S S E T H:
WHEREAS, in accordance with Section 9(j) of the Facility
Lease, the Owner Trustee is obligated, in certain cases, to cause the Undivided
Interest and the Real Property Interest to be subjected to the Lien of the
Indenture; and
WHEREAS, in order to further secure the obligations referred
to in the Indenture, the Owner Trustee desires to grant to the Indenture Trustee
the security interest and realty mortgage herein provided and parties hereto
desire that the Indenture be regarded (i) to the extent that the Undivided
Interest constitutes personal property, as a "security agreement" and as a
"financing statement" under the Uniform Commercial Code and (ii) to the extent
that the Undivided Interest and the Real Property Interest constitute fixtures
or real property, as a realty mortgage;
NOW, THEREFORE, in consideration of the premises and of other
good and valuable consideration, receipt and surficiency of which are hereby
acknowledged, the parties hereto agree as follows:
6091.BURNHAM.2898.51:1
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<PAGE>
SECTION 1.1. The Indenture. This Supplemental Indenture
No._____ shall be construed as supplemental to and amendatory of the Indenture
and shall form a part thereof, and the Indenture is hereby incorporated by
reference herein and is hereby ratified, approved and confirmed.
SECTION 1.2. Definitions. Capitalized terms used herein, but
which are not otherwise defined herein shall have the meaning set forth in
Appendix A to the Indenture.
SECTION 1.3. Recording Information. The Indenture was recorded
on December 31, 1985, in Maricopa County, Arizona [describe] [specify other
recorded documents] [specify other places of recordation].
SECTION 1.4. Governing Law. This Supplemental Indenture No.
_____ and the Indenture shall, for all purposes, be construed in accordance with
and governed by the laws of the State of New York except to the extent that the
laws of the State of Arizona shall be mandatorily applicable thereto.
SECTION 1.5. Security Interest and Realty Mortgage. As further
security for the due and punctual payment of the principal of and premium, if
any, and interest on the Notes according to their respective terms and effect
and the performance and observance by the Owner Trustee of all the covenants and
agreements made by it or on its behalf in the Notes, the Participation Agreement
and this Indenture, the Owner Trustee does, by its execution and delivery
hereof, hereby grant a security interest in, bargain, convey, warrant, assign,
transfer, mortgage, pledge and set over unto the Indenture Trustee, and to its
successors and assigns in trust, the following (which shall be a part of the
Lease Indenture Estate for all purposes of the Indenture and the other
Transaction Documents):
6091.20.2898.51:1
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<PAGE>
(1) the Undivided Interest and the Real Property Interest,
including, but without limitation, the Owner Trustee's Share of all
Capital Improvements (including any which constitute fixtures under
Applicable Law) now existing or which hereafter may become part of the
Undivided Interest;
(2) all right, title and interest of the Owner Trustee in, to
and under (a) the Bill of Sale, (b) the ANPP Participation Agreement,
(c) the Deed and (d) the Assignment of Beneficial Interest, including,
but without limitation, all amounts of Rent, insurance proceeds and
condemnation, requisition and other awards and payments of any kind for
or with respect to any part of the Lease Indenture Estate as
contemplated in such documents;
(3) all other property of every kind and description, real,
personal and mixed, and interests therein now held or hereafter
acquired by the Owner Trustee pursuant to any term of any Transaction
Document, whether or not subjected to the Lien of this Indenture by an
indenture supplemental hereto; and
(4) all proceeds of the foregoing;
but excluding, however, from the Lease Indenture Estate any and all Excepted
Payments; and subject, however, to (i) the terms and provisions of this
Indenture and (ii) the rights of the Lessee under the Facility Lease.
TO HAVE AND TO HOLD all the aforesaid properties, rights and
interests unto the Indenture Trustee, its successors and assigns forever, but in
trust, nevertheless, for the use and purposes and with the power and authority
and subject to the terms and conditions mentioned and set forth in this
Indenture.
UPON CONDITION that, unless and until an Indenture Event of
Default shall have occurred and be continuing, the Owner Trustee shall be
permitted, to the exclusion of the Indenture Trustee, to possess and use the
Lease Indenture Estate and exercise all rights with respect thereto and, without
limitation of the foregoing, the Owner Trustee may exercise all its rights under
6091.20.2898.51:1
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<PAGE>
the documents specified in clause (2) above to the same extent as if it is
right, title and interest therein had not been assigned to the Indenture Trustee
to the extent set forth above, except that the Indenture Trustee shall receive
all payments of Assigned Payments and all moneys and securities required to be
held by or deposited with the Indenture Trustee hereunder.
The Owner Trustee hereby warrants and represents that it has
not assigned or pledged any of its right, title or interest in and to the Lease
Indenture Estate to anyone other than the Indenture Trustee.
SECTION 1.6. Real Estate Remedies. In addition to the remedies
specified in the Indenture (including but without limitation Section 6.4
thereof) or otherwise available pursuant to Applicable Law, to the extent that
any portion of the Lease Indenture Estate constitutes fixtures or real property,
the Indenture and this Supplemental Indenture No.__ shall be, and shall be
deemed to be, a realty mortgage and assignment of rents with respect to all
items of real property and fixtures and the Indenture Trustee shall have all
rights, remedies and benefits of a mortgagee of real property under Applicable
Law (including, but without limitation, rights and remedies pursuant to Arizona
Revised Statutes Section 33-702.B, or any comparable successor provision) and
the Owner Trustee shall be and be deemed to be, a mortgagor with respect to such
fixtures and real property.
SECTION 1.7. Certain Releases. In case a release from the
security and other interests created by Section 1.5 hereof by the Indenture
Trustee of a portion of the Undivided Interest shall be necessary in order to
enable the Owner Trustee or the Lessee to perform its covenants and agreements
set forth in the Transaction Documents or in the ANPP Participation Agreement or
the Owner Trustee or the Lessee to carry out any action required by Section 8 of
the Facility Lease, the Indenture Trustee shall execute and deliver to, or as
directed by, the Owner Trustee or the Lessee an appropriate instrument or
instruments provided to the Indenture Trustee by the Owner Trustee or the Lessee
(in due form for filing or recording), so releasing a portion of the Undivided
Interest, provided, however, that the Indenture Trustee shall have first
received an Officer's Certificate in form and substance reasonably satisfactory
to the Indenture Trustee, executed by the Lessee, accompanied by an opinion of
counsel reasonably satisfactory to the Indenture Trustee, each of which shall be
the effect that all necessary actions have been or are being taken
simultaneously with such release in connection with the proposed action to
comply with the items of this Indenture and Section 8 of the Facility Lease.
6091.20.2898.51:1
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<PAGE>
SECTION 1.8. Severance. The parties hereto understand and
agree Unit 1 (including the Undivided Interest), each Capital Improvement and
each part thereof is or shall be severed, and shall be and remain severed, from
the real estate constituting the PVNGS Site and even if physically attached
thereto, shall retain the character of personal property, shall be treated as
personal property with respect to the rights of all persons whomsoever, shall
not be or become fixtures or otherwise part of the real estate constituting the
PVNGS Site, and by virtue of its nature as personal property, shall not be
affected in any way by any instrument dealing with the real estate constituting
the PVNGS Site.
SECTION 1.9. ANPP Participation Agreement. The provision by
the Owner Trustee to the Indenture Trustee of the realty mortgage and the
security interest contemplated by this Supplemental Indenture No. ___ is in
compliance with the provisions of the ANPP Participation Agreement, including,
but without limitation, Section 15.6.3.2 thereof.
SECTION 1.10. Appointment of Co-Trustees or Separate Trustees.
(a) At any time or times, when necessary or prudent or for the
purpose of meeting the legal requirements of any jurisdiction in which any part
of the Lease Indenture Estate may, at any time, be located, the Indenture
Trustee, except as set forth in subsection (b)(6) of this Section 1.10, may, and
upon receipt of a Directive shall, appoint one or more Persons to act as
co-trustee of all or any such part of the Lease Indenture Estate or to act as
separate trustee of any property constituting part thereof, in either case with
such powers as may be provided in the instrument of appointment, and to vest in
such Person or Persons any property, title, right or power demand necessary or
desirable, subject to the remaining provisions of this Section 1.10. Except as
set forth in subsection (b)(6) of this Section 1.10 the Owner Trustee shall join
in any such appointment upon the request of the Indenture Trustee, but such
joining will not be necessary for the effectiveness of such appointment.
6091.20.2898.51:1
C-5
<PAGE>
(b) Every separate trustee or co-trustee shall be appointed
subject to the following terms:
(1) The rights, powers, duties and obligations conferred or
imposed upon any such separate trustee or co-trustee shall not be
greater than those conferred or imposed upon the Indenture Trustee, and
such rights and powers shall be exercisable only jointly with the
Indenture Trustee, except to the extent that, under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Indenture Trustee shall be incompetent or unqualified to perform
such act or acts, in which event, except as set forth in subsection
(b)(6) of this Section 1.10, such rights and powers shall be exercised
by such separate trustee or co-trustee subject to the provisions of
subsection (b)(4) of this Section 1.10.
(2) The Indenture Trustee may at any time, by an instrument in
writing executed by it, accept the resignation of, and may (and upon
the receipt of a Directive, shall) remove any separate trustee or
co-trustee appointed under this Section 1.10.
(3) No trustee under the Indenture and this Supplemental
Indenture No. ___ shall be liable by reason of any act or omission of
any other trustee or co-trustee under this Indenture.
(4) Except as set forth in subsection (b)(6) of this Section
1.10, no power given to such separate trustee or co-trustee shall be
separately exercised hereunder by such separate trustee or co-trustee
except with the consent in writing of the Indenture Trustee.
(5) The Indenture Trustee shall maintain custody of all money
and securities.
(6) Notwithstanding anything contained to the contrary in this
Section 1.10, to the extent the laws of any jurisdiction preclude the
Indenture Trustee from taking any action hereunder either alone,
jointly or through a separate trustee under the direction and control
of the Indenture Trustee, the Owner Trustee, at the instruction of the
6091.20.2898.51:1
C-6
<PAGE>
Indenture Trustee, shall appoint a separate trustee for such
jurisdiction, which separate trustee shall have full power and
authority to take all action hereunder as to matters relating to such
jurisdiction without the consent of the Indenture Trustee, but subject
to the same limitations in any exercise of his power and authority as
those to which the Indenture Trustee is subject.
(c) Upon the acceptance in writing of such appointment by any
such separate trustee or co-trustee, it shall be vested with the estates or
property to which its appointment relates as specified in the instrument of
appointment, subject to all the terms of the Indenture and this Supplemental
Indenture No. ___.
(d) Any separate trustee or co-trustee may, at any time,
constitute the Indenture Trustee, its agent or attorney-in-fact, with full power
and authority, to the extent not prohibited by law, to do any lawful act under
or in respect of the Indenture and this Supplemental Indenture No. ___ on its
behalf and in its name. If a separate trustee or co-trustee shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Indenture
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 1.11. Separability of Provisions. In case any one or
more of the provisions of this Supplemental Indenture No. ___ or any application
thereof shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions hereof and the Indenture
and any other application hereof and thereof shall not in any way be affected or
impaired.
SECTION 1.12. Counterpart Execution. This Supplemental
Indenture No. ___ may be executed in any number of counterparts and by the
different parties hereto and thereto on separate counterparts, each of which,
when so executed and delivered, shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
6091.20.2898.51:1
C-7
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee and the Indenture
Trustee have each caused this Indenture to be duly executed by their respective
officers thereunto duly authorized, all as of the date first set forth above.
THE FIRST NATIONAL BANK OF BOSTON,
not in its individual capacity,
but solely as Owner Trustee under
the Trust Agreement dated as of
December 16, 1985, with Burnham
Leasing Corporation
By __________________________
Title:
CHEMICAL BANK
By __________________________
Title:
6091.20.2898.51:1
C-8
<PAGE>
When Recorded, Return to: Greg R. Nielson
SNELL & WILMER
3100 Valley Bank Center
Phoenix, Arizona 85073
================================================================================
SUPPLEMENTAL INDENTURE NO. 1
dated as of July 15, 1986
To
TRUST INDENTURE, MORTGAGE, SECURITY AGREEMENT AND
ASSIGNMENT OF RENTS
Dated as of December 16, 1985
between
THE FIRST NATIONAL BANK OF BOSTON, not
in its individual capacity, but solely
as Owner Trustee under a Trust
Agreement dated as of December 16,
1985 with Burnham Leasing
Corporation
and
CHEMICAL BANK,
as Indenture Trustee
Original Indenture recorded December 31, 1985, as
Instrument No. 85-623270, re-recorded April 17, 1986,
as Instrument No. 86-187559, and confirmed by docu-
ment recorded April 25, 1986, as Instrument No.
86-203241, all in Maricopa County, Arizona Recorder's
Office.
================================================================================
6091.BURNHAM.2898.10:1
<PAGE>
SUPPLEMENTAL INDENTURE No. 1 dated as of July 15, 1986 to
Trust Indenture, Mortgage, Security Agreement and Assignment Of Rents dated as
of December 16, 1985, between THE FIRST NATIONAL BANK OF BOSTON, a national
banking association (FNB), not in its individual capacity, but solely as trustee
(the Owner Trustee) under a Trust Agreement dated as of December 16, 1985
between FNB, whose address is 100 Federal Street, Boston, Massachusetts 02110,
with Burnham Leasing Corporation, and CHEMICAL BANK, a New York banking
corporation (the Indenture Trustee), whose address is 55 Water Street, New York,
New York 10041.
W I T N E S S E T H:
WHEREAS, the Owner Trustee and the Indenture Trustee have
entered into a Trust Indenture, Mortgage, Security Agreement and Assignment of
Rents dated as of December 16, 1985 (the Indenture) pursuant to which the Owner
Trustee has issued the Initial Series Note;
WHEREAS, Section 3.5(1) of the Indenture provides, among other
things, that the Initial Series Note may be refunded with Additional Notes;
WHEREAS, Section 3.5(4) of the Indenture provides, among other
things, that the Owner Trustee and the Indenture Trustee may enter into
indentures supplemental to the Indenture for, among other things, the purpose of
establishing the terms, conditions an designations of Additional Notes;
WHEREAS, the Owner Trustee desires to issue Additional Notes
to effect a refunding of the Initial Series Note and to enter into this
Supplemental Indenture No. 1 to establish the terms, conditions and designations
of such Additional Notes;
WHEREAS, Section 10.1 of the Indenture provides that, without
the consent of Holders of the Notes Outstanding, the Indenture Trustee may, with
the written consent of the Owner Trustee, from time to time and at any time
execute a supplement to the Indenture for the purposes set forth in said Section
10.1; and
6091.BURNHAM.2898.10:1
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<PAGE>
WHEREAS, the Owner Trustee desires to make the amendments to
the Indenture set forth in Section 3 of this Supplemental Indenture No. 1;
NOW, THEREFORE, in consideration of the premises and of other
good and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions.
For purposes hereof, capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in
Appendix A to the Indenture; provided, however, that, for all purposes of the
Indenture, to the extent different from Appendix A thereto, the definitions of
Deemed Loss Event, Event of Loss and Final Shutdown shall have the respective
meanings set forth in or appended to the Facility Lease as amended from time to
time in accordance with its terms and the terms of the Indenture.
SECTION 2. Terms, Conditions and Designations of the Additional Notes.
(a) The Fixed Rate Notes.
There is hereby created and established a separate series of
Notes of the Owner Trustee designated "Nonrecourse Promissory Notes, Fixed Rate
Series" herein referred to as the Fixed Rate Notes. The Fixed Rate Notes shall
be payable as to principal and bear interest on the principal amount thereof as
follows:
Fixed Rate Note Interest Principal
Due Rate Amount
--------------- -------- ---------
July 15, 1991 8.300% $ 7,017,000
July 15, 1996 9.125% $12,496,000
January 15, 2013 10.300% $58,031,000
-----------
$77,544,000
6091.BURNHAM.2898.10:1
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<PAGE>
Each Fixed Rate Note shall bear interest on the principal amount thereof from
time to time Outstanding from the date thereof until paid at the rate of
interest set forth therein. The principal amount of each Fixed Rate Note shall
be payable as set forth in Schedule 1 attached thereto. Installments of interest
on and principal of (and premium, if any, on) each Fixed Rate Note shall be due
and payable on the payment dates specified in Schedule 1 attached thereto. The
Fixed Rate Note due July 15, 1991 shall be substantially in the form of Exhibit
A-1 to this Supplemental Indenture No. 1. The Fixed Rate Note due July 15, 1996
shall be substantially in the form of Exhibit A-2 to this Supplemental Indenture
No. 1. The Fixed Rate Note due January 15, 2013 shall be substantially in the
form of Exhibit A-3 to this Supplemental Indenture No. 1.
(b) Certain Adjustments to Amortization Schedules.
The schedule of principal amortization attached to each Fixed
Rate Note may be adjusted at the discretion of the Owner Trustee at one time
prior to July 15, 1988; provided, however, that no such adjustment shall be made
by the Owner Trustee which will increase or reduce the average life of such
Fixed Rate Note (calculated in accordance with generally accepted financial
practice from the date of initial issuance) by more than six months; provided,
however, such adjustment may be made only in connection with an adjustment to
Basic Rent pursuant to Section 3(d) of the Facility Lease. If the Owner Trustee
shall elect to make the foregoing adjustment, the Owner Trustee shall deliver to
the Trustee and to the Lessee at least 60 days prior to the first payment date
(specified on the schedule to such Fixed Rate Note) proposed to be affected by
such adjustment, a certificate of the Owner Trustee (x) stating that the Owner
Trustee has elected to make such adjustment, (y) setting forth the revised
schedule of principal amortization for such Fixed Rate Note and (z) attaching
calculations showing that the average life of such Fixed Rate Note will not be
reduced or increased except as permitted by this paragraph (b). The Trustee may
rely on such Owner Trustee certificate and shall have no duty with respect to
the calculations referred to in the foregoing clause (z).
6091.BURNHAM.2898.10:1
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<PAGE>
SECTION 3. Amendments.
(a) Amendment to Section 3.5(1).
The proviso to paragraph (1) of Section 3.5 of the Indenture
is hereby amended to insert "(if applicable)" immediately following the
reference to the "Participation Agreement" appearing in such proviso.
(b) Amendment to Section 3.5(2).
The first sentence of paragraph (2) of Section 3.5 of the
Indenture is hereby amended to insert the phrase "not less than 2 Business Days
nor more than 30 Business Days" in lieu of the phrase "not less than 10 nor more
than 30 days."
(c) Amendment to Section 10.2.
Section 10.2 is hereby amended to insert at the end thereof
the following sentence:
"Notwithstanding the foregoing, the Indenture Trustee shall,
upon receipt of a written instruction from the Lessee and the Owner Trustee,
consent to an amendment of the definitions of "Deemed Loss Event", "Event of
Loss" and "Final Shutdown" contained in or appended to the Facility Lease."
SECTION 4. Miscellaneous.
(a) Dating of Supplemental Indenture.
Although this Supplemental Indenture No. 1 is dated for
convenience and for the purpose of reference as of the date mentioned, the
actual date or dates of execution by the Owner Trustee and the Indenture Trustee
are as indicated by their respective acknowledgements hereto annexed.
(b) Counterpart Execution.
This Supplemental Indenture No. 1 may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
6091.BURNHAM.2898.10:1
- 6 -
<PAGE>
(c) Execution as Supplemental Indenture.
This Supplemental Indenture No. 1 is executed and shall be
construed as an indenture supplemental to the Indenture and, as provided in the
Indenture, this Supplemental Indenture No. 1 forms a part thereof.
(d) Disclosure.
Pursuant to Arizona Revised Statutes Section 33-401, the
beneficiary of the Trust Agreement is Burnham Leasing Corporation, a Delaware
corporation. The address of the beneficiary is 60 Broad Street, New York, New
York 10004, Attention: Chief Financial Officer. A copy of the Trust Agreement is
available for inspection at the offices of the Owner Trustee at 100 Federal
Street, Boston, Massachusetts 02110, Attention of Corporate Trust Division.
IN WITNESS WHEREOF, the Owner Trustee and the Indenture
Trustee have each caused this Supplemental Indenture No. 1 to be duly executed
by their respective officers thereunto duly authorized, all as of the date first
set forth above.
THE FIRST NATIONAL BANK OF BOSTON,
not in its individual capacity,
but solely as Owner Trustee under
the Trust Agreement dated as of
December 16, 1985, with Burnham
Leasing Corporation
By /S/
------------------------------
Authorized Officer
CHEMICAL BANK,
By /S/
-----------------------------
Vice President
6091.BURNHAM.2898.10:1
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<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 16th day of July, before me personally came /S/ K. D.
Woods, to me known, who, being by me duly sworn, did acknowledge, depose and say
that he resides at Boston, Massachusetts; that he is an Authorized Officer of
THE WEST NATIONAL BANK OF BOSTON, a national banking association, described in
and which executed the foregoing instrument; that he knows the seal of said
association; that the seal affixed to said instrument is such seal; that it was
so affixed by authority of the by-laws of said association; and that he signed
his name thereto on behalf of said association by like order.
/S/ Peter Lin Brightbill
--------------------------
Notary Public
[NOTARIAL SEAL] Term Expires: 1/21/88
6091.BURNHAM.2898.10:1
- 8 -
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 16th day of July, before me personally came T.J. FOLEY,
to me known, who, being by me duly sworn, did acknowledge, depose and say that
he resides at Bethpage, New York; that he is a Vice President of CHEMICAL BANK,
a New York banking corporation, described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such seal; that it was so affixed by authority of the board
of directors of said corporation; and that he signed his name thereto on behalf
of said corporation by like order.
/S/ Peter Lin Brightbill
--------------------------
Notary Public
[NOTARIAL SEAL] Term Expires: 1/21/88
6091.BURNHAM.2898.10:1
- 9 -
<PAGE>
EXHIBIT A-1
TO AMENDMENT
NO. 1
FORM OF FIXED RATE NOTE
(DUE JULY 15, 1991)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT
NONRECOURSE PROMISSORY NOTE, FIXED RATE SERIES
(DUE JULY 15, 1991)
Issued at: New York, New York
Issue Date: July 17, 1986
THE FIRST NATIONAL BANK OF BOSTON, not in its individual
capacity, but solely as owner trustee (Owner Trustee) under a Trust Agreement
dated as of December 16, 1985 with Burnham Leasing Corporation (the Owner
Participant), hereby promises to pay to FIRST PV FUNDING CORPORATION, or
registered assigns, the principal sum of Seven Million Seventeen Thousand
Dollars (7,017,000) on July 15, 1991, together with interest (computed on the
basis of a 360-day year of twelve 30-day months) on the aggregate amount of such
principal sum remaining unpaid from time to time fro the date of this Fixed Rate
Note until due and payable, in arrears, at the rate of 8.3% per annum. Payments
of principal installments of this Fixed Rate Note shall be made in the
"principal amount payable" and on the "principal amount payable" and on the
"payment dates" specified in Schedule 1 hereto. Payments of accrued interest on
this Fixed Rate Note shall be made on the "payment dates" specified in Schedule
1 hereto.
Capitalized terms used in this Fixed Rate Note which are not
otherwise defined herein shall have the meanings ascribed thereto in the
Indenture (as hereinafter defined).
6091.BURNHAM.2898.10:1
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<PAGE>
Interest on any overdue principal and premium, if any, and (to
the extent permitted by applicable law) any overdue interest shall be paid, on
demand, from the due date thereof at the rate per annum equal to 9.3% (computed
on the basis of a 360-day year of twelve 30-day months) for the period during
which any such principal, premium or interest shall be overdue.
In the event any date on which a payment is due under this
Fixed Rate Note is not a Business Day, then payment thereof may be made on the
next succeeding Business Day with the same force and effect as if made on the
date on which such payment was due.
All payments of principal, premium, if any, and interest to be
made by the Owner Trustee hereunder and under the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of December 16, 1985, as at
any time heretofore or hereafter amended or supplemented in accordance with the
provisions thereof (the Indenture), between the Owner Trustee and Chemical Bank,
as Trustee (the Indenture Trustee), shall be made only from the Lease Indenture
Estate and the Trust Estate and the Indenture Trustee shall have no obligation
for the payment thereof except to the extent that the Indenture Trustee shall
have sufficient income or proceeds from the Lease Indenture Estate to make such
payments in accordance with the terms of Article V of the Indenture. The Holder
hereof, by its acceptance of this Fixed Rate Note, agrees that such Holder will
look solely to the Trust Estate and the income and proceeds from the Lease
Indenture Estate to the extent available for distribution to the Holder hereof
as above provided, and that neither the Owner Participant nor, except as
expressly provided in the Indenture, the Owner Trustee nor the Indenture Trustee
is or shall be personally liable to the Holder hereof for any amounts payable
under this Fixed Rate Note or for any performance to be rendered under the
Indenture or any other Transaction Document or for any liability thereunder;
provided, however, that in the event the Lessee shall assume all the obligations
of the Owner Trustee hereunder and under the Indenture pursuant to Section
3.9(b) of the Indenture, then all the payments to be made under this Note shall
be made only from payments made by the Lessee under this Note in accordance with
the Assumption Agreement referred to in said Section 3.9(b) and the Holder of
this Note agrees that on such event it will look solely to the Lessee for such
payment.
6091.BURNHAM.2898.10:1
- 2 -
<PAGE>
Principal, premium, if any, and interest shall be payable, in
the manner provided in the Indenture, on presentment of this Fixed Rate Note at
the Indenture Trustee's Office, or as otherwise provided in the Indenture.
In the manner and to the extent provided in the Indenture,
Schedule 1 hereto may be adjusted once at the discretion of the Owner Trustee
prior to July 15, 1988, in connection with an adjustment to Basic Rent under
Section 3(d) of the Facility Lease.
The Holder hereof, by its acceptance of this Fixed Rate Note,
agrees that each payment received by it hereunder shall be applied in the manner
set forth in Section 3.11 of the Indenture. The Holder of this Fixed Rate Note
agrees, by its acceptance hereof, that it will duly note by appropriate means
all payments of principal or interest made hereon and that it will not in any
event transfer or otherwise dispose of this Fixed Rate Note unless and until all
such notations have been duly made.
This Fixed Rate Note is one of the Fixed Rate Notes referred
to in the Indenture. The Indenture permits the issuance of additional series of
Notes, as provided in Section 3.5 of the Indenture, and the several series may
be for varying aggregate principal amounts and may have different maturity
dates, interest rates, redemption provisions and other terms. The properties of
the Owner Trustee included in the Lease Indenture Estate are pledged to the
Indenture Trustee to the extent provided in the Indenture as security for the
payment of the principal of and premium, if any, and interest on this Fixed Rate
Note and all other Notes issued and outstanding from time to time under the
Indenture. Reference is hereby made to the Indenture for a statement of the
rights of the Holders of, and the nature and extent of the security for, this
Fixed Rate Note and of the rights of, and the nature and extent of the security
for, the Holders of the other Notes and of certain rights of the Owner Trustee,
as well as for a statement of the terms and conditions of the trust created by
the Indenture, to all of which terms and conditions the Holder hereof agrees by
its acceptance of this Fixed Rate Note.
This Fixed Rate Note is not subject to prepayment in whole or
in part.
6091.BURNHAM.2898.10:1
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<PAGE>
In case an Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Fixed Rate Note and any
other Notes, together with all accrued but unpaid interest thereon, may, subject
to certain rights of the Owner Trustee or the Owner Participant contained or
referred to in the Indenture, be declared or may become due and payable in the
manner and with the effect provided in the Indenture. Upon such declaration
there shall also be due and payable as a special premium on this Fixed Rate Note
an amount equal to a ratable portion of the fees and expenses then payable to
the Collateral Trust Trustee, as certified to the Indenture Trustee by the
Collateral Trust Trustee.
The lien upon the Lease Indenture Estate is subject to being
legally discharged prior to the maturity of this Fixed Rate Note upon the
deposit with the Indenture Trustee of cash or certain securities sufficient to
pay this Fixed Rate Note when due or an assumption of the obligation of the
Owner Trustee under this Fixed Rate Note and the Indenture, in each case in
accordance with the terms of the Indenture.
There shall be maintained at the Indenture Trustee's Office a
register for the purpose of registering transfers and exchanges of Notes in the
manner provided in the Indenture. The transfer of this Fixed Rate Note is
registrable, as provided in the Indenture, upon surrender of this Fixed Rate
Note for registration of transfer duly accompanied by a written instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable transfer taxes. Prior to due presentment for
registration of transfer of this Fixed Rate Note, the Owner Trustee and the
Indenture Trustee may treat the person in whose name this Fixed Rate Note is
registered as the owner hereof for the purpose of receiving payments of
principal of and premium, if any, and interest on this Fixed Rate Note and for
all other purposes whatsoever, whether or not this Fixed Rate Note be overdue,
and neither the Owner Trustee nor the Indenture Trustee shall be affected by
notice to the contrary.
This Fixed Rate Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
6091.BURNHAM.2898.10:1
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<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Fixed
Rate Note to be duly executed as of the date hereof.
THE FIRST NATIONAL BANK OF BOSTON,
not in its individual capacity,
but solely as Owner Trustee under
a Trust Agreement dated as of
December 16, 1985, with Burnham
Leasing Corporation
By
-------------------------------
Authorized Officer
This Note is one of the series of Notes referred to therein
and in the within-mentioned Indenture.
CHEMICAL BANK,
as Indenture Trustee
By
-------------------------------
Authorized Officer
6091.BURNHAM.2898.10:1
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<PAGE>
SCHEDULE 1
TO THE FIXED RATE NOTE
(DUE JULY 15, 1991)
Schedule of Principal Amortization
$7,017,000 Principal Amount
Payment Principal Principal
Date Amount Payable Amount Paid
---- -------------- -----------
January 15, 1987 $ 0 $
July 15, 1987 232,000
January 15, 1988 732,000
July 15, 1988 763,000
January 15, 1989 794,000
July 15, 1989 827,000
January 15, 1990 862,000
July 15, 1990 898,000
January 15, 1991 935,000
July 15, 1991 974,000
----------
Principal Amount $7,017,000
----------
6091.BURNHAM.2898.10:1
Page 1 of 1
<PAGE>
ASSIGNMENT
Date: July 17, 1986
For value received, the undersigned hereby sells, assigns and
transfers to CHEMICAL BANK, as Trustee pursuant to the Collateral Trust
Indenture dated as of December 16, 1985, as amended and supplemented among the
undersigned, Public Service Company of New Mexico and said Trustee, without
recourse, the Fixed Rate Note to which this Assignment is annexed and all rights
thereunder.
FIRST PV FUNDING CORPORATION
BY _______________________
President
6091.BURNHAM.2898.10:1
Page 1 of 1
<PAGE>
EXHIBIT A-2
TO AMENDMENT
NO. 1
FORM OF FIXED RATE NOTE
(DUE JULY 15, 1996)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT
NONRECOURSE PROMISSORY NOTE, FIXED RATE SERIES
(DUE JULY 15, 1996)
Issued at: New York, New York
Issue Date: July 17, 1986
THE FIRST NATIONAL BANK OF BOSTON, not in its individual
capacity, but solely as owner trustee (Owner Trustee) under a Trust Agreement
dated as of December 16, 1985 with Burnham Leasing Corporation (the Owner
Participant), hereby promises to pay to FIRST PV FUNDING CORPORATION, or
registered assigns, the principal sum of Twelve Million Four Hundred and
Ninety-Six Thousand Dollars (12,496,000) on July 15, 1996, together with
interest (computed on a basis of a 360-day year of twelve 30-day months) on the
aggregate amount of such principal sum remaining unpaid from time to time from
the date of this Fixed Rate Note until due and payable, in arrears, at the rate
of 9.125% per annum. Payments of principal installments of this Fixed Rate Note
shall be made in the "principal amount payable" and on the "payment dates"
specified in Schedule 1 hereto. Payments of accrued interest on this Fixed Rate
Note shall be made on the "payment dates" specified in Schedule 1 hereto.
Capitalized terms used in this Fixed Rate Note which are not
otherwise defined herein shall have the meanings ascribed thereto in the
Indenture (as hereinafter defined).
6091.BURNHAM.2898.10:1
- 1 -
<PAGE>
Interest on any overdue principal and premium, if any, and (to
the extent permitted by applicable law) any overdue interest shall be paid, on
demand, from the due date thereof at the rate per annum equal to 10.125%
(computed on the basis of a 360-day year of twelve 30-day months) for the period
during which any such principal, premium or interest shall be overdue.
In the event any date on which a payment is due under this
Fixed Rate Note is not a Business Day, then payment thereof may be made on the
next succeeding Business Day with the same force and effect as if made on the
date on which such payment was due.
All payments of principal, premium if any, and interest to be
made by Owner Trustee hereunder and under the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of December 16, 1985, as at
any time heretofore or hereafter amended or supplemented in accordance with the
provisions thereof (the Indenture), between the Owner Trustee and Chemical Bank,
as Trustee (the Indenture Trustee), shall be made only from the Lease Indenture
Estate and the Trust Estate and the Indenture Trustee shall have no obligation
for the payment thereof except to the extent that the Indenture Trustee shall
have sufficient income or proceeds from the Lease Indenture Estate to make such
payments in accordance with the terms of Article V of the Indenture. The Holder
hereof, by its acceptance of this Fixed Rate Note, agrees that such Holder will
look solely to the Trust Estate and the income and proceeds from the Lease
Indenture Estate to the extent available for distribution to the Holder hereof
as above provided, and that neither the Owner Participant nor, except as
expressly provided in the Indenture, the Owner Trustee nor the Indenture Trustee
is or shall be personally liable to the Holder hereof for any amounts payable
under this Fixed Rate Note or for any performance to be rendered under the
Indenture or any other Transaction Document or for any liability thereunder;
provided, however, that in the event the Lessee shall assume all the obligations
6091.BURNHAM.2898.10:1
- 2 -
<PAGE>
of the Owner Trustee hereunder and under the Indenture pursuant to Section
3.9(b) of the Indenture, then all the payments to be made under this Note shall
be made only from payments made by the Lessee under this Note in accordance with
the Assumption Agreement referred to in said Section 3.9(b) and the Holder of
this Note agrees that on such event it will look solely to the Lessee for such
payment.
Principal, premium, if any, and interest shall be payable, in
the manner provided in the Indenture, on presentment of this Fixed Rate Note at
the Indenture Trustee's Office, or as otherwise provided in the Indenture.
In the manner and to the extent provided in the Indenture,
Schedule 1 hereto may be adjusted once at the discretion of the Owner Trustee
prior to July 15, 1988, in connection with an adjustment to Basic Rent under
Section 3(d) of the Facility Lease.
The Holder hereof, by its acceptance of this Fixed Rate Note,
agrees that each payment received by it hereunder shall be applied in the manner
set forth in Section 3.11 of the Indenture. The Holder of this Fixed Rate Note
agrees, by its acceptance hereof, that it will duly note by appropriate means
all payments of principal or interest made hereon and that it will not in any
event transfer or otherwise dispose of this Fixed Rate Note unless and until all
such notations have been duly made.
This Fixed Rate Note is one of the Fixed Rate Notes referred
to in the Indenture. The Indenture permits the issuance of additional series of
Notes, as provided in Section 3.5 of the Indenture, and the several series may
be for varying aggregate principal amounts and may have different maturity
dates, interest rates, redemption provisions and other terms. The properties of
the Owner Trustee included in the Lease Indenture Estate are pledged to the
Indenture Trustee to the extent provided in the Indenture as security for the
payment of the principal of and premium, if any, and interest on this Fixed Rate
Note and all other Notes issued and outstanding from time to time under the
Indenture.
6091.BURNHAM.2898.10:1
- 3 -
<PAGE>
Reference is hereby made to the Indenture for a statement of the rights of the
Holders of, and the nature and extent of the security for, this Fixed Rate Note
and of the rights of, and the nature and extent of the security for, the Holders
of the other Notes and of certain rights of the Owner Trustee, as well as for a
statement of the terms and conditions of the trust created by the Indenture, to
all of which terms and conditions the Holder hereof agrees by its acceptance of
this Fixed Rate Note.
This Fixed Rate Note may be prepaid in whole or in part at any
time by the Owner Trustee as follows: upon the giving of not less than 30 days'
notice as provided in the Indenture and at the following prepayment prices
(expressed as a percentage of the unpaid principal amount hereof), together with
interest accrued to the date fixed for prepayment: 109.125% of its principal
amount, such percentage to decline by 1.304 on July 15, 1987 and on each second
anniversary thereof and by 1.303 on July 15, 1988 and on each second anniversary
thereof until such date as such percentage shall be 100%, and 100% thereafter;
provided, however, that no such prepayment shall be made prior to July 15, 1991,
directly or indirectly, as a part of, or in anticipation of, any refunding
operation involving the incurrence of indebtedness by the Owner Trustee, the
Lessee or any Affiliate of either thereof if such indebtedness has an effective
interest cost to the Owner Trustee, the Lessee of such Affiliate, as the cases
may be (computed in accordance with generally accepted accounting practice) of
less than 9.125% per annum. This Fixed Rate Note is not otherwise subject to
prepayment in whole or in part.
In case an Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Fixed Rate Note and any
other Notes, together with all accrued but unpaid interest thereon, may, subject
to certain rights of the Owner Trustee or the Owner Participant contained or
referred to in the Indenture, be declared or may become due and payable in the
manner and with the effect provided in the Indenture.
6091.BURNHAM.2898.10:1
- 4 -
<PAGE>
Upon such declaration there shall also be due and payable as a special premium
on this Fixed Rate Note an amount equal to a ratable portion of the fees and
expenses then payable to the Collateral Trust Trustee, as certified to the
Indenture Trustee by the Collateral Trust Trustee.
The lien upon the Lease Indenture Estate is subject to being
legally discharged prior to the maturity of this Fixed Rate Note upon the
deposit with the Indenture Trustee of cash or certain securities sufficient to
pay this Fixed Rate Note when due or an assumption of the obligation of the
Owner Trustee under this Fixed Rate Note and the Indenture, in each case in
accordance with the terms of the Indenture.
There shall be maintained at the Indenture Trustee's Office a
register for the purpose of registering transfers and exchanges of Notes in the
manner provided in the Indenture. The transfer of this Fixed Rate Note is
registrable, as provided in the Indenture, upon surrender of this Fixed Rate
Note for registration of transfer duly accompanied by a written instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable transfer taxes. Prior to due presentment for
registration of transfer of this Fixed Rate Note, the Owner Trustee and the
Indenture Trustee may treat the person is whose name this Fixed Rate Note is
registered as the owner hereof for the purpose of receiving payments of
principal of and premium, if any, and interest on this Fixed Rate Note and for
all other purposes whatsoever, whether or not this Fixed Rate Note be overdue,
and neither the Owner Trustee nor the Indenture Trustee shall be affected by
notice to the contrary.
This Fixed Rate Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
6091.BURNHAM.2898.10:1
- 5 -
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Fixed
Rate Note to be duly executed as of the date hereof.
THE FIRST NATIONAL BANK OF BOSTON,
not in its individual capacity,
but solely as Owner Trustee under
a Trust Agreement dated as of
December 16, 1985 with Burnham
Leasing Corporation
By _________________________
Authorized Officer
This Note is one of the series of Notes referred to therein
and in the within-mentioned Indenture.
CHEMICAL BANK,
as Indenture Trustee
By _________________________
Authorized Officer
6091.BURNHAM.2898.10:1
- 6 -
<PAGE>
SCHEDULE 1
TO THE FIXED RATE NOTE
(DUE JULY 15, 1996)
Schedule of Principal Amortization
$12,496,000 Principal Amount
Payment Principal Principal
Date Amount Payable Amount Paid
---- -------------- -----------
January 15, 1992 1,014,000 $
July 15, 1992 1,060,000
January 15, 1993 1,109,000
July 15, 1993 1,159,000
January 15, 1994 1,212,000
July 15, 1994 1,267,000
January 15, 1995 1,325,000
July 15, 1995 1,386,000
January 15, 1996 1,449,000
July 15, 1996 1,515,000
-----------
Principal Amount $12,496,000
-----------
6091.BURNHAM.2898.10:1
Page 1 of 1
<PAGE>
ASSIGNMENT
Date: July 17, 1986
For value received, the undersigned hereby sells, assigns and
transfers to CHEMICAL BANK, as Trustee pursuant to the Collateral Trust
Indenture dated as of December 16, 1985, as amended and supplemented, among the
undersigned, Public Service Company of New Mexico and said Trustee, without
recourse, the Fixed Rate Note to which this Assignment is annexed and all rights
thereunder.
FIRST PV FUNDING CORPORATION
BY _______________________
President
6091.BURNHAM.2898.10:1
Page 0 of 1
<PAGE>
EXHIBIT A-3
TO AMENDMENT
No. 1
FORM OF FIXED RATE NOTE
(DUE JULY 15, 2013)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT
NONRECOURSE PROMISSORY NOTE, FIXED RATE SERIES
(DUE JULY 15, 2013)
Issued at: New York, New York
Issue Date: July 17, 1986
THE FIRST NATIONAL BANK OF BOSTON, not in its individual
capacity, but solely as owner trustee (Owner Trustee) under a Trust Agreement
dated as of December 16, 1985 with Burnham Leasing Corporation (the Owner
Participant), hereby promises to pay to FIRST PV FUNDING CORPORATION, or
registered assigns, the principal sum of Fifty-Eight Million Thirty-One Thousand
Dollars (58,031,000) on January 15, 2013, together with interest (computed on a
basis of a 360-day year of twelve 30-day months) on the aggregate amount of such
principal sum remaining unpaid from time to time from the date of this Fixed
Rate Note until due and payable, in arrears, at the rate of 10.3% per annum.
Payments of principal installments of this Fixed Rate Note shall be made in the
"principal amount payable" and on the "payment dates" specified in Schedule 1
hereto. Payments of accrued interest on this Fixed Rate Note shall be made on
the "payment dates" specified in Schedule 1 hereto.
Capitalized terms used in this Fixed Rate Note which are not
otherwise defined herein shall have the meanings ascribed thereto in the
Indenture (as hereinafter defined).
6091.BURNHAM.2898.10:1
- 1 -
<PAGE>
Interest on any overdue principal and premium, if any, and (to
the extent permitted by applicable law) any overdue interest shall be paid, on
demand, from the due date thereof at the rate per annum equal to 11.3% (computed
on the basis of a 360-day year of twelve 30-day months) for the period during
which any such principal, premium or interest shall be overdue.
In the event any date on which a payment is due under this
Fixed Rate Note is not a Business Day, then payment thereof may be made on the
next succeeding Business Day with the same force and effect as if made on the
date on which such payment was due.
All payments of principal, premium, if any, and interest to be
made by Owner Trustee hereunder and under the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of December 16, 1985, as at
any time heretofore or hereafter amended or supplemented in accordance with the
provisions thereof (the Indenture), between the Owner Trustee and Chemical Bank,
as Trustee (the Indenture Trustee), shall be made only from the Lease Indenture
Estate and the Trust Estate and the Indenture Trustee shall have no obligation
for the payment thereof except to the extent that the Indenture Trustee shall
have sufficient income or proceeds from the Lease Indenture Estate to make such
payments in accordance with the terms of Article V of the Indenture. The Holder
hereof, by its acceptance of this Fixed Rate Note, agrees that such Holder will
look solely to the Trust Estate and the income and proceeds from the Lease
Indenture Estate to the extent available for distribution to the Holder hereof
as above provided, and that neither the Owner Participant nor, except as
expressly provided in the Indenture, the Owner Trustee nor the Indenture Trustee
is or shall be personally liable to the Holder hereof for any amounts payable
under this Fixed Rate Note or for any performance to be rendered under the
Indenture or any other Transaction Document or for any liability thereunder;
provided, however, that in the event the Lessee shall assume all the obligations
6091.BURNHAM.2898.10:1
- 2 -
<PAGE>
of the Owner Trustee hereunder and under the Indenture pursuant to Section
3.9(b) of the Indenture, then all the payments to be made under this Note shall
be made only from payments made by the Lessee under this Note in accordance with
the Assumption Agreement referred to in said Section 3.9(b) and the Holder of
this Note agrees that on such event it will look solely to the Lessee for such
payment.
Principal, premium, if any, and interest shall be payable, in
the manner provided in the Indenture, on presentment of this Fixed Rate Note at
the Indenture Trustee's Office, or as otherwise provided in the Indenture.
In the manner and to the extent provided in the Indenture,
Schedule 1 hereto may be adjusted once at the discretion of the Owner Trustee
prior to July 15, 1988, in connection with an adjustment to Basic Rent under
Section 3(d) of the Facility Lease.
The Holder hereof, by its acceptance of this Fixed Rate Note,
agrees that each payment received by it hereunder shall be applied in the manner
set forth in Section 3.11 of the Indenture. The Holder of this Fixed Rate Note
agrees, by its acceptance hereof, that it will duly note by appropriate means
all payments of principal or interest made hereon and that it will not in any
event transfer or otherwise dispose of this Fixed Rate Note unless and until all
such notations have been duly made.
This Fixed Rate Note is one of the Fixed Rate Notes referred
to in the Indenture. The Indenture permits the issuance of additional series of
Notes, as provided in Section 3.5 of the Indenture, and the several series may
be for varying aggregate principal amounts and may have different maturity
dates, interest rates, redemption provisions and other terms. The properties of
the Owner Trustee included in the Lease Indenture Estate are pledged to the
Indenture Trustee to the extent provided in the Indenture as security for the
payment of the principal of and premium, if any, and interest on this Fixed Rate
Note and all other Notes issued and outstanding from time to time under the
Indenture.
6091.BURNHAM.2898.10:1
- 3 -
<PAGE>
Reference is hereby made to the Indenture for a statement of the rights of the
Holders of, and the nature and extent of the security for, this Fixed Rate Note
and of the rights of, and the nature and extent of the security for, the Holders
of the other Notes and of certain rights of the Owner Trustee, as well as for a
statement of the terms and conditions of the trust created by the Indenture, to
all of which terms and conditions the Holder hereof agrees by its acceptance of
this Fixed Rate Note.
This Fixed Rate Note is subject to prepayment in whole as
contemplated by Section 5.2 of the Indenture and in the circumstances therein
described. In addition, this Fixed Rate may be prepaid in whole or in part at
any time by the Owner Trustee as follows: upon the giving of not less than 30
days' notice as provided in the Indenture and at the following prepayment prices
(expressed as a percentage of the unpaid principal amount hereof), together with
interest accrued to the date fixed for prepayment: 110.3% of its principal
amount, such percentage to decline by .412 on July 15, 1987 and each anniversary
thereof, until such date as such percentage shall be 100%, and 100% thereafter;
provided, however, that no such prepayment shall be made prior to July 15, 1991,
directly or indirectly, as a part of, or in anticipation of, any refunding
operation involving the incurrence of indebtedness by the Owner Trustee, the
Lessee or any Affiliate of either thereof if such indebtedness has an effective
interest cost to the Owner Trustee, the Lessee or such Affiliate, as the case
may be (computed in accordance with generally accepted accounting practice) of
less than 10.3% per annum. This Fixed Rate Note is not otherwise subject to
prepayment in whole or in part.
In case an Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Fixed Rate Note and any
other Notes, together with all accrued but unpaid interest thereon, may, subject
to certain rights of the Owner Trustee or the Owner Participant contained or
referred to in the Indenture, be declared or may become due and payable in the
manner and with the effect provided in the Indenture.
6091.BURNHAM.2898.10:1
- 4 -
<PAGE>
Upon such declaration there shall also be due and payable as a special premium
on this Fixed Rate Note an amount equal to a ratable portion of the fees and
expenses then payable to the Collateral Trust Trustee, as certified to the
Indenture Trustee by the Collateral Trust Trustee.
The lien upon the Lease Indenture Estate is subject to being
legally discharged prior to the maturity of this Fixed Rate Note upon the
deposit with the Indenture Trustee of cash or certain securities sufficient to
pay this Fixed Rate Note when due or an assumption of the obligation of the
Owner Trustee under this Fixed Rate Note and the Indenture, in each case in
accordance with the terms of the Indenture.
There shall be maintained at the Indenture Trustee's Office a
register for the purpose of registering transfers and exchanges of Notes in the
manner provided in the Indenture. The transfer of this Fixed Rate Note is
registrable, as provided in the Indenture, upon surrender of this Fixed Rate
Note for registration of transfer duly accompanied by a written instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable transfer taxes. Prior to due presentment for
registration of transfer of this Fixed Rate Note, the Owner Trustee and the
Indenture Trustee may treat the person is whose name this Fixed Rate Note is
registered as the owner hereof for the purpose of receiving payments of
principal of and premium, if any, and interest on this Fixed Rate Note and for
all other purposes whatsoever, whether or not this Fixed Rate Note be overdue,
and neither the Owner Trustee nor the Indenture Trustee shall be affected by
notice to the contrary.
This Fixed Rate Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
6091.BURNHAM.2898.10:1
- 5 -
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Fixed
Rate Note to be duly executed as of the date hereof.
THE FIRST NATIONAL BANK OF BOSTON,
not in its individual capacity,
but solely as Owner Trustee under
a Trust Agreement dated as of
December 16, 1985 with Burnham
Leasing Corporation
By _________________________
Authorized Officer
This Note is one of the series of Notes referred to therein
and in the within-mentioned Indenture.
CHEMICAL BANK,
as Indenture Trustee
By _________________________
Authorized Officer
6091.BURNHAM.2898.10:1
- 6 -
<PAGE>
SCHEDULE 1
TO THE FIXED RATE NOTE
(DUE JANUARY 15, 2013)
Schedule of Principal Amortization
$58,031,000 Principal Amount
Payment Principal Principal
Date Amount Payable Amount Paid
---- -------------- -----------
January 15, 1997 $ 1,584,000 $
July 15, 1997 1,666,000
January 15, 1998 1,751,000
July 15, 1998 1,078,000
January 15, 1999 1,337,000
July 15, 1999 739,000
January 15, 2000 1,411,000
July 15, 2000 779,000
January 15, 2001 1,490,000
July 15, 2001 822,000
January 15, 2002 1,573,000
July 15, 2002 867,000
January 15, 2003 1,661,000
July 15, 2003 915,000
January 15, 2004 1,754,000
July 15, 2004 965,000
January 15, 2005 1,851,000
July 15, 2005 1,587,000
January 15, 2006 1,626,000
July 15, 2006 1,417,000
January 15, 2007 1,715,000
July 15, 2007 1,495,000
January 15, 2008 1,810,000
July 15, 2008 1,577,000
January 15, 2009 1,910,000
July 15, 2009 1,664,000
January 15, 2010 2,016,000
July 15, 2010 1,782,000
6091.BURNHAM.2898.10:1
Page 1 of 2
<PAGE>
SCHEDULE 1
TO THE FIXED RATE NOTE
(DUE JANUARY 15, 2013)
Schedule of Principal Amortization
(Continued)
Payment Principal Principal
Date Amount Payable Amount Paid
January 15, 2011 $ 3,687,000 $
July 15, 2011 3,877,000
January 15, 2012 4,077,000
July 15, 2012 4,287,000
January 15, 2013 1,261,000
-----------
Principal Amount $58,031,000
-----------
6091.BURNHAM.2898.10:1
Page 2 of 2
<PAGE>
ASSIGNMENT
Date: July 17, 1986
For value received, the undersigned hereby sells, assigns and
transfers to CHEMICAL BANK, as Trustee pursuant to the Collateral Trust
Indenture dated as of December 16, 1985, as amended and supplemented, among the
undersigned, Public Service Company of New Mexico and said Trustee, without
recourse, the Fixed Rate Note to which this Assignment is annexed and all rights
thereunder.
FIRST PV FUNDING CORPORATION
BY _______________________
President
6091.BURNHAM.2898.10:1
<PAGE>
When Recorded, Return to: Greg R. Nielson
SNELL & WILMER
3100 Valley Bank Center
Phoenix, Arizona 85073
================================================================================
SUPPLEMENTAL INDENTURE NO. 2
Dated as of November 18, 1986
To
TRUST INDENTURE, MORTGAGE, SECURITY AGREEMENT AND
ASSIGNMENT OF RENTS
Dated as of December 16, 1985, as amended,
between
THE FIRST NATIONAL BANK OF BOSTON, not
in its individual capacity, but solely
as Owner Trustee under a Trust
Agreement dated as of December 16,
1985 with Burnham Leasing
Corporation
and
CHEMICAL BANK,
as Indenture Trustee
================================================================================
Original Indenture recorded December 31, 1985, as
Instrument No. 85-623270, re-recorded April 17, 1986,
as Instrument No. 86-187559, and confirmed by docu-
ment recorded April 25, 1986, as Instrument
No. 86-203241, and Supplemental Indenture No. 1
thereto, dated as of July 15, 1986, recorded July 17,
1986 as Instrument No. 86-367472, all in Maricopa
County, Arizona Recorder's Office.
================================================================================
6091.BURNHAMU1.DEBT.147C:1
<PAGE>
SUPPLEMENTAL INDENTURE No. 2 dated as of November 18, 1986 to
Trust Indenture, Mortgage, Security Agreement and Assignment of Rents dated as
of December 16, 1985, between THE FIRST NATIONAL BANK OF BOSTON, a national
banking association (FNB), not in its individual capacity, but solely as Owner
Trustee (the Owner Trustee) under a Trust Agreement dated as of December 16,
1985, between FNB, whose address is 100 Federal Street, Boston, Massachusetts
02110, with Burnham Leasing Corporation, a New York corporation, and CHEMICAL
BANK, a New York banking corporation (the Indenture Trustee), whose address is
55 Water Street, New York, New York 10041.
W I T N E S S E T H:
WHEREAS, the Owner Trustee and the Indenture Trustee have
entered into a Trust Indenture, Mortgage, Security Agreement and Assignment of
Rents dated as of December 16, 1985 (as heretofore supplemented and amended, the
Indenture);
WHEREAS, Section 3.5(1) of the Indenture provides, among other
things, that Additional Notes may be issued for the purpose of providing funds
to be paid to the Owner Trustee in the event of a partial return of the
Investment as contemplated by Section 2(c) of the Participation Agreement;
WHEREAS, Section 3.5(4) of the Indenture provides, among other
things, that the Owner Trustee and the Indenture Trustee may enter into
indentures supplemental to the Indenture for, among other things, the purpose of
establishing the terms, conditions and designations of Additional Notes;
WHEREAS, the Owner Trustee desires to issue Additional Notes
to effect a partial return of the Investment and to enter into this Supplemental
Indenture No. 2 to establish the terms, conditions and designations of such
Additional Notes; and
WHEREAS, Section 10.1(viii) of the Indenture provides that,
without the consent of Holders of the Notes Outstanding, the Indenture Trustee
may, with the written consent of the Owner Trustee, from time to time and at any
time execute a supplement to the Indenture in order to evidence the issuance of
and to provide the terms of Additional Notes;
6091.BURNHAMU1.DEBT.147C:1
- 3 -
<PAGE>
NOW THEREFORE, in consideration of the premises and of other
good and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions.
For purposes hereof, capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in
Appendix A to the Indenture.
SECTION 2. Terms, Conditions and Designations of the Releveraging Note.
There is hereby created and established a separate series of
Notes of the Owner Trustee designated "Nonrecourse Promissory Notes,
Releveraging Series" herein referred to as the Releveraging Notes. Each
Releveraging Note shall be substantially in the form of Exhibit A to this
Supplemental Indenture No. 2. The Releveraging Note initially issued shall be in
the principal amount of $2,456,000 and shall bear interest from the date of
issuance until the principal amount thereof is paid at the rate per annum of
10.15%. The principal amount of each Releveraging Note shall be payable as set
forth therein. Installments of interest on each Releveraging Note shall be due
and payable on the payment dates specified in such Releveraging Note.
SECTION 3. Miscellaneous.
(a) Payment of Accrued Interest on Fixed Rate Notes.
Anything in the Fixed Rate Notes (as defined in Supplemental
Indenture No. 1 to the Indenture) to the contrary notwithstanding, the Owner
Trustee agrees that payments of accrued interest on each Fixed Rate Note shall
be made on January 15 and July 15 in each year, commencing January 15, 1987, to
and including the last "payment date" specified in Schedule 1 to each Fixed Rate
Note.
(b) Effective Date of Supplemental Indenture.
This Supplemental Indenture No. 2 shall be and become
effective upon the execution hereof by the parties hereto.
6091.BURNHAMU1.DEBT.147C:1
- 4 -
<PAGE>
(c) Counterpart Execution.
This Supplemental Indenture No. 2 may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
(d) Execution as Supplemental Indenture.
This Supplemental Indenture No. 2 is executed and shall be
construed as an indenture supplemental to the Indenture and, as provided in the
Indenture, this Supplemental Indenture No. 2 forms a part thereof.
(e) Disclosure.
Pursuant to Arizona Revised Statutes Section 33-401, the
beneficiary of the Trust Agreement is Burnham Leasing Corporation, a New York
corporation. The address of the beneficiary is 60 Broad Street, New York, New
York 10004, Attention: Assistant Treasurer. A copy of the Trust Agreement is
available for inspection at the offices of the Owner Trustee at 100 Federal
Street, Boston, Massachusetts 02110, Attention of Corporate Trust Division.
(f) Filing Information.
The Facility Lease, as such term is used in the Trust
Indenture, Mortgage, Security Agreement and Assignment of Rents, dated as of
December 16, 1985, as amended and supplemented, is a lease of the property
described in and conveyed to the Owner Trustee by (i) the Deed and Bill of Sale
recorded December 31, 1985 as Instrument No. 85-623265, (ii) the Deed recorded
December 31, 1985 as Instrument No. 85-623266, and (iii) the Deed and Assignment
of Beneficial Interest dated December 31, 1985, with respect to Title USA
Company of Arizona Trust No. 530 (as reflected in Affidavit of Trustee recorded
December 31, 1985 as Instrument No. 85-623286), all in the records of Maricopa
County Recorder's Office, the legal descriptions of such property being
incorporated herein by this reference. The original Facility Lease was recorded
December 31, 1985 as Instrument No. 85- 623268, in the records of the Maricopa
County, Arizona Recorder's Office.
6091.BURNHAMU1.DEBT.147C:1
- 5 -
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee and the Indenture
Trustee have each caused this Supplemental Indenture No. 2 to be duly executed
by their respective officers thereunto duly authorized, all as of the date first
set forth above.
THE FIRST NATIONAL BANK OF BOSTON,
not in its individual capacity,
but solely as Owner Trustee under
the Trust Agreement dated as of
December 16, 1985, with Burnham
Leasing Corporation
By /S/
-------------------------------
Assistant Vice President
CHEMICAL BANK,
By /S/
------------------------------
Vice President
6091.BURNHAMU1.DEBT.147C:1
- 6 -
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 24th day of November, 1986, before me personally came MARTIN P.
HENRY, to me known, who, being by me duly sworn, did acknowledge, depose and say
that he resides at Boston, Massachusetts; that he is an Assistant Vice President
of THE FIRST NATIONAL BANK OF BOSTON, a national banking association, described
in and which executed the foregoing instrument; and that he signed his name
thereto on behalf of said association by authority of the Board of Directors of
such association.
/S/ David A. Spivak
-----------------------------
Notary Public
[NOTARIAL SEAL] Term Expires: 3/30/87
6091.BURNHAMU1.DEBT.147C:1
- 7 -
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 24th day of November, 1986, before me personally came T. J.
FOLEY, to me known, who, being by me duly sworn, did acknowledge, depose and say
that he resides at Bethpage, New York; that he is a Vice President of CHEMICAL
BANK, a New York banking corporation, described in and which executed the
foregoing instrument; and that he signed his name thereto on behalf of said
corporation by authority of the Board of Directors of such association.
/S/ Delia T. Santiago
-----------------------
Notary Public
[NOTARIAL SEAL] Term Expires: 3/30/87
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EXHIBIT A
TO SUPPLEMENTAL
INDENTURE NO. 2
FORM OF RELEVERAGING NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED,
SOLD OR OFFERED FOR SALE IN VIOLATION OF SUCH ACT
NONRECOURSE PROMISSORY NOTE, RELEVERAGING SERIES
(DUE JANUARY 15, 2015)
Issued at: New York, New York
Issue Date: November 25, 1986
THE FIRST NATIONAL BANK OF BOSTON, not in its individual
capacity, but solely as Owner Trustee (Owner Trustee) under a Trust Agreement
dated as of December 16, 1985 with Burnham Leasing Corporation (the Owner
Participant), hereby promises to pay to FIRST PV FUNDING CORPORATION, or
registered assigns, the principal sum of $2,456,000 (Two Million Four Hundred
Fifty Six Thousand Dollars) on January 15, 2015 together with interest (computed
on the basis of a 360-day year of twelve 30-day months) on the aggregate amount
of such principal sum remaining unpaid from time to time from the date of this
Releveraging Note until due and payable, in arrears, at the rate of 10.15% per
annum. Payments of accrued interest on this Releveraging Note shall be made on
January 15 and July 15 in each year, commencing January 15, 1987 to and
including January 15, 2015.
Capitalization terms used in this Releveraging Note which are
not otherwise defined herein shall have the meanings ascribed thereto in the
Indenture (as hereinafter defined).
Interest on any overdue principal and premium, if any, and (to
the extent permitted by applicable law) any overdue interest, shall be paid, on
demand, from the due date thereof at the rate per annum equal to 11.15%
(computed on the basis of a 360-day year of twelve 30-day months) for the period
during which any such principal, premium or interest shall be overdue.
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In the event any date on which a payment is due under this
Releveraging Note is not a Business Day, then payment thereof may be made on the
next succeeding Business Day with the same force and effect as if made on the
date which such payment was due.
All payments of principal, premium, if any, and interest to be
made by the Owner Trustee hereunder and under the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents dated as of December 16, 1985, as at
any time heretofore or hereafter amended or supplemented in accordance with the
provisions thereof (the Indenture), between the Owner Trustee and Chemical Bank,
as Trustee (the Indenture Trustee), shall be made only from the Lease Indenture
Estate and the Trust Estate and the Indenture Trustee shall have no obligation
for the payment thereof except to the extent that the Indenture Trustee shall
have sufficient income or proceeds from the Lease Indenture Estate to make such
payments in accordance with the terms of Article V of the Indenture. The Holder
hereof, by its acceptance of this Releveraging Note, agrees that such Holder
will look solely to the Trust Estate and the income and proceeds from the Lease
Indenture Estate to the extent available for distribution to the Holder hereof
as above provided, and that neither the Owner Participant nor, except as
expressly provided in the Indenture, the Owner Trustee nor the Indenture Trustee
is or shall be personally liable to the Holder hereof for any amounts payable
under this Releveraging Note or for any performance to be rendered under the
Indenture or any other Transaction Document or for any liability thereunder;
provided, however, that in the event the Lessee shall assume the obligations of
the Owner Trustee hereunder and under the Indenture pursuant to Section 3.9(b)
of the Indenture, then all the payments to be made under this Releveraging Note
shall be made only from payments made by the Lessee under this Releveraging Note
in accordance with the Assumption Agreement referred to in said Section 3.9(b)
and the Holder of this Releveraging Note agrees that in such event it will look
solely to the Lessee for such payment.
Principal, premium, if any, and interest shall be payable, in
the manner provided in the Indenture, on presentment of this Releveraging Note
at the Indenture Trustee's Office, or as otherwise provided in the Indenture.
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The Holder hereof, by its acceptance of this Releveraging
Note, agrees that each payment received by it hereunder shall be applied in the
manner set forth in Section 3.11 of the Indenture. The Holder of this
Releveraging Note agrees, by its acceptance hereof, that it will duly note by
appropriate means all payments of principal or interest made hereon and that it
will not in any event transfer or otherwise dispose of this Releveraging Note
unless and until all such notations have been duly made.
This Releveraging Note is one of the Releveraging Notes
referred to in the Indenture. The Indenture permits the issuance of additional
series of Notes, as provided in Section 3.5 of the Indentured, and the several
series may be for varying aggregate principal amounts and may have different
maturity dates, interest rates, redemption provisions and other terms. The
properties of the Owner Trustee included in the Lease Indenture Estate are
pledged to the Indenture Trustee to the extent provided in the Indenture as
security for the payment of the principal of and premium, if any, and interest
on this Releveraging Note and all other Notes issued and outstanding from time
to time under the Indenture. Reference is hereby made to the Indenture for a
statement of the rights of the Holders of, and the nature and extent of the
security for, this Releveraging Note and of the rights of, and the nature and
extent of the security for, the Holders of the other Notes and of certain rights
of the Owner Trustee, as well as for a statement of the terms and conditions of
the trust created by the Indenture, to all of which terms and conditions the
Holder hereof agrees by its acceptance of this Releveraging Note.
This Releveraging Note is subject to prepayment in whole as
contemplated by Section 5.2 of the Indenture and in the circumstances therein
described. In addition, this Releveraging Note may be prepaid in whole or in
part at any time on or after January 15, 1992 by the Owner Trustee upon the
giving of not less than 30 days' notice (as provided in the Indenture) and at
the following prepayment prices (expressed as a percentage of the unpaid
principal amount hereof), together with interest accrued to the date fixed for
prepayment:
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Twelve Month Redemption
Period Beginning Price
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January 15, 1992 108.120%
January 15, 1993 107.714
January 15, 1994 107.308
January 15, 1995 106.902
January 15, 1996 106.496
January 15, 1997 106.090
January 15, 1998 105.684
January 15, 1999 105.278
January 15, 2000 104.872
January 15, 2001 104.466
January 15, 2002 104.060
January 15, 2003 103.654
January 15, 2004 103.248
January 15, 2005 102.842
January 15, 2006 102.436
January 15, 2007 102.030
January 15, 2008 101.624
January 15, 2009 101.218
January 15, 2010 100.812
January 15, 2011 100.406
and thereafter at the principal amount thereof, together with interest accrued
to the date fixed for prepayment. This Releveraging Note is not otherwise
subject to prepayment in whole or in part.
In case an Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of this Releveraging Note and
any other Notes, together with all accrued but unpaid interest thereon, may,
subject to certain rights of the Owner Trustee or the Owner Participant
contained or referred to in the Indenture, be declared or may become due and
payable in the manner and with the effect provided in the Indenture.
The lien upon the Lease Indenture Estate is subject to being
legally discharged prior to the maturity of this Releveraging Note upon the
deposit with the Indenture Trustee of cash or certain securities sufficient to
pay this Releveraging Note when due or an assumption of the obligation of the
Owner Trustee under this Releveraging Note and the Indenture, in each case in
accordance with the terms of the Indenture.
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There shall be maintained at the Indenture Trustee's Office a
register for the purpose of registering transfers and exchanges of Notes in the
manner provided in the Indenture. The transfer of this Releveraging Note is
registrable, as provided in the Indenture, upon surrender of this Releveraging
Note for registration of transfer duly accompanied by a written instrument of
transfer duly executed by or on behalf of the registered Holder hereof, together
with the amount of any applicable transfer taxes. Prior to due presentment for
registration of transfer of this Releveraging Note, the Owner Trustee and the
Indenture Trustee may treat the person in whose name this Releveraging Note is
registered as the Owner hereof for the purpose of receiving payments of
principal of and premium, if any, and interest on this Releveraging Note and for
all other purposes whatsoever, whether or not this Releveraging Note be overdue,
and neither the Owner Trustee nor the Indenture Trustee shall be affected by
notice to the contrary.
This Releveraging Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
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IN WITNESS WHEREOF, the Owner Trustee has caused this
Releveraging Note to be duly executed as of the date hereof.
THE FIRST NATIONAL BANK OF BOSTON,
not in its individual capacity,
but solely as Owner Trustee under
the Trust Agreement dated as of
December 16, 1985, with Burnham
Leasing Corporation
By
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Assistant Vice President
This Note is one of the series of Notes referred to therein and in the
within-mentioned Indenture.
CHEMICAL BANK,
as Indenture Trustee
By
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Authorized Officer
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ASSIGNMENT
Date: November 25, 1986
For value received, FIRST PV FUNDING CORPORATION (First PV) hereby sells,
assigns and transfers to CHEMICAL BANK, as Collateral Trust Trustee pursuant to
the Collateral Trust Indenture dated as of December 16, 1985, as heretofore
amended and supplemented, among First PV, Public Service Company of New Mexico
and said Collateral Trust Trustee, without recourse, the Releveraging Note to
which this Assignment is annexed and all rights thereunder.
FIRST PV FUNDING CORPORATION
By____________________________
President
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