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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1995 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 87158
Albuquerque, New Mexico (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (505) 241-2700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $5.00 Par Value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
(Title of Class)
1965 Series, 4.58% Cumulative Preferred Stock ($100 stated value and
without sinking fund)
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 and (2) has been subject to such filing
requirements for the past 90 days. YES x/ NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|
The total number of shares of the Company's Common Stock outstanding as of
January 31, 1996 was 41,774,083. On such date, the aggregate market value of the
voting stock held by non-affiliates of the Company, as computed by reference to
the New York Stock Exchange composite transaction closing price of $17 7/8 per
share reported by the Wall Street Journal, was $746,711,733.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following document are incorporated by reference into the
indicated part of this report:
Proxy Statement to be filed with the Securities and Exchange Commission
pursuant to Regulation 14A relating to the annual meeting of stockholders
to be held on April 30, 1996--PART III.
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<PAGE>
TABLE OF CONTENTS
Page
----
GLOSSARY................................................................... iv
PART I
ITEM 1. BUSINES........................................................... 1
THE COMPANY..................................................... 1
ELECTRIC OPERATIONS............................................. 1
Service Area and Customers.................................. 1
Power Sales................................................. 2
Sources of Power............................................ 3
Fuel and Water Supply....................................... 4
NATURAL GAS OPERATIONS.......................................... 6
Service Area and Customers.................................. 6
Natural Gas Supply.......................................... 7
Natural Gas Sales........................................... 8
RATES AND REGULATION............................................ 9
FPPCAC...................................................... 9
Fossil-Fueled Plant Decommissioning Costs................... 9
Energy and Utility Related Subsidiaries..................... 9
Gas Rate Case............................................... 10
PGAC Continuation Filing.................................... 10
Consolidation Issues........................................ 10
Legislative Action............................................ 11
ENVIRONMENTAL FACTORS........................................... 11
ITEM 2. PROPERTIES......................................................... 12
ELECTRIC...................................................... 12
Fossil-Fueled Plants........................................ 12
Nuclear Plant............................................... 13
Other Electric Properties................................... 14
NATURAL GAS................................................... 15
OTHER INFORMATION............................................. 15
ITEM 3. LEGAL PROCEEDINGS.................................................. 15
PVNGS WATER SUPPLY LITIGATION................................. 15
SAN JUAN RIVER ADJUDICATION................................... 16
PVNGS PROPERTY TAXES.......................................... 16
OTHER PROCEEDINGS............................................. 16
Federal Deposit Insurance Corporation ("FDIC") Litigation... 16
Four Corners................................................ 18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................ 18
SUPPLEMENTAL ITEM. EXECUTIVE OFFICERS OF THE COMPANY........................ 19
ii
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PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS........................................... 21
ITEM 6. SELECTED FINANCIAL DATA............................................ 22
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS........................... 23
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA........................ F-1
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE........................... E-1
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.................... E-1
ITEM 11. EXECUTIVE COMPENSATION............................................. E-1
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.................................................... E-1
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................... E-1
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K...................................................... E-1
SIGNATURES..................................................................E-21
iii
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GLOSSARY
AG ..................................... New Mexico Attorney General
Anaheim................................. City of Anaheim, California
APPA.................................... Arizona Power Pooling Association
APS..................................... Arizona Public Service Company
BCD..................................... Bellamah Community Development
BHP..................................... BHP Minerals International, Inc.
BLM..................................... Bureau of Land Management
BTU..................................... British Thermal Unit
Century................................. Century Power Corporation
decatherm............................... 1,000,000 BTUs
DOE..................................... United States Department of Energy
EIP..................................... Eastern Interconnection Project
El Paso................................. El Paso Electric Company
EPA..................................... United States Environmental Protection
Agency
EPNG.................................... El Paso Natural Gas Company
Farmington.............................. City of Farmington, New Mexico
FERC.................................... Federal Energy Regulatory Commission
Four Corners............................ Four Corners Power Plant
FPPCAC.................................. Fuel and Purchased Power Cost
Adjustment Clause
Gathering Company....................... Sunterra Gas Gathering Company, a
wholly-owned subsidiary of the
Company
Kv ..................................... Kilovolt
KW...................................... Kilowatt
KWh..................................... Kilowatt Hour
Los Alamos.............................. The County of Los Alamos, New Mexico
mcf..................................... Thousand cubic feet
Meadows................................. Meadows Resources, Inc., a wholly-owned
subsidiary of the Company
M-S-R................................... M-S-R Public Power Agency, a California
public power agency
MW ..................................... Megawatt
MWh..................................... Megawatt Hour
NMED.................................... New Mexico Environment Department
NMPUC................................... New Mexico Public Utility Commission
NRC..................................... United States Nuclear Regulatory
Commission
OCD..................................... New Mexico Oil Conservation Division
OLE..................................... Ojo Line Extension
PGAC.................................... PNMGS' Purchased Gas Adjustment Clause
Plains.................................. Plains Electric Generation and
Transmission Cooperative, Inc.
PNMGS................................... Public Service Company of New Mexico
Gas Services, a division of the
Company
Processing Company...................... Sunterra Gas Processing Company, a
wholly-owned subsidiary of the
Company
PVNGS................................... Palo Verde Nuclear Generating Station
Reeves Station.......................... Reeves Generating Station
Salt River Project...................... Salt River Project Agricultural
Improvement and Power District
SCE..................................... Southern California Edison Company
SCPPA................................... Southern California Public Power
Authority
SDG&E................................... San Diego Gas and Electric Company
iv
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SJCC.................................... San Juan Coal Company
SJGS.................................... San Juan Generating Station
SPS..................................... Southwestern Public Service Company
TNP..................................... Texas-New Mexico Power Company
throughput.............................. Volumes of gas delivered, whether or
not owned by PNMGS
Tucson.................................. Tucson Electric Power Company
UAMPS................................... Utah Associated Municipal Power Systems
USEC.................................... United States Enrichment Corporation
Williams................................ Williams Gas Processing-Blanco, Inc., a
subsidiary of the Williams Field
Services Group, Inc., of Tulsa,
Oklahoma
v
<PAGE>
PART I
ITEM 1. BUSINESS
THE COMPANY
Public Service Company of New Mexico (the "Company") was incorporated in
the State of New Mexico in 1917 and has its principal offices at Alvarado
Square, Albuquerque, New Mexico 87158 (telephone number 505-241-2700). The
Company is a public utility primarily engaged in the generation, transmission,
distribution and sale of electricity and in the transmission, distribution and
sale of natural gas within the State of New Mexico. The Company is also engaged
in the operation and management of the City of Santa Fe's water system and in
the development of new business activities in the energy and utility related
services area (see PART II, ITEM 7. -- "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- OVERVIEW -- Preparation for the
Changes") .
On June 30, 1995, the Company consummated the sale of substantially all
of the gas gathering and processing assets of the Company and its gas
subsidiaries to Williams. On July 3, 1995, the Company consummated the sale of
the Company's water division to the City of Santa Fe. (See note 12 of the notes
to consolidated financial statements.)
The total population of the area served by one or more of the Company's
utility services is estimated to be approximately 1.2 million, of which 55% live
in the greater Albuquerque area.
For the year ended December 31, 1995, the Company derived 72.3% of its
utility operating revenues from electric operations, 26.9% from natural gas
operations and .8% from water operations.
As of December 31, 1995, the Company employed 2,626 persons.
Financial information relating to amounts of revenue and operating income
and identifiable assets attributable to the Company's industry segments is
contained in note 13 of the notes to consolidated financial statements.
ELECTRIC OPERATIONS
Service Area and Customers
The Company's electric operations serve four principal markets. Sales to
retail customers and sales to firm-requirements wholesale customers, sometimes
referred to collectively as "system" sales, comprise two of these markets. The
third market consists of other contracted sales to utilities for which the
Company commits to deliver a specified amount of capacity (measured in MW) or
energy (measured in MWh) over a given period of time. The fourth market consists
of economy energy sales made on an hourly basis to utilities at fluctuating,
spot-market rates. Sales to the third and fourth markets are sometimes referred
to collectively as "off-system" sales.
The Company provides retail electric service to a large area of north
central New Mexico, including the cities of Albuquerque, Santa Fe, Rio Rancho,
Las Vegas, Belen and Bernalillo. The Company also provides retail electric
service to Deming in southwestern New Mexico and to Clayton in northeastern New
Mexico. As of December 31, 1995, approximately 333,000 retail electric customers
were served by the Company, the largest of which accounted for approximately
3.6% of the Company's total electric revenues for the year ended December 31,
1995.
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The Company holds 23 long-term, non-exclusive franchise agreements for
its electric retail operations, expiring between August 1996 and November 2028.
The City of Albuquerque (the "City") franchise expired in early 1992. Customers
in the area covered by the City franchise represent approximately 46% of the
Company's 1995 total electric operating revenues, and no other franchise area
represents more than 6.9%. These franchises are agreements that provide the
Company access to public rights-of-way for placement of the Company's electric
facilities. The Company remains obligated under state law to provide service to
customers in the franchise area even in the absence of a franchise agreement
with the City. (See PART II, ITEM 7. -- "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- OTHER ISSUES FACING THE COMPANY
- -- ALBUQUERQUE FRANCHISE ISSUES".)
Power Sales
For the years 1991 through 1995, retail KWh sales have grown at a
compound annual rate of approximately 4.1%. The Company's system and off-system
sales (revenues and energy consumption) and system peak demands in summer and
winter are shown in the following tables:
<TABLE>
<CAPTION>
ELECTRIC SALES BY MARKET
(Thousands of dollars)
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Retail .......................... $485,568 $506,286 $471,099 $455,387 $444,594
Firm-requirements wholesale ..... $ 20,282 $ 22,296 $ 18,468 $ 20,173 $ 22,390
Other contracted off-system sales $ 43,158+ $ 54,862+ $ 56,214+ $ 62,348 $ 55,581
Economy energy sales ............ $ 17,509+ $ 19,663+ $ 25,213+ $ 40,770 $ 29,665
</TABLE>
<TABLE>
<CAPTION>
ELECTRIC SALES BY MARKET
(Megawatt hours)
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Retail .................... 6,029,365 5,953,151 5,446,788 5,358,246 5,139,954
Firm-requirements wholesale 447,629 489,182 342,137 322,177 308,390
Other contracted off-system
sales .................. 594,367 1,403,480 1,450,966 1,198,250 1,223,212
Economy energy sales ...... 1,548,517 1,469,271 1,582,113 2,164,991 1,559,939
</TABLE>
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+ Due to the provision for the loss associated with the M-S-R contingent
power purchase contract recognized in 1992, revenues from other
contracted off-system sales and economy energy sales were reduced by a
total of $7.3 million, $25.0 million and $20.5 million in 1995, 1994 and
1993, respectively.
SYSTEM PEAK DEMAND*
(Megawatts)
1995 1994 1993 1992 1991
--------- --------- --------- --------- --------
Summer.................... 1,247 1,189 1,104 1,053 1,018
Winter.................... 1,076 1,040 982 992 955
- -----------
* System peak demand relates to retail and firm-requirements wholesale
customers only.
2
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During 1995 and 1994, the Company's sales in the off-system markets
accounted for approximately 24.9% and 30.8%, respectively, of its total KWh
sales and approximately 11.8% and 15.8% (before reduction of revenues from the
M-S-R contingent power purchase contract, which were accounted for in the
determination of the provision for loss recorded in 1992), respectively, of its
total revenues from energy sales. During 1995, the Company's major off-system
sale contracts in effect were with SDG&E and APPA.
The SDG&E contract requires SDG&E to purchase 100 MW from the Company
through April 2001. On October 27, 1993, SDG&E filed a complaint with the FERC
against the Company, alleging that certain charges under this 1985 power
purchase agreement are unjust, unreasonable and unduly discriminatory. SDG&E is
requesting that the FERC investigate the rates charged under the agreement. The
relief, if granted, would reduce annual demand charges paid by SDG&E by up to
$11 million per year from the date of the ruling through April 2001, and could
require a refund of up to approximately $14 million. The Company responded to
the complaint on December 8, 1993, and SDG&E and the Company filed subsequent
pleadings. The FERC has not issued a ruling in the case and has not indicated
when or if the complaint will be considered. The Company believes that the
complaint is without merit, and the Company intends to vigorously resist the
complaint.
The APPA contract requires APPA to purchase varying amounts of power from
the Company through May 2008 and allows APPA to make adjustments to the purchase
amounts subject to certain notice provisions. APPA provided notice that it was
invoking its option to reduce the power demand in 1995, resulting in a peak
demand of 89 MW.
The Company furnished firm-requirements wholesale power in New Mexico in
1995 to the cities of Farmington and Gallup, TNP and Plains. Plains terminated
its contract for 10 MW in 1995. The Company is committed to provide service to
the City of Gallup through April 2003. Average monthly demands under the City of
Gallup contract for 1995 were approximately 26 MW. TNP is currently purchasing
36 MW but has provided notice that it will reduce its purchase to 15 MW for 1996
and 1997. TNP may adjust its annual demand between 15 MW and 40 MW with one
year's notice and may terminate service with two years' notice. No
firm-requirements wholesale customer accounted for more than 1.6% of the
Company's total electric operating revenues for the year ended December 31,
1995.
Sources of Power
As of December 31, 1995, the total net generation capacity of facilities
owned or leased by the Company was 1,506 MW.
In addition, the Company has a power purchase contract with SPS for up to
200 MW from May 1995 through May 2011. The Company may reduce its purchases from
SPS by 25 MW annually upon three years' notice. The Company provided such notice
in 1995 to reduce the purchase by 25 MW in 1999. Also, the Company has 39 MW of
contingent capacity obtained from El Paso under a transmission capacity for
generation capacity trade arrangement that increases to 70 MW from 1998 through
2003. In addition, the Company is interconnected with various utilities for
economy interchanges and mutual assistance in emergencies.
The Company anticipates the need for approximately 100 to 200 MW of
additional generating capacity in the 1998 through 2000 timeframe, and is
currently pursuing its options to meet these capacity needs.
3
<PAGE>
Fuel and Water Supply
The percentages of the Company's generation of electricity (on the basis
of KWh) fueled by coal, nuclear fuel and gas and oil, and the average costs to
the Company of those fuels (in cents per million BTU), during the past five
years were as follows:
Coal Nuclear Gas and Oil
------------------- ------------------- -------------------
Percent of Average Percent of Average Percent of Average
---------- ------- ---------- ------- ---------- -------
1991............ 67.1 167.9 32.9 67.9 -- 216.5
1992............ 69.2 161.7 30.5 59.8 0.3 239.7
1993............ 72.9 164.7 26.7 58.1 0.4 331.7
1994............ 72.0 162.9 27.8 58.5 0.2 321.7
1995............ 67.9 168.3 31.9 49.1 0.2 242.2
The estimated generation mix for 1996 is 71.5% coal, 28.4% nuclear and
0.1% gas and oil. Due to locally available natural gas and oil supplies, the
utilization of locally available coal deposits and the generally abundant supply
of nuclear fuel, the Company believes that adequate sources of fuel are
available for its generating stations.
Coal
The coal requirements for SJGS are being supplied by SJCC, a wholly-owned
subsidiary of BHP, from certain Federal, state and private coal leases under a
Coal Sales Agreement, pursuant to which SJCC will supply processed coal for
operation of SJGS until 2017. BHP guaranteed the obligations of SJCC under the
agreement, which contemplates the delivery of approximately 121 million tons of
coal during its remaining term. Such amount would supply substantially all the
requirements of SJGS through approximately 2017. The primary sources of coal are
a mine adjacent to SJGS and a mine located approximately 25 miles northeast of
SJGS in the La Plata area of northwestern New Mexico. The Company is currently
discussing with SJCC alternatives for securing both short and long term fuel
resource requirements which at this time are uncommitted. As a part of this
discussion, the Company is also negotiating other issues which may result in
modifications to certain Coal Sales Agreement terms and provisions which include
but are not limited to cost recovery and pricing. On September 1, 1995, the
parties executed an amendment to the Coal Sales Agreement. The amendment
provides for flexibility in coal sourcing. Mining operations are being shifted
over time to the La Plata Mine and several newly introduced sources including
expanded La Plata reserves and a new lease contiguous with the existing San Juan
Mine. While the savings in fuel cost over the life of the contract are
continuing to be developed, it is currently estimated that the Company will save
approximately $200 million of coal fuel costs during the period 1996 through
2004. The average cost of fuel, including ash disposal and land reclamation
costs, for SJGS for the years 1993, 1994 and 1995 was 177.4 cents, 172.1 cents
and 184.6 cents, respectively, per million BTU ($34.59, $33.62 and $35.75 per
ton, respectively).
Four Corners is supplied with coal under a fuel agreement between the
owners and BHP, under which BHP agreed to supply all the coal requirements for
the life of the plant. BHP holds a long-term coal mining lease, with options for
renewal, from the Navajo Nation and operates a strip mine adjacent to Four
Corners with the coal supply expected to be sufficient to supply the units for
their estimated useful lives. The average cost of fuel, including ash disposal
and land reclamation costs, for the years 1993, 1994 and 1995 at Four Corners
was 114.9 cents, 125.8 cents and 113.4 cents, respectively, per million BTU
($20.11, $22.03 and $20.04 per ton, respectively).
4
<PAGE>
Natural Gas
The natural gas used as fuel for the Company's Albuquerque electric
generating plant (Reeves Station) is delivered by PNMGS. (See "NATURAL GAS
OPERATIONS".) In addition to rate changes under filed tariffs, the Company's
cost of gas increases or decreases according to the average cost of the gas
supply.
Nuclear Fuel
The fuel cycle for PVNGS is comprised of the following stages: (1) the
mining and milling of uranium ore to produce uranium concentrates, (2) the
conversion of uranium concentrates to uranium hexafluoride, (3) the enrichment
of uranium hexafluoride, (4) the fabrication of fuel assemblies, (5) the
utilization of fuel assemblies in reactors, and (6) the storage of spent fuel
and the disposal thereof. The Company has made arrangements through contract
flexibilities to obtain quantities of uranium concentrates anticipated to be
sufficient to meet its share of uranium concentrates requirements through 2000.
The Company's existing contracts and options could be utilized to meet 75% of
such requirements in 2001 and 2002 and 40% of requirements from 2003 through
2007. The Company understands that other PVNGS participants have made
arrangements for the uranium concentrate requirements through 2000. Their
existing contracts and options could be utilized to meet 80% of requirements in
1998 and 1999 and 70% of requirements from 2000 through 2006. The PVNGS
participants, including the Company, contracted for all conversion services
required through 2000 with options for up to 70% through 2002. The PVNGS
participants, including the Company, also have an enrichment services contract
with USEC which obligates USEC to furnish enrichment services required for the
operation of the three PVNGS units over a term expiring in September 2002, with
options to continue through September 2007.
Existing spent fuel storage facilities at PVNGS have sufficient capacity
with certain modifications to store all fuel expected to be discharged from
normal operation of all of the PVNGS units through at least the year 2005.
Pursuant to the Nuclear Waste Policy Act of 1982, as amended in 1987 (the "Waste
Act"), DOE is obligated to accept and dispose of all spent nuclear fuel and
other high-level radioactive wastes generated by all domestic power reactors.
The NRC, pursuant to the Waste Act, also requires operators of nuclear power
reactors to enter into spent fuel disposal contracts with DOE. APS, on its own
behalf and on behalf of the other PVNGS participants, executed a spent fuel
disposal contract with DOE. The Waste Act also obligates DOE to develop the
facilities necessary for the permanent disposal of all spent fuel generated and
to be generated by domestic power reactors and to have the first such facility
in operation by 1998 under prescribed procedures. In November 1989, DOE reported
that such a permanent disposal facility will not be in operation until 2010. As
a result, under DOE's current criteria for shipping allocation rights, PVNGS's
spent fuel shipments to the DOE permanent disposal facility would begin in
approximately 2025. In addition, APS believes that on-site storage of spent fuel
may be required beyond the life of the PVNGS Units. APS currently believes that
alternative interim spent fuel storage methods are or will be available on-site
or off-site for use by PVNGS to allow its continued operation beyond 2005 and to
safely store spent fuel until DOE's scheduled shipments from PVNGS begin.
Currently, low-level radioactive waste is being stored on-site. A new
low-level waste facility was built in 1995 on the PVNGS site. The new facility
has the capability to store an amount of waste equivalent to 10 years of normal
operation of PVNGS. APS, the operating agent of PVNGS, is currently evaluating
its options of shipping low-level waste to facilities that have reopened or
continuing to store the waste in the new facility.
While believing that scientific and financial aspects of the issues with
respect to spent fuel and low-level waste can be resolved satisfactorily, APS
acknowledges that their ultimate resolution in a timely fashion will require
political resolve and action on national and regional scales which it is less
able to predict.
5
<PAGE>
Water Supply
Water for Four Corners and SJGS is obtained from the San Juan River. (See
ITEM 3. -- "LEGAL PROCEEDINGS -- SAN JUAN RIVER ADJUDICATION".) BHP holds rights
to San Juan River water and has committed a portion of such rights to Four
Corners through the life of the project. The Company and Tucson have a contract
with the United States Bureau of Reclamation for consumption of 16,200 acre feet
of water per year for SJGS, which contract expires in 2005, and in addition, the
Company was granted the authority to consume 8,000 acre feet of water per year
under a state permit that is held by BHP. The Company is of the opinion that
sufficient water is under contract for SJGS until 2005.
On January 29, 1993, the U.S. Fish and Wildlife Service proposed a
portion of the San Juan River as critical habitat for two fish species. This
designation may impact uses of the river and its flood plains and will require
certain analysis under the Endangered Species Act of 1973 of all significant
Federal actions. Renewal of the SJGS water contract is considered a significant
Federal action.
Due to extensive lead times required to renew the water rights contract,
the Company has formally initiated the renewal and extension process for
requesting rights through the year 2025. The Company is actively conducting an
environmental assessment with the Bureau of Reclamation and a biological
assessment with the U.S. Fish and Wildlife Service. These studies are required
by the Federal agencies before the existing water contract can be renewed. The
Company is currently unable to predict the outcome of these matters.
Sewage effluent used for cooling purposes in the operation of the PVNGS
units has been obtained under contracts with certain municipalities in the area.
The contracted quantity of effluent exceeds the amount required for the three
PVNGS units. The validity of these effluent contracts is the subject of
litigation in state and Federal courts. (See ITEM 3. -- "LEGAL PROCEEDINGS --
PVNGS WATER SUPPLY LITIGATION".)
NATURAL GAS OPERATIONS
On June 30, 1995, the Company, Gathering Company and Processing Company
sold substantially all of their gas gathering and processing facilities. The
Company believes that the sale allows the Company to focus on providing gas
transportation and retail gas services to New Mexico gas consumers while
maintaining its flexibility in accessing competitively priced, reliable and
secure gas supplies. (See PART II, ITEM 7. -- "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- OTHER ISSUES FACING
THE COMPANY -- SALE OF GAS GATHERING AND PROCESSING ASSETS".)
Service Area and Customers
The Company's gas operating division, PNMGS, distributes natural gas to
most of the major communities in New Mexico, including Albuquerque and Santa Fe,
serving approximately 393,000 customers as of December 31, 1995. The Albuquerque
metropolitan area accounts for approximately 54.7% of the total sales-service
customers. PNMGS holds long-term, non-exclusive franchises with varying
expiration dates in all incorporated communities requiring franchise agreements.
PNMGS completed franchise negotiations with the City of Santa Fe extending the
franchise through October 25, 2020. PNMGS' customer base includes both
"sales-service" customers and "transportation-service" customers. Sales-service
customers purchase natural gas and receive transportation and delivery services
from PNMGS for which PNMGS receives both cost-of-gas and cost-of-service
revenues. Cost-of-gas revenues collected from sales-service customers are a
recovery of the cost of purchased gas in accordance with NMPUC rules and
regulations and, in that sense, do not affect the net earnings of the Company.
6
<PAGE>
Transportation-service customers, who procure gas independently of PNMGS and
contract with PNMGS for transportation and related services, provide PNMGS with
cost-of-service revenues only. Transportation services are provided to gas
marketers generally for delivery to locations throughout the PNMGS distribution
systems, to natural gas producers generally for delivery to interstate pipelines
and directly to end-users. PNMGS provided gas transportation deliveries to
approximately 1,200 gas marketers and producers during 1995.
For the twelve months ended December 31, 1995, PNMGS had throughput of
approximately 110 million decatherms, including sales of 37.3 million decatherms
to sales-service customers. No single "sales-service" customer accounted for
more than 1.5% of PNMGS' therm sales in 1995. During 1995, approximately 63.7%
of the PNMGS' total gas throughput was related to transportation gas deliveries.
PNMGS' transportation rates are unbundled, and transportation customers only pay
for the amount of transportation service they receive. PNMGS' total operating
revenues for the year ended December 31, 1995, were approximately $218.0
million. Cost-of-gas revenues, received from sales-service customers, accounted
for approximately 39.7% of PNMGS' total operating revenues. Since a major
portion of PNMGS' load is related to heating, levels of therm sales are affected
by the weather. Approximately 44.2% of PNMGS' total therm sales in 1995 occurred
in the months of January, February, November and December.
Natural Gas Supply
During the late 1980's, there were significant changes in the natural gas
industry brought about by Federal and state regulations which dramatically
altered the way gas is bought, transported and sold nationwide. These changes
required PNMGS to reform or terminate certain natural gas purchase contracts
which required PNMGS to take gas in excess of demand. This process resulted in
breach of contract claims from some producers. PNMGS has been able to resolve
substantially all of the producer litigation and reform its supply portfolio so
that it better matches the demands of PNMGS' sales-service customers. These
reformations have also allowed PNMGS to seek new sources of gas supplies through
pipeline interconnects which have created a more flexible and reliable supply
portfolio. PNMGS obtains its supply of natural gas primarily from sources within
New Mexico pursuant to contracts with producers and marketers. These contracts
are generally sufficient to meet the PNMGS's peak-day demand.
PNMGS serves certain cities which depend on EPNG or Transwestern Pipeline
Company for transportation of gas supplies. Because these cities are not
directly connected to PNMGS's transmission facilities, gas transported by these
companies is the sole supply source for those cities. Such transportation is
regulated by FERC. As a result of FERC Order 636, PNMGS' options for
transporting gas to such cities and other portions of its distribution system
have increased.
7
<PAGE>
Natural Gas Sales
The following table shows gas throughput by customer class**:
GAS THROUGHPUT
(Millions of decatherms)
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
Residential ............ 25.9 27.1 28.0 27.1 26.2
Commercial ............. 8.9 9.8 10.4 10.6 11.4
Industrial ............. 0.7 0.8 0.9 0.7 0.8
Public authorities...... 2.4 2.5 2.5 4.2 4.9
Irrigation ............. 1.2 1.3 1.3 1.1 1.4
Sales for resale........ 2.5 0.7 1.0 2.0 1.4
Unbilled ............... (1.8) (0.3) (0.6) 0.6 --
Transportation* ........ 69.8 90.2 91.8 73.6 62.6
Spot market sale ....... -- -- -- 0.9 1.6
------ ------ ------ ------ ------
109.6 132.1 135.3 120.8 110.3
====== ====== ====== ====== ======
The following table shows gas revenues by customer class**:
GAS REVENUES
(Thousands of dollars)
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
Residential .......... $ 125,290 $ 149,439 $ 149,796 $ 125,313 $ 137,436
Commercial ........... 32,328 42,725 44,575 37,222 46,676
Industrial ........... 1,873 2,905 3,369 2,063 2,754
Public authorities.... 7,939 9,969 9,694 12,313 17,711
Irrigation ........... 3,077 4,061 4,418 2,713 4,495
Sales for resale ..... 4,999 2,462 3,137 4,460 3,848
Unbilled ............. (2,430) 267 (1,573) 716 --
Transportation* ...... 22,172 27,592 26,729 18,753 16,997
Liquids .............. 13,414 16,090 18,724 26,427 30,500
Processing fees ...... 5,180 10,638 9,761 6,795 5,819
Spot market sales..... 42 -- 4 1,410 1,771
Other ................ 4,101 3,362 2,453 4,974 9,062
--------- --------- --------- --------- ---------
$ 217,985 $ 269,510 $ 271,087 $ 243,159 $ 277,069
========= ========= ========= ========= =========
- --------------------
* Customer-owned gas
** On June 30, 1995, the Company sold substantially all of the gas gathering
and processing assets of the Company and its gas subsidiaries. The above
information reflects the revenues and throughput of the gathering company
and processing company through this date.
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RATES AND REGULATION
The Company is subject to the jurisdiction of the NMPUC with respect to
its retail electric and gas rates, service, accounting, issuance of securities,
construction of major new generation and transmission facilities and other
matters. The FERC has jurisdiction over rates and other matters related to
wholesale electric sales.
FPPCAC
The Company's firm-requirements wholesale customers have a FPPCAC which
has an approximate 30-day time lag in implementation of the FPPCAC for billing
purposes. The Company's FPPCAC for its firm-requirement wholesale customers had
been at variance with the filed FERC tariffs. As a result, the Company filed a
petition with FERC on October 28, 1993 to request deviation from the filed FERC
tariffs for the period of July 1985 through January 1993. The Company's filing
indicated that the four firm-requirements wholesale customers benefitted during
that time period relative to the energy costs they would have been billed under
the application of the filed FERC tariffs. The four affected customers concur
with the Company's position and have filed a certificate of concurrence with
FERC. Discussions regarding the Company's filing with FERC staff have occurred,
but at this time no formal response has been given to the Company. The Company
has no indication of when a formal response will be received; however, the
Company does not anticipate any material adverse impact on the Company's
financial condition or results of operations as a result of this issue.
Fossil-Fueled Plant Decommissioning Costs
The Company's six owned or partially owned, in service and retired,
fossil-fueled generating stations are expected to incur dismantling and
reclamation costs as they are decommissioned. The Company's share of
decommissioning costs for all of its fossil-fueled generating stations is
projected to be approximately $141 million stated in 1995 dollars, including
approximately $24.0 million (of which $12.1 million has already been expended)
for Person, Prager and Santa Fe Stations which have been retired.
The Company is currently recovering estimated decommissioning costs from
NMPUC retail customers through its depreciation rates. Depreciation amounts for
the retired generating units are not being recovered.
Energy and Utility Related Subsidiaries
On June 23, 1995, the Company filed an application for authorization for
the creation of three wholly-owned subsidiaries to: (i) manage and operate water
and wastewater systems; (ii) pursue energy marketing, alternative fuel vehicle
services and energy management services; and (iii) pursue utility management
services and related energy management services for Federal installations and
large commercial customers. The Company 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. The NMPUC Staff
filed a motion on September 20, 1995 to have the case dismissed. On January 31,
1996, the hearing examiner assigned to the case recommended that the NMPUC deny
the Staff's motion. On February 5, 1996, the Staff filed a motion seeking to
have the Company file an immediate report on its non-regulated activities being
conducted without prior NMPUC approval; explain why NMPUC approval is not
required; and explain why sanctions should not be considered if approval is
required. On February 19, 1996, the Company filed its response describing its
non-utility (energy and utility related) activities and presenting the legal
authority demonstrating that prior NMPUC approval is not required. 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.
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Gas Rate Case
On August 28, 1995, the Company filed a request for a $13.3 million
increase in its retail natural gas sales and transportation rates. NMPUC Staff
and intervenors in the case filed their testimony on January 16, 1996. The Staff
recommended a $2.5 million rate decrease and the AG recommended a $14.7 million
rate decrease. The major issues in the case center around the Company's request
to recover certain costs associated with reservation fees, discounts given to
large and industrial transportation customers and losses incurred to reacquire
debt. The Company anticipates that it will have deferred as regulatory assets
approximately $22 million related to these items through July 1, 1996, the date
when rates are anticipated to go into effect. The Company will file its rebuttal
testimony on February 23, 1996 and hearings will begin on March 4, 1996.
Although the Company cannot predict the ultimate outcome of this case, the
Company believes that it has meritorious claims and will vigorously pursue the
recovery of these assets.
PGAC Continuation Filing
Retail gas rate schedules contain a PGAC which provides for timely
recovery of the cost of gas purchased for resale to its sales-service customers.
On April 20, 1993, PNMGS filed its application requesting authority to continue
the use of its PGAC. An item included in this application was a request to
recover reservation fees as a cost of gas through the PGAC. On October 26, 1995,
the Hearing Examiner issued a Recommended Decision allowing, among other items,
the continued use of the PGAC but recommended that reservation fees not be
recoverable through the PGAC. PNMGS filed an exception to the portion of the
Recommended Decision relating to reservation fees. PNMGS is awaiting final NMPUC
approval. PNMGS is attempting to recover these same reservation fees in the
ongoing general rate proceeding (see "Gas Rate Case" above). On February 19,
1996, the NMPUC issued an order requiring PNMGS to file supplemental testimony
regarding the volatile nature of its gas costs.
In a related proceeding, the NMPUC on September 18, 1995, issued a Notice
of Inquiry seeking comments as to whether the NMPUC rule that governs the
operation of PGACs should be amended. In November 1995, the Company joined with
the NMPUC Staff and the AG in recommending that such rule be substantially
rewritten.
Consolidation Issues
Pursuant to a prior NMPUC order, the Company filed an application in
December 1993 for NMPUC approval to combine certain customer service functions
of its gas and electric utility divisions in order to achieve more efficient
operations and to improve service to customers. At the same time, the Company
filed a separate request for a declaratory order from the NMPUC confirming that
the Company's realignment of senior corporate officers' responsibilities during
1993 complies with a 1984 NMPUC order placing certain organizational
restrictions on the operation of the gas and electric divisions. In 1994, the
NMPUC consolidated the two proceedings.
In January 1995, the Company and the staff of the NMPUC entered into a
stipulation regarding the consolidated cases. The stipulation provides for the
approval of the consolidation of certain customer service functions of the gas
and electric divisions, as proposed by the Company. The stipulation also
provides for the dismissal of the declaratory order proceeding without a
determination that the Company's 1993 or 1994 organizational structure was
either in compliance or not in compliance with the 1984 NMPUC order. In May
1995, the NMPUC issued its final order approving the stipulation. In its order,
the NMPUC stated that it was explicitly not ruling at this time on whether the
Company's 1993-1994 organization has harmed the public interest. The NMPUC also
approved the phase-in of consolidation of certain customer services for one
year. During this period, the Company is required to submit semi-annual reports
to the NMPUC on the costs and savings of customer service consolidation.
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Legislative Action
In the recent legislature session which ended February 15, 1996, the New
Mexico Legislature approved a constitutional amendment which would alter the
current state regulatory system relating to the electric utility industry in New
Mexico. If approved by voters at the next general election in November 1996, the
amendment to the state constitution would replace the existing NMPUC and State
Corporate Commission with a single, elected regulatory body. Beginning in 1999,
the new five-member "Public Regulation Commission" would regulate electric and
gas utilities as well as telecommunications, cable TV, insurance, trucking and
all other entities presently regulated under current state law. The Company is
neutral on this proposed change.
ENVIRONMENTAL FACTORS
The Company, in common with other electric and gas utilities, is subject
to stringent regulations for protection of the environment by both state and
Federal authorities. PVNGS is subject to the jurisdiction of the NRC, which has
authority to issue permits and licenses and to regulate nuclear facilities in
order to protect the health and safety of the public from radioactive hazards
and to conduct environmental reviews pursuant to the National Environmental
Policy Act. The Company believes that it is in compliance, in all material
respects, with the environmental laws. The Company does not currently expect
that material expenditures for environmental control facilities will be required
in 1996 and 1997.
The Clean Air Act
The Clean Air Act amendments of 1990 (the "Act") impose stringent limits
on emissions of sulfur dioxide and nitrogen oxides from fossil-fueled electric
generating plants. The Act is intended to reduce air contamination from every
sizeable source of air pollution in the nation. Electric utilities with
fossil-fueled generating units will be affected particularly by the section of
the Act which deals with acid rain. To be in compliance with the Act, many
utilities will be faced with installing expensive sulfur dioxide removal
equipment, securing low sulfur coal, buying sulfur dioxide emission allowances,
or a combination of these. Due to the existing air pollution control equipment
on the coal-fired SJGS and Four Corners, the Company believes that it will not
be faced with any material capital expenditures in order to be in compliance
with the acid rain provision of the Act. SJGS and Four Corners have installed
flow monitoring equipment and have completed certification testing of their
continuous emission monitoring equipment. Certification testing data was
submitted to the EPA on January 30, 1995, as required. Certification of the
monitoring systems by the EPA is expected. Under other provisions of the Act,
the Company will be required to obtain operating permits for its coal- and
gas-fired generating units and to pay annual fees associated with the operating
permit program. The New Mexico operating permit program was approved by the EPA
in November 1994. Operating permit applications were submitted to the state in
1995. The state has not issued any operating permits.
The Act also established the Grand Canyon Visibility Transport Commission
("Commission") and charged it with assessing adverse impacts on visibility at
the Grand Canyon. The Commission broadened its scope to assess visibility
impairment in mandatory Class I areas (parks and wilderness areas) located in
the Colorado Plateau ("Golden Circle"). The Commission must report to the EPA by
June 1996 on its findings and make recommendations regarding what actions, if
any, should be pursued in order to remedy the visibility impairment in the
Golden Circle. Depending on the recommendations of the Commission, the EPA may
require stricter controls on sources that may be contributing to the visibility
impairment. Both SJGS and Four Corners are located near the Golden Circle. The
exact nature and cost of additional controls, if any, that may be required as a
result of the recommendations cannot be estimated at this time.
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<PAGE>
For other environmental issues facing the Company, see PART II, ITEM 7.
- -- "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS --OTHER ISSUES FACING THE COMPANY -- ENVIRONMENTAL ISSUES -- Electric
Operations and ENVIRONMENTAL ISSUES -- Gas Operations".
ITEM 2. PROPERTIES
Substantially all of the Company's utility plant is mortgaged to secure
its first mortgage bonds.
ELECTRIC
The Company's electric generating stations in commercial service as of
December 31, 1995, were as follows:
Total Net
Generation
Type Name Location Capacity (MW)
- ---- ---- -------- -------------
Nuclear.......... PVNGS (a) Wintersburg, Arizona 390*
Coal............. SJGS (b) Waterflow, New Mexico 750
Coal............. Four Corners (c) Fruitland, New Mexico 192
Gas/Oil.......... Reeves Albuquerque, New Mexico 154
Gas/Oil.......... Las Vegas Las Vegas, New Mexico 20
-----
1,506
=====
* For load and resource purposes, the Company has notified the NMPUC
that it recognizes the maximum dependable capacity rating for PVNGS
to be 375 MW.
- -----------------
(a) The Company is entitled to 10.2% of the power and energy
generated by PVNGS. The Company has a 10.2% ownership interest
in Unit 3 and has leasehold interests in Units 1 and 2.
(b) SJGS Units 1, 2 and 3 are 50% owned by the Company; SJGS Unit 4
is 38.457% owned by the Company.
(c) Four Corners Units 4 and 5 are 13% owned by the Company.
Fossil-Fueled Plants
SJGS is located in northwestern New Mexico, and consists of four units
operated by the Company. Units 1, 2, 3 and 4 at SJGS have net rated capacities
of 316 MW, 312 MW, 488 MW and 498 MW, respectively. SJGS Units 1 and 2 are owned
on a 50% shared basis with Tucson. Unit 3 is owned 50% by the Company, 41.8% by
SCPPA and 8.2% by Tri-State Generation and Transmission Association, Inc. Unit 4
is owned 38.457% by the Company, 8.475% by Farmington, 28.8% by M-S-R, 7.2% by
Los Alamos, 10.04% by Anaheim and 7.028% by UAMPS. The Company's net aggregate
ownership in SJGS is 750 MW. In connection with the Company's sale to M-S-R in
December 1983 of a 28.8% interest in SJGS Unit 4, the Company agreed to purchase
under certain conditions 73.53% (105 MW) of M-S-R's capacity through April 30,
1995. The Company also agreed to market the energy associated with the remaining
26.47% portion of M-S-R's capacity through April 30, 1995.
The Company also owns 192 MW of net rated capacity derived from its 13%
interest in Units 4 and 5 of Four Corners located in northwestern New Mexico on
land leased from the Navajo Nation and adjacent to available coal deposits.
Units 4 and 5 at Four Corners are jointly owned with SCE, APS, Salt River
Project, Tucson and El Paso and are operated by APS.
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The Company owns 154 MW of generation capacity at Reeves Station in
Albuquerque, New Mexico, and 20 MW of generation capacity at Las Vegas Station
in Las Vegas, New Mexico. These stations are used primarily for peaking and
transmission support.
Nuclear Plant
The Company's Interest in PVNGS
The Company is participating in the three 1,270 MW units of PVNGS, also
known as the Arizona Nuclear Power Project, with APS (the operating agent), Salt
River Project, El Paso, SCE, SCPPA and The Department of Water and Power of the
City of Los Angeles. The Company has a 10.2% undivided interest in PVNGS, with
its interests in Units 1 and 2 held under leases. In September 1992, the Company
purchased approximately 22% of the beneficial interests in the PVNGS Units 1 and
2 leases for approximately $17.5 million. The Company's ownership and leasehold
interests in PVNGS amount to 130 MW per unit, or a total of 390 MW. PVNGS Units
1, 2 and 3 were declared in commercial service by the Company in January 1986,
September 1986 and January 1988, respectively. Commercial operation of PVNGS
requires full power operating licenses which were granted by the NRC.
Maintenance of these licenses is subject to NRC regulation.
During 1995, PVNGS was operated at a capacity factor of 83.6%. This is
the highest yearly capacity factor that has been attained at the plant. In
addition, PVNGS operating costs declined and the length of refueling outages was
significantly reduced. Recently, an independent organization that reviews
nuclear plants for safety and effectiveness of operation awarded PVNGS the
highest rating possible.
Steam Generator Tubes
For information concerning steam generator tubes, see PART II, ITEM 7. --
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS -- OTHER ISSUES FACING THE COMPANY -- PVNGS -- STEAM GENERATOR
TUBES".
Sale and Leaseback Transactions of PVNGS Units 1 and 2
In eleven transactions consummated in 1985 and 1986, the Company sold and
leased back its entire 10.2% interest in PVNGS Units 1 and 2, together with
portions of the Company's undivided interest in certain PVNGS common facilities.
In each transaction, the Company sold interests to an owner trustee under an
owner trust agreement with an institutional equity investor. The owner trustees,
as lessors, leased the interests to the Company under lease agreements having
initial terms expiring January 15, 2015 (with respect to the Unit 1 leases) or
January 15, 2016 (with respect to the Unit 2 leases). Each lease provides an
option to the Company to extend the term of the lease as well as a repurchase
option. The lease expense for the Company's PVNGS leases is approximately $66.3
million per year. Throughout the terms of the leases, the Company continues to
have full and exclusive authority and responsibility to exercise and perform all
of the rights and duties of a participant in PVNGS under the Arizona Nuclear
Power Project Participation Agreement and retains the exclusive right to sell
and dispose of its 10.2% share of the power and energy generated by PVNGS Units
1 and 2. The Company also retains responsibility for payment of its share of all
taxes, insurance premiums, operating and maintenance costs, costs related to
capital improvements and decommissioning and all other similar costs and
expenses associated with the leased facilities. On September 2, 1992, the
Company purchased approximately 22% of the beneficial interests in the PVNGS
Units 1 and 2 leases for $17.5 million. For accounting purposes, this
transaction was recorded as a purchase with the Company recording approximately
$158.3 million as utility plant and $140.8 million as long-term debt on the
Company's consolidated balance sheet. In connection with the $30 million retail
rate reduction, the Company wrote down the purchased beneficial interests in
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PVNGS Units 1 and 2 leases to $46.7 million. In March 1995, the Company retired
approximately $130 million of PVNGS lease obligation bonds ("LOBs").
Each lease describes certain events, "Events of Loss" or "Deemed Loss
Events", the occurrence of which could require the Company to, among other
things, (i) pay the lessor and the equity investor, in return for such
investor's interest in PVNGS, cash in the amount provided in the lease, which
amount, primarily because of certain tax consequences, would exceed such equity
investor's outstanding equity investment, and (ii) assume debt obligations
relating to the PVNGS lease. The "Events of Loss" generally relate to
casualties, accidents and other events at PVNGS, which would severely adversely
affect the ability of the operating agent, APS, to operate, and the ability of
the Company to earn a return on its interests in, PVNGS. The "Deemed Loss
Events" consist mostly of legal and regulatory changes (such as changes in law
making the sale and leaseback transactions illegal, or changes in law making the
lessors liable for nuclear decommissioning obligations). The Company believes
the probability of such "Events of Loss" or "Deemed Loss Events" occurring is
remote. Such belief is based on the following reasons: (i) to a large extent,
prevention of "Events of Loss" and some "Deemed Loss Events" is within the
control of the PVNGS participants, including the Company, and the PVNGS
operating agent, through the general PVNGS operational and safety oversight
process and (ii) with respect to other "Deemed Loss Events," which would involve
a significant change in current law and policy, the Company is unaware of any
pending proposals or proposals being considered for introduction in Congress or
any state legislative or regulatory body that, if adopted, would cause any such
events.
PVNGS Decommissioning Funding
For information concerning PVNGS decommissioning funding, see PART II,
ITEM 7. --"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS -- OTHER ISSUES FACING THE COMPANY -- PVNGS NUCLEAR
DECOMMISSIONING".
PVNGS Liability and Insurance Matters
The PVNGS participants have insurance for public liability payments
resulting from nuclear energy hazards to the full limit of liability under
Federal law. This potential liability is covered by primary liability insurance
provided by commercial insurance carriers in the amount of $200 million and the
balance by an industry-wide retrospective assessment program. The maximum
assessment per reactor under the retrospective rating program for each nuclear
incident occurring at any nuclear power plant in the United States is
approximately $79.3 million, subject to an annual limit of $10 million per
incident. Based upon the Company's 10.2% interest in the three PVNGS units, the
Company's maximum potential assessment per incident is approximately $24.3
million, with an annual payment limitation of $3 million. The insureds under
this liability insurance include the PVNGS participants and "any other person or
organization with respect to his legal responsibility for damage caused by the
nuclear energy hazard". The PVNGS participants maintain "all-risk" (including
nuclear hazards) insurance for nuclear property damage to, and decontamination
of, property at PVNGS in the aggregate amount of approximately $2.75 billion as
of January 1, 1996, a substantial portion of which must be applied to
stabilization and decontamination. The Company has also secured insurance
against a portion of the increased cost of generation or purchased power
resulting from certain accidental outages of any of the three PVNGS units if the
outage exceeds 21 weeks.
Other Electric Properties
Four Corners and a portion of the facilities adjacent to SJGS are located
on land held under easements from the United States and also under leases from
the Navajo Nation, the enforcement of which leases might require Congressional
consent. The risk with respect to the enforcement of these easements
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<PAGE>
and leases is not deemed by the Company to be material. However, the Company is
dependent in some measure upon the willingness and ability of the Navajo Nation
to protect these properties. (See PART II, ITEM 7. -- "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- OTHER ISSUES
FACING THE COMPANY -- TRANSMISSION ISSUES -- Transmission Right-of-Way".)
As of December 31, 1995, the Company owned, jointly owned or leased 2,789
circuit miles of electric transmission lines, 5,279 miles of distribution
overhead lines, 3,109 cable miles of underground distribution lines (excluding
street lighting) and 225 substations.
NATURAL GAS
The natural gas property as of December 31, 1995 consisted primarily of
natural gas storage, transmission and distribution systems. Provisions for
storage made by the Company include ownership and operation of an underground
storage facility located near Albuquerque and an agreement with owners of a
unitized oil field located near Artesia, New Mexico, in which the Company has
injection and redelivery rights. The Company has agreed to terminate the storage
agreement with owners of the unitized oil field and plans to withdraw all gas
stored in that facility by April 1996. The transmission systems consisted of
approximately 1,256 miles of pipe with appurtenant compression facilities. The
distribution systems consisted of approximately 9,898 miles of pipe.
The Company leases approximately 98 miles of transmission pipe from the
DOE for transportation of natural gas to Los Alamos and to certain other
communities in northern New Mexico. The lease can be terminated by either party
on 30 days written notice, although the Company believes it has the right to use
the facility for two years after termination. The DOE has announced plans to
sell the pipeline and issued a draft Request for Proposal with a schedule to
complete the sale of the pipeline by September 30, 1996. Several right-of-way
and regulatory issues remain to be resolved making the scheduled completion date
questionable. The Company has been and will continue to be highly involved in
the process.
OTHER INFORMATION
The electric and gas transmission and distribution lines are generally
located within easements and rights-of-way on public, private and Indian lands.
The Company leases interests in PVNGS Units 1 and 2 and related property, EIP
and associated equipment, data processing, communication, office and other
equipment, office space, utility poles (joint use), vehicles and real estate.
The Company also owns and leases service and office facilities in Albuquerque
and in other operating divisions throughout its service territory.
ITEM 3. LEGAL PROCEEDINGS
PVNGS WATER SUPPLY LITIGATION
The validity of the primary effluent contract under which water necessary
for the operation of the PVNGS units is obtained was challenged in a suit filed
in January 1982 by the Salt River Pima-Maricopa Indian Community (the
"community") against the Department of the Interior, the Federal agency alleged
to have jurisdiction over the use of the effluent. The PVNGS participants,
including the Company, were named as additional defendants in the proceeding,
which is before the United States District Court for the District of Arizona.
The portion of the action challenging the effluent contract has been stayed
until the community litigates certain claims in the same action against the
Department of the Interior and other defendants. On October 21, 1988, Federal
legislation was enacted conforming to the requirements of a proposed settlement
that would terminate this case without affecting the validity of the primary
effluent contract. However, certain contingencies are to be performed before the
15
<PAGE>
settlement is finalized and the suit is dismissed. One of these contingencies is
the approval of the settlement by the court in the Lower Gila River Watershed
litigation referred to below.
The Company understands that a summons served on APS in early 1986
required all water claimants in the Lower Gila River Watershed of Arizona to
assert any claims to water on or before January 20, 1987, in an action pending
in the Maricopa County Superior Court. PVNGS is located within the geographic
area subject to the summons and the rights of the PVNGS participants to the use
of groundwater and effluent at PVNGS are potentially at issue in this action.
APS, as the PVNGS project manager, filed claims that dispute the court's
jurisdiction over the PVNGS participants' groundwater rights and their
contractual rights to effluent relating to PVNGS and, alternatively, seek
confirmation of such rights. No trial date has been set in this matter.
Although the foregoing matters remain subject to further evaluation, APS
expects that the described litigation will not have a material adverse impact on
the operation of PVNGS.
SAN JUAN RIVER ADJUDICATION
In 1975, the State of New Mexico filed an action entitled State of New
Mexico v. United States, et al., in the District Court of San Juan County, New
Mexico, to adjudicate all water rights in the "San Juan River Stream System".
The Company was made a defendant in the litigation in 1976. The action was
expected to adjudicate water rights used at Four Corners and at SJGS. (See ITEM
1. "BUSINESS -- ELECTRIC OPERATIONS -- Fuel and Water Supply".) The Company
cannot at this time anticipate the effect, if any, of any water rights
adjudication on the present arrangements for water at SJGS and Four Corners. It
is the Company's understanding that final resolution of the case cannot be
expected for several years.
PVNGS PROPERTY TAXES
On June 29, 1990, an Arizona state tax law was enacted, effective as of
December 31, 1989, which adversely impacted the Company's earnings in the years
of 1990 through 1995 by approximately $5 million per year, before income taxes.
On December 20, 1990, the PVNGS participants, including the Company, filed a
lawsuit in the Arizona Tax Court, a division of the Maricopa County Superior
Court, against the Arizona Department of Revenue, the Treasurer of the State of
Arizona, and various Arizona counties, claiming, among other things, that
portions of the new tax law are unconstitutional. In December 1992, the court
granted summary judgment to the taxing authorities, holding that the law is
constitutional. The PVNGS participants appealed this decision to the Arizona
Court of Appeals. On November 21, 1995, the Arizona Court of Appeals ruled in
favor of the PVNGS participants. Due to the significance of this decision, it is
anticipated that the case will be further pursued through the courts. The
Company cannot currently predict the ultimate outcome of this matter.
OTHER PROCEEDINGS
FederalDeposit Insurance Corporation ("FDIC") Litigation, formerly Resolution
Trust Corporation ("RTC") Litigation ("MDL-995")
On March 31, 1993, certain individuals ("the New Mexico Plaintiffs"),
formerly affiliated with BCD, whose general partners include Meadows, filed suit
("the New Mexico suit") in the United States District Court for the District of
New Mexico against numerous parties, including the Company, current and former
employees of the Company or Meadows, and MCB Financial Group, Inc., a Delaware
corporation ("MCB"), 50% of which stock is owned by Meadows. The New Mexico
Plaintiffs did not request any monetary relief against the Company or certain
current and former employees of the Company and Meadows but have
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<PAGE>
joined those parties in connection with insurance coverage and bad faith
insurance practices alleged against the insurance company which had issued a
directors and officers liability policy to various entities, including MCB and
BCD. The insurance allegations are made in connection with claims which were
then threatened by the RTC, as receiver for Western Savings & Loan Association
("Western"), against the Company and others. The New Mexico Plaintiffs also sued
the RTC for a declaration that they are not liable for any claims asserted by
the RTC involving Western and BCD. The Company and the current and former
employees of the Company or Meadows counterclaimed against the New Mexico
Plaintiffs and cross-claimed against the insurance company and the RTC in
connection with insurance coverage and bad faith insurance practices. In
addition, the Company and the current and former employees of the Company or
Meadows cross-claimed against the RTC, seeking a declaration of non-liability.
The RTC moved to transfer the case to the United States District Court
for the District of Arizona. On February 7, 1994, an order was entered
transferring the case in its entirety. Prior to the transfer, however, the New
Mexico magistrate judge issued a proposed order which, if accepted by the
district judge, would require the parties to enter into mediation of all the
claims. The parties to the New Mexico suit reached agreement on a dismissal
without prejudice of the claims remaining in that suit, and on April 22, 1995,
the Court entered an order dismissing the case without prejudice. Under the
terms of the proposed order of dismissal, a motion for sanctions filed against
the RTC by the Company and other parties to the suit (which asserts that RTC
engaged in bad faith settlement negotiations) remains pending before the Arizona
court.
On April 16, 1993, the Company and certain current and former employees
of the Company or Meadows were named as defendants in an action filed in the
United States District Court for the District of Arizona by the RTC, as receiver
for Western. Three of the individuals sued by the RTC have indemnity agreements
with the Company. The claims relate to alleged actions of the Company's or
Meadows' employees in 1987 in connection with a loan procured by BCD, whose
general partners include Meadows, from Western and the purchase by that
partnership of property owned by Western. The RTC 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 RTC 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. These
allegations involve claims against the Company for damages to Western caused by
other defendants and from other transactions to which BCD was not a party. The
Company is sued only on the Arizona racketeering claims. The RTC claims that
damages under the Arizona racketeering statute would be trebled under applicable
Arizona law. The prevailing parties on the Arizona racketeering claims could
seek their fees and costs from the parties who do not prevail.
In May 1994, the RTC filed a motion seeking to amend the complaint to
allege against the Company civil conspiracy, common law fraud, negligent
misrepresentation, aiding and abetting breach of fiduciary duties, aiding and
abetting common law fraud, aiding and abetting violation of Federal and Arizona
racketeering laws (all of which claims are already asserted against the
Company's current and former employees named in the suit) and claims seeking to
hold the Company liable on undisclosed principal and unjust enrichment theories.
The Company filed an opposition to the motion and, in September 1994, the Court
denied the RTC's motion to amend. Previously, the Court dismissed the RTC's
claims for aiding and abetting violations of the Federal and Arizona
racketeering laws against the Company, the current and former employees of the
Company or Meadows and others.
Subsequent to the Court's denial of the RTC's motion to amend the
complaint, the RTC filed a motion seeking to amend the case management order
previously entered by the Court. The purpose of the motion was to allow the RTC
to file an amended complaint which would include the allegations against the
17
<PAGE>
Company sought by the motion to amend that was denied by the Court in September
1994. On November 7, 1994, the Court denied this new motion.
On December 31, 1995, the RTC ceased to exist and its duties and
responsibilities were transferred to the FDIC. The FDIC has been substituted for
the RTC as plaintiff in MDL-995.
The Company and the current and former employees of the Company or
Meadows sued by the RTC continued to have settlement negotiations with the RTC
during its existence, but those efforts were not successful. Settlement
discussions will continue with the FDIC.
The Company continues to investigate all of the claims made by the FDIC
in this litigation and is vigorously defending those claims. The Company cannot
predict the ultimate outcome of the case but believes that the FDIC's
contentions are without merit and currently believes that the outcome will not
result in a material adverse impact on the Company's results of operations or
financial condition.
Four Corners
The Company owns a 13% ownership interest in Units 4 and 5 of Four
Corners located in northwestern New Mexico on land leased from the Navajo
Nation. APS is the operating agent. In July 1995, the Navajo Nation enacted the
Navajo Nation Air Pollution Prevention and Control Act, the Navajo Nation Safe
Drinking Water Act and the Navajo Nation Pesticide Act (collectively, the
"Acts"). By letter dated October 12, 1995, the Four Corners participants
requested the United States Secretary of the Interior (the "Secretary") to
resolve their dispute with the Navajo Nation regarding whether or not the Acts
apply to operation of Four Corners. The Four Corners participants subsequently
filed a lawsuit in the District Court of the Navajo Nation (the "Court"), Window
Rock District, seeking, among other things, a declaratory judgment that: (i) the
Four Corners leases and Federal easements preclude the application of the Acts
to the operation of Four Corners; and (ii) the Navajo Nation and its agencies
and courts lack adjudicatory jurisdiction to determine the enforceability of the
Acts as applied to Four Corners. On October 18, 1995, the Navajo Nation and the
Four Corners participants agreed to indefinitely stay the proceedings referenced
above so that the parties may attempt to resolve the dispute without litigation,
and have requested that the Secretary and the Court stay these proceedings. The
Company is unable to predict the outcome of this matter.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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<PAGE>
SUPPLEMENTAL ITEM. EXECUTIVE OFFICERS OF THE COMPANY
Executive officers, their ages, offices held with the Company in the past
five years and initial effective dates thereof, were as follows on December 31,
1995, except as otherwise noted:
Name Age Office Initial Effective Date
---- --- ------ ----------------------
B. F. Montoya...... 60 President and Chief Executive Officer August 1, 1993
M. P. Bourque...... 48 Senior Vice President, Energy Services December 6, 1994
Senior Vice President, Marketing and December 7, 1993
Customer Services
Senior Vice President, Marketing and March 2, 1993
Energy Management
Senior Vice President, Gas Management June 19, 1990
Services
M. D. Christensen.. 47 Senior Vice President, Customer Service January 9, 1996
and Public Affairs
Vice President, Public Affairs December 7, 1993
Vice President, Communications July 22, 1991
R. J. Flynn........ 53 Senior Vice President, Electric December 1, 1994
Services
M. H. Maerki....... 55 Senior Vice President and Chief December 7, 1993
Financial Officer
Senior Vice President, Administration March 2, 1993
and Chief Financial Officer
Senior Vice President and Chief June 1, 1988
Financial Officer
P. T. Ortiz........ 45 Senior Vice President, General December 6, 1994
Counsel and Secretary
Senior Vice President, Regulatory December 7, 1993
Policy, General Counsel and
Secretary
Senior Vice President, Public Policy, March 2, 1993
General Counsel and Secretary
Senior Vice President, General February 4, 1992
Counsel and Corporate Secretary
Senior Vice President and General October 14, 1991
Counsel
W. J. Real......... 47 Senior Vice President, Gas Services December 6, 1994
Senior Vice President, Utility December 7, 1993
Operations
Senior Vice President, Customer March 2, 1993
Service and Operations
Executive Vice President, Gas June 19, 1990
Operations
J. E. Sterba....... 40 Senior Vice President, Bulk Power December 6, 1994
Services
Senior Vice President, Corporate December 7, 1993
Development
Senior Vice President, Asset April 6, 1993
Restructuring
Senior Vice President, Retail January 29, 1991
Electric and Water Services
Senior Vice President, Business September 1, 1988
Development Group, Electric
and Water Operations
19
<PAGE>
Name Age Office Initial Effective Date
---- --- ------ ----------------------
J. A. Zanotti...... 55 Senior Vice President, Human Resources January 9, 1996
Vice President, Human Resources March 2, 1993
Senior Vice President, Human Resources July 26, 1990
and Communications
- -----------
All officers are elected annually by the board of directors of the
Company.
All of the above executive officers have been employed by the Company
and/or its subsidiaries for more than five years in executive or management
positions, with the exception of P. T. Ortiz, M. D. Christensen, B. F. Montoya
and R. J. Flynn. Prior to employment with the Company, P. T. Ortiz was employed
by U S WEST Communications during the period of January 1988 to October 1991 as
Chief Counsel- New Mexico. The principal business of U S WEST Communications is
telecommunications. Prior to employment with the Company, M. D. Christensen was
employed with Southern California Gas. During the period 1990 through 1991, M.
D. Christensen was Vice President of Planning. Prior to employment with the
Company, B. F. Montoya was employed with Pacific Gas and Electric Company
("PG&E") since 1989. In 1991, he was promoted to Senior Vice President and
General Manager of the Gas Supply Business Unit of PG&E. Prior to his employment
with PG&E, B. F. Montoya spent 31 years in the Civil Engineer Corps of the U.S.
Navy, performing a wide range of management and utility-related assignments. B.
F. Montoya achieved the rank of Rear Admiral when he became Commander, Naval
Facilities Engineering Command and Chief of Civil Engineers. R. J. Flynn has a
30-year history in the utility industry working with PG&E. Since 1989, R. J.
Flynn held the position of Regional Vice President, responsible for all gas and
electric utility operations in the San Joaquin Valley.
20
<PAGE>
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is traded on the New York Stock Exchange.
Ranges of sales prices of the Company's common stock, reported as composite
transactions (Symbol: PNM) for 1995 and 1994, by quarters, are as follows:
Range of
Quarter Ended Sales Prices
High Low
---- ---
1995:
December 31.............................................. 18 1/4 16 1/8
September 30............................................. 16 3/8 13 3/4
June 30.................................................. 14 1/4 12 3/8
March 31................................................. 13 7/8 12 1/4
Fiscal Year........................................... 18 1/4 12 1/4
1994:
December 31.............................................. 13 1/2 11 5/8
September 30............................................. 12 5/8 11 1/4
June 30.................................................. 13 3/8 11 3/8
March 31................................................. 13 5/8 11
Fiscal Year........................................... 13 5/8 11
On January 31, 1996, there were 20,382 holders of record of the Company's
common stock.
Cumulative Preferred Stock
While isolated sales of the Company's cumulative preferred stock have
occurred in the past, the Company is not aware of any active trading market for
its cumulative preferred stock. Quarterly cash dividends were paid on each
series of the Company's cumulative preferred stock at their stated rates during
1995 and 1994.
For a discussion of dividend restrictions on the Company's common and
preferred stock and the 1995 preferred stock redemption, see note 4 of the notes
to consolidated financial statements and ITEM 7. --"MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- LIQUIDITY AND
CAPITAL RESOURCES -- Financing Capability and Dividend Restrictions".
21
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
(In thousands except per share amounts and ratios)
<S> <C> <C> <C> <C> <C>
Total Operating Revenues*............... $ 808,465 $ 904,711 $ 873,878 $ 851,953 $ 857,168
Net Earnings (Loss)..................... $ 75,562 $ 80,318 $ (61,486)** $ (104,255)+ $ 22,960
Earnings (Loss) per Common
Share................................ $ 1.72 $ 1.77 $ (1.64)** $ (2.67)+ $ 0.32
Total Assets............................ $ 2,035,669 $ 2,203,265 $ 2,212,189 $ 2,375,582 $ 2,344,332
Preferred Stock with Mandatory
Redemption Requirements.............. -- $ 17,975 $ 24,386 $ 25,700 $ 26,982
Long-Term Debt, less Current
Maturities........................... $ 728,843 $ 752,063 $ 957,622 $ 911,252 $ 786,279
Common Stock Data:
Market price per common
share at year end................. $ 17.625 $ 13.00 $ 11.25 $ 12.375 $ 9.75
Book value per common share
at year end....................... $ 16.82 $ 15.11 $ 13.29 $ 15.00 $ 17.69
Average number of common
shares outstanding................ 41,774 41,774 41,774 41,774 41,774
Return on Average Common
Equity............................... 10.7% 12.4% (10.7)% (15.0)% 1.8%
Capitalization:
Common stock equity.................. 48.6% 43.2% 34.8% 38.6% 45.8%
Preferred stock:
Without mandatory
redemption requirements......... 0.9 4.1 3.7 3.6 3.7
With mandatory redemption
requirements.................... -- 1.2 1.5 1.6 1.7
Long-term debt, less current
maturities........................ 50.5 51.5 60.0 56.2 48.8
------------ ------------ ------------ ------------ ------------
100.0% 100.0% 100.0% 100.0% 100.0%
============ ============ ============ ============ ============
</TABLE>
- -----------
* The Company changed its method of accounting for unbilled revenues in 1992.
** Includes the write-down of the 22% beneficial interests in the PVNGS Units
1 and 2 leases purchased by the Company, the write-off of certain
regulatory assets and other deferred costs and the write-off of certain
PVNGS Units 1 and 2 common costs, aggregating $108.2 million, net of taxes
($2.59 per share).
+ Includes the write-down of the Company's investment in PVNGS Unit 3 and the
provision for loss associated with the M-S-R power purchase contract,
aggregating $126.2 million, net of taxes ($3.02 per share).
The selected financial data should be read in conjunction with the
consolidated financial statements, the notes to consolidated financial
statements and Management's Discussion and Analysis of Financial Condition and
Results of Operations.
22
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's assessment of the Company's financial
condition and the significant factors affecting the results of operations. This
discussion should be read in conjunction with the Company's consolidated
financial statements.
OVERVIEW
Competitive Electric Market
The electric utility industry is currently undergoing a period of
fundamental change intended to promote a competitive environment in the retail
and wholesale energy marketplaces. Legislators and regulators at both the state
and Federal level are considering whether, and how, to promote competition among
suppliers of electricity and how to provide customers with choice among
suppliers.
At the Federal level, the FERC promulgated a Notice of Proposed Rule Making
("Mega-NOPR") in March 1995, which proposes to require utilities to unbundle
their generation and transmission services and to provide open access
transmission. The Mega-NOPR also supplemented a prior NOPR concerning the
appropriate treatment of stranded asset costs associated with the transition.
Specifically, the FERC stated that recovery of legitimate and verifiable
stranded asset costs is critical to the successful transition of the electric
utility industry from a tightly regulated cost-of-service industry to an open
transmission access, competitively priced industry. The Company in its response
to the Mega-NOPR supported the FERC initiative toward open access transmission,
but requested that all transmission asset owners, including municipal and
Federal, be subject to the same requirements in order to establish a level
playing field for all participants in the electric utility industry. The Company
also agreed with the FERC regarding the proposed recovery of stranded asset
costs. A final decision on the Mega-NOPR is expected in the middle of 1996. On
January 22, 1996, a U.S. Senate bill, "Electricity Competition Act of 1996" was
introduced, providing a national framework for a competitive electric industry
by no later than the year 2010. The bill provides for recovery of stranded asset
costs. On February 14, 1996, the Council of Economic Advisors issued an economic
report to Congress in which it cautioned that electric industry competition
should ensure competitive benefits to all power buyers and should not aggravate
pollution or cause supply cuts to the poor. The report favors recovery of
stranded asset costs borne by all parties on whose behalf the stranded costs
were incurred, including customers that switch to other suppliers.
Representative Dan Schaeffer, Chairman of the Energy Subcommittee of the House
of Commerce Committee, has announced that he plans to conduct hearings on
electric industry restructuring, possibly beginning this summer. The Company
does not expect Congressional legislation to pass this year, but does expect
Congressional interest to continue next year.
In November 1995, after three years of study, the Integrated Water and
Resource Planning Committee of the New Mexico State Legislature (the "IWRPC")
issued a resolution reporting its findings on the advantages and disadvantages
of retail wheeling and alternative restructuring schemes applicable to the
electric power industry in New Mexico. The IWRPC's recommendation stated that
any proposed restructuring (i) must benefit all ratepayers in the state, (ii)
must maintain and possibly encourage the financial health and economic viability
of each of the state's utilities, (iii) must provide for appropriate protection
from unfair or advantaged competition from utilities or others from outside the
state, and (iv) must share equitably any costs, including stranded asset costs,
among the varied interests benefitted. The IWRPC also recommended that the
NMPUC, under legislative direction and guidance, should monitor and evaluate the
electric power industry and applicable market influences and factors and report
its findings, conclusions and recommendations to the New Mexico State
Legislature for legislative approval and action, as necessary, before any
proposed restructuring may be implemented. The resolution further indicated that
23
<PAGE>
this continuing evaluation was necessary because of continuing changes even
though restructuring and retail wheeling are not justified or in the public
interest at this time. The IWRPC resolution was presented to the full
Legislature as a Senate Joint Memorial. It was unanimously passed by the Senate
and the House.
In November 1995, the NMPUC issued a Notice of Inquiry regarding the
restructuring of regulation of the electric utility industry in New Mexico. The
NMPUC is seeking input on a variety of questions related to competition, retail
wheeling and state vs. Federal jurisdiction. The Company in its February 15,
1996 response stated that it believes that: (i) competition and customer choice
may be beneficial to all affected interests in New Mexico if done appropriately
and (ii) in order to achieve restructuring, there must be cooperative state and
Federal action to avoid prolonged uncertainty and litigation, as well as to
avert inconsistent state actions that would inhibit the development of
competitive markets and restrict the benefits that they may provide. The Company
proposed a five-year period to accomplish the transition to a workable
competitive market. The Company also stated that it supports action by the
United States Congress to clarify boundaries between state and Federal
jurisdiction over the electric utility industry, and to ensure that retail
wheeling can be implemented in a manner that ensures fair competition and
provides utilities the opportunity to recover all stranded asset costs.
Although it is uncertain as to the ultimate outcome of possible open access
or retail wheeling initiatives, the Company will continue to be active at both
the state and Federal levels in the public policy debate on the restructuring of
the electric utility industry. By working with customers, regulators and
legislators, the Company believes that an agreement will be reached that will
protect the interests of stockholders as well as offer the potential benefits of
a competitive marketplace to all customers.
Uncertainties
The future structure of the industry, the form and timing of competition
and the method of regulation in a competitive environment remain uncertain. If
retail wheeling is implemented, it is possible that, based on other deregulated
industries' experiences, retail energy prices could drop significantly. Should
that be the case, the value of a utility's assets could be affected
significantly in the transition to a more competitive market from a traditional
rate regulated environment. Currently, the Company's generation costs are above
those of neighboring utilities to the north and east of the Company's service
territory.
The Company believes that the 1994 electric retail rate reduction improved
its competitive position, but recognizes that lower cost producers may have an
advantage if the regulatory framework changes significantly towards retail
wheeling. The Company's owned nuclear capacity is currently valued at
approximately $900 per KW. If the Company were required to value its leased
nuclear capacity at the same level as its owned nuclear capacity, it would be
valued at approximately $180 million versus approximately $560 million. If there
were no provision for the recovery of stranded asset costs, the Company would be
required to charge against earnings approximately $380 million.
Preparation for the Changes
In order to mitigate the exposures associated with a competitive electric
market and transition into this changing environment, the Company established
the following strategic plan in 1995: (i) secure financial flexibility by
retiring debt, (ii) control operation and maintenance costs, (iii) focus on
maximizing shareholder value for the nuclear generation assets, and (iv) develop
new business opportunities in the energy and utility related area. As part of
this plan, the Company restructured its operation into four distinctive business
units, each targeted at a specific segment of its customer base with emphasis on
being more customer oriented and responsive to the changing competitive
environment. The four business units are as follows: (i) Electric Services, (ii)
Gas Services, (iii) Bulk Power Services and (iv) Energy Services.
24
<PAGE>
In order to maximize value of the nuclear generation assets, the Company's
board of directors (the "Board"), at its December 5, 1995 meeting, confirmed
that it is in the best interest of the Company at this time to focus its efforts
and resources on maximizing shareholder value from PVNGS as an asset (leased and
owned) of the Company rather than disposing of it. Growth in the region, rapid
growth in the Company's own local service territory and the continuous
improvement in the operating performance of the plant were all factors in the
change of approach. The Board stated that the Company no longer considers it to
be a goal to dispose of its interests in PVNGS.
In conjunction with the development of new business opportunities, the
Company focused on three energy and utility related activities under its Energy
Services Unit. These activities will provide energy marketing, alternative fuel
vehicle services and energy management services focused on residential and small
customers, management services for water and wastewater systems and utility
related management and operation services for Federal installations and other
large commercial institutions. The Company believes that successful operation of
these ventures will better position the Company in an increasingly competitive
utility environment. The Company is currently seeking NMPUC approval for
investment in energy and utility related subsidiaries under the Company's
general diversification plan. The NMPUC Staff filed a motion in September 1995
to have the case dismissed. On January 31, 1996, the hearing examiner assigned
to the case recommended that the NMPUC deny the Staff's motion. On February 5,
1996, the Staff filed a motion seeking to have the Company file an immediate
report on its non-regulated activities being conducted without prior NMPUC
approval; explain why NMPUC approval is not required; and explain why sanctions
should not be considered if approval is required. On February 19, 1996, the
Company filed its response describing its non-utility (energy and utility
related) activities and presenting the legal authority demonstrating that prior
NMPUC approval is not required. 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.
LIQUIDITY AND CAPITAL RESOURCES
Capital Requirements
Total capital requirements include construction expenditures as well as
other major capital requirements, including retirement of long-term debt,
preferred stock and long-term debt sinking funds and preferred stock dividend
requirements. The main focus of the construction program is upgrading generating
systems, upgrading and expanding the electric and gas transmission and
distribution systems, and purchasing nuclear fuel. Total capital requirements
for 1995 and projections for 1996-2000 are $367.4 million and $676.8 million,
respectively. These estimates are under continuing review and subject to
on-going adjustment.
The Company currently anticipates that internal cash generation will be
sufficient to meet capital requirements during 1996 through 2000. To cover the
difference in the amounts and timing of cash generation and cash requirements,
the Company intends to utilize short-term borrowings under its liquidity
arrangements.
Liquidity and Financing
The Company's construction expenditures for 1995 were entirely funded
through cash generated from operations. In addition to cash flow from
operations, the Company received approximately $206.5 million from the sale of
gas gathering and processing assets and the Company's water division. During
1995, the Company retired approximately $133 million of PVNGS LOBs, redeemed, at
par, $64 million of the Company's cumulative preferred stock and retired
approximately $58 million of other long-term debt. At the end of 1995, the
Company had $96 million of temporary investments and no short-term borrowings.
25
<PAGE>
In addition, at year-end 1995, 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 (the "Accounts Receivable Facility") and
$11 million in local lines of credit. On January 30, 1996, the Company requested
NMPUC approval 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 Facility will expire in June 1998 and
includes a maximum allowed debt to capitalization ratio of 70%. As of December
31, 1995, such ratio was 65%.
The Company's ability to finance its construction program at a reasonable
cost and to provide for other capital needs is largely dependent upon its
ability to earn a fair return on equity, results of operations, credit ratings,
regulatory approvals and financial market conditions. Financing flexibility is
enhanced by providing a high percentage of total capital requirements from
internal sources and having the ability, if necessary, to issue long-term
securities, and to obtain short-term credit. All of the Company's securities are
rated below investment grade by Standard & Poor's Corp., Moody's Investors
Service and Fitch Investors Service, Inc., which may result in limited credit
markets being available and/or higher financing costs to the Company. Duff &
Phelps Credit Rating Co. maintains an investment grade rating for the Company's
first mortgage bonds, but continues to rate all other of the Company's
securities below investment grade.
Financing Capability and Dividend Restrictions
One impact of the Company's current ratings, together with covenants in the
Company's PVNGS Units 1 and 2 lease agreements (see PART I, ITEM 2. --
"PROPERTIES -- Nuclear Plant"), is to limit the Company's ability, without
consent of the owner participants and bondholders in the lease transactions, (i)
to enter into any merger or consolidation, or (ii) except in connection with
normal dividend policy, to convey, transfer, lease or dividend more than 5% of
its assets in any single transaction or series of related transactions. The
Facility and a reimbursement agreement associated with the letter of credit
supporting $37.3 million of pollution control revenue bonds impose similar
restrictions irrespective of credit ratings.
The issuance of first mortgage bonds by the Company is subject to earnings
coverage and bondable property provisions of the Company's first mortgage
indenture. The Company also has the capability under the mortgage indenture,
without regard to the earnings test but subject to other conditions, to issue
first mortgage bonds on the basis of certain previously retired bonds. At
December 31, 1995, based on the earnings test, the Company could have issued
approximately $124 million of additional first mortgage bonds, assuming an
annual interest rate of 9.25 percent. The Company's restated articles of
incorporation limit the amount of preferred stock which may be issued. Assuming
a preferred stock dividend rate of 9.75 percent, the Company could have issued
$381 million of preferred stock as of year-end.
The Company currently has no requirements for long-term financing during
the period of 1996 through 2000. However, during this period, the Company could
enter into long-term financings for the purpose of strengthening its balance
sheet and reducing its cost of capital. The Company continues to evaluate its
investment and debt retirement options to optimize its financing strategy and
earnings potential. The Company currently plans to retire approximately $90
million of long-term debt in 1996.
The Company has not declared dividends on its common stock since January
1989 and anticipates announcing a dividend plan sometime before the end of the
second quarter of 1996. The Company's board of directors reviews the Company's
dividend policy on a continuing basis. The resumption of common dividends is
dependent upon a number of factors including earnings and financial condition of
the Company and market conditions. The deficit in retained earnings was
eliminated during 1995.
26
<PAGE>
Capital Structure:
The Company's capitalization, including short-term debt, at December 31 is
shown below:
1995 1994 1993
---- ---- ----
Common Equity...................................... 48.6% 39.2% 34.4%
Preferred Stock.................................... 0.9 4.8 5.2
Long-term Debt (including current maturities) ..... 50.5 56.0 60.4
---- ---- ----
Total Capitalization*........................... 100.0% 100.0% 100.0%
===== ===== =====
- -----------
* Total capitalization does not include the present value of the
Company's lease obligations for PVNGS Units 1 and 2 and EIP as debt but
does include, for 1994 and 1993, the debt associated with the
beneficial interests in certain PVNGS Units 1 and 2 leases purchased by
the Company, which were retired in March 1995.
RESULTS OF OPERATIONS
Net earnings per common share in 1995 were $1.72, compared to net earnings
of $1.77 per common share in 1994 and a loss of $1.64 per common share in 1993.
The loss experienced in 1993 was due to the Company recording an after-tax
charge of $108.2 million to earnings resulting from the write-down in connection
with the Company's $30 million retail electric rate reduction.
The financial performance of the excluded resources has been improved by
the PVNGS Unit 3 write-down and the provision for loss associated with the M-S-R
power purchase contract recorded in 1992. The gains from the sale of generating
facilities to Anaheim recorded in August 1993 and to UAMPS recorded in June 1994
have also improved the financial performance of the excluded resources.
A number of items contributed to the $3.5 million decrease in net earnings
of the excluded resources as compared with 1994 results. The most significant
item was the UAMPS gain recorded in June 1994. Operating results for the
excluded resources for all these periods reflect the allocation of interest
charges based on the average investment in excluded net utility plant as a
percent of total utility plant for the period.
Selected financial information for the excluded resources for 1995, 1994
and 1993 is shown below:
1995 1994 1993
----------- ----------- -----------
(In thousands)
Operating revenues..................$ 35,317 $ 39,227 $ 42,517
Operating income ...................$ 2,372 $ 2,358 $ 2,034
Net earnings (loss).................$ (1,710) $ 1,838 $ (2,099)
Net utility plant at year-end.......$ 133,757 $ 133,697 $ 159,387
The following discussion highlights other significant items which affected
the results of operations in 1995, 1994 and 1993, and certain items expected to
impact future earnings.
Electric gross margin (electric operating revenues less fuel and purchased
power expense) decreased $37.9 million in 1995 due to the retail rate reduction
implemented in late 1994, reduced off-system sales as a result of the expiration
of three sales contracts and generally poor wholesale power market conditions.
Partially offsetting such decreases was the increase in retail revenues
resulting from retail sales growth.
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<PAGE>
Electric gross margin increased $32.3 million in 1994 compared to 1993,
$23.2 million of which was due to an increase in jurisdictional energy sales.
This increase was partially due to warmer weather and a difference of $6.7
million between the estimated unbilled revenues reported in 1993 and actual
unbilled revenues in 1994.
Gas gross margin (gas operating revenues less gas purchased for resale)
decreased $16.4 million from a year ago due to a decrease of $5.5 million in gas
deliveries resulting from warmer than normal weather in 1995 and reduced margin
of $11.7 as a result of the gas gathering and processing assets sale in June
1995. Gas gross margin decreased $5.1 million in 1994 from 1993. Principal
factors were the write-off of certain deferred charges relating to costs of gas
and a decrease in gas deliveries resulting from a warmer than normal winter in
1994.
Other operation and maintenance expenses ("O&M") decreased $12.3 million in
1995 due to the following: (i) a $2.1 million decrease in PVNGS O&M expense as a
result of a reduction in scheduled maintenance outage hours and lower property
taxes in the current period, (ii) decreased Four Corners O&M expenses of $2.0
million resulting from a maintenance outage of Unit 4 in 1994, (iii) decreased
SJGS O&M expenses of $1.7 million resulting from lower maintenance outage hours
in 1995, (iv) a decrease in gas production and products extraction expense of
$6.2 million resulting from the gas assets sale in June 1995, (v) a decrease in
injuries and damages expense of $4.5 million as a result of the recording of
workers' compensation liability in 1994, (vi) lower office supplies and expenses
of $3.0 million as a result of a decrease in temporary office labor and postage
expense and (vii) a decrease in water O&M expense of $2.1 million resulting from
the sale of the Company's water division in July 1995. Such decreases were
partially offset by (i) higher administrative and general labor expense of $4.7
million, (ii) higher employee benefit expense of $2.7 million caused by the
retroactive deferral of the gas operation's retirees health care costs for
regulatory purposes recorded in 1994 and (iii) higher production O&M expenses
for the gas and oil-fired plants of $1.7 million resulting from the maintenance
outages in 1995.
Other O&M expenses decreased $5.1 million in 1994 from 1993 due to the
following: (i) a $10.6 million decrease as a result of the Company's 1993
severance program, (ii) a deferral of gas operation's retirees health care costs
of $2.8 million for regulatory purposes and (iii) lower electric regulatory
commission expense of $2.1 million. Offsetting such decrease was the following:
(i) increased pension and retirees health care cost of $3.0 million, (ii)
increased electric distribution expense of $3.6 million due to weather-related
outages and increased tree trimming activity, (iii) increased generating station
maintenance expense of $2.4 million and (iv) increased workers' compensation
liability of $2.2 million.
Depreciation and amortization expenses increased $6.7 million from a year
ago as a result of the implementation of new depreciation rates approved by the
NMPUC in November 1994.
Other, under the caption Other Income and Deductions, increased $44.2
million from a year ago and increased $9.3 million in 1994 from 1993.
Significant 1995 items, net of taxes, included the following: (i) the gain of
$12.8 million recognized from the sale of the gas gathering and processing
assets, (ii) the gain of $6.4 million recognized from the sale of the Company's
water division, (iii) an after-tax accrual of $2.6 million of income pertaining
to the carrying costs related to gas take-or-pay settlement amounts, (iv) income
of $1.9 million for insurance recovery and (v) income of $1.4 million related to
adjusting reclamation reserves for certain mining operations. Partially
offsetting such increases were: (i) additional regulatory reserves of $4.8
million and (ii) write-downs of $1.8 million for various non-utility properties.
Significant 1994 items, net of taxes, included the following: (i) the
write-off of $3.0 million relating to gas take-or-pay settlement payments which
are not recoverable through rates, (ii) additional provisions for legal expense
of $3.6 million and (iii) a gain and associated tax benefits of $6.1 million
from the sale of generating facilities to UAMPS.
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Significant 1993 items, net of taxes, included the following: (i) the gain
of $7.5 million recognized from the sale of an investment, (ii) the gain and
associated tax benefits of $7.6 million from the sale of generating facilities
to Anaheim and (iii) tax benefits of $3.2 million from the Federal income tax
rate change which allows the Company to utilize its net operating loss at a
higher tax rate. Partially offsetting such increases were: (i) additional
provisions for legal and litigation expenses of $5.7 million, (ii) a write-off
of $4.6 million of other deferred costs, (iii) PVNGS decommissioning fund
adjustment of $2.8 million and (iv) a write-off of $2.1 million resulting from
costs associated with refunding certain pollution control and EIP bonds, which
represents the amount related to FERC firm-requirement wholesale customers and
resources excluded from New Mexico jurisdictional rates.
Net interest charges decreased $12.7 million in 1995 as a result of the
retirement of $130 million of PVNGS LOBs in March 1995 and the retirement of $45
million of first mortgage bonds in April 1994. In 1994, net interest charges
decreased $15.2 million compared to 1993. Major factors were: (i) lower
short-term borrowings in 1994, (ii) the refinancing of $182 million of pollution
control revenue bonds in January ($46 million) and September ($136 million) of
1993 and (iii) the retirement of $45 million of first mortgage bonds in April
1994.
Preferred stock dividend requirements decreased $2.7 million in 1995 as a
result of the retirement of $64 million of preferred stock in August 1995.
OTHER ISSUES FACING THE COMPANY
TRANSMISSION ISSUES
OLE Transmission Project
OLE, a proposed 345 Kv transmission line connecting the existing Ojo 345 Kv
line to the Norton Station in northern New Mexico, was designed to provide a
needed improvement to the northern New Mexico transmission system and to allow
greater delivery of power into the Company's two largest service territories,
the greater Albuquerque area and the Santa Fe/Las Vegas area. OLE has faced
considerable opposition by persons concerned primarily about the environmental
impacts of the project.
The Company filed in 1991 for NMPUC approval for construction of OLE. On
November 20, 1995, the NMPUC issued a final order disapproving the project. On
December 20, 1995, the Company filed a limited Motion for Rehearing, accepting
the NMPUC's determination that the OLE routing should not be pursued but seeking
reconsideration of various parts of the final order which discuss system
planning and reliability matters. The NMPUC took no action on the Company's
request which in effect deemed it denied. The Company has elected not to appeal
the NMPUC order or denial of rehearing. The Company has incurred approximately
$17 million for the OLE project and has established accounting reserves as
deemed appropriate. The Company intends to seek recovery of these costs as
legitimate and prudent costs in future appropriate proceedings.
Transmission Right-of-Way
The Company has easements for right-of-way with the Navajo Nation for
portions of several transmission lines that deliver the Company's generation
resources to the Albuquerque metropolitan area. One grant of easement for
approximately 4.2 miles of right-of-way for two parallel 345 Kv transmission
lines expired in 1993. Prior to the expiration, the Company had numerous
unsuccessful negotiation meetings with the Navajo Nation for the renewal of the
long-term grant. In 1994, the Navajo Nation adopted a Civil Trespass Statute
providing for civil penalties, damages and other remedies, including removal, to
be imposed for unconsented or unauthorized use of Navajo Nation lands. During
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1995, the Company reached a tentative agreement with the Navajo Nation for a
twenty-year renewal of the transmission easement and a resolution of all other
transmission right-of-way issues. Prior to the execution of the agreement,
another agency of the Navajo Nation notified the Company that it was contesting
certain water rights at the SJGS, which has delayed resolution of the
transmission right-of-way issues. The Company continues to work with the Navajo
Nation to resolve this conflict.
The Company continues to assess its options but is not pursuing other
alternatives unless it receives indications that settlement cannot be reached in
a satisfactory manner. The Company currently cannot predict the outcome of the
negotiations or the costs resulting therefrom; however, the Company believes
that resolution of this issue will not have a material adverse impact on the
Company's financial condition or results of operations.
Transmission Disputes
The Company receives approximately $14.0 million annually for the provision
of firm transmission service to several customers. Most of these customers,
through various actions, have initiated formal FERC investigations into the
transmission service billing units and transmission rates charged by the
Company. If these various allegations and requested rate reductions are approved
by the FERC, the Company's revenues for transmission services could be reduced
by as much as $9 million annually. The Company has responded to these
allegations and has requested that the FERC dismiss the complaints. The Company
is currently awaiting the FERC decision. In a related FERC filing, the Company
committed to file, on or before April 1, 1996, a rate change for all firm,
point-to-point and network service transmission customers, including those
customers that have filed the pending complaints. Although the Company
anticipates a reduction in rates resulting from the filing, the Company does not
anticipate any material adverse impact on the Company's financial condition or
results of operations.
SALE OF GAS GATHERING AND PROCESSING ASSETS
As part of the Company's announced action plan in 1993 to focus on its core
utility business, the Company, in 1994, entered into an agreement with Williams
for the sale of substantially all of the assets of Gathering Company and
Processing Company and for the sale of Northwest and Southeast gas gathering and
processing facilities of the Company.
The sales transaction provides for three 10-year contracts, each with an
option to renew for an additional 5-year term, with Williams for competitively
priced gathering and processing services. The purchase and sale agreement
contains contractual requirements for the Company to address various
environmental deficiencies identified as retained liabilities. It also contains
environmental representations and warranties and indemnification provisions
whereby the Company indemnifies Williams for a five-year period after closing
for breaches of the environmental representations and warranties and against
third party claims to a maximum of $10.6 million. After the $10.6 million cap
has been reached, or after the expiration of the five-year post-closing
indemnification period, whichever comes first, Williams indemnifies the Company
against further environmental expenditures related to the properties sold. On
June 30, 1995, following NMPUC approval, the Company and Williams closed the
sale of the assets. As a result, the Company and its gas subsidiaries received
$154 million from Williams and recognized an after-tax gain of $12.8 million, or
31 cents per share. Under the NMPUC approval, the Company recorded a liability
of approximately $35 million, representing an estimate of a portion of the gain
resulting from the sale, which will be credited to the Company's gas customers'
bills over five years. After completion of the fifth year, the amount of the
gain will be recalculated to reflect actual expenses associated with the
transaction which were appropriately and legitimately incurred. Such amount
should include amounts expended to indemnify Williams as described above. Any
resulting differences will be refunded or billed to customers over a one year
period.
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As a result of the gas assets sales, the operations of the Company's two
wholly-owned gas subsidiaries, Gathering Company and Processing Company, have
been substantially discontinued, effective June 30, 1995.
ENVIRONMENTAL ISSUES
The Company is committed to complying with all applicable environmental
regulations in a responsible manner. Environmental issues have presented and
will continue to present a challenge to the Company. The Company has evaluated
the potential impacts of the following environmental issues and believes, after
consideration of established reserves, that the ultimate outcome of these
environmental issues will not have a material adverse effect on the Company's
financial condition or results of operations.
Electric Operations
Person Station
The Company, in compliance with the New Mexico Environment Department
Corrective Action Directive, determined that groundwater contamination exists in
the deep and shallow water aquifers. The Company is required to delineate the
extent of the contamination and remediate the contaminants in the groundwater.
The extent of the contaminated plume in the deep water aquifer has been assessed
and results have been reported to the NMED. The Company has also proposed
revised remedial options to the NMED. The Company is awaiting a final response
from the NMED. The Company's current estimate to decommission its retired
fossil-fueled plants includes approximately $10.9 million to complete the
groundwater remediation program at Person Station. As part of the financial
assurance requirement of the Person Station Hazardous Waste Permit, the Company
posted a $5.1 million performance bond with a trustee. The remediation program
continues on schedule.
Santa Fe Station
The NMED has been conducting an investigation of the groundwater
contamination detected beneath the Santa Fe Station site to determine the source
of the contamination. The Company has been and is continuing to cooperate with
the NMED site investigation pursuant to a settlement agreement between the
Company and the NMED. In May 1995, the Company received a letter from the NMED
indicating that the NMED had made a determination that Santa Fe Station was the
source of gasoline-contaminated groundwater at the site and vicinity. The
Company contested the NMED's determination and believes insufficient data exists
to definitely identify the sources of groundwater contamination. A minimum site
assessment ("MSA") of the two former underground storage tank sites at the Santa
Fe Station site was conducted by the Company under the settlement agreement. The
MSA report indicated that the Santa Fe Station site does not appear to have been
a source of gasoline contamination. The MSA report has been submitted to the
NMED and is currently pending NMED review.
Albuquerque Electric Service Center
Trenching work at the electric service center revealed oil contaminated
soil in an area of the service center where used oil in drums were stored. The
trenched area bisects a small portion of the storage area, indicating that
potentially the area could be underlain with contaminated soil. The Company
requested a laboratory analysis on the soil to determine the type of
contamination. The Company may be required to assess soil and groundwater for
contamination as well as remediate extensive volumes of soil in the area. The
Company currently cannot predict the outcome of the analysis, to what extent the
soil was contaminated or the costs of the remediation, if any.
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In addition, leaking underground fuel lines, which have been replaced,
caused soil and groundwater contamination in the vicinity of the leak. The
Company proposed a quarterly sampling plan to the NMED for the site. The NMED
has expressed concerns regarding the placement of monitoring wells and the
relatively high levels of residual contamination remaining in the soil at the
site. Based on the recent analysis of the groundwater sampling, the contaminated
soil does not appear to be a continual recharge source to the groundwater
contamination. The NMED may require additional monitoring wells and soil
remediation work at the site.
Gas Operations
Air Permits
In 1994, following an environmental audit performed in conjunction with the
Company's sale of certain gas assets, which audit brought to light certain
discrepancies regarding required air permits associated with certain natural gas
facilities, the Company met with the NMED to discuss the nature of the permit
discrepancies and to propose methods and schedules to resolve the discrepancies.
The Company submitted in 1994 its permit modification application for the
Lybrook Gas Processing Plant ("Lybrook"). The Lybrook permit has now been issued
to Williams, the purchaser of the gas assets.
The Company submitted an air permit modification application for the Kutz
Canyon Gas Processing Plant ("Kutz") in the first quarter of 1995. In October
1995, the Company received a Notice of Violation ("NOV") from the NMED with
specified corrective actions on the permit discrepancies in the Kutz air permit.
In January 1996, the Company accepted a settlement offer for the NOV from the
NMED in the amount of $15,000. The Company cannot predict when the final permit
will be issued by the NMED or whether additional requirements will be imposed by
the NMED as conditions for issuance of the permit.
Gas Wellhead Pit Remediation
The New Mexico Oil Conservation Commission ("NMOCC") issued an order,
effective on January 14, 1993, that affects the gas gathering facilities, which
were sold to Williams, located in the San Juan Basin in northwestern New Mexico.
The order prohibits the further discharge of fluids associated with the
production of natural gas into unlined earthen pits in certain specified areas
of the San Juan Basin. The order also required the submission of closure plans
for the closure of pits in which production fluids were previously discharged.
The BLM has issued a similar ruling. The Company has complied with such rulings
and submitted and received approval of the pit closure plans from the OCD, the
Energy Minerals and Natural Resources Department, as well as the BLM.
The Company has received letters and directives from the OCD directing the
Company to determine if certain unlined discharge pits have contributed to the
groundwater contamination plumes that were identified at those sites. The
Company is currently assessing the sites in accordance with the OCD directive.
The Company continues to assess unlined pits in accordance with the OCD
directive and is addressing potential groundwater contamination issues as they
arise during the assessment process.
On March 3, 1995, the Jicarilla Apache Tribe ("Jicarilla") enacted an
ordinance directing that unlined surface impoundments located within
environmentally sensitive areas be remediated and closed by December 1996, and
that all other unlined surface impoundments on Jicarilla's lands be remediated
and closed by December 1998. The Company has received a claim for
indemnification by Williams for the environmental work required to comply with
the Jicarilla ordinance. The Company has submitted a closure/remediation plan to
the Jicarilla, which has been approved, and the Company anticipates initiating
the remediation process in the spring of 1996. The costs of remediation will be
charged against the $10.6 million indemnification cap contained in the purchase
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and sale agreement between the Company and Williams. The Company does not
anticipate that the claim for indemnification will have any material impact on
the Company's financial condition or results of operations.
GAS RATE CASE
On August 28, 1995, the Company filed a request for a $13.3 million
increase in its retail natural gas sales and transportation rates. NMPUC Staff
and intervenors in the case filed their testimony on January 16, 1996. The Staff
recommended a $2.5 million rate decrease and the AG recommended a $14.7 million
rate decrease. The major issues in the case center around the Company's request
to recover certain costs associated with reservation fees, discounts given to
large and industrial transportation customers and losses incurred to reacquire
debt. The Company anticipates that it will have deferred as regulatory assets
approximately $22 million related to these items through July 1, 1996, the date
when rates are anticipated to go into effect. The Company will file its rebuttal
testimony on February 23, 1996 and hearings will begin on March 4, 1996.
Although the Company cannot predict the ultimate outcome of this case, the
Company believes that it has meritorious claims and will vigorously pursue the
recovery of these assets.
ALBUQUERQUE FRANCHISE ISSUES
The Company's non-exclusive electric service franchise with the City of
Albuquerque (the "City") expired in 1992. The franchise agreement provided for
the Company's use of City rights-of-way for placement of electric service
facilities. The Company provides service to the area which contributed 46% of
the Company's total 1995 electric operating revenues. The absence of a franchise
does not change the Company's right and obligation to serve those customers
under state law.
In 1991, the NMPUC issued an order concluding, among other things, that the
City could bid for services to its own facilities (Albuquerque municipal loads
generated approximately $16.6 million in annual revenue for 1995), but not for
service to other customers. However, the New Mexico Supreme Court ("Court")
ruled that a city can negotiate rates for its citizens in addition to its own
facility uses. The Court also ruled that any contracts with utilities for
electric rates are a matter of statewide concern and subject to approval,
disapproval or modification by the NMPUC. In addition, the Court reaffirmed the
NMPUC's exclusive power to designate providers of utility service within a
municipality and confirmed that municipal franchises are not licenses to serve
but rather provide access to public rights-of-way.
During 1992, representatives of the Company and the City had numerous
meetings in attempts to resolve the franchise renewal issue. Since that time, no
meetings have been held. The City continues to maintain its options by
advocating industry restructuring and monitoring the municipalization activities
of the City of Las Cruces. A measure designed to start municipalization
activities in Albuquerque was defeated by the City Council. The Company
continues to collect and pay franchise fees to the City.
PVNGS NUCLEAR DECOMMISSIONING
Decommissioning Costs and Trust Funds
The Company has a program for funding its share of decommissioning costs
for PVNGS. Under this program, the Company makes a series of annual deposits to
an external trust fund over the estimated useful life of each unit with the
trust funds being invested under a plan which allows the accumulation of funds
largely on a tax-deferred basis through the use of life insurance policies on
certain current and former employees. The results of the 1995 decommissioning
study indicate that the Company's share of the PVNGS decommissioning costs will
be approximately $145.6 million, a decrease from $157.8 million based on the
previous 1992 study (both amounts are stated in 1995 dollars).
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The Company has determined that a supplemental investment program will be
needed as a result of both cost increases identified in the 1992 study and the
lower than anticipated performance of the existing program. On September 29,
1995, the Company filed a request for permission from the NMPUC to establish a
qualified tax advantaged trust for PVNGS Units 1 and 2. Due to Internal Revenue
Service ("IRS") regulations, PVNGS Unit 3 will remain in a non-qualified trust.
The Company, on February 7, 1996, filed a motion for interim relief for
establishment of a qualified trust pending final NMPUC action. The interim
request was necessary in order to meet the March 15 deadline under IRS
requirements for the qualified trust to be effective for the current year. On
February 19, 1996, the NMPUC granted this request.
The market value of the existing trust at the end of 1995 was approximately
$12.4 million, which includes the cash surrender value of the current insurance
policies.
Decommissioning Costs of Nuclear Power Plants
In February 1996, the Financial Accounting Standards Board ("FASB") issued
an Exposure Draft on the accounting for closure and removal costs, including
decommissioning, of nuclear power plants. If current electric utility industry
accounting practices for nuclear power plant decommissioning are changed, the
annual provision for decommissioning could increase relative to 1995, and
estimated costs for decommissioning could be recorded as a liability (rather
than as accumulated depreciation), with recognition of an increase in the cost
of related nuclear power plants. The Company is unable to predict the ultimate
outcome of this project.
PVNGS PROPERTY TAXES
On June 29, 1990, an Arizona state tax law was enacted, effective as of
December 31, 1989, which adversely impacted the Company's earnings in the years
of 1990 through 1995 by approximately $5 million per year, before income taxes.
On December 20, 1990, the PVNGS participants, including the Company, filed a
lawsuit in the Arizona Tax Court, a division of the Maricopa County Superior
Court, against the Arizona Department of Revenue, the Treasurer of the State of
Arizona, and various Arizona counties, claiming, among other things, that
portions of the new tax law are unconstitutional. In December 1992, the court
granted summary judgment to the taxing authorities, holding that the law is
constitutional. The PVNGS participants appealed this decision to the Arizona
Court of Appeals. On November 21, 1995, the Arizona Court of Appeals ruled in
favor of the PVNGS participants. Due to the significance of this decision, it is
anticipated that the case will be further pursued through the courts. The
Company cannot currently predict the ultimate outcome of this matter.
EL PASO
El Paso, one of the joint owners of PVNGS and Four Corners, has been
operating under Chapter 11 of the Bankruptcy Code since 1992. After the failed
merger transaction with Central and South West Corporation, in September 1995,
El Paso filed with the bankruptcy court a revised plan whereby, among other
things, certain issues would be resolved, including its assumption of the joint
facilities operating agreements. The revised plan, as amended, was confirmed by
order of the Bankruptcy Court on January 9, 1996. The order approves an amended
Assumption and Cure Agreement between El Paso and all participants at PVNGS. As
a part of its plan, El Paso also assumed agreements at Four Corners and paid all
sums outstanding under the agreements. In addition, El Paso assumed various
transmission agreements with the Company. Currently, there are no remaining
claims by the Company to be resolved in connection with the bankruptcy. El Paso
emerged from bankruptcy on February 12, 1996.
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ACCOUNTING STANDARDS
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of
In March 1995, the FASB issued Statement of Financial Accounting Standard
("SFAS") No. 121. This statement requires companies to review their long-lived
assets for impairment whenever events or changes in circumstances indicate that
the carrying amount of such assets may not be recoverable. SFAS No. 121 also
requires all regulatory assets, which must have a high probability of recovery
to be initially established, must continue to meet that high probability
standard to avoid being written off. However, if written off, a regulatory asset
can be restored if, through regulatory actions, it again becomes probable of
recovery. The adoption of SFAS No. 121 had no impact on the Company's financial
condition or results of operations.
PVNGS -- STEAM GENERATOR TUBES
APS, as the operating agent of PVNGS, has encountered tube cracking in the
steam generators and has taken, and will continue to take, remedial actions that
it believes have slowed further tube degradation. The steam generator tubes in
each unit continue to be inspected in conjunction with their respective outages.
APS currently believes that the PVNGS steam generators in Units 1 and 3 are
capable of operating for their designed life of forty years, although, at some
point, long-term economic considerations may warrant examination of possible
steam generator replacement. APS's ongoing analyses indicate that it will be
economically desirable for APS to replace the Unit 2 steam generators, which
have been most affected by tube cracking, in five to ten years. APS expects that
the steam generator replacement can be accomplished within financial parameters
established before replacement was a consideration. Based on APS's analyses, the
Company believes that its share of the replacement costs (in 1995 dollars and
including installation and replacement power costs) would be between $10.5
million and $17.5 million, most of which would be incurred after the year 2000.
APS expects that the replacement would be performed in conjunction with a normal
refueling outage in order to limit additional incremental outage time to
approximately 50 days. APS believes that replacement of the Unit 2 steam
generators within five to ten years will be economically desirable. The Company
is evaluating this and other options in regards to this issue.
All of the PVNGS units were operating at full power at December 31, 1995
and are expected to continue operating at full power, except for scheduled
(mid-cycle or refueling) outages. Last year, PVNGS had three refueling outages,
one for each of the three units.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX
Page
--------
Management's Responsibility for Financial Statements................... F-1
Report of Independent Public Accountants .............................. F-2
Financial Statements:
Consolidated Statements of Earnings (Loss).......................... F-3
Consolidated Statements of Retained Earnings (Deficit).............. F-4
Consolidated Balance Sheets......................................... F-5
Consolidated Statements of Cash Flows............................... F-6
Consolidated Statements of Capitalization........................... F-7
Notes to Consolidated Financial Statements.......................... F-8
Supplementary Data:
Quarterly Operating Results......................................... F-34
Comparative Operating Statistics.................................... F-35
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
The management of Public Service Company of New Mexico is responsible
for the preparation and presentation of the accompanying consolidated financial
statements. The consolidated financial statements have been prepared in
conformity with generally accepted accounting principles and include amounts
that are based on informed estimates and judgments of management. Management
maintains a system of internal accounting controls which it believes is adequate
to provide reasonable assurance that assets are safeguarded, transactions are
executed in accordance with management authorization and the financial records
are reliable for preparing the consolidated financial statements. The system of
internal accounting controls is supported by written policies and procedures, by
a staff of internal auditors who conduct comprehensive internal audits and by
the selection and training of qualified personnel. The board of directors,
through its audit committee comprised entirely of outside directors, meets
periodically with management, internal auditors and the Company's independent
auditors to discuss auditing, internal control and financial reporting matters.
To ensure their independence, both the internal auditors and independent
auditors have full and free access to the audit committee. The independent
auditors, Arthur Andersen LLP, are engaged to audit the Company's consolidated
financial statements in accordance with generally accepted auditing standards.
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Public Service Company of New Mexico:
We have audited the accompanying consolidated balance sheets and statements of
capitalization of Public Service Company of New Mexico (a New Mexico
corporation) and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of earnings (loss), retained earnings (deficit), and
cash flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Public Service Company of New
Mexico and subsidiaries as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
As explained in notes 1 and 7 to the financial statements, effective January 1,
1993, the Company adopted Statement of Financial Accounting Standards No. 106,
Employer's Accounting for Postretirement Benefits Other Than Pensions, and No.
109, Accounting for Income Taxes.
ARTHUR ANDERSEN LLP
Albuquerque, New Mexico
February 13, 1996
F-2
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
Year Ended December 31,
---------------------------------
1995 1994 1993
---- ---- ----
(In thousands except per share amounts)
Operating Revenues:
Electric.....................................$ 584,284 $ 621,794 $ 589,728
Gas.......................................... 217,985 269,510 271,087
Water........................................ 6,196 13,407 13,063
--------- --------- ---------
Total operating revenues........................ 808,465 904,711 873,878
--------- --------- ---------
Operating Expenses:
Fuel and purchased power..................... 140,752 140,411 140,674
Gas purchased for resale..................... 94,299 129,381 125,940
Other operation expenses..................... 257,627 264,391 274,023
Maintenance and repairs...................... 55,809 61,386 56,821
Depreciation and amortization................ 80,865 74,137 77,326
Taxes, other than income taxes............... 35,531 39,717 40,089
Income taxes................................. 30,194 44,210 25,721
--------- --------- ---------
Total operating expenses.................. 695,077 753,633 740,594
--------- --------- ---------
Operating income.......................... 113,388 151,078 133,284
--------- --------- ---------
Other Income and Deductions:
Write-down of the PVNGS Units 1 and 2
leases, regulatory assets and other
deferred costs............................ -- -- (178,954)
Other........................................ 40,707 (3,512) (12,792)
Income tax benefit (expense)................. (20,599) 3,339 82,799
--------- --------- ---------
Net other income and deductions........... 20,108 (173) (108,947)
--------- --------- ---------
Income before interest charges............ 133,496 150,905 24,337
--------- --------- ---------
Interest Charges:
Interest on long-term debt................... 52,637 65,511 72,525
Other interest charges....................... 5,297 5,341 13,719
Allowance for borrowed funds used during
construction............................. -- (265) (421)
--------- --------- ---------
Net interest charges...................... 57,934 70,587 85,823
--------- --------- ---------
Net Earnings (Loss)............................. 75,562 80,318 (61,486)
Preferred Stock Dividend Requirements........... 3,714 6,433 6,829
--------- --------- ---------
Net Earnings (Loss) Available for Common Stock..$ 71,848 $ 73,885 (68,315)
========= ========= =======
Average Number of Common Shares Outstanding..... 41,774 41,774 41,774
========= ========= =======
Net Earnings (Loss) per Share of Common Stock...$ 1.72 $ 1.77 $ (1.64)
========= ========= =======
Dividends Paid per Share of Common Stock........$ -- $ -- $ --
========= ========= =======
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT)
Year Ended December 31,
---------------------------------
1995 1994 1993
---- ---- ----
(In thousands)
Balance at Beginning of Year.................$(46,006) $(120,848) $ (52,533)
Net earnings (loss).......................... 75,562 80,318 (61,486)
Redemption of cumulative preferred stock..... (599) 957 --
Cumulative preferred stock dividends......... (3,714) (6,433) (6,829)
-------- --------- ---------
Balance at End of Year.......................$ 25,243 $ (46,006) $(120,848)
======== ========= =========
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
-----------------------
1995 1994
---- ----
(In thousands)
Utility Plant, at original cost except PVNGS:
Electric plant in service.............................$1,871,897 $1,783,962
Gas plant in service.................................. 421,607 537,762
Water plant in service................................ -- 63,048
Common plant in service............................... 35,222 49,049
Plant held for future use............................. 639 894
---------- ----------
2,329,365 2,434,715
Less accumulated depreciation and amortization........ 892,727 890,905
---------- ----------
1,436,638 1,543,810
Construction work in progress......................... 106,892 119,308
Nuclear fuel, net of accumulated amortization of
$26,395 and $35,333 ............................... 30,904 33,569
---------- ----------
Net utility plant.................................. 1,574,434 1,696,687
---------- ----------
Other Property and Investments:
Non-utility property, net of accumulated
depreciation of $1,547 and $1,328.................. 4,063 5,752
Other investments..................................... 29,370 28,771
---------- ----------
Total other property and investments............... 33,433 34,523
---------- ----------
Current Assets:
Cash.................................................. 4,228 21,029
Temporary investments, at cost........................ 95,972 74,521
Receivables........................................... 127,642 129,048
Income taxes receivable............................... 4,792 4,182
Fuel, materials and supplies, at average cost......... 44,660 51,068
Gas in underground storage, at average cost........... 5,431 8,744
Other current assets.................................. 7,186 9,549
---------- ----------
Total current assets............................. 289,911 298,141
---------- ----------
Deferred charges......................................... 137,891 173,914
---------- ----------
$2,035,669 $2,203,265
========== ==========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock equity:
Common stock outstanding-- 41,774,083 shares.......$ 208,870 $ 208,870
Additional paid-in capital......................... 470,358 469,648
Excess pension liability, net of tax............... (1,623) (1,106)
Retained earnings (deficit) since January 1, 1989.. 25,243 (46,006)
----------- ----------
Total common stock equity........................ 702,848 631,406
Cumulative preferred stock without mandatory
redemption requirements.......................... 12,800 59,000
Cumulative preferred stock with mandatory
redemption requirements.......................... -- 17,975
Long-term debt, less current maturities............... 728,843 752,063
----------- ----------
Total capitalization............................. 1,444,491 1,460,444
----------- ----------
Current Liabilities:
Short-term debt....................................... -- --
Accounts payable...................................... 93,666 105,213
Current maturities of long-term debt.................. 146 148,532
Accrued interest and taxes............................ 26,856 28,073
Other current liabilities............................. 44,699 43,662
----------- ----------
Total current liabilities........................ 165,367 325,480
----------- ----------
Deferred Credits:
Accumulated deferred investment tax credits........... 66,734 71,564
Accumulated deferred income taxes..................... 78,829 77,207
Other deferred credits................................ 280,248 268,570
----------- ----------
Total deferred credits........................... 425,811 417,341
----------- ----------
Commitments and Contingencies (notes 2 through 12)
$2,035,669 $2,203,265
========== ==========
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1995 1994 1993
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net earnings (loss)................................$ 75,562 $ 80,318 $(61,486)
Adjustments to reconcile net earnings (loss) to
net cash flows from operating activities:
Depreciation and amortization................... 93,125 90,656 95,415
Accumulated deferred investment tax credit...... (4,830) (6,898) (8,321)
Accumulated deferred income taxes............... 1,622 23,069 (63,393)
Gain on sale of utility property................ (39,050) (6,576) (7,350)
Gain on sale of other property and investments.. -- -- (12,394)
Write-down of the PVNGS Units 1 & 2 leases,
regulatory assets and other deferred costs.... -- -- 178,954
Changes in certain assets and liabilities:
Receivables................................... 795 23,868 (12,551)
Fuel, materials and supplies.................. (26,505) (3,126) 3,222
Deferred charges.............................. 6,731 8,427 20,936
Accounts payable.............................. (11,527) (11,893) (53,973)
Accrued interest and taxes.................... (1,218) (1,919) 631
Deferred credits.............................. 29,185 (5,418) (7,137)
Other......................................... 7,090 (3,604) 10,571
Other, net...................................... 16,095 14,160 14,181
------ ------ ------
Net cash flows from operating activities... 147,075 201,064 97,305
------- ------- ------
Cash Flows From Investing Activities:
Utility plant additions............................ (106,627) (119,284) (100,784)
Utility plant sales................................ 206,482 39,562 49,302
Other property additions........................... (801) (1,307) (2,554)
Other property sales............................... -- -- 19,912
Temporary investments, net......................... (21,451) (26,671) (47,665)
------- ------- -------
Net cash flows from investing activities... 77,603 (107,700) (81,789)
------ -------- -------
Cash Flows From Financing Activities:
Redemptions of PVNGS lease obligation bonds ....... (132,663) -- --
Redemptions and repurchases of preferred stock..... (64,175) (7,711) (600)
Redemption of first mortgage bonds................. -- (45,000) --
Bond refinancing costs............................. -- -- (8,960)
Bond redemption premium and costs.................. (505) (2,732) --
Proceeds from asset securitization................. 18,758 -- 60,475
Repayments of long-term debt....................... (57,768) (31,002) (8,842)
Net decrease in short-term debt.................... -- -- (51,550)
Dividends paid..................................... (5,126) (6,400) (6,609)
------ ------ ------
Net cash flows from financing activities... (241,479) (92,845) (16,086)
-------- ------- -------
Increase (Decrease) in Cash........................... (16,801) 519 (570)
Cash at Beginning of Year............................. 21,029 20,510 21,080
--------- --------- ----------
Cash at End of Year...................................$ 4,228 $ 21,029 $ 20,510
========= ========= ==========
Supplemental cash flow disclosures:
Interest paid......................................$ 63,366 $ 70,720 $ 83,248
========= ========= ==========
Income taxes paid..................................$ 52,405 $ 20,000 $ 13,978
========= ========= ==========
</TABLE>
Cash consists of currency on hand and demand deposits.
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITALIZATION
<TABLE>
<CAPTION>
December 31,
----------------------
1995 1994
---------- ----------
(In thousands)
<S> <C> <C>
Common Stock Equity:
Common Stock, par value $5 per share.................................... $ 208,870 $ 208,870
Additional paid-in capital.............................................. 470,358 469,648
Excess pension liability, net of tax.................................... (1,623) (1,106)
Retained earnings (deficit) since January 1, 1989....................... 25,243 (46,006)
----------- ----------
Total common stock equity.......................................... 702,848 631,406
----------- ----------
</TABLE>
<TABLE>
<CAPTION>
Shares
Outstanding
at Current
Stated December 31, Redemption
Value 1995 Price
-------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Cumulative Preferred Stock:
Without mandatory redemption
requirements:
1965 Series, 4.58%........... $100 128,000 $102.00 12,800 13,000
8.48% Series................. 100 -- -- -- 20,000
8.80% Series................. 100 -- -- -- 26,000
------- ------- ------- ----------
128,000 12,800 59,000
======= ------- ----------
With mandatory redemption
requirements:
8.75% Series................. 100 -- -- -- 17,975
Redeemable within one year... -- -- --
------- ------- ----------
-- -- 17,975
======= ------- ----------
</TABLE>
<TABLE>
<CAPTION>
Long-Term Debt:
Issue and Final Maturity Interest Rates
- ------------------------ ----------------
<S> <C> <C> <C>
First mortgage bonds:
1997............................... 5 7/8% 14,650 14,650
1999 through 2002.................. 7 1/4% to 8 1/8% 43,063 43,272
2004 through 2007.................. 8 1/8% to 9 1/8% 43,421 43,421
2008............................... 9 % 54,374 54,374
Pollution control revenue bonds:
2008 through 2023.................. 5.9% to 7 3/4% 537,045 537,045
2022............................... Variable rate 37,300 37,300
---------- ----------
Total first mortgage bonds....... 729,853 730,062
Lease obligation bonds of First PV
Funding
Corporation:
Funding Corporation:
1996 through 2016.................. 8.95% to 10.3% -- 132,663
Asset securitization.................. -- 38,805
Other, including unamortized
premium and (discount), net........ (864) (935)
---------- ----------
Total long-term debt............. 728,989 900,595
Less current maturities............... 146 148,532
---------- ----------
Long-term debt, less current
maturities....................... 728,843 752,063
---------- ----------
Total Capitalization..................... $1,444,491 $1,460,444
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995, 1994 and 1993
(1) Summary of Significant Accounting Policies
Systems of Accounts
The Company maintains its accounts for utility operations primarily in
accordance with the uniform systems of accounts prescribed by the Federal Energy
Regulatory Commission ("FERC") and the National Association of Regulatory
Utility Commissioners ("NARUC"), and adopted by the New Mexico Public Utility
Commission ("NMPUC").
Organization
Public Service Company of New Mexico (the "Company") is an investor-owned
utility company engaged in the generation, transmission, distribution and sale
of electricity. The Company provides retail electric service to a large area of
north central New Mexico, including the cities of Albuquerque, Santa Fe, Rio
Rancho, Las Vegas, Belen and Bernalillo. The Company provides service to
customers in the City of Albuquerque without a franchise agreement, which
contributes approximately one-half of the Company's total electric operating
revenues. The absence of a franchise does not change the Company's right and
obligation to serve these customers under state law. The Company also provides
retail electric service to Deming in southwestern New Mexico and to Clayton in
northeastern New Mexico. The Company is also engaged in the transmission,
distribution and sale of natural gas within the State of New Mexico. The Company
distributes natural gas to most of the major communities in New Mexico,
including Albuquerque and Santa Fe.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and subsidiaries in which it owns a majority voting interest. All significant
intercompany transactions and balances have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual recorded amounts could differ from those estimated.
Utility Plant
Utility plant, with the exception of Palo Verde Nuclear Generating
Station ("PVNGS") Unit 3 and the Company's purchased 22% beneficial interests in
the PVNGS Units 1 and 2 leases, is stated at original cost, which includes
capitalized payroll-related costs such as taxes, pension and other fringe
benefits, administrative costs and an allowance for funds used during
construction ("AFUDC"). Utility plant includes certain electric assets not
subject to NMPUC regulation. The results of operations of such electric assets
are included in operating income.
F-8
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(1) Summary of Significant Accounting Policies (Continued)
PVNGS Unit 3 and the Company's purchased 22% beneficial interests in the
PVNGS Units 1 and 2 leases were written down in 1992 and 1993, respectively, to
their net realizable value to reflect a permanent impairment to their original
costs.
It is Company policy to charge repairs and minor replacements of property
to maintenance expense and to charge major replacements to utility plant. Gains
or losses resulting from retirements or other dispositions of operating property
in the normal course of business are credited or charged to the accumulated
provision for depreciation.
Depreciation and Amortization
Provision for depreciation and amortization of utility plant is made at
annual straight-line rates approved by the NMPUC. The average rates used are as
follows:
1995 1994 1993
------------- ----------- -----------
Electric plant........................ 3.32% 3.01% 2.98%
Gas plant............................. 3.21% 3.15% 3.12%
Water plant (1)....................... -- 2.68% 2.62%
Common plant (2)...................... -- 4.94% 4.90%
(1) Water plant was sold in July 1995 (see note 12).
(2) As a result of the water plant sale, common plant was transferred
to electric plant.
Effective January 1, 1995, depreciation rates were revised and include a
provision for the recovery of fossil-fueled plant decommissioning costs approved
by the NMPUC in 1994 (see note 11).
The provision for depreciation of certain equipment is charged to
clearing accounts and subsequently allocated to operating expenses or
construction projects based on the use of the equipment. Depreciation of
non-utility property is computed on the straight-line method. Amortization of
nuclear fuel is computed based on the units of production method.
Nuclear Decommissioning
The Company accounts for nuclear decommissioning costs on a straight-line
basis over the estimated useful life of the facilities. Such amounts are based
on the net present value of expenditures estimated to be required to
decommission the plant.
Fuel and Purchased Power Adjustment Clause ("FPPCAC")
The Company's FPPCAC for its retail customers was eliminated in November
1994. A base fuel cost was incorporated with the overall rates approved by the
NMPUC. The Company uses the deferral method of accounting for fuel and purchased
power costs for its firm-requirements wholesale customers. Such amounts are
reflected in subsequent periods under a FPPCAC approved by the FERC.
F-9
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(1) Summary of Significant Accounting Policies (Continued)
Purchased Gas Adjustment Clause ("PGAC")
The Company uses the deferral method of accounting for gas purchase costs
which are settled in subsequent periods under gas adjustment clauses. Future
recovery of these costs is subject to approval by the NMPUC.
Amortization of Debt Discount, Premium and Expense
Discount, premium and expense related to the issuance of long-term debt
are amortized over the lives of the respective issues. In connection with the
retirement of long-term debt, such amounts associated with resources subject to
NMPUC regulation are amortized over the lives of the respective issues. Amounts
associated with the Company's firm-requirements wholesale customers and its
excluded resources are recognized immediately as expense or income as they are
incurred.
Income Taxes
The Company reports income tax expense in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, Accounting for Income Taxes.
SFAS No. 109 requires deferred income taxes for temporary differences between
book and tax to be recorded using the liability method. Deferred income taxes
are computed using the statutory tax rates scheduled to be in effect when the
temporary differences reverse. Current NMPUC jurisdictional rates include the
tax effects of the majority of these temporary differences (normalization).
Recovery of reversing temporary differences previously accounted for under the
flow-through method is also included in rates charged to customers. For
regulated operations, any changes in tax rates applied to accumulated deferred
income taxes may not be immediately recognized because of ratemaking and tax
accounting provisions contained in the Tax Reform Act of 1986. For items
accorded flow-through treatment under NMPUC orders, deferred income taxes and
the future ratemaking effects of such taxes, as well as corresponding regulatory
assets and liabilities, are recorded in the financial statements.
Accounting for Stock-Based Compensation
The Company has a stock option plan for certain selected key employees.
The Company accounts for this plan under Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees, under which no compensation cost
has been recognized (see note 7).
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of
In March 1995, the FASB issued SFAS No. 121. This statement requires
companies to review their long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of such assets may
not be recoverable. SFAS No. 121 also requires all regulatory assets, which must
have a high probability of recovery to be initially established, must continue
to meet that high probability standard to avoid being written off. However, if
written off, a regulatory asset can be restored if, through regulatory actions,
it again becomes probable of recovery. The adoption of SFAS No. 121 had no
impact on the Company's financial condition or results of operations.
F-10
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(2) Risks and Uncertainties
Competitive Electric Market
The electric utility industry is currently undergoing a period of
fundamental change intended to promote a competitive environment in the retail
and wholesale energy marketplaces. Legislators and regulators at both the state
and Federal level are considering whether, and how, to promote competition among
suppliers of electricity and how to provide customers with choice among
suppliers.
At the Federal level, the FERC promulgated a Notice of Proposed Rule Making
("Mega-NOPR") in March 1995, which proposes to require utilities to unbundle
their generation and transmission services and to provide open access
transmission. The Mega-NOPR also supplemented a prior NOPR concerning the
appropriate treatment of stranded asset costs associated with the transition.
Specifically, the FERC stated that recovery of legitimate and verifiable
stranded asset costs is critical to the successful transition of the electric
utility industry from a tightly regulated cost-of-service industry to an open
transmission access, competitively priced industry. The Company in its response
to the Mega-NOPR supported the FERC initiative toward open access transmission,
but requested that all transmission asset owners, including municipal and
Federal, be subject to the same requirements in order to establish a level
playing field for all participants in the electric utility industry. The Company
also agreed with the FERC regarding the proposed recovery of stranded asset
costs. A final decision on the Mega-NOPR is expected in the middle of 1996. On
January 22, 1996, a U.S. Senate bill, "Electricity Competition Act of 1996", was
introduced, providing a national framework for a competitive electric industry
by no later than the year 2010. The bill provides for recovery of stranded asset
costs. On February 14, 1996, the Council of Economic Advisors issued an economic
report to Congress in which it cautioned that electric industry competition
should ensure competitive benefits to all power buyers and should not aggravate
pollution or cause supply cuts to the poor. The report favors recovery of
stranded asset costs borne by all parties on whose behalf the stranded costs
were incurred, including customers that switch to other suppliers.
Representative Dan Schaeffer, Chairman of the Energy Subcommittee of the House
of Commerce Committee, has announced that he plans to conduct hearings on
electric industry restructuring, possibly beginning this summer. The Company
does not expect Congressional legislation to pass this year, but does expect
Congressional interest to continue next year.
F-11
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(2) Risks and Uncertainties (Continued)
In November 1995, after three years of study, the Integrated Water and
Resource Planning Committee of the New Mexico State Legislature (the "IWRPC")
issued a resolution reporting its findings on the advantages and disadvantages
of retail wheeling and alternative restructuring schemes applicable to the
electric power industry in New Mexico. The IWRPC's recommendation stated that
any proposed restructuring (i) must benefit all ratepayers in the state, (ii)
must maintain and possibly encourage the financial health and economic viability
of each of the state's utilities, (iii) must provide for appropriate protection
from unfair or advantaged competition from utilities or others from outside the
state, and (iv) must share equitably any costs, including stranded asset costs,
among the varied interests benefitted. The IWRPC also recommended that the
NMPUC, under legislative direction and guidance, should monitor and evaluate the
electric power industry and applicable market influences and factors and report
its findings, conclusions and recommendations to the New Mexico State
Legislature for legislative approval and action, as necessary, before any
proposed restructuring may be implemented. The resolution further indicated that
this continuing evaluation was necessary because of continuing changes even
though restructuring and retail wheeling are not justified or in the public
interest at this time. The Committee resolution was presented to the full
Legislature as a Senate Joint Memorial. It was unanimously passed by the Senate
and the House.
In November 1995, the NMPUC issued a Notice of Inquiry regarding the
restructuring of regulation of the electric utility industry in New Mexico. The
NMPUC is seeking input on a variety of questions related to competition, retail
wheeling and state vs. Federal jurisdiction. The Company in its February 15,
1996 response stated that it believes that: (i) competition and customer choice
may be beneficial to all affected interests in New Mexico if done appropriately
and (ii) in order to achieve restructuring, there must be cooperative state and
Federal action to avoid prolonged uncertainty and litigation, as well as to
avert inconsistent state actions that would inhibit the development of
competitive markets and restrict the benefits that they may provide. The Company
proposed a five-year period to accomplish the transition to a workable
competitive market. The Company also stated that it supports action by the
United States Congress to clarify boundaries between state and Federal
jurisdiction over the electric utility industry, and to ensure that retail
wheeling can be implemented in a manner that ensures fair competition and
provide utilities the opportunity to recover all stranded asset costs.
Although it is uncertain as to the ultimate outcome of possible open access
or retail wheeling initiatives, the Company will continue to be active at both
the state and Federal levels in the public policy debate on the restructuring of
the electric utility industry. By working with customers, regulators and
legislators, the Company believes that an agreement will be reached that will
protect the interests of stockholders as well as offer the potential benefits of
a competitive marketplace to all customers.
F-12
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(2) Risks and Uncertainties (Continued)
Uncertainties
The future structure of the industry, the form and timing of competition
and the method of regulation in a competitive environment remain uncertain. If
retail wheeling is implemented, it is possible that, based on other deregulated
industries' experiences, retail energy prices could drop significantly. Should
that be the case, the value of a utility's assets could be affected
significantly in the transition to a more competitive market from a traditional
rate regulated environment. Currently, the Company's generation costs are above
those of neighboring utilities to the north and east of the Company's service
territory.
The Company believes that the 1994 electric retail rate reduction improved
its competitive position, but recognizes that lower cost producers may have an
advantage if the regulatory framework changes significantly towards retail
wheeling. The Company's owned nuclear capacity is currently valued at
approximately $900 per KW. If the Company were required to value its leased
nuclear capacity at the same level as its owned nuclear capacity, it would be
valued at approximately $180 million versus approximately $560 million. If there
were no provision for the recovery of stranded asset costs, the Company would be
required to charge against earnings approximately $380 million.
Preparation for the Changes
In order to mitigate the exposures associated with a competitive electric
market and transition into this changing environment, the Company established
the following strategic plan in 1995: (i) secure financial flexibility by
retiring debt, (ii) control operation and maintenance costs, (iii) focus on
maximizing shareholder value for the nuclear generation assets, and (iv) develop
new business opportunities in the energy and utility related area. As part of
this plan, the Company restructured its operation into four distinctive business
units, each targeted at a specific segment of its customer base with emphasis on
being more customer oriented and responsive to the changing competitive
environment. The four business units are as follows: (i) Electric Services, (ii)
Gas Services, (iii) Bulk Power Services and (iv) Energy Services.
In order to maximize value of the nuclear generation assets, the Company's
board of directors (the "Board"), at its December 5, 1995 meeting, confirmed
that it is in the best interest of the Company at this time to focus its efforts
and resources on maximizing shareholder value from PVNGS as an asset (leased and
owned) of the Company rather than disposing of it. Growth in the region, rapid
growth in the Company's own local service territory and the continuous
improvement in the operating performance of the plant this year were all factors
in the change of approach. The Board stated that the Company no longer considers
it to be a goal to dispose of its interests in PVNGS.
F-13
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(2) Risks and Uncertainties (Continued)
On December 30, 1994, the Company filed a petition for declaratory order
with the NMPUC. In the petition, the Company requested, among other things, a
declaratory order that its corporate reorganization into four main business
units was in compliance with NMPUC regulations and previous orders and otherwise
lawful. Subsequently, on June 23, 1995, the Company filed an application for
authorization for the creation of three wholly-owned subsidiaries to: (i) manage
and operate water and wastewater systems, (ii) pursue energy marketing,
alternative fuel vehicle services and energy management services; and (iii)
pursue utility management services and related energy management services for
federal installations and large commercial customers. The Company 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 $30 million with these
subsidiaries. The NMPUC Staff filed a motion on September 20, 1995 to have the
case dismissed. On January 31, 1996, the hearing examiner assigned to the case
recommended that the NMPUC deny the Staff's motion. On February 5, 1996, the
Staff filed a motion seeking to have the Company file an immediate report on its
non-regulated activities being conducted without prior NMPUC approval; explain
why NMPUC approval is not required; and explain why sanctions should not be
considered if approval is required. On February 19, 1996, the Company filed its
response describing its non-utility (energy and utility related) activities and
presenting the legal authority demonstrating that prior NMPUC approval is not
required. The Company currently cannot predict the ultimate outcome of this
proceeding but intends to vigorously defend against any allegation that it is in
violation of any legal requirements.
F-14
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(3) Regulatory Assets and Liabilities
The Company is subject to the provisions of SFAS No. 71, "Accounting for
the Effects of Certain Types of Regulation" on operations regulated by the
NMPUC. Regulatory assets represent probable future revenue to the Company
associated with certain costs which will be recovered from customers through the
ratemaking process. Regulatory liabilities represent probable future reductions
in revenues associated with amounts that are to be credited to customers through
the ratemaking process. Regulatory assets and liabilities reflected in the
Consolidated Balance Sheets as of December 31, relate to the following:
1995 1994
---------- ----------
(in thousands)
Deferred Income Taxes................................$ 71,094 $ 77,020
Gas Take-or-Pay Costs................................ 50,870 64,858
Gas Imputed Revenues................................. 8,113 4,529
Loss on Reacquired Debt.............................. 6,377 7,360
Gas Reservation Fees................................. 5,622 2,805
Gas Retirees' Health Care Costs...................... 4,437 2,776
Gas Rate Case Costs.................................. 1,100 --
Purchased Gas Adjustment Clause...................... 931 2,868
Fuel and Purchased Power Cost Adjustment Clause...... 121 1,224
--------- ---------
Subtotal........................................ 148,665 163,440
--------- ---------
Deferred Income Taxes................................ (60,815) (64,877)
Customer Gain on Gas Assets Sale..................... (31,559) --
PVNGS Prudence Audit................................. (7,313) (7,688)
Settlement Due Customers............................. (4,101) (5,049)
Gain on Reacquired Debt.............................. (669) (842)
Revenue Subject to Refund............................ (382) --
--------- ---------
Subtotal (104,839) (78,456)
--------- ---------
Net Regulatory Assets...........................$ 43,826 $ 84,984
========= =========
If a portion of the Company's operations under the NMPUC jurisdiction
becomes no longer subject to the provisions of SFAS No. 71, a write off of
related regulatory assets and liabilities would be required, unless some form of
transition cost recovery (refund) continues through rates established and
collected for the Company's remaining regulated operations.
F-15
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(4) Capitalization
Changes in common stock, additional paid-in capital and cumulative
preferred stock are as follows:
<TABLE>
<CAPTION>
Cumulative Preferred Stock
------------------------------------------------
With Mandatory
Without Mandatory Redemption
Redemption Requirements
Common Stock Requirements Requirements
----------------------------------------- ----------------------- -----------------------
Additional Aggregate Aggregate
Number of Aggregate Paid-In Number Stated Number Stated
Shares Par Value Capital of Shares Value of Shares Value
------------ ------------ ----------- ---------- ----------- ----------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993..... 41,774,083 $ 208,870 $ 470,149 590,000 $ 59,000 243,861 $ 24,386
Redemption of preferred stock. -- -- (501) -- -- (64,111) (6,411)
---------- ------------ ----------- ------- ----------- -------- ----------
Balance at December 31, 1994..... 41,774,083 208,870 469,648 590,000 59,000 179,750 17,975
Redemption of preferred stock. -- -- 710 (462,000) (46,200) (179,750) (17,975)
---------- ------------ ----------- ------- ----------- -------- ----------
Balance at December 31, 1995..... 41,774,083 $ 208,870 $ 470,358 128,000 $ 12,800 -- --
========== ============ =========== ======= =========== ======== ==========
</TABLE>
Common Stock
The number of authorized shares of common stock with par value of $5 per
share is 80 million shares.
The Company has not declared dividends on its common stock since January
1989 and anticipates announcing a dividend plan sometime before the end of the
second quarter of 1996. The Company's board of directors reviews the Company's
dividend policy on a continuing basis. The resumption of common dividends is
dependent upon a number of factors including earnings and financial condition of
the Company and market conditions. The deficit in retained earnings was
eliminated during 1995.
Cumulative Preferred Stock
The number of authorized shares of cumulative preferred stock is 10
million shares. The Company's restated articles of incorporation limit the
amount of preferred stock which may be issued. The earnings test in the
Company's restated articles of incorporation currently allows for the issuance
of preferred stock.
On August 7, 1995, the Company redeemed, at par, all of its 8.48% Series,
8.80% Series and 8.75% Series of cumulative preferred stock outstanding as of
July 6, 1995. The redemption price of $64 million included accrued dividends
through the redemption date.
Long-Term Debt
Substantially all utility plant is pledged to secure the Company's first
mortgage bonds. A portion of certain series of long-term debt will be redeemed
serially prior to their due dates. The issuance of first mortgage bonds by the
Company is subject to earnings coverage and bondable property provisions of the
Company's first mortgage indenture. The Company also has the capability under
the mortgage indenture to issue first mortgage bonds on the basis of certain
previously retired bonds and earnings.
F-16
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(4) Capitalization (Continued)
On March 8, 1995, $121 million of PVNGS Lease Obligation Bonds ("LOBs")
were retired. The retired LOBs consisted of $58 million of 10.30% LOBs due 2014
retired at a price of 100% of par and $63 million of 10.15% LOBs due 2016
retired at a price of 97.8% of par. Additionally, $4.4 million and $4.8 million
of LOBs due 1996 and 1997 at interest rates of 9.125% and 8.95%, respectively,
were retired at par on March 22, 1995. In conjunction with these retirements,
the Company wrote off $1.5 million of net costs related to these transactions.
The retirement of the LOBs, which were the Company's highest cost debt, will
save the Company approximately $11 million annually in interest expense over a
five year period.
The aggregate amounts (in thousands) of maturities for 1996 through 2000
on long-term debt outstanding at December 31, 1995 are as follows:
1996.......................................................... $ 146
1997.......................................................... $ 16,470
1998.......................................................... $ 4,275
1999.......................................................... $ 16,185
2000.......................................................... $ 5,460
Fair Value of Financial Instruments
The estimated fair value of the Company's financial instruments
(including current maturities) at December 31, is as follows:
1995 1994
----------------- -------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
(In thousands)
Long-Term Debt.................$728,989 $730,337 $900,595 $805,000
Redeemable Preferred Stock..... -- -- $ 17,975 $ 15,638
Estimates are based on market quotes provided by the Company's investment
bankers.
F-17
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(5) Revolving Credit Facility and Other Credit Facilities
The carrying amounts reflected on the consolidated balance sheets
approximate fair value for cash, temporary investments, and receivables and
payables due to the short period of maturity.
At December 31, 1995, the Company had a $100 million secured revolving
credit facility (the "Facility") with an expiration date of June 30, 1998. The
Company must pay commitment fees of 3/8% per year on the total amount of the
Facility. The Company also has a $40 million credit facility, collateralized by
the Company's electric customer accounts receivable (the "Accounts Receivable
Facility") with an expiration date of December 20, 1998. On January 30, 1996,
the Company requested NMPUC approval 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. This would increase the
Company's liquidity arrangements up to $211 million from $151 million, including
local lines of credit of $11 million. As of December 31, 1995, there were no
borrowings outstanding under the Facility, the Accounts Receivable Facility or
any of the local lines of credit.
F-18
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(6) Income Taxes
Income taxes consist of the following components:
1995 1994 1993
---- ---- ----
(In thousands)
Current Federal income tax...........................$45,940 $24,243 $ 12,502
Current State income tax............................. 5,864 -- --
Deferred Federal income tax.......................... (3,212) 15,449 (52,827)
Deferred State income tax............................ 7,031 8,077 (8,433)
Amortization of accumulated investment tax credits... (4,442) (4,701) (5,036)
Recognition of accumulated deferred investment tax
credits relating to sales of utility property .... (388) (2,197) (3,284)
------ ------ -------
Total income taxes................................$50,793 $40,871 $(57,078)
======= ======= ========
Charged to operating expenses........................$30,194 $44,210 $ 25,721
Charged (credited) to other income and deductions.... 20,599 (3,339) (82,799)
------ ------ -------
Total income taxes ...............................$50,793 $40,871 $(57,078)
======= ======= ========
The Company's provision for income taxes differed from the Federal income
tax computed at the statutory rate for each of the years shown. The differences
are attributable to the following factors:
1995 1994 1993
---- ---- ----
(In thousands)
Federal income tax at statutory rates................$44,224 $42,417 $(41,497)
Investment tax credits............................... (4,442) (4,701) (5,036)
Depreciation of flow-through items................... 723 1,112 1,719
Gains on the sale and leaseback of PVNGS
Units 1 and 2..................................... (527) (527) (514)
State income tax..................................... 7,146 5,222 (5,585)
Gains on sale of utility property.................... 3,090 (2,139) (3,169)
Federal income tax rate change to 35%................ -- -- (2,527)
Other................................................ 579 (513) (469)
------- ------- ---------
Total income taxes ...............................$50,793 $40,871 $(57,078)
======= ======= ========
F-19
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(6) Income Taxes (Continued)
Deferred income taxes result from certain differences between the
recognition of income and expense for tax and financial reporting purposes, as
described in note 1. The major sources of these differences for which deferred
taxes have been provided and the tax effects of each are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------ --------------
(In thousands)
<S> <C> <C> <C>
Deferred fuel costs............................................. $ (3,990) $ (1,945) $ 4,549
Depreciation and cost recovery.................................. 12,730 22,118 17,668
Loss provision for the M-S-R power purchase contract............ 3,497 5,632 6,335
Contributions in aid of construction............................ (4,308) (5,055) (4,491)
Alternative minimum tax in excess of regular tax................ (26,002) (24,100) (13,808)
Net operating losses utilized .................................. 55,217 35,077 15,067
PVNGS decommissioning........................................... (2,321) (2,445) (3,962)
Write-down of interests in PVNGS Units 1 and 2.................. -- -- (51,585)
Hedge loss write-off............................................ -- -- (3,908)
Loss on reacquired debt write-off............................... -- -- (5,561)
Gains on sale of utility property............................... (29,868) (8,421) (11,321)
Contribution to 401(h) plan..................................... (885) 1,204 (3,226)
Reserve for litigation.......................................... -- -- (1,979)
OLE Transmission Project........................................ (3,177) (792) (929)
Other........................................................... 2,926 2,253 (4,109)
------------- ----------- ----------
Net deferred taxes provided.................................. $ 3,819 $ 23,526 $ (61,260)
============= =========== ==========
</TABLE>
The components of the net accumulated deferred income tax liability
were:
1995 1994
------------ ------------
(In thousands)
Deferred Tax Assets:
Net operating losses.............................. $ -- $ 51,199
Alternative minimum tax credit carryforward....... 66,628 40,626
Nuclear decommissioning........................... 14,023 11,703
Regulatory liabilities............................ 60,070 64,877
Other............................................. 45,403 41,446
------------ ------------
Total deferred tax assets......................$ 186,124 $ 209,851
------------ ------------
Deferred Tax Liabilities:
Depreciation......................................$ 168,562 $ 175,068
Investment tax credit............................. 66,734 71,564
Fuel costs........................................ 24,804 28,794
Regulatory assets................................. 70,348 77,020
Other............................................. 1,239 6,176
------------ ------------
Total deferred tax liabilities................. 331,687 358,622
------------ ------------
Accumulated deferred income taxes, net...............$ 145,563 $ 148,771
============ ============
F-20
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(6) Income Taxes (Continued)
The Company has no net operating loss carryforwards as of December 31,
1995.
The Company defers investment tax credits related to utility assets and
amortizes them over the estimated useful lives of those assets. Investment tax
credits related to non-utility assets have been flowed through in earlier years.
(7) Employee and Post-Employment Benefits
Pension Plan
The Company and its subsidiaries have a pension plan covering
substantially all of their employees, including officers. The plan is
non-contributory and provides for benefits to be paid to eligible employees at
retirement based primarily upon years of service with the Company and the
average of their highest annual base salary for three consecutive years. The
Company's policy is to fund actuarially-determined contributions. Contributions
to the plan reflect benefits attributed to employees' years of service to date
and also for services expected to be provided in the future. Plan assets
primarily consist of common stock, fixed income securities, cash equivalents and
real estate. The components of pension cost (in thousands) are as follows:
1995 1994 1993
----------- ----------- -----------
Service cost...........................$ 6,770 $ 8,121 $ 7,263
Interest cost.......................... 18,332 17,589 16,849
Actual loss (return) on plan assets.... (42,148) 1,079 (18,148)
Net amortization and deferral.......... 23,295 (18,731) (878)
----------- ----------- -----------
Net periodic pension cost.............. 6,249 8,058 5,086
Curtailment loss....................... -- -- 1,657
----------- ----------- -----------
Total pension expense..................$ 6,249 $ 8,058 $ 6,743
=========== =========== ===========
F-21
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(7) Employee and Post-Employment Benefits (Continued)
The following sets forth the plan's funded status and amounts (in
thousands) at December 31:
1995 1994
------------ ------------
Vested benefits.................................... $ 222,501 $ 183,364
Non-vested benefits................................ 10,556 8,071
------------ ------------
Accumulated benefit obligation..................... 233,057 191,435
Effect of future compensation levels............... 46,889 36,581
------------ ------------
Projected benefit obligation....................... 279,946 228,016
Fair value of plan assets.......................... 246,670 208,751
------------ ------------
Projected benefit obligation in excess of assets... 33,276 19,265
Unrecognized prior service cost.................... (214) (248)
Net unrecognized loss from past experience
different from assumed and the effects of
changes in assumptions.......................... (41,185) (27,183)
Unamortized asset at transition, being amortized
through the year 2002........................... 6,978 8,142
------------ ------------
Accrued pension asset.............................. $ (1,145) $ (24)
============ ===========
The weighted average discount rate used to measure the projected benefit
obligation was 7.50% and 8.25% for 1995 and 1994, respectively, and the expected
long-term rate of return on plan assets was 8.75% for 1995 and 1994. The rate of
increase in future compensation levels based on age-related scales was 4.1% for
1995 and 1994.
Other Postretirement Benefits
The Company provides medical and dental benefits to eligible retirees.
Currently, retirees are offered the same benefits as active employees after
reflecting Medicare coordination. The components of postretirement benefit cost
(in thousands) are as follows:
1995 1994 1993
---------- -------- ----------
Service cost................................$ 1,869 $ 1,389 $ 1,175
Interest cost............................... 4,962 3,250 2,974
Actual loss (return) on plan assets......... (2,726) 100 (56)
Transition obligation amortization.......... 1,817 1,817 1,857
Net amortization and deferral............... 2,498 (295) --
---------- -------- ----------
Net periodic postretirement benefit cost.... 8,420 6,261 5,950
Curtailment loss............................ -- -- 4,295
---------- -------- ----------
Total postretirement benefit expense........$ 8,420 $ 6,261 $ 10,245
========== ======== ==========
F-22
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(7) Employee and Post-Employment Benefits (Continued)
The following sets forth the plan's funded status and amounts (in
thousands) at December 31:
1995 1994
------------ -------------
Accumulated benefit obligations for:
Retirees....................................... $ 29,088 $ 32,085
Fully eligible employees....................... 7,144 1,848
Active employees............................... 39,854 27,387
----------- ------------
Accumulated benefit obligation.................... 76,086 61,320
Fair value of plan assets......................... 15,600 8,559
----------- ------------
Funded status..................................... (60,486) (52,761)
Net unrecognized loss............................. 22,196 15,310
Unrecognized transition obligation (being
amortized through the year 2012)............... 30,891 32,708
----------- ------------
Accrued postretirement liability.................. $ (7,399) $ (4,743)
=========== ============
Plan assets consist primarily of domestic common stock, fixed income
securities and cash equivalents.
The weighted average discount rate used to measure the projected benefit
obligation was 7.5% and 8.25% for 1995 and 1994, respectively, and the expected
long-term rate of return on plan assets was 8.75% for 1995 and 1994. The health
care cost trend rate was 8.0%, 7.5% and 6.0% for 1995, 1994 and 1993,
respectively. The effect of a 1% increase in the health care trend rate
assumption would increase the accumulated postretirement benefit obligation as
of December 31, 1995 by approximately $11.8 million and the aggregate service
and interest cost components of net periodic postretirement benefit cost for
1995 by approximately $1.2 million. The health care cost trend rate was expected
to decrease to 6.0% by 2010 and to remain at that level thereafter.
The Company received NMPUC approval in 1994 for the recovery of the full
accrual amount of Electric Business Unit's retirees' health care costs expense.
The Company currently defers the benefit costs in excess of the pay-as-you-go
basis for PNMGS ($4.4 million deferred as of December 31, 1995) and has
addressed the recovery of this amount as well as the full accrual amount of
retirees' health care costs related to PNMGS in its general rate case which was
filed in August 1995.
Performance Stock Plan
In 1993, the Company adopted a nonqualified stock option plan covering a
group of management employees. Options are granted at the fair market value of
the shares on the date of grant. Options granted through December 31, 1995, vest
on June 30, 1996, and have a purchase term of up to 10 years.
F-23
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(7) Employee and Post-Employment Benefits (Continued)
The Performance Stock Plan activity for 1993, 1994 and 1995 is summarized
as follows:
Shares Range of
Subject Exercise Prices
to Option Per Share
------------- ----------------------
Balance at December 31, 1993....... 370,000 $13.75
Options Granted............... 817,135 $11.50 - $13.00
Options Cancelled............. --
Balance at December 31, 1994....... 1,173,542 $11.50 - $13.75
Options Granted............... 507,238 $17.625
Options Cancelled............. --
Balance at December 31, 1995....... 1,664,500 $11.50 - $17.625
Options may be exercised following vesting as described in the plan. The
aggregate maximum number of options granted under the current plan during its
five-year time frame is two million shares, subject to certain adjustments. As
proposed under an amended plan, all subsequent awards granted after December 31,
1995, shall vest three years from the grant date of the award and the maximum
number of options would be increased to five million shares through December 31,
2000. This amended plan is subject to shareholder approval at the next annual
meeting in April 1996.
Executive Retirement Program
The Company has an executive retirement program for a group of management
employees. The program was intended to attract, motivate and retain key
management employees. The Company's projected benefit obligation for this
program, as of December 31, 1995, was $18.5 million, of which the accumulated
and vested benefit obligation was $17.6 million. As of December 31, 1995, the
Company has recognized an additional liability of $1.6 million for the amount of
unfunded accumulated benefits in excess of accrued pension costs. The net
periodic pension cost for 1995, 1994 and 1993 was $2.0 million, $2.2 million and
$2.1 million, respectively. In 1989, the Company established an irrevocable
grantor trust in connection with the executive retirement program. Under the
terms of the trust, the Company may, but is not obligated to, provide funds to
the trust, which was established with an independent trustee, to aid it in
meeting its obligations under such program. Funds in the amount of approximately
$10.5 million (fair market value of $13.0 million) are presently in trust. No
additional funds have been provided to the trust since 1989.
(8) Construction Program and Jointly-Owned Plants
It is estimated that the Company's construction expenditures for 1996 will
be approximately $123 million, including expenditures on jointly-owned projects.
The Company's proportionate share of expenses for the jointly-owned plants is
included in operating expenses in the consolidated statements of earnings.
F-24
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(8) Construction Program and Jointly-Owned Plants (Continued)
At December 31, 1995, the Company's interests and investments in
jointly-owned generating facilities are:
<TABLE>
<CAPTION>
Construction
Plant in Accumulated Work in Composite
Station (Fuel Type) Service Depreciation Progress Interest
- ------------------- ------- ------------ -------- --------
(In thousands)
<S> <C> <C> <C> <C>
San Juan Generating Station (Coal).... $ 729,516 $ 308,656 $ 5,653 46.3%
Palo Verde Nuclear Generating
Station (Nuclear)*................. $ 189,504 $ 38,301 $ 15,743 10.2%
Four Corners Power Plant Units 4
and 5 (Coal)....................... $ 115,729 $ 42,179 $ 4,316 13.0%
- -----------
</TABLE>
* Includes the Company's interest in PVNGS Unit 3, the Company's
interest in common facilities for all PVNGS units and the 22%
beneficial interests in the PVNGS Units 1 and 2 leases.
San Juan Generating Station ("SJGS")
The Company operates and jointly owns SJGS. At December 31, 1995, SJGS
Units 1 and 2 are owned on a 50% shared basis with Tucson Electric Power
Company, Unit 3 is owned 50% by the Company, 41.8% by Southern California Public
Power Authority and 8.2% by Century Power Corporation ("Century"). Century sold
its remaining 8.2% interest to Tri-State Generation and Transmission
Association, Inc. Unit 4 is owned 38.457% by the Company, 8.475% by the City of
Farmington, 28.8% by M-S-R Public Power Agency, a California public power agency
("M-S-R"), 7.2% by the County of Los Alamos, 10.04% by the City of Anaheim,
California and 7.028% by Utah Associated Municipal Power Systems.
Palo Verde Nuclear Generating Station
The Company has a 10.2% interest in PVNGS. Commercial operation commenced
in 1986 for Unit 1 and Unit 2 and 1988 for Unit 3. In 1985 and 1986, the Company
completed sale and leaseback transactions for its undivided interests in Units 1
and 2 and certain related common facilities.
In 1992, the Company purchased approximately 22% of the beneficial
interests in PVNGS Units 1 and 2 leases for approximately $17.5 million,
recording $158.3 million as utility plant and $140.8 million as long-term debt.
In 1993, such utility plant was written down to $46.7 million in conjunction
with the electric retail rate reduction.
F-25
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(8) Construction Program and Jointly-Owned Plants (Continued)
The PVNGS participants have insurance for public liability payments
resulting from nuclear energy hazards to the full limit of liability under
Federal law. This potential liability is covered by primary liability insurance
provided by commercial insurance carriers in the amount of $200 million and the
balance by an industry wide retrospective assessment program. The maximum
assessment per reactor under the retrospective rating program for each nuclear
incident occurring at any nuclear power plant in the United States is
approximately $79.3 million, subject to an annual limit of $10 million per
incident. Based upon the Company's 10.2% interest in the three PVNGS units, the
Company's maximum potential assessment per incident is approximately $24.3
million, with an annual payment limitation of $3 million. The insureds under
this liability insurance include the PVNGS participants and "any other person or
organization with respect to his legal responsibility for damage caused by the
nuclear energy hazard".
The PVNGS participants maintain "all-risk" (including nuclear hazards)
insurance for nuclear property damage to, and decontamination of, property at
PVNGS in the aggregate amount of approximately $2.75 billion as of January 1,
1996, a substantial portion of which must first be applied to stabilization and
decontamination. The Company has also secured insurance against a portion of the
increased cost of generation or purchased power resulting from certain
accidental outages of any of the three PVNGS units if such outage exceeds 21
weeks.
The Company has a program for funding its share of decommissioning costs
for PVNGS. Under this program, the Company makes a series of annual deposits to
an external trust over the estimated useful life of each unit with the trust
funds being invested under a plan which allows the accumulation of funds largely
on a tax-deferred basis through the use of life insurance policies on certain
current and former employees. The results of the 1995 decommissioning study
indicate that the Company's share of the PVNGS decommissioning costs will be
approximately $145.6 million, a decrease from $157.8 million based on the
previous 1992 study (both amounts are stated in 1995 dollars).
The Company has determined that a supplemental investment program will be
needed as a result of both cost increases identified in the 1992 study and the
lower than anticipated performance of the existing program. On September 29,
1995, the Company filed a request for permission from the NMPUC to establish a
qualified tax advantaged trust for PVNGS Units 1 and 2. Due to Internal Revenue
Service ("IRS") regulations, PVNGS Unit 3 will remain in a non-qualified trust.
The Company, on February 7, 1996, filed a motion for interim relief for
establishment of a qualified trust pending final NMPUC action. The interim
request was necessary in order to meet the March 15 deadline under IRS
requirements for the qualified trust to be effective for the current year. On
February 19, 1996, the NMPUC granted this request.
The market value of the existing trust at the end of 1995 was
approximately $12.4 million, which includes the cash surrender value of the
current insurance policies.
F-26
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(9) Long-Term Power Contracts and Franchises
The Company had two long-term contracts for the purchase of electric
power. Under a contract with M-S-R, which expired in early 1995, the Company was
obligated to pay certain minimum amounts and a variable component representing
the expenses associated with the energy purchased and debt service costs
associated with capital improvements. Total payments under this contract
amounted to approximately $14 million for 1995 and $42 million in each year for
1994 and 1993.
The Company has a long-term contract with Southwestern Public Service
Company ("SPS") for up to 200 MW of interruptible power from May 1995 through
May 2011. Total payments under this contract amounted to approximately $12.1
million in 1995. Minimum payments under the contract amount to approximately
$14.0 million for 1996 and 1997. In addition, the Company will be required to
pay for any energy purchased under the contract. The amount of minimum payments
for future years will depend on whether the Company exercises its option to
reduce its purchase obligations under the contract. The Company provided such
notice in 1995 to reduce the purchase by 25 MW in 1999.
(10) Lease Commitments
The Company classifies its leases in accordance with generally accepted
accounting principles. The Company leases Units 1 and 2 of PVNGS, transmission
facilities, office buildings and other equipment under operating leases. The
lease expense for PVNGS is $66.3 million per year over base lease terms expiring
in 2015 and 2016. Prior to 1992, the aggregate lease expense for the PVNGS
leases was $84.6 million per year over the base lease terms; however, this
amount was reduced by the purchase of approximately 22% of the beneficial
interests in the PVNGS Units 1 and 2 leases (see note 8). Each PVNGS lease
contains renewal and fair market value purchase options at the end of the base
lease term.
Future minimum operating lease payments (in thousands) at December 31,
1995 are:
1996................................................ $ 77,926
1997................................................ 77,674
1998................................................ 77,563
1999................................................ 77,268
2000................................................ 77,217
Later years......................................... 1,102,754
-------------
Total minimum lease payments..................... $ 1,490,402
=============
Operating lease expense, inclusive of PVNGS leases, was approximately $80
million in 1995, $79.1 million in 1994 and $80.6 million in 1993. Aggregate
minimum payments to be received in future periods under noncancelable subleases
are approximately $7.2 million.
F-27
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(11) Environmental Issues and Fossil-Fueled Plant Decommissioning Costs
The Company is committed to complying with all applicable environmental
regulations in a responsible manner. Environmental issues have presented and
will continue to present a challenge to the Company. The Company has evaluated
the potential impacts of the following environmental issues and believes, after
consideration of established reserves, that the ultimate outcome of these
environmental issues will not have a material adverse effect on the Company's
financial condition or results of operations.
Electric Operations
Person Station
The Company, in compliance with the New Mexico Environment Department
("NMED") Corrective Action Directive, determined that groundwater contamination
exists in the deep and shallow water aquifers. The Company is required to
delineate the extent of the contamination and remediate the contaminants in the
groundwater. The extent of the contaminated plume in the deep water aquifer has
been assessed and results have been reported to the NMED. The Company has also
proposed revised remedial options to the NMED. The Company is awaiting a final
response from the NMED. The Company's current estimate to decommission its
retired fossil-fueled plants includes approximately $10.9 million to complete
the groundwater remediation program at Person Station. As part of the financial
assurance requirement of the Person Station Hazardous Waste Permit, the Company
posted a $5.1 million performance bond with a trustee. The remediation program
continues on schedule.
Santa Fe Station
The NMED has been conducting an investigation of the groundwater
contamination detected beneath the Santa Fe Station site to determine the source
of the contamination. The Company has been and is continuing to cooperate with
the NMED site investigation pursuant to a settlement agreement between the
Company and the NMED. In May 1995, the Company received a letter from the NMED
indicating that the NMED had made a determination that Santa Fe Station was the
source of gasoline-contaminated groundwater at the site and vicinity. The
Company contested the NMED's determination and believes insufficient data exists
to definitely identify the sources of groundwater contamination. A minimum site
assessment ("MSA") of the two former underground storage tank sites at the Santa
Fe Station site was conducted by the Company under the settlement agreement. The
MSA report indicated that the Santa Fe Station site does not appear to have been
a source of gasoline contamination. The MSA report has been submitted to the
NMED and is currently pending NMED review.
F-28
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(11) Environmental Issues and Fossil-Fueled Plant Decommissioning Costs
(Continued)
Albuquerque Electric Service Center
Trenching work at the electric service center revealed oil contaminated
soil in an area of the service center where used oil in drums were stored. The
trenched area bisects a small portion of the storage area, indicating that
potentially the entire area could be underlain with contaminated soil. The
Company requested a laboratory analysis on the soil to determine the type of
contamination. The Company may be required to assess soil and groundwater for
contamination as well as remediate extensive volumes of soil in the area. The
Company currently cannot predict the outcome of the analysis, to what extent the
soil was contaminated or the costs of the remediation, if any.
In addition, leaking fuel lines, which have been replaced, caused soil
and groundwater contamination in the vicinity of the leak. The Company proposed
a quarterly sampling plan to the NMED for the site. The NMED has expressed
concerns regarding the placement of monitoring wells and the relatively high
levels of residual contamination remaining in the soil at the site. Based on the
recent analysis of the groundwater sampling, the contaminated soil does not
appear to be a continual recharge source to the groundwater contamination. The
NMED may require additional monitoring wells and soil remediation work at the
site.
Gas Operations
Air Permits
In 1994, following an environmental audit performed in conjunction with
the Company's sale of certain gas assets, which audit brought to light certain
discrepancies regarding required air permits associated with certain natural gas
facilities, the Company met with the NMED to discuss the nature of the permit
discrepancies and to propose methods and schedules to resolve the discrepancies.
The Company submitted in 1994 its permit modification application for the
Lybrook Gas Processing Plant ("Lybrook"). The Lybrook permit has now been issued
to Williams Gas Processing-Blanco, Inc.("Williams"), the purchaser of the gas
assets.
The Company submitted an air permit modification application for the Kutz
Canyon Gas Processing Plant ("Kutz") in the first quarter of 1995. In October
1995, the Company received a Notice of Violation ("NOV") from the NMED with
specified corrective actions on the permit discrepancies in the Kutz air permit.
In January 1996, the Company accepted a settlement offer for the NOV from the
NMED in the amount of $15,000. The Company cannot predict when the final permit
will be issued by the NMED or whether additional requirements will be imposed by
the NMED as conditions for issuance of the permit.
F-29
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(11) Environmental Issues and Fossil-Fueled Plant Decommissioning Costs
(Continued)
Gas Wellhead Pit Remediation
The New Mexico Oil Conservation Commission ("NMOCC") issued an order,
effective on January 14, 1993, that affects the gas gathering facilities, which
were sold to Williams, located in the San Juan Basin in northwestern New Mexico.
The order prohibits the further discharge of fluids associated with the
production of natural gas into unlined earthen pits in certain specified areas
of the San Juan Basin. The order also required the submission of closure plans
for the closure of pits in which production fluids were previously discharged.
The Bureau of Land Management ("BLM") has issued a similar ruling. The Company
has complied with such rulings and submitted and received approval of the pit
closure plans from the New Mexico Oil Conservation Division ("OCD"), the Energy
Minerals and Natural Resources Department, as well as the BLM.
The Company has received letters and directives from the OCD directing
the Company to determine if certain unlined discharge pits have contributed to
the groundwater contamination plumes that were identified at those sites. The
Company is currently assessing the sites in accordance with the OCD directive.
The Company continues to assess unlined pits in accordance with the OCD
directive and is addressing potential groundwater contamination issues as they
arise during the assessment process.
On March 3, 1995, the Jicarilla Apache Tribe ("Jicarilla") enacted an
ordinance directing that unlined surface impoundments located within
environmentally sensitive areas be remediated and closed by December 1996, and
that all other unlined surface impoundments on Jicarilla's lands be remediated
and closed by December 1998. The Company has received a claim for
indemnification by Williams for the environmental work required to comply with
the Jicarilla ordinance. The Company has submitted a closure/remediation plan to
the Jicarilla, which has been approved, and the Company anticipates initiating
the remediation process in the spring of 1996. The costs of remediation will be
charged against the $10.6 million indemnification cap contained in the purchase
and sale agreement between the Company and Williams (see note 12). The Company
does not anticipate that the claim for indemnification will have any material
impact on the Company's financial condition or results of operations.
Fossil-Fueled Plant Decommissioning Costs
The Company's six owned or partially owned, in service and retired,
fossil-fueled generating stations are expected to incur dismantling and
reclamation costs as they are decommissioned. The Company's share of
decommissioning costs for all of its fossil-fueled generating stations is
projected to be approximately $141 million stated in 1995 dollars, including
approximately $24.0 million (of which $12.1 million has already been expended)
for Person, Prager and Santa Fe Stations which have been retired.
The Company is currently recovering estimated decommissioning costs from
NMPUC retail customers through its depreciation rates. Depreciation amounts for
the retired generating units are not being recovered.
F-30
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(12) Asset Sales
Sale of Sangre de Cristo Water Company
In February 1994, the Company and the City of Santa Fe (the "City")
executed a purchase and sale agreement for the Company's water division, subject
to NMPUC approval. On May 22, 1995, the NMPUC issued a final order approving the
sale. On July 3, 1995, the closing of the sale was finalized. As a result, the
Company received $51.2 million (exclusive of current assets netted against
current liabilities) from the sale and recorded an after-tax gain of $6.4
million, or 15 cents per share. Pursuant to the purchase and sale agreement, the
Company, through its Energy Services Unit, will continue to operate the water
utility up to four years for a fee under a contract with the City.
Sale of Gas Gathering and Processing Assets
As part of the Company's announced action plan in 1993 to focus on its
core utility business, the Company, in 1994, entered into an agreement with
Williams for the sale of substantially all of the assets of Gathering Company
and Processing Company and for the sale of Northwest and Southeast gas gathering
and processing facilities of the Company.
The sales transaction provides for three 10-year contracts, each with an
option to renew for an additional 5-year term, with Williams for competitively
priced gathering and processing services. The purchase and sale agreement
contains contractual requirements for the Company to address various
environmental deficiencies identified as retained liabilities. It also contains
environmental representations and warranties and indemnification provisions
whereby the Company indemnifies Williams for a five-year period after closing
for breaches of the environmental representations and warranties and against
third party claims to a maximum of $10.6 million. After the $10.6 million cap
has been reached, or after the expiration of the five-year post-closing
indemnification period, whichever comes first, Williams indemnifies the Company
against further environmental expenditures related to the properties sold. On
June 30, 1995, following NMPUC approval, the Company and Williams closed the
sale of the assets. As a result, the Company and its gas subsidiaries received
$154 million from Williams and recognized an after-tax gain of $12.8 million, or
31 cents per share. Under the NMPUC approval, the Company recorded a liability
of approximately $35 million, representing an estimate of a portion of the gain
resulting from the sale, which will be credited to the Company's gas customers'
bills over five years. After completion of the fifth year, the amount of the
gain will be recalculated to reflect actual expenses associated with the
transaction which were appropriately and legitimately incurred. Such amount
should include amounts expended to indemnify Williams as described above. Any
resulting differences will be refunded or billed to customers over a one year
period.
As a result of the gas assets sales, the operations of the Company's two
wholly-owned gas subsidiaries, Gathering Company and Processing Company, have
been substantially discontinued, effective June 30, 1995.
F-31
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(13) Segment Information
The financial information pertaining to the Company's electric, gas and
other operations for the years ended December 31, 1995, 1994 and 1993 are as
follows:
<TABLE>
<CAPTION>
Electric* Gas Other Total
--------------- ------------ ----------- --------------
(In thousands)
<S> <C> <C> <C> <C>
1995:
Operating revenues.....................................$ 584,284 $ 217,985 $ 6,196 $ 808,465
Operating expenses excluding income taxes.............. 470,824 190,128 3,931 664,883
--------------- ------------ ----------- --------------
Pre-tax operating income............................... 113,460 27,857 2,265 143,582
Operating income tax................................... 24,884 4,313 997 30,194
--------------- ------------ ----------- --------------
Operating income.......................................$ 88,576 $ 23,544 $ 1,268 $ 113,388
=============== ============ =========== ==============
Depreciation and amortization expense..................$ 63,047 $ 17,248 $ 570 $ 80,865
=============== ============ =========== ==============
Construction expenditures..............................$ 76,610 $ 26,315 $ 4,741 $ 107,666
=============== ============ =========== ==============
Identifiable assets:
Net utility plant...................................$ 1,298,103 $ 276,218 $ 113 $ 1,574,434
Other............................................... 327,547 125,387 8,301 461,235
--------------- ------------ ----------- --------------
Total assets......................................$ 1,625,650 $ 401,605 $ 8,414 $ 2,035,669
=============== ============ =========== ==============
1994:
Operating revenues.....................................$ 621,794 $ 269,510 $ 13,407 $ 904,711
Operating expenses excluding income taxes.............. 468,519 233,743 7,161 709,423
--------------- ------------ ----------- --------------
Pre-tax operating income............................... 153,275 35,767 6,246 195,288
Operating income tax................................... 32,998 9,158 2,054 44,210
--------------- ------------ ----------- --------------
Operating income.......................................$ 120,277 $ 26,609 $ 4,192 $ 151,078
=============== ============ =========== ==============
Depreciation and amortization expense.....................$ 56,003 $ 16,847 $ 1,287 $ 74,137
=============== ============ =========== ==============
Construction expenditures..............................$ 80,282 $ 31,518 $ 8,506 $ 120,306
=============== ============ =========== ==============
Identifiable assets:
Net utility plant...................................$ 1,302,467 $ 341,232 $ 52,988 $ 1,696,687
Other............................................... 307,010 187,748 11,820 506,578
--------------- ------------ ----------- --------------
Total assets......................................$ 1,609,477 $ 528,980 $ 64,808 $ 2,203,265
=============== ============ =========== ==============
</TABLE>
F-32
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995, 1994 and 1993
(13) Segment Information (Continued)
<TABLE>
<CAPTION>
Electric* Gas Other Total
--------------- ------------ ----------- --------------
(In thousands)
<S> <C> <C> <C> <C>
1993:
Operating revenues.....................................$ 589,728 $ 271,087 $ 13,063 $ 873,878
Operating expenses excluding income taxes.............. 467,659 239,859 7,355 714,873
--------------- ------------ ----------- --------------
Pre-tax operating income............................... 122,069 31,228 5,708 159,005
Operating income tax................................... 19,184 5,347 1,190 25,721
--------------- ------------ ----------- --------------
Operating income.......................................$ 102,885 $ 25,881 $ 4,518 $ 133,284
=============== ============ =========== ==============
Depreciation and amortization expense..................$ 59,298 $ 16,859 $ 1,169 $ 77,326
=============== ============ =========== ==============
Construction expenditures..............................$ 67,886 $ 26,593 $ 2,847 $ 97,326
=============== ============ =========== ==============
Identifiable assets:
Net utility plant...................................$ 1,324,110 $ 333,862 $ 45,960 $ 1,703,932
Other............................................... 257,153 240,908 10,196 508,257
--------------- ------------ ----------- --------------
Total assets......................................$ 1,581,263 $ 574,770 $ 56,156 $ 2,212,189
=============== ============ =========== ==============
</TABLE>
- -----------
* Includes the resources excluded from NMPUC regulation.
On June 30, 1995, the Company sold substantially all of the gas gathering
and processing assets of the Company and its gas subsidiaries and on July 3,
1995, the Company sold its water division (see note 12).
F-33
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
QUARTERLY OPERATING RESULTS
The unaudited operating results by quarters for 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
Quarter Ended
------------------------------------------------------------------
March 31 June 30 September 30 December 31
------------- ------------- ---------------- ---------------
(In thousands except per share amounts)
------------- ---------------- ---------------
<S> <C> <C> <C> <C>
1995:
Operating Revenues............................... $ 230,235 $ 191,532 $ 195,586 $ 191,112
Operating Income................................. $ 33,731 $ 25,024 $ 34,734 $ 19,899
Net Earnings (1)................................. $ 18,184 $ 23,419 $ 28,969 $ 4,990
Net Earnings per Share (1)....................... $ 0.40 $ 0.52 $ 0.68 $ 0.12
1994:
Operating Revenues............................... $ 260,807 $ 204,260 $ 218,717 $ 220,927
Operating Income................................. $ 42,671 $ 32,150 $ 43,606 $ 32,651
Net Earnings .................................... $ 24,103 $ 19,248 $ 21,789 $ 15,178
Net Earnings per Share .......................... $ 0.54 $ 0.42 $ 0.48 $ 0.33
</TABLE>
In the opinion of management of the Company, all adjustments (consisting
of normal recurring accruals) necessary for a fair statement of the results
of operations for such periods have been included.
- -------------------
(1) On June 30, 1995, the Company consummated the sale of substantially all
of the gas gathering and processing assets of the Company and its gas
subsidiaries to Williams. The Company recorded an after-tax gain of
$12.8 million, or 31 cents per share. On July 3, 1995, the Company
consummated the sale of the Company's water division to the City of
Santa Fe. The Company recorded an after-tax gain of $6.4 million, or 15
cents per share.
F-34
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Electric Service Energy Sales -- KWh (in thousands):
Residential.................................. 1,795,371 1,786,292 1,683,213 1,650,491 1,606,993
Commercial................................... 2,578,243 2,534,507 2,398,725 2,353,152 2,299,213
Industrial................................... 1,434,974 1,268,208 1,145,369 1,087,357 1,025,420
Other ultimate customers..................... 220,777 364,144 219,481 267,246 208,328
--------- --------- --------- --------- ---------
Total sales to ultimate customers......... 6,029,365 5,953,151 5,446,788 5,358,246 5,139,954
Sales for resale............................. 2,590,513 3,361,933 3,375,216 3,685,418 3,091,541
--------- --------- --------- --------- ---------
Total KWh sales........................... 8,619,878 9,315,084 8,822,004 9,043,664 8,231,495
========= ========= ========= ========= =========
Electric Revenues (in thousands):
Residential.................................. $ 168,633 $ 172,559 $ 163,131 $ 158,190 $ 155,162
Commercial................................... 218,222 229,851 218,263 211,086 207,929
Industrial................................... 79,964 79,729 74,157 69,590 67,031
Other ultimate customers..................... 18,749 24,147 15,548 16,521 14,472
--------- --------- --------- --------- ---------
Total revenues to ultimate
customers............................... 485,568 506,286 471,099 455,387 444,594
Sales for resale............................. 80,949* 96,821* 99,895* 123,291 107,636
--------- --------- --------- --------- ---------
Total revenues from energy sales.......... 566,517 603,107 570,994 578,678 552,230
Miscellaneous electric revenues.............. 17,767 18,687 18,734 17,645 16,256
--------- --------- --------- --------- ---------
Total electric revenues................... $ 584,284 $ 621,794 $ 589,728 $ 596,323 $ 568,486
============= ============= ============= ============== ==============
Customers at Year End:
Residential.................................. 296,821 287,369 278,357 271,155 264,425
Commercial................................... 35,390 34,336 33,568 32,504 31,666
Industrial................................... 374 384 381 386 385
Other ultimate customers..................... 598 599 576 537 499
--------- --------- --------- --------- ---------
Total ultimate customers.................. 333,183 322,688 312,882 304,582 296,975
Sales for Resale............................. 37 42 37 47 33
--------- --------- --------- --------- ---------
Total customers........................... 333,220 322,730 312,919 304,629 297,008
======= ======= ======= ======= =======
Reliable Net Capability-- KW.................... 1,506,000 1,506,000 1,541,000 1,591,000 1,591,000
Coincidental Peak Demand-- KW................... 1,247,000 1,189,000 1,104,000 1,053,000 1,018,000
Average Fuel Cost per Million BTU............... $ 1.3177 $ 1.3488 $ 1.3844 $ 1.3263 $ 1.3696
BTU per KWh of Net Generation................... 10,811 10,817 11,036 11,039 11,086
Water Service**
Water Sales-- Gallons (in thousands 1,616,544 3,366,388 3,414,950 3,224,271 2,996,587
Revenues (in thousands)...................... $ 6,196 $ 13,407 $ 13,063 $ 12,471 $ 11,613
Customers at Year End........................ 23,752 23,452 22,743 22,098 21,522
- ---------
</TABLE>
* Due to the provision for the loss associated with the M-S-R
contingent power purchase contract recognized in 1992, operating
revenues were reduced by $7.3 million, $25.0 and $20.5 million for
1995, 1994 and 1993, respectively.
** On July 3, 1995, the Company sold its water utility division (see
note 12 of the notes to consolidated financial statements). Water
Service's comparative operating statistics for 1995 are through this
date.
F-35
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
----------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
PNMGS*
Gas Throughput--Decatherms (in thousands) GCNM:
Residential....................................... 25,865 27,139 28,031 27,063 26,237
Commercial........................................ 8,864 9,767 10,428 10,590 11,375
Industrial........................................ 661 831 923 707 766
Public authorities................................ 2,411 2,465 2,473 4,199 4,951
Irrigation........................................ 1,245 1,272 1,259 1,134 1,374
Sales for resale.................................. 2,442 680 1,041 2,035 1,357
Unbilled.......................................... (1,764) (309) (636) 649 --
------- ------- ------- ------- -------
GCNM sales........................................ 39,724 41,845 43,519 46,377 46,060
Transportation throughput......................... 49,136 43,135 46,059 48,674 38,976
------- ------- ------- ------- -------
GCNM throughput................................... 88,860 84,980 89,578 95,051 85,036
Gathering Company:
Spot market sales................................. 39 -- -- 858 1,624
Transportation throughput......................... 20,695 47,091 45,754 24,889 23,631
------- ------- ------- ------- -------
Total PNMGS throughput......................... 109,594 132,071 135,332 120,798 110,291
======= ======= ======= ======= =======
Gas Revenues (in thousands) GCNM:
Residential....................................... $ 125,290 $ 149,439 $ 149,796 $ 125,313 $ 137,436
Commercial........................................ 32,328 42,725 44,575 37,222 46,676
Industrial........................................ 1,873 2,905 3,369 2,063 2,754
------- ------- ------- ------- -------
Public authorities................................ 7,939 9,969 9,694 12,313 17,711
Irrigation........................................ 3,077 4,061 4,418 2,713 4,495
Sales for resale.................................. 4,999 2,462 3,137 4,460 3,848
Imbalance penalties............................... 1,786 944 -- -- --
Unbilled.......................................... (2,430) 267 (1,573) 716 --
------- ------- ------- ------- -------
Revenues from gas sales........................... 174,862 212,772 213,416 184,800 212,920
Transportation.................................... 18,532 19,742 19,376 14,861 13,386
Other............................................. 1,897 2,392 2,453 4,974 9,062
------- ------- ------- ------- -------
GCNM gas revenues................................. 195,291 234,906 235,245 204,635 235,368
Gathering Company:
Spot market sales................................. 42 -- 4 1,410 1,771
Transportation.................................... 3,640 7,850 7,353 3,892 3,611
Imbalance penalties............................... 418 26 -- -- --
Processing Company:
Sales of liquids.................................. 13,414 16,090 18,724 26,427 30,500
Processing fees................................... 5,180 10,638 9,761 6,795 5,819
------- ------- ------- ------- -------
Total PNMGS revenues........................... $ 217,985 $ 269,510 $ 271,087 $ 243,159 $ 277,069
=========== ============ =========== ============ ============
Customers at Year End
GCNM:
Residential....................................... 358,822 348,715 337,768 329,385 320,546
Commercial........................................ 30,493 30,139 30,151 29,765 29,608
Industrial........................................ 59 57 72 61 72
Public authorities................................ 2,444 2,463 1,958 2,004 2,153
Irrigation........................................ 886 899 951 1,012 1,043
Sales for resale.................................. 2 3 3 4 7
Transportation.................................... 38 43 37 43 41
------- ------- ------- ------- -------
GCNM customers.................................... 392,744 382,319 370,940 362,274 353,470
Gathering Company:
Off-system sales.................................. -- -- 1 2 13
Transportation.................................... -- 21 21 16 8
Processing Company................................... -- 32 25 22 21
Total customers................................ 392,744 382,372 370,987 362,314 353,512
======= ======= ======= ======= =======
</TABLE>
* On June 30, 1995, the Company sold substantially all of the gas gathering and
processing assets of the Company and its gas subsidiaries (see note 12 of the
notes to consolidated financial statements). PNMGS' comparative operating
statistics for Gathering Company and Processing Company are through this
date.
F-36
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Reference is hereby made to "Election of Directors" in the Company's
Proxy Statement relating to the annual meeting of stockholders to be held on
April 30, 1996 (the "1996 Proxy Statement") and to PART I, SUPPLEMENTAL ITEM --
"EXECUTIVE OFFICERS OF THE COMPANY".
ITEM 11. EXECUTIVE COMPENSATION
Reference is hereby made to "Executive Compensation" in the 1996 Proxy
Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Reference is hereby made to "Voting Information", "Election of Directors"
and "Stock Ownership of Certain Executive Officers" in the 1996 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reference is hereby made to the 1996 Proxy Statement for such disclosure,
if any, as may be required by this item.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) -- 1. See Index to Financial Statements under Item 8.
(a) -- 2. Financial Statement Schedules for the years 1995, 1994,
and 1993 are omitted for the reason that they are
not required or the information is otherwise supplied.
(a) -- 3-A. Exhibits Filed:
Exhibit
No. Description
--- -----------
10.1.1 Amendment and Supplement No. 1 to Supplemental and Additional
Indenture of Lease dated April 25, 1985 between the Navajo Tribe
of Indians and Arizona Public Service Company, El Paso Electric
Company, Public Service Company of New Mexico, Salt River
Project Agricultural Improvement and Power District, Southern
California Edison Company, and Tucson Electric Power Company
(refiled).
10.5.3 Modification No. 4 dated October 25, 1984 and Modification No. 5
dated July 1, 1985 to Co-Tenancy Agreement between the Company
and Tucson Electric Power Company (refiled).
10.5.7 Modification No. 10 to San Juan Project Co-Tenancy Agreement
between Public Service Company of New Mexico and Tucson Electric
Power Company dated November 30, 1995.
E-1
<PAGE>
Exhibit
No. Description
--- -----------
10.7.1 Modification No. 4 dated October 25, 1984 and Modification No. 5
dated July 1, 1985 to San Juan Project Operating Agreement
between the Company and Tucson Electric Power Company (refiled).
10.7.5 Modification No. 10 dated November 30, 1995 to San Juan Project
Operating Agreement between Public Service Company of New Mexico
and Tucson Electric Power Company.
10.8.5 Amendment No. 10 dated as of November 21, 1985 and Amendment No.
11 dated as of June 13, 1986 and effective January 10, 1987 to
Arizona Nuclear Power Project Participation Agreement (refiled).
10.9.5 Amendment No. Eight to Coal Sales Agreement, dated as of
September 1, 1995, among San Juan Coal Company, the Company and
Tucson Electric Power Company .
10.18* Facility Lease dated as of December 16, 1985 between The First
National Bank of Boston, as Owner Trustee, and Public Service
Company of New Mexico together with Amendments No. 1, 2 and 3
thereto. (refiled).
10.24** Management Life Insurance Plan (July 1985) of the Company
(refiled).
10.67** Deferred Compensation Agreement for Jeffry E. Sterba
23.1 Consent of Arthur Andersen LLP.
27 Financial Data Schedule.
99.1 Collateral Trust Indenture dated as of December 16, 1985 among
First PV Funding Corporation, Public Service Company of New
Mexico and Chemical Bank, as Trustee together with Series 1986A
Bond Supplemental, Series 1986B Bond Supplemental, Unit 1
Supplemental and Unit 2 Supplemental thereto (refiled).
99.2* Participation Agreement dated as of December 16, 1985, among the
Owner Participant named therein, First PV Funding Corporation.
The First National Bank of Boston, in its individual capacity
and as Owner Trustee (under a Trust Agreement dated as of
December 16, 1985 with the Owner Participant), Chemical Bank, in
its individual capacity and as Indenture Trustee (under a Trust
Indenture, Mortgage, Security Agreement and Assignment of Rents
dated as of December 16, 1985 with the Owner Trustee), and
Public Service Company of New Mexico, including Appendix A
definitions (refiled).
99.4* Assignment, Assumption and Further Agreement dated as of
December 16, 1985, between Public Service Company of New Mexico
and The First National Bank of Boston, as Owner Trustee
(refiled).
(a) -- 3-B. Exhibits Incorporated By Reference:
- -----------
* One or more additional documents, substantially identical in
all material respects to this exhibit, have been entered into,
relating to one or more additional sale and leaseback
transactions. Although such additional documents may differ in
other respects (such as dollar amounts and percentages), there
are no material details in which such additional documents
differ from this exhibit.
** Designates each management contract or compensatory plan or
arrangement required to be identified pursuant to paragraph 3
of Item 14(a) of Form 10-K.
E-2
<PAGE>
In addition to those Exhibits shown above, the Company hereby
incorporates the following Exhibits pursuant to Exchange Act Rule 12b-32 and
Regulation S-K section 10, paragraph (d) by reference to the filings set forth
below:
Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
2.1 Purchase and Sale Agreement By and 4-(b) to Registration 2-99990
Among Public Service Company of New Statement No. 2-99990 of
Mexico, Sunterra Gas Gathering the Company.
Company, Sunterra Gas Processing
(Sellers) and Williams Gas Processing-
Blanco, Inc. (Buyer).
2.1.1 First Amendment to Purchase and Sale 2.1.1 to Annual Report of 1-6986
Agreement By and Among Public Service the Registrant on Form 10-K
Company of New Mexico, Sunterra Gas for fiscal year ended
Gathering Company, Sunterra Gas December 31, 1994.
Processing Company (Sellers) and
Williams Gas Processing-Blanco, Inc.
(Buyer)
2.1.2 Second Amendment to Purchase and Sale 2.1.2 to Annual Report of 1-6986
Agreement By and Among Public Service the Registrant on Form 10-K
Company of New Mexico, Sunterra Gas for fiscal year ended
Gathering Company, Sunterra Gas December 31, 1994.
Processing Company (Sellers) and
Williams Gas Processing-Blanco, Inc.
(Buyer)
2.2
2.2.1 First Amendment to Agreement to 2.2.1 to Annual Report of 1-6986
Purchase and Sell Between the City of the Registrant on Form 10-K
Santa Fe, New Mexico and Public Service for fiscal year ended
Company of New Mexico. December 31, 1994.
2.2.2 Second Amendment to Agreement to 2.2.2 to Annual Report of 1-6986
Purchase and Sell Between the City of the Registrant on Form 10-K
Santa Fe, New Mexico and Public Service for fiscal year ended
Company of New Mexico. December 31, 1994.
2.2.3 Third Amendment to Agreement to 2.2.3 to Annual Report of 1-6986
Purchase and Sell Between the City of the Registrant on Form 10-K
Santa Fe, New Mexico and Public Service for fiscal year ended
Company of New Mexico. December 31, 1994.
2.2.4 Fourth Amendment to Agreement to 2.2.4 to Annual Report of 1-6986
Purchase and Sell Between the City of the Registrant on Form 10-K
Santa Fe, New Mexico and Public Service for fiscal year ended
Company of New Mexico. December 31, 1994.
</TABLE>
E-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
2.2.5 Fifth Amendment to Agreement to 2.2.5 to Annual Report of 1-6986
Purchase and Sell Between the City of the Registrant on Form 10-K
Santa Fe, New Mexico and Public Service for fiscal year ended
Company of New Mexico. December 31, 1994.
2.2.6 Sixth Amendment to Agreement to 2.2.6 to Annual Report of 1-6986
Purchase and Sell Between the City of the Registrant on Form 10-K
Santa Fe, New Mexico and Public Service for fiscal year ended
Company of New Mexico. December 31, 1994.
2.2.7 Seventh Amendment to Agreement to 2.2.7 to the Company's 1-6986
Purchase and Sell Between the City of Quarterly Report on Form
Santa Fe, New Mexico and Public Service 10-Q for the quarter ended
Company of New Mexico. June 30, 1995.
Articles of Incorporation and By-laws
3.1 Restated Articles of Incorporation of the 4-(b) to Registration 2-99990
Company, as amended through May 10, Statement No. 2-99990 of
1985. the Company.
Instruments Defining the Rights of Security Holders, Including Indentures
4.1 Indenture of Mortgage and Deed of Trust 4-(d) to Registration 2-99990
dated as of June 1, 1947, between the Statement No. 2-99990 of
Company and The Bank of New York the Company.
(formerly Irving Trust Company), as
Trustee, together with the Ninth
Supplemental Indenture dated as of
January 1, 1967, the Twelfth
Supplemental Indenture dated as of
September 15, 1971, the Fourteenth
Supplemental Indenture dated as of
December 1, 1974 and the Twenty-second
Supplemental Indenture dated as of
October 1, 1979 thereto relating to First
Mortgage Bonds of the Company.
4.2 Portions of sixteen supplemental 4-(e) to Registration 2-99990
indentures to the Indenture of Mortgage Statement No. 2-99990 of
and Deed of Trust dated as of June 1, the Company.
1947, between the Company and The
Bank of New York (formerly Irving Trust
Company), as Trustee, relevant to the
declaration or payment of dividends or the
making of other distributions on or the
purchase by the Company of shares of the
Company's Common Stock.
</TABLE>
E-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
Material Contracts
10.1 Supplemental Indenture of Lease dated as 4-D to Registration 2-26116
of July 19, 1966 between the Company Statement No. 2-26116 of
and other participants in the Four Corners the Company.
Project and the Navajo Indian Tribal
Council.
10.2 Fuel Agreement, as supplemented, dated 4-H to Registration 2-35042
as of September 1, 1966 between Utah Statement No. 2-35042 of
Construction & Mining Co. and the the Company.
participants in the Four Corners Project
including the Company.
10.3 Fourth Supplement to Four Corners Fuel 10.3 to Annual Report of the 1-6986
Agreement No. 2 effective as of January 1, Registrant on Form 10-K for
1981, between Utah International Inc. fiscal year ended
and the participants in the Four Corners December 31, 1991.
Project, including the Company.
10.4 Contract between the United States and 5-L to Registration 2-41010
the Company dated April 11, 1968, for Statement No. 2-41010 of
furnishing water. the Company.
10.4.1 Amendatory Contract between the United 5-R to Registration 2-60021
States and the Company dated Statement No. 2-60021 of
September 29, 1977, for furnishing water. the Company.
10.5 Co-Tenancy Agreement between the 5-O to Registration 2-44425
Company and Tucson Gas & Electric Statement No. 2-44425 of
Company dated February 15, 1972, the Company.
pertaining to the San Juan generating
plant.
10.5.5 Modification No. 8 to San Juan Project 10.5.5 to the Company's 1-6986
Co-Tenancy Agreement between Public Quarterly Report on Form
Service Company of New Mexico and 10-Q for the quarter ended
Tucson Electric Power Company dated March 31, 1994.
September 15, 1993.
10.5.6 Modification No. 9 to San Juan Project 10.5.6 to the Company's 1-6986
Co-Tenancy Agreement between Public Quarterly Report on
Service Company of New Mexico and Form 10-Q for the quarter
Tucson Electric Power Company dated ended March 31, 1994.
January 12, 1994.
10.7 San Juan Project Operating Agreement 5-S to Registration 2-50338
between the Company and Tucson Gas & Statement No. 2-50338 of
Electric Company, executed December 21, the Company.
1973.
10.7.3 Modification No. 8 to San Juan Project 10.7.3 to the Company's 1-6986
Operating Agreement between Public Quarterly Report on
Service Company of New Mexico and Form 10-Q for the quarter
Tucson Electric Power Company dated ended March 31, 1994.
September 15, 1993.
</TABLE>
E-5
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
10.7.4 Modification No. 9 to San Juan Project 10.7.4 to the Company's 1-6986
Operating Agreement between Public Quarterly Report on
Service Company of New Mexico and Form 10-Q for the quarter
Tucson Electric Power Company dated ended March 31, 1994.
January 12, 1994.
10.8 Arizona Nuclear Power Project 5-T to Registration 2-50338
Participation Agreement among the Statement No. 2-50338 of
Company and Arizona Public Service the Company.
Company, Salt River Project Agricultural
Improvement and Power District, Tucson
Gas & Electric Company and El Paso
Electric Company, dated August 23, 1973.
10.8.1 Amendments No. 1 through No. 6 to 10.8.1 to Annual Report of 1-6986
Arizona Nuclear Power Project the Registrant on Form 10-K
Participation Agreement. for fiscal year ended
December 31, 1991.
10.8.2 Amendment No. 7 effective April 1, 1982, 10.8.2 to Annual Report of 1-6986
to the Arizona Nuclear Power Project the Registrant on Form 10-K
Participation Agreement (refiled). for fiscal year ended
December 31, 1991.
10.8.3 Amendment No. 8 effective September 12, 10.58 to Annual Report of 1-6986
1983, to the Arizona Nuclear Power the Registrant on Form 10-K
Project Participation Agreement. (refiled) for fiscal year ended
December 31, 1993.
10.8.4 Amendment No. 9 to Arizona Nuclear 10.8.4 to Annual Report of 1-6986
Power Project Participation Agreement the Registrant on Form 10-K
dated as of June 12, 1984 (refiled). for fiscal year ended
December 31, 1994.
10.8.7 Amendment No. 12 to Arizona Nuclear 19.1 to the Company's 1-6986
Power Project Participation Agreement Quarterly Report on
dated June 14, 1988, and effective Form 10-Q for the quarter
August 5, 1988. ended September 30, 1990.
10.8.8 Amendment No. 13 to the Arizona 10.8.10 to Annual Report of 1-6986
Nuclear Power Project Participation Registrant on Form 10-K for
Agreement dated April 4, 1990, and the fiscal year ended
effective June 15, 1991. December 31, 1990.
10.9 Coal Sales Agreement executed August 18, 10.9 to Annual Report of the 1-6986
1980 among San Juan Coal Company, the Registrant on Form 10-K for
Company and Tucson Electric Power fiscal year ended
Company, together with Amendments December 31, 1991.
No. One, Two, Four, and Six thereto.
</TABLE>
E-6
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
10.9.1 Amendment No. Three to Coal Sales 10.9.1 to Annual Report of 1-6986
Agreement dated April 30, 1984 among the Registrant on Form 10-K
San Juan Coal Company, the Company for fiscal year ended
and Tucson Electric Power Company. December 31, 1994
(confidentiality treatment was
requested at the time of
filing the Annual Report
of the Registrant on
Form 10-K for fiscal year
ended December 31, 1984;
exhibit was not filed
therewith based on the
same confidentiality request).
10.9.2 Amendment No. Five to Coal Sales 10.9.2 to Annual Report of 1-6986
Agreement dated May 29, 1990 among the Registrant on Form 10-K
San Juan Coal Company, the Company for fiscal year ended
and Tucson Electric Power Company. December 31, 1991
(confidentiality treatment was
requested as to portions of
this exhibit, and such
portions were omitted from
the exhibit filed and were
filed separately with the
Securities and Exchange
Commission).
10.9.3 Amendment No. Seven to Coal Sales 19.3 to the Company's 1-6986
Agreement, dated as of July 27, 1992 Quarterly Report on
among San Juan Coal Company, the Form 10-Q for the quarter
Company and Tucson Electric Power ended September 30, 1992
Company. (confidentiality treatment
was requested as to portions
of this exhibit, and
such portions were omitted
from the exhibit filed
and were filed separately
with the Securities and
Exchange Commission).
10.9.4 First Supplement to Coal Sales Agreement, 19.4 to the Company's 1-6986
dated July 27, 1992 among San Juan Coal Quarterly Report on
Company, the Company and Tucson Form 10-Q for the quarter
Electric Power Company. ended September 30, 1992
(confidentiality treatment
was requested as to portions
of this exhibit, and such
portions were omitted from
the exhibit as of filed and
were filed separately with the
Securities and Exchange
Commission).
</TABLE>
E-7
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
10.11 San Juan Unit 4 Early Purchase and 10.11 to the Company's 1-6986
Participation Agreement dated as of Quarterly Report on
September 26, 1983 between the Form 10-Q for the quarter
Company and M-S-R Public Power ended March 31, 1994.
Agency, and Modification No. 2 to the
San Juan Project Agreements dated
December 31, 1983. (refiled)
10.11.1 Amendment No. 1 to the Early Purchase 10.11.1 to Annual Report of 1-6986
and Participation Agreement between the Registrant on Form 10-K
Public Service Company of New Mexico for fiscal year ended
and M-S-R Public Power Agency, executed December 31, 1987.
as of December 16, 1987, for San Juan
Unit 4.
10.12 Amended and Restated San Juan Unit 4 10.12 to Annual Report of 1-6986
Purchase and Participation Agreement the Registrant on Form 10-K
dated as of December 28, 1984 between for the fiscal year ended
Company and the Incorporated December 31, 1994.
County of Los Alamos (refiled).
10.14 Participation Agreement among the 10.14 to Annual Report of 1-6986
Company, Tucson Electric Power the Registrant on Form 10-K
Company and certain financial institutions for fiscal year ended
relating to the San Juan Coal Trust dated December 31, 1992.
as of December 31, 1981 (refiled).
10.16 Interconnection Agreement dated 10.16 to Annual Report of 1-6986
November 23, 1982, between the the Registrant on Form 10-K
Company and Southwestern Public for fiscal year ended
Service Company (refiled). December 31, 1992.
10.18.4* Amendment No. 4 dated as of March 8, 10.18.4 to the Company's 1-6986
1995, to Facility Lease between Public Quarter Report on Form 10-
Service Company of New Mexico and the Q for the quarter ended
First National Bank of Boston, dated as of March 31, 1995.
December 16, 1985.
10.19 Facility Lease dated as of July 31, 1986, 28.1 to the Company's 1-6986
between The First National Bank of Quarterly Report on
Boston, as Owner Trustee, and Public Form 10-Q for the quarter
Service Company of New Mexico. ended June 30, 1986.
10.19.1 Amendment No. 1 dated as of 28.5 to the Company's 1-6986
November 18, 1986, to Facility Lease Current Report on Form 8-K
dated as of July 31, 1986. dated November 25, 1986.
10.19.2 Amendment No. 2 dated as of 10.22.2 to Annual Report of 1-6986
December 11, 1986, to Facility Lease the Registrant on Form 10-K
dated as of July 31, 1986. for fiscal year ended
December 31, 1986.
</TABLE>
E-8
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
10.19.3 Amendment No. 3 dated as of April 8, 10.22.3 to Annual Report of 1-6986
1987, to Facility Lease dated as of July 31, the Registrant on Form 10-K
1986. for fiscal year ended
December 31, 1987.
10.20* Facility Lease dated as of August 12, 1986, 28.1 to the Company's 1-6986
between The First National Bank of Current Report on Form 8-K
Boston, as Owner Trustee, and Public dated August 18, 1986.
Service Company of New Mexico.
10.20.1* Amendment No. 1 dated as of 28.9 to the Company 1-6986
November 18, 1986, to Facility Lease Current Report on Form 8-K
dated as of August 12, 1986. dated November 25, 1986.
10.20.2 Amendment No. 2 dated as of 10.23.2 to Annual Report of 1-6986
November 25, 1986, to Facility Lease the Registrant on Form 10-K
dated as of August 12, 1986. for fiscal year ended
December 31, 1986.
10.20.3 Amendment No. 3 dated as of March 8, 10.20.3 to the Company's 1-6986
1995, to Facility Lease between Public Quarterly Report on Form
Service Company of New Mexico and the 10-Q for the quarter ended
First National Bank of Boston, dated as of March 31, 1995.
August 12, 1996.
10.21 Facility Lease dated as of December 15, 28.1 to the Company's 1-6986
1986, between The First National Bank of Current Report on Form 8-K
Boston, as Owner Trustee, and Public dated December 17, 1986.
Service Company of New Mexico (Unit 1
Transaction).
10.21.1 Amendment No. 1 dated as of April 8, 10.24.1 to Annual Report of 1-6986
1987, to Facility Lease dated as of the Registrant on Form 10-K
December 15, 1986. for fiscal year ended
December 31, 1987.
10.22 Facility Lease dated as of December 15, 28.9 to the Company's 1-6986
1986, between The First National Bank of Current Report on Form 8-K
Boston, as Owner Trustee, and Public dated December 17, 1986.
Service Company of New Mexico (Unit 2
Transaction).
10.22.1 Amendment No. 1 dated as of April 8, 10.25.1 to Annual Report of 1-6986
1987, to Facility Lease dated as of the Registrant on Form 10-K
December 15, 1986. for fiscal year ended
December 31, 1987.
10.23** Restated and Amended Public Service 19.5 to the Company's 1-6986
Company of New Mexico Accelerated Quarterly Report on
Management Performance Plan (1988). Form 10-Q for the quarter
(August 16, 1988.) ended September 30, 1988.
</TABLE>
E-9
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
10.23.1** First Amendment to Restated and 19.6 to the Company's 1-6986
Amended Public Service Company of New Quarterly Report on
Mexico Accelerated Management Form 10-Q for the quarter
Performance Plan (1988). (August 30, ended September 30, 1988.
1988.)
10.23.2** Second Amendment to Restated and 10.26.2 to Annual Report of 1-6986
Amended Public Service Company of New the Registrant on Form 10-K
Mexico Accelerated Management for fiscal year ended
Performance Plan (1988). (December 29, December 31, 1989.
1989).
10.25** Amended and Restated Medical 19.6 to the Company's 1-6986
Reimbursement Plan of Public Service Quarterly Report on
Company of New Mexico. Form 10-Q for the quarter
ended March 31, 1987.
10.25.1** Second Restated and Amended Public 10.25.1 to Annual Report of 1-6986
Service Company of New Mexico the Registrant on Form 10-K
Executive Medical Plan. for the fiscal year ended
December 31, 1992.
10.27 Amendment No. 2 dated as of April 10, 10.53 to Annual Report of 1-6986
1987, to the Facility Lease dated as of the Registrant on Form 10-K
August 12, 1986, between The First for fiscal year ended
National Bank of Boston, as Owner December 31, 1987.
Trustee, and Public Service Company of
New Mexico. (Unit 2 Transaction.) (This
is an amendment to a Facility Lease
which is substantially similar to the
Facility Lease filed as Exhibit 28.1
to the Company's Current Report on
Form 8-K dated August 18, 1986.)
10.29 Decommissioning Trust Agreement 10.55 to Annual Report of 1-6986
between Public Service Company of New the Registrant on Form 10-K
Mexico and First Interstate Bank of for fiscal year ended
Albuquerque dated as of July 31, 1987. December 31, 1987.
10.30 New Mexico Public Service Commission 10.56 to Annual Report of 1-6986
Order dated July 30, 1987, and Exhibit 1 the Registrant on Form 10-K
thereto, in NMPUC Case No. 2004, for fiscal year ended
regarding the PVNGS decommissioning December 31, 1987.
trust fund.
10.31** Executive Retention Agreements. 10.42 to Annual Report of 1-6986
the Registrant on Form 10-K
for fiscal year ended
December 31, 1990.
10.32** Supplemental Employee Retirement 19.4 to the Company's 1-6986
Agreements dated August 4, 1989. Quarterly Report on
Form 10-Q for the quarter
ended September 30, 1989.
</TABLE>
E-10
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
10.33** Supplemental Employee Retirement 10.47 to Annual Report of 1-6986
Agreement dated March 6, 1990. the Registrant on Form 10-K
for fiscal year ended
December 31, 1989.
10.34 Settlement Agreement between Public 10.48 to Annual Report of 1-6986
Service Company of New Mexico and the Registrant on Form 10-K
Creditors of Meadows Resources, Inc. for fiscal year ended
dated November 2, 1989. December 31, 1989.
10.34.1 First amendment dated April 24, 1992 to 19.1 to the Company's 1-6986
the Settlement Agreement dated Quarterly Report on
November 2, 1989 among Public Service Form 10-Q for the quarter
Company of New Mexico, the lender ended September 30, 1992.
parties thereto and collateral agent.
10.35 Amendment dated April 11, 1991 among 19.1 to the Company's 1-6986
Public Service Company of New Mexico, Quarterly Report on
certain banks and Chemical Bank and Form 10-Q for the quarter
Citibank, N.A., as agents for the banks. ended September 30, 1991.
10.36 San Juan Unit 4 Purchase and 19.2 to the Company's 1-6986
Participation Agreement Public Service Quarterly Report on
Company of New Mexico and the City of Form 10-Q for the quarter
Anaheim, California dated April 26, 1991. ended March 31, 1991.
10.36.1 Second stipulation in the matter of 10.38 to Annual Report of 1-6986
application of Public Service Company of the Registrant on Form 10-K
New Mexico for NMPSC approval to sell a for fiscal year ended
10.04% undivided interest in San Juan December 31, 1992.
Generating Station Unit 4 to the City
of Anaheim, California, and for related
orders and approvals.
10.37** Executive Retention Plan. 10.37 to Annual Report of 1-6986
the Registrant on Form 10-K
for fiscal year ended
December 31, 1991.
10.38 Restated and Amended San Juan Unit 4 10.2.1 to the Company's 1-6986
Purchase and Participation Agreement Quarterly Report on
between Public Service Company of New Form 10-Q for the quarter
Mexico and Utah Associated Municipal ended September 30, 1993.
Power Systems.
10.39 Purchase agreement dated February 7, 10.39 to Annual Report of 1-6986
1992 between Burnham Leasing the Registrant on Form 10-K
Corporation and Public Service Company for fiscal year ended
of New Mexico. December 31, 1991.
10.40** Director Restricted Stock Retainer Plan. 10.40 to Annual Report of 1-6986
the Registrant on Form 10-K
for fiscal year ended
December 31, 1991.
</TABLE>
E-11
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
10.40.1** First Amendment to the Public Service 19.3 to the Company's 1-6986
Company of New Mexico Director Quarterly Report on
Restricted Stock Retainer Plan. Form 10-Q for the quarter
ended March 31, 1993.
10.40.2** Second Amendment to the Public Service 10.40.2 to the Company's 1-6986
Company of New Mexico Director Quarterly Report on
Restricted Stock Retainer Plan dated Form 10-Q for the quarter
April 27, 1994. ended March 31, 1994.
10.41 Waste Disposal Agreement, dated as of 19.5 to the Company's 1-6986
July 27, 1992 among San Juan Coal Quarterly Report on
Company, the Company and Tucson Form 10-Q for the quarter
Electric Power Company. ended September 30, 1992
(confidentiality treatment
was requested as to portions
of this exhibit, and such
portions were omitted from
the exhibit and were filed
separately with the Securities
and Exchange Commission).
10.42 Stipulation in the matter of the 10.42 to Annual Report of 1-6986
application of Gas Company of New the Registrant on Form 10-K
Mexico for an order authorizing recovery for fiscal year ended
of MDL costs through Rate Rider December 31, 1992.
Number 8.
10.43** Description of certain Plans which include 10.43 to Annual Report of 1-6986
executive officers as participants. the Registrant on Form 10-K
for fiscal year ended
December 31, 1992.
10.44** Public Service Company of New 10.44 to Annual Report of 1-6986
Mexico-Non-Union Voluntary Separation the Registrant on Form 10-K
Program. for fiscal year ended
December 31, 1992.
10.44.1** First Amendment dated April 6, 1993 to 19.2 to the Company's 1-6986
the First Restated and Amended Public Quarterly Report on
Service Company of New Mexico Form 10-Q for the quarter
Non-Union Severance Pay Plan dated ended March 31, 1993.
August 1, 1992.
10.45** Public Service Company of New Mexico 99.1 to Registration 33-65418
Performance Stock Plan. Statement No. 33-65418 of
the Company.
10.46** Public Service Company of New Mexico 10.1 to the Company's 1-6986
Asset Sales Incentive Plan. Quarterly Report on
Form 10-Q for the quarter
ended June 30, 1993.
</TABLE>
E-12
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
10.46.1** Amendment No. 1 to the Public Service 10.46.1 to the Company's 1-6986
Company of New Mexico Asset Sales Quarterly Report on
Incentive Plan dated August 1, 1994. Form 10-Q for the quarter
ended June 30, 1994.
10.47** Compensation Arrangement with Chief 10.3 to the Company's 1-6986
Executive Officer. Quarterly Report on
Form 10-Q for the quarter
ended June 30, 1993.
10.47.1** Pension Service Adjustment Agreement for 10.3.1 to the Company's 1-6986
Benjamin F. Montoya. Quarterly Report on
Form 10-Q for the quarter
ended September 30, 1993.
10.47.2** Severance Agreement for Benjamin F. 10.3.2 to the Company's 1-6986
Montoya. Quarterly Report on
Form 10-Q for the quarter
ended September 30, 1993.
10.47.3** Executive Retention Agreement for 10.3.3 to the Company's 1-6986
Benjamin F. Montoya. Quarterly Report on
Form 10-Q for the quarter
ended September 30, 1993.
10.48** Public Service Company of New Mexico 10.4 to the Company's 1-6986
OBRA '93 Retirement Plan. Quarterly Report on
Form 10-Q for the quarter
ended September 30, 1993.
10.49** Employment Contract By and Between 10.49 to Annual Report of 1-6986
the Public Service Company of New the Registrant on Form 10-K
Mexico and Roger J. Flynn. for fiscal year ended
December 31, 1994.
10.50** Public Service Company of New Mexico 10.50 to Annual Report of 1-6986
Section 415 Plan. the Registrant on Form 10-K
for fiscal year ended
December 31, 1993.
10.51** First Amendment to the Public Service 10.51 to Annual Report of 1-6986
Company of New Mexico Executive the Registrant on Form 10-K
Retention Plan. for fiscal year ended
December 31, 1993.
10.51.1** Second Amendment to the Public Service 10.51.1 to the Company's 1-6986
Company of New Mexico Executive Quarterly Report on
Retention Plan. Form 10-Q for the quarter
ended June 30, 1994.
10.52** First Amendment to the Public Service 10.52 to Annual Report of 1-6986
Company of New Mexico Performance the Registrant on Form 10-K
Stock Plan. for fiscal year ended
December 31, 1993.
</TABLE>
E-13
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
10.53 January 12, 1994 Stipulation. 10.53 to Annual Report of 1-6986
the Registrant on Form 10-K
for fiscal year ended
December 31, 1993.
10.54** Employment, Retirement and Release 10.54 to Annual Report of 1-6986
Agreement By and Between the Public the Registrant on Form 10-K
Service Company of New Mexico and for fiscal year ended
William M. Eglinton. December 31, 1993.
10.54.1** Health Care and Retirement Benefit 10.54.1 to the Company's 1-6986
Agreement By and Between the Public Quarterly Report on
Service Company of New Mexico and Form 10-Q for the quarter
John T. Ackerman dated February 1, ended March 31, 1994.
1994.
10.57 U.S. $100,000,000 Revolving Credit 10.57 to Annual Report of 1-6986
Agreement Dated as of December 14, the Registrant on Form 10-K
1993 Among Public Service Company of for fiscal year ended New
Mexico and certain Banks Herein December 31, 1993.
(Banks) and Chemical Bank and Citibank,
N.A. (Co-Agents)
10.57.1 Amendment No. 1, dated June 7, 1995 to 10.57.1 to the Company's 1-6986
the U.S. $100,000,000 Revolving Credit Quarterly Report on Form
Agreement Dated as of December 14, 10-Q for the quarter ended
1993 Among Public Service Company of June 30, 1995.
New Mexico and certain Banks Herein
(Banks) and Chemical Bank and Citibank,
N.A. (Co-Agents)
10.59* Amended and Restated Lease dated as of 10.59 to Annual Report of 1-6986
September 1, 1993, between The First the Registrant on Form 10-K
National Bank of Boston, Lessor, and the for fiscal year ended
Company, Lessee. (EIP Lease) December 31, 1993.
10.60 Reimbursement Agreement, dated as of 4.5 to Registration Statement 33-65418
November 1, 1992 between Public Service No. 33-65418 of the
Company of New Mexico and Canadian Company.
Imperial Bank of Commerce, New York
Agency.
10.60.1 Amendment No. 1 dated as of July 1, 10.60.1 to the Company's 1-6986
1994, to the Reimbursement Agreement Quarterly Report on
dated as of November 1, 1992 between Form 10-Q for the quarter
Public Service Company of New Mexico ended June 30, 1994.
and Canadian Imperial Bank of
Commerce, New York Agency.
10.60.2 Amendment No. 2 dated as of October 1, 10.60.2 to the Company's 1-6986
1995, to the Reimbursement Agreement Quarterly Report on Form
dated as of November 1, 1992 between 10-Q for the quarter ended
Public Service Company of New Mexico September 30, 1995.
and Canadian Imperial Bank of
Commerce, New York Agency.
</TABLE>
E-14
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
10.61 Participation Agreement dated as of 10.61 to Annual Report of 1-6986
June 30, 1983 among Security Trust the Registrant on Form 10-K
Company, as Trustee, the Company, for fiscal year ended
Tucson Electric Power Company and December 31, 1993.
certain financial institutions relating to the
San Juan Coal Trust. (refiled)
10.62 Agreement of the Company pursuant to 10.62 to Annual Report of 1-6986
Item 601(b)(4)(iii) of Regulation SK. the Registrant on Form 10-K
(refiled) for fiscal year ended
December 31, 1993.
10.63 A Stipulation regarding sale of certain 10.63 to Current Report on 1-6986
natural gas gathering and processing Form 8-K dated January 26,
assets. 1995.
10.64* Results Pay 10.64 to the Company's 1-6986
Quarterly Report on Form
10-Q for the quarter ended
March 31, 1995.
10.65 Agreement for Contract Operation and 10.64 to the Company's 1-6986
Maintenance of the City of Santa Fe Quarterly Report on Form
Water Supply Utility System, dated July 3, 10-Q for the quarter ended
1995. June 30, 1995.
10.66 Stipulation regarding negotiated 10.50 to Annual Report of 1-6986
agreement with intervenors to settle all the Registrant on Form 10-K
outstanding issues regarding recovery of for fiscal year ended
payments GCNM made to settle gas December 31, 1994.
take-or-pay contracts and pricing disputes.
Additional Exhibits
22 Certain subsidiaries of the registrant. 22 to Annual Report of the 1-6986
Registrant on Form 10-K for
fiscal year ended
December 31, 1992.
99.1.5 1994 Supplemental Indenture dated as of 99.1.5 to the Company's 1-6986
June 8, 1994 among First PV Funding Quarterly Report on
Corporation, Public Service Company of Form 10-Q for the quarter
New Mexico, and Chemical Bank, as ended June 30, 1994.
Trustee.
99.1.6 1995 Supplemental Indenture among First 99.1.6 to the Company's 1-6986
PV Funding Corporation, Public Service Quarterly Report on Form
Company of New Mexico and Chemical 10-Q for the quarter ended
Bank, as Trustee dated as of February 14, March 31, 1995.
1995.
99.2.1* Amendment No. 1 dated as of July 15, 2.1 to the Company's 1-6986
1986, to Participation Agreement dated as Current Report on Form 8-K
of December 16, 1985. dated July 17, 1986.
</TABLE>
E-15
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
99.2.2* Amendment No. 2 dated as of 2.1 to the Company's 1-6986
November 18, 1986, to Participation Current Report on Form 8-K
Agreement dated as of December 16, dated November 25, 1986.
1985.
99.3* Trustee Indenture, Mortgage, Security 28(b) to the Company's 1-6986
Agreement and Assignment to Rents dated Current Report on Form 8-K
as of December 16, 1985, between The dated December 31, 1985.
First National Bank of Boston, as Owner
Trustee, and Chemical Bank, as Indenture
Trustee.
99.3.1* Supplemental Indenture No. 1 dated as of 28.2 to the Company's 1-6986
July 15, 1986, to the Trust Indenture, Current Report on Form 8-K
Mortgage, Security Agreement and dated July 17, 1986.
Assignment of Rents dated as of
December 16, 1985.
99.3.2* Supplemental Indenture No. 2 dated as of 28.2 to the Company's 1-6986
November 18, 1986, to the Trust Current Report on Form 8-K
Indenture, Mortgage, Security Agreement dated November 25, 1986.
and Assignment of Rents dated as of
December 16, 1985.
99.3.3 Supplemental Indenture No. 3 dated as of 99.3.3 to the Company's 1-6986
March 8, 1995, to Trust Indenture Quarterly Report on Form
Mortgage, Security Agreement and 10-Q for the quarter ended
Assignment of Rents between The First March 31, 1995.
National Bank of Boston and Chemical
Bank dated as of December 16, 1985.
99.5 Participation Agreement dated as of 2.1 to the Company's 1-6986
July 31, 1986, among the Owner Quarterly Report on Participant
named therein, First Form 10-Q for the quarter
PV Funding Corporation. The First ended June 30, 1986.
National Bank of Boston, in its individual
capacity and as Owner Trustee (under a Trust
Agreement dated as of July 31, 1986, with
the Owner Participant), Chemical Bank,
in its individual capacity and as
Indenture Trustee (under a Trust Indenture,
Mortgage, Security Agreement and Assignment
of Rents dated as of July 31, 1986, with the
Owner Trustee), and Public Service
Company of New Mexico, including Appendix
A definitions.
99.5.1 Amendment No. 1 dated as of 28.4 to the Company's 1-6986
November 18, 1986, to Participation Current Report on Form 8-K
Agreement dated as of July 31, 1986. dated November 25, 1986.
</TABLE>
E-16
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
99.6 Trust Indenture, Mortgage, Security 28.2 to the Company's 1-6986
Agreement and Assignment of Rents dated Quarterly Report on
as of July 31, 1986, between The First Form 10-Q for the quarter
National Bank of Boston, as Owner ended June 30, 1986.
Trustee, and Chemical Bank, as Indenture
Trustee.
99.6.1 Supplemental Indenture No. 1 dated as of 28.6 to the Company's 1-6986
November 18, 1986, to the Trust Current Report on Form 8-K
Indenture, Mortgage, Security Agreement dated November 25, 1986.
and Assignments of Rents dated as of
July 31, 1986.
99.7 Assignment, Assumption, and Further 28.3 to the Company's 1-6986
Agreement dated as of July 31, 1986, Quarterly Report on
between Public Service Company of New Form 10-Q for the quarter
Mexico and The First National Bank of ended June 30, 1986.
Boston, as Owner Trustee.
99.8* Participation Agreement dated as of 2.1 to the Company's 1-6986
August 12, 1986, among the Owner Current Report on Form 8-K
Participant named therein, First dated August 18, 1986.
PV Funding Corporation. The First
National Bank of Boston, in its individual
capacity and as Owner Trustee (under a Trust
Agreement dated as of August 12, 1986,
with the Owner Participant), Chemical
Bank, in its individual capacity and as
Indenture Trustee (under a Trust Indenture,
Mortgage, Security Agreement and Assignment
of Rents dated as of August 12, 1986, with
the Owner Trustee), and Public Service
Company of New Mexico, including Appendix
A definitions.
99.8.1* Amendment No. 1 dated as of 28.8 to the Company's 1-6986
November 18, 1986, to Participation Current Report on Form 8-K
Agreement dated as of August 12, 1986. dated November 25, 1986.
99.9* Trust Indenture, Mortgage, Security 28.2 to the Company's 1-6986
Agreement and Assignment of Rents dated Current Report on Form 8-K
as of August 12, 1986, between The First dated August 18, 1986.
National Bank of Boston, as Owner
Trustee, and Chemical Bank, as Indenture
Trustee.
99.9.1* Supplemental Indenture No. 1 dated as of 28.10 to the Company's 1-6986
November 18, 1986, to the Trust Current Report on Form 8-K
Indenture, Mortgage, Security Agreement dated November 25, 1986.
and Assignment of Rents dated as of
August 12, 1986.
</TABLE>
E-17
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
99.9.2 Supplemental Indenture No. 2 dated as of 99.9.1 to the Company's 1-6986
March 8, 1995, to Trust Indenture, Quarterly Report on Form
Mortgage, Security Agreement and 10-Q for the quarter ended
Assignment of Rents between The First March 31, 1995.
National Bank of Boston and Chemical
Bank dated as of August 12, 1986.
99.10* Assignment, Assumption, and Further 28.3 to the Company's 1-6986
Agreement dated as of August 12, 1986, Current Report on Form 8-K
between Public Service Company of New dated August 18, 1986.
Mexico and The First National Bank of
Boston, as Owner Trustee.
99.11 Participation Agreement dated as of 2.1 to the Company's 1-6986
December 15, 1986, among the Owner Current Report on Form 8-K
Participant named therein, First dated December 17, 1986.
PV Funding Corporation, The First
National Bank of Boston, in its individual
capacity and as Owner Trustee (under a
Trust Agreement dated as of December 15, 1986,
with the Owner Participant), Chemical
Bank, in its individual capacity and as
Indenture Trustee (under a Trust Indenture,
Mortgage, Security Agreement and Assignment
of Rents dated as of December 15, 1986,
with the Owner Trustee), and Public Service
Company of New Mexico, including Appendix
A definitions (Unit 1 Transaction).
99.12 Trust Indenture, Mortgage, Security 28.2 to the Company's 1-6986
Agreement and Assignment of Rents dated Current Report on Form 8-K
as of December 15, 1986, between The dated December 17, 1986.
First National Bank of Boston, as Owner
Trustee, and Chemical Bank, as Indenture
Trustee (Unit 1 Transaction).
99.13 Assignment, Assumption and Further 28.3 to the Company's 1-6986
Agreement dated as of December 15, Current Report on Form 8-K
1986, between Public Service Company of dated December 17, 1986.
New Mexico and The First National Bank
of Boston, as Owner Trustee (Unit 1
Transaction).
</TABLE>
E-18
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
99.14 Participation Agreement dated as of 2.2 to the Company's 1-6986
December 15, 1986, among the Owner Current Report on Form 8-K
Participant named therein, First dated December 17, 1986.
PV Funding Corporation, The First
National Bank of Boston, in its individual
capacity and as Owner Trustee (under a Trust
Agreement dated as of December 15, 1986,
with the Owner Participant), Chemical
Bank, in its individual capacity and as
Indenture Trustee (under a Trust Indenture,
Mortgage, Security Agreement and Assignment
of Rents dated as of December 15, 1986,
with the Owner Trustee), and Public Service
Company of New Mexico, including Appendix
A definitions (Unit 2 Transaction).
99.15 Trust Indenture, Mortgage, Security 28.10 to the Company's 1-6986
Agreement and Assignment of Rents dated Current Report on Form 8-K
as of December 15, 1986, between the dated December 17, 1986.
First National Bank of Boston, as Owner
Trustee, and Chemical Bank, as Indenture
Trustee (Unit 2 Transaction).
99.16 Assignment, Assumption, and Further 28.11 to the Company's 1-6986
Agreement dated as of December 15, Current Report on Form 8-K
1986, between Public Service Company of dated December 17, 1986.
New Mexico and The First National Bank
of Boston, as Owner Trustee (Unit 2
Transaction).
99.17* Waiver letter with respect to "Deemed 28.12 to the Company's 1-6986
Loss Event" dated as of August 18, 1986, Current Report on Form 8-K
between the Owner Participant named dated August 18, 1986.
therein, and Public Service Company of
New Mexico.
99.18* Waiver letter with respect to "Deemed 28.13 to the Company's 1-6986
Loss Event" dated as of August 18, 1986, Current Report on Form 8-K
between the Owner Participant named dated August 18, 1986.
therein, and Public Service Company of
New Mexico.
99.19 Agreement No. 13904 (Option and 28.19 to Annual Report of 1-6986
Purchase of Effluent), dated April 23, the Registrant on Form 10-K
1973, among Arizona Public Service for fiscal year ended
Company, Salt River Project Agricultural December 31, 1986.
Improvement and Power District, the
Cities of Phoenix, Glendale, Mesa,
Scottsdale, and Tempe, and the Town of
Youngtown.
</TABLE>
E-19
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Filed As Exhibit: File No:
<S> <C> <C> <C>
99.20 Agreement for the Sale and Purchase of 28.20 to Annual Report of 1-6986
Wastewater Effluent, dated June 12, 1981, the Registrant on Form 10-K
among Arizona Public Service Company, for fiscal year ended
Salt River Project Agricultural December 31, 1986.
Improvement and Power District and the
City of Tolleson, as amended.
</TABLE>
- -----------
* One or more additional documents, substantially identical in all material
respects to this exhibit, have been entered into, relating to one or more
additional sale and leaseback transactions. Although such additional
documents may differ in other respects (such as dollar amounts and
percentages), there are no material details in which such additional
documents differ from this exhibit.
** Designates each management contract or compensatory plan or arrangement
required to be identified pursuant to paragraph 3 of Item 14(a) of Form
10-K.
(b) Reports on Form 8-K:
During the quarter ended December 31, 1995 and during the period beginning
January 1, 1996 and ending February 22, 1996, the Company filed, on the dates
indicated, the following reports on Form 8-K.
Dated: Filed: Relating to:
------ ------ ------------
December 8, 1995 December 8, 1995 Palo Verde Nuclear Generating Station
December 21, 1995 December 21, 1995 Ojo Line Extension Transmission Project
E-20
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: February 22, 1996 By /s/ B. F. MONTOYA
-------------------------------------
B. F. Montoya
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ B. F. MONTOYA Principal Executive Officer and February 22, 1996
- ------------------------------------------------- Director
B. F. MONTOYA
President and Chief Executive Officer
/s/ M. H. MAERKI Principal Financial Officer February 22, 1996
- -------------------------------------------------
M. H. Maerki
Senior Vice President and
Chief Financial Officer
/s/ D. M. BURNETT Principal Accounting Officer February 22, 1996
- -------------------------------------------------
D. M. Burnett
Corporate Controller and
Chief Accounting Officer
/s/ J. T. ACKERMAN Chairman of the Board February 22, 1996
- -------------------------------------------------
J. T. Ackerman
/s/ R. G. ARMSTRONG Director February 22, 1996
- -------------------------------------------------
R. G. Armstrong
/s/ J. A. GODWIN Director February 22, 1996
- -------------------------------------------------
J. A. Godwin
/s/ L. H. LATTMAN Director February 22, 1996
- -------------------------------------------------
L. H. Lattman
/s/ M. LUJAN JR. Director February 22, 1996
- -------------------------------------------------
M. Lujan Jr.
/s/ R. U. ORTIZ Director February 22, 1996
- -------------------------------------------------
R. U. Ortiz
/s/ R. M. PRICE Director February 22, 1996
- -------------------------------------------------
R. M. Price
/s/ P. F. ROTH Director February 22, 1996
- -------------------------------------------------
P. F. Roth
</TABLE>
E-21
<PAGE>
AMENDMENT AND SUPPLEMENT NO. 1
TO
SUPPLEMENTAL AND ADDITIONAL INDENTURE OF LEASE
BETWEEN
THE NAVAJO TRIBE OF INDIANS
AND
ARIZONA PUBLIC SERVICE COMPANY,
EL PASO ELECTRIC COMPANY,
PUBLIC SERVICE COMPANY OF NEW MEXICO,
SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT
AND POWER DISTRICT,
SOUTHERN CALIFORNIA EDISON COMPANY,
AND
TUCSON ELECTRIC POWER COMPANY
<PAGE>
AMENDMENT AND SUPPLEMENT NO. 1
TO
SUPPLEMENTAL AND ADDITIONAL INDENTURE OF LEASE
TABLE OF CONTENTS
SECTION PAGE
------- ----
1. Parties 1
2. Recitals 1
3. Agreement 3
4. Effective Date 6
5. Leasing Provisions 6
6. Consent to Grants of Rights-of-Way
by Secretary 21
7. Relocation Procedures 21
8. Future Rights-of-Way 22
9. Rental For Additional Land 26
10. Lease Rentals 28
11. Water Rights 30
12. Labor Policy 31
13. Navajo Scholarships 31
14. Supplemental Lease to Remain in Effect 33
<PAGE>
AMENDMENT AND SUPPLEMENT NO. 1
TO
SUPPLEMENTAL AND ADDITIONAL OF LEASE
1. PARTIES:
The Parties to this Amendment and Supplement No. 1 to Supplemental and
Additional Indenture of Lease (hereinafter referred to as "Amendment
No. 1") are THE NAVAJO TRIBE OF INDIANS, acting through the Navajo
Tribal Council and its chairman for and on behalf of the Navajo Tribe
of Indians (hereinafter) referred to as the "Tribe"), as Lessor, and
ARIZONA PUBLIC SERVICE COMPANY, EL PASO ELECTRIC COMPANY, PUBLIC
SERVICE COMPANY OF NEW MEXICO, SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT, SOUTHERN CALIFORNIA EDISON COMPANY, and
TUCSON ELECTRIC POWER COMPANY, formerly Tucson Gas & Electric company
(hereinafter collectively, together with their successors and assigns,
referred to as "Lessees," and singly referred to as "Lessee"), as
Lessees.
2. RECITALS:
The Parties are entering into this Amendment No. 1 with reference to
the following facts, among others:
2.1 Effective July 6, 1966, the Parties entered into the Supplemental
- 1 -
<PAGE>
and Additional Indenture of Lease ("Supplemental Lease"), which
among other things amended the Amended Original Lease in
certain respects and further granted the Lessees certain
leasehold rights to construct, reconstruct, use, operate,
maintain, locate, and remove the Four Corners Project.
2.2 Since the Supplemental Lease was signed in 1966, a number of
matters have arisen which were not addressed therein or which,
if addressed, require modifications to the Lease and to the
coal lease between the Tribe and Utah Mining (now named Utah
International, Inc.), the coal supplier to the Four Corners
Project, in order to satisfy the purposes and objectives of
the Parties.
2.3 Among the more important modifications from the Tribe's point
of view is a substantial increase in the royalties payable on
coal mined by Utah Mining, which eventually will be borne by
the Lessees and their customers, thereby creating
consideration to the Tribe for additional benefits conferred
on Lessees by this Amendment No. 1.
2.4 The Parties desire through this Amendment No. 1 to address and
resolve to the extent feasible the matters referred to in
Sections 2.2 and 2.3.
2.5 The Parties desire to use in this Amendment No. 1 the terms
defined on Pages 1 through 6 of the Supplemental Lease in the
same context as defined and used therein, except those terms
which are amended to read as follows:
- 2 -
<PAGE>
"Related Facilities" - Those facilities to be
constructed or installed at Four Corners and ultimately to be
owned by one or more Lessees which will serve in connection
with the operation and maintenance of any or all of Units 4
and 5 and the existing three units of the Initial Four Corners
Plant;
"Amended Original Plant Site" - The plant site for
the existing three units of the Initial Four Corners Plant,
the area and location of which are shown and described on the
plat attached hereto as amended Exhibit 1 hereof, this Amended
Original Plant Site being a revision (and a diminution) of the
so called "plant site area" leased to Arizona under the
Original Lease and shown on Exhibit A and Supplemental
Exhibits thereto of the Original lease;
"New Plant Site" - The plant site for Units 4 and 5
and the switchyard facilities therefor, the area and location
of which are shown and described on the plat attached hereto
as Amended Exhibit 2 hereof. The New Plant Site includes a
portion of the so-called "plant site area" leased to Arizona
under the Original Lease, as well as additional contiguous
lands (the portion heretofore leased to Arizona as part of the
area designated as the "plant site area" under the Original
Lease being deleted from said "plant site area" pursuant to
this Supplement Lease);
- 3 -
<PAGE>
"Pumping Plant Site" - The site for facilities to
divert and pump water from the San Juan River, including
diversion works, water intake works, pumping station, water
lines and facilities related thereto, the area and location of
which are shown described on the plat attached hereto as
Amended Exhibit 3 hereof, this Pumping Plant Site being the
same as the area designated as the "pumping plant site" leased
to Arizona under the Original Lease and shown on Exhibit b and
Supplemental Exhibits thereto of the Original Lease;
"Dam Site" - The site of the dam and other facilities
and appurtenances constructed by Arizona as Lessee under the
Original Lease, the area and location of which are shown and
described on the plat attached hereto as Amended Exhibit 4
hereof, this Dam Site being the same as the area designated as
the "dam site" leased to Arizona under the Original Lease and
shown on Exhibit C and Supplemental Exhibits thereto of the
Original Lease;
- 4 -
<PAGE>
"Common and Related Facilities Area" - The area, in
addition to, an exclusive of, the Amended Original Plant Site,
New Plant Site, Pumping Plant site, Dam Site and Ash Disposal
Area, on which are or will be located certain of the Common
Facilities and certain of the Related Facilities, which is
shown and described on the plat attached hereto as Amended
Exhibit 5 hereof;
"Ash Disposal Area" - The area for the disposal of
ash and refuse products resulting from the operation of the
Enlarged Four Corners Generating Station, together with access
there from the Amended Original Plant Site and the New Plant
Site, which area is shown and described on the plat attached
hereto as Amended Exhibits 6 and 6A hereof. This area includes
the area designated as the "ash disposal area" under the
Original Lease and shown on Exhibit D thereof and Supplemental
Exhibits thereto, together with an additional area contiguous
thereto;
"Storage Lake" - The lake formed by the water
impounded behind the dam located on the Dam Site, the contour
line showing the maximum level of which lake is shown on
Amended Exhibit 8 hereof;
3. AGREEMENT:
The Parties agree as follows:
- 5 -
<PAGE>
4. EFFECTIVE DATE:
This Amendment No. 1 shall become effective upon the date of the last
to occur of the following: (i) the approval of the Secretary of the
Interior or his authorized delegate of this Amendment No. 1; (ii) the
approval of the Secretary of the Interior or his authorized delegate
of Amendment No. 4 and Supplement to the Mining Lease dated July 26,
1957, or (iii) execution by the Secretary of the Interior or his
authorized delegate of amendments to the ss. 323 Grant and the Arizona
ss. 323 Grant, conforming said Grants to this Amendment No. 1. 5.
5. LEASING PROVISIONS:
Sections 2, 3, and 4 of the Supplemental Lease are hereby amended to
read as follows:
"2. LEASED LANDS UNDER NEW LEASE: The Tribe, for and in
consideration of the payment by the Lessees of the rentals
specified and the performance by the Lessees of the covenants
hereinafter recited, does hereby for the term hereinafter set
out, and for the purpose of constructing, reconstructing,
using, operating, maintaining, relocating and removing the
Four Corners Project, lease unto the Lessees under the new
Lease the real property hereinafter described:
- 6 -
<PAGE>
(a) The Tribe hereby leases the New Plant Site to the
Lessees as tenants in common, with Arizona having an
undivided 15% interest therein, El Paso having an
undivided 7% interest therein, New Mexico having an
undivided 13% interest therein. Salt River Project
having an undivided 10% interest therein, Edison
having an undivided 48% interest therein, and Tucson
having an undivided 7% interest therein.
(b) The Tribe hereby leases the Pumping Plant Site, the
Dam Site, the Common and Related Facilities Areas and
the Ash Disposal Area to the Lessees as tenants in
common, with Arizona having an undivided 10.86%
interest therein, El Paso having an undivided 5.07%
interest therein, New Mexico having an undivided
9.42% interest therein, Salt River Project having an
undivided 7.24% interest therein, Edison having an
undivided 34.76% interest therein, and Tucson having
an undivided 5.07% interest therein. Pending the
outcome of technical studies and/or operating
experience, it is possible that additional common and
related facilities area and ash disposal area will be
- 7 -
<PAGE>
required either contiguous to or in the general areas
of the Common and Related Facilities Area and Ash
Disposal Area. In the event that such additional
areas are required, subject to procuring the approval
of the Tribe and the Secretary at that time, the
appropriate exhibits will be amended to show the
additional areas. Payments to the Tribe for such
additional areas shall include an initial payment of
$200 per acre, plus payments at the rate of $10.00
per acre per year. Such payments shall be in addition
to the lease rental payments hereinafter provided in
Section 11.
(c) Insofar as some portions or components of the
Common Facilities or Related Facilities are located
on the Amended Original Plant Site, the Tribe hereby
leases the Amended Original Plant Site to the Lessees
as tenants in common, with Lessees having the same
respective interests set forth above in Section 2(b),
to the extent and only to the extent that the Lessees
shall have reasonable access to such portions or
components of the Common Facilities and Related
Facilities and shall have the right to construct,
- 8 -
<PAGE>
use, operate, maintain, relocate, replace and remove
the same in connection with the construction,
reconstruction, use, operation, maintenance,
relocation and removal of the Four Corners Project,
provided that Lessees, in exercising the rights
hereby leased, shall not interfere with or impair the
use by Arizona of the Amended Original Plant Site for
the purpose for which said plant site is held by
Arizona under the Amended Original Lease.
A plat showing, among other things, all of said Leased Lands,
and also indicating the portions thereof heretofore leased to
Arizona under the Original Lease, is attached hereto as
Amended Exhibit 7 hereof.
3. AMENDMENTS TO ORIGINAL LEASE: The Original Lease is hereby
amended and supplemented, in addition to other amendments and
supplements as herein provided, so that the Amended Original
Lease shall provide as follows:
(a) The Amended Original Plant Site hereunder (Amended
Exhibit 1 hereof) is substituted for the plant site
thereunder (Exhibit A thereof and Supplemental
Exhibits thereto);
- 9 -
<PAGE>
(b) The Tribe hereby leases to Arizona, as Lessee under
the Amended Original Lease, an undivided 27.58%
interest in the lands within the Ash Disposal Area
(Amended Exhibits 6 and 6A hereof) not included
within the Ash Disposal Area leased to Arizona under
the Original Lease (Exhibit D thereof and
Supplemental Exhibits thereto); and the Ash Disposal
Area under this Supplemental Lease, as hereby
amended, is substituted for the ash disposal area
under the Original Lease;
(c) Insofar as some portions or components of the Common
Facilities or Related Facilities, or facilities of
Arizona, are located on the New Plant Site, the
Tribe hereby leases the New Plant Site to Arizona,
to the extent and only to the extent that Arizona
shall have reasonable access to such portions or
components of the Common Facilities and Related
Facilities, and facilities of Arizona, and shall
have the right to construct, reconstruct, use,
operate, maintain, relocate, replace and remove the
same in connection with the construction,
reconstruction, use, operation, maintenance,
relocation and removal of the Initial Four Corners
Plant, provided that Arizona, in exercising the
- 10 -
<PAGE>
rights hereby leased, shall not interfere with or
impair the use by Lessees of the New Plant Site for
the purpose for which said plant site is held by
Lessees under the New Lease;
(d) The Common and Related Facilities Area hereunder
(Amended Exhibit 5 hereof) is substituted as to that
portion of the plant site thereunder (Exhibit A
thereof and Supplemental Exhibits thereto) included
within said Common and Related Facilities Area;
(e) Plant access road hereunder (Amended Exhibits 10 and
10A hereof) is substituted for the plant access road
thereunder (Exhibit I, Sheets 1 and 2 thereof and
Supplemental Exhibits thereto);
(f) Access road and water pipeline hereunder (Amended
Exhibit 9 hereof) is substituted for the access road
and water pipeline thereunder (Exhibit H, Sheets 1
and 2 thereof and supplemental Exhibits thereto);
(g) Sections 6, 16 and 19 of the Original Lease are
hereby amended to conform with Sections 11(e), 21 and
25, respectively, of the Supplemental Lease, as
amended herein.
- 11 -
<PAGE>
(h) Sections 6A, 6B, 11(f), 51 and 52 of the Supplemental
Lease, as added by this Amendment No. 1, are hereby
added as Sections 7A, 7B, 6, 34 and 35, respectively,
of the Original Lease.
(i) The leasehold rights leased to Arizona under Section
2(b) hereof, as a Lessee under the New Lease, shall
be separate and independent from, and shall not merge
with, the leasehold rights leased to Arizona under
the Amended Original Lease;
(j) The leasehold rights leased to Lessees under Section
2(b) hereof shall be equal in time and priority with
the leasehold rights leased to Arizona under the
Amended Original Lease;
(k) The leasehold rights leased to Lessees under Section
2(c) hereof shall be equal in time and priority with
the leasehold rights in the Amended Original Plant
Site leased to Arizona under the Amended Original
Lease;
(l) The leasehold rights leased to Arizona under Section
3(c) hereof shall be equal in time and priority with
the leasehold rights in the New Plant Site leased to
Lessees under the New Lease;
- 12 -
<PAGE>
4. LEASE OR RELATED RIGHTS:The Tribe hereby leases to Lessees under thenew
-----------------------
Lease and to Arizona under the Amended Original Lease the auxiliary and
related rights hereinafter set out (herein sometimes for convenience
referred to as "Related Rights") as tenants in common, with the Lessees
having the same respective interests therein under the New Lease set
forth above in Section 2(b), and with Arizona being a tenant in common
and having an undivided 27.58% interest in the Related Rights as lessee
under the Amended Original Lease (in addition to its undivided 10.86%
interest therein under the New Lease, as herein provided); and the
Related Rights leased to Lessees under the New Lease and the related
rights leased to Arizona under the Original Lease and retained by
Arizona under the Amended Original Lease and shall be equal in time and
priority. The Related Rights herein leased are rights to occupancy and
possession of the real property hereinafter described and do not apply
to or affect any Common Facilities heretofore constructed by Arizona on
such real property pursuant to the Original Lease, or any Related
Facilities hereafter constructed by Lessees on said real property
pursuant to the New Lease and the Amended Original Lease.
- 13 -
<PAGE>
(a) The right to occupy and use Reservation Lands in order to
construct, reconstruct, install, operate, maintain, relocate
and remove (i) diversion works, including dams, wells,
pipelines, facilities and structures for diverting water,
on the stream bed of the San Juan River within the Reservation
Lands, in addition to diversion works in the Pumping Plant
Site, in order to maintain diversion works in the Pumping
Plant Site, in order to maintain diversions of water to the
pumps installed on the Pumping Plant Site, in event of change
in the location of the stream bed of the San Juan River; (ii)
electric power and communication lines and facilities and
access roads to the said new diversion works from other
facilities of the Lessees; and (iii) pipelines, conduits and
other structures and facilities which will conduct water from
the San Juan River or from other sources to the Storage Lake.
(b) the right to construct,reconstruct,install, operate, maintain,
relocate and remove water lines across the Reservation
Lands (in addition to those from the Pumping Plant Site) for
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<PAGE>
the purpose of transporting water for operation of the
Enlarged Four Corners Generating Station, and the right of
access thereto.
(c) The right to construct, reconstruct, install, operate,
maintain, relocate and remove a power line and a communication
line from the Dam Site to the Pumping Plant Site. The location
of said power line and communication line is within is within
the real property shown and described on Amended Exhibit 13
hereof.
(d) The right to construct, reconstruct, install, improve,
operate, maintain, relocate and remove a water pipeline and
access road from the Storage Lake to the Pumping Plant Site.
The locations of said pipeline and access road are within the
real property shown and described on Amended Exhibit 9 hereof.
(e) The right to construct, reconstruct, improve, maintain, and
relocate an access road extending from San Juan River bridge
to the Amended Original Plant Site. The location of said
access road is within the real property shown and described on
Amended Exhibits 10 and 10A hereof.
(f) The right to conduct, reconstruct, install, improve, operate,
maintain, relocate and remove an access road, water pipelines
- 15 -
<PAGE>
andpower and communication lines extending from the Common and
Related Facilities Area to the Utah Mining Leased Lands. The
location of said access road, water pipelines and power and
communication lines is within the real property shown and
described on Amended Exhibit 11 hereof.
(g) The right to construct, reconstruct, install, operate,
maintain, relocate and remove water pipelines extending from
the Common and Related Facilities Area to the Storage Lake to
the Utah Mining Leased Lands. The location of said water
pipelines is within the real property shown and described on
Amended Exhibit 12 hereof.
(h) The right to store water in the Storage Lake behind the dam
located on the Dam Site; to flood and utilize Reservation
Lands to the extent that will be required to store the water
in the Storage Lake which can be contained behind the Dam, up
to a maxim elevation of 5327.5 feet, with a maximum Storage
Lake area of approximately 1288 acres (including the portions
of the Storage Lake included in the Common and Related
Facilities Area
- 16 -
<PAGE>
and the Dam Site), the Storage Lake at such maximum level to
have substantially the contour line shown on Amended Exhibit 8
hereof; to use and draw down the water from, and to fill,
refill and empty the Storage Lake; to fluctuate the level of
the Storage Lake and the Storage Lake surface area; to take
water from the Storage Lake into the Enlarged Four Corners
Generating Station and to discharge water back into the
Storage Lake at a higher temperature; to use the Storage Lake
in any way required for operation of the Enlarged Four Corners
Generating Station; to clean the Storage Lake surface; to take
any action that Lessees may deem necessary for limiting or
preventing undue seepage and for controlling, curtailing and
removing debris, weed, vegetable, marine, insect and animal
growths; to have access to all of the Storage Lake area for
all of such previously described purposes; and to construct
and maintain dikes and embankments to prevent flooding of
roads and to make full use of the area described as Parcel B
(all as shown on Amended Exhibit 8). Insofar as the Dam and
Storage Lake will affect Reservation Lands subject to existing
rights-of-way, to the extent the Tribe has the right to do so,
the Tribe hereby leases to the Lessees the right to construct
- 17 -
<PAGE>
and maintain said Dam and Storage Lake and confers upon the
Lessees whatever rights the Tribe may have with respect to
construction and maintenance of a Dam and Storage Lake
affecting Reservation Lands subject to such rights-of-way.
(i) The right to dispose of waste water on the Reservation Lands
by permitting waste water from the Enlarged Four Corners
Generating Station to flow from the Ash Disposal Area into and
along the Chaco wash; the right to construct, reconstruct,
install, operate, maintain, relocate and remove pipelines,
sluice works and other facilities for transporting of ashes,
refuse products and waste water, and roads, from the Common
and Related Facilities Area to the Ash Disposal Area. In
addition to the Related Rights leased under this Section 4(i),
the lease of the Ash Disposal Area to the Lessees shall
include the right for the following uses, among others: the
right to dispose of and dump thereon ashes, refuse products
and waste water from the Enlarged Four Corners Generating
Station; the right to
- 18 -
<PAGE>
construct, reconstruct, install, operate, maintain, replace
and remove roads, pipelines, sluice works, dikes, dams,
canals, and other works and facilities for the storage and
disposal of ashes, refuse products and waste water. Lessees
will install such dikes, settling basins, or other facilities
as are reasonably necessary to retain said ashes in the Ash
Disposal Area. Appropriate and standard tests for determining
the presence of contaminants in the waste water will be
conducted by Lessees under the New Lease and Arizona under the
Amended Original Lease, and reasonable steps will be taken by
them to reduce such contaminants to an acceptable minimum.
(j) The locations and routes of the facilities referred to in
Section 4(a) and (b), and of any ash, refuse product and waste
water disposal facilities located outside of the Ash Disposal
Area, and referred to in Section 4(i), shall be first
submitted to and approved by the Tribe and the Secretary, and
the Tribe agrees that it will not withhold its consent to any
reasonable locations and routes. In the event additional or
extended diversion works are constructed or installed in the
- 19 -
<PAGE>
stream bed of the San Juan River within the Reservation Lands,
other than on the Pumping Plant site, or facilities are
constructed within the Chaco wash, a plat or plats showing the
location thereof shall promptly be filled with the Secretary
and with the Tribe.
(k) All access roads outside the Leased Lands will be subject to
being used by members of the tribe or its permittees in a
normal manner not preventing the Lessees from making normal
use of the roads; provided, however, that the Lessees are not
obligated hereby to maintain such roads, except for
maintenance made necessary by the use by the Lessees of such
roads. In the event an access road shall be incorporated into
the improved road system for the State of New Mexico or the
Reservation Road System of the Bureau of Indian Affairs, so as
to become open for public use, the Lessees will surrender
their right-of-way and easement for such road. For heavy
haulage during periods of construction, reconstruction, use,
operation, maintenance, relocation and removal of Enlarged
Four Corners Generating Station, in cases where use of the
access roads hereinabove described is not practicable, the
Lessees shall have the right to reasonable access across the
Reservation Lands to the Leased Lands."
- 20 -
<PAGE>
6. CONSENT TO GRANT OF RIGHTS-OF-WAY BY SECRETARY:
Section 5 of the Supplemental Lease is hereby amended by adding the
following Subsection (d):
"(d) The Tribe hereby gives its consent to the amendment by the
Secretary of any Exhibit to the ss. 323 Grant and the Arizona
ss. 323 Grant required in order to conform said Exhibits with
the Amended Exhibits to this Supplemental Lease covering both
the New Lease and the Amended Original Lease." 7. RELOCATION
PROCEDURES:
A new Section 6A is hereby added to the Supplemental Lease to read as
follows:
"6A. RELOCATION OF NAVAJOS:
(a) Lessees shall comply with all existing and future rules
and regulations, ordinances, and laws of the Tribe
relating to relocation of individual Navajos and just
compensation to individual Navajo permittees for
impairment of their use areas as a result of Lessees'
operations hereunder, including, but not limited to, the
loss of or damage to traditional or customary grazing
areas or area grazed under permit; the removal,
relocation and/or replacement of people, buildings,
hogans, and other structures; damages to livestock and
crops; and other losses. In connection with the
foregoing, Lessees shall pay such compensation as may be
- 21 -
<PAGE>
determined according to rules, regulations, ordinances,
and laws of the Tribe and, in addition, shall (if
required by such rules, regulations, ordinances, and
laws) pay or reimburse the administrative costs involved
in determining, awarding, and implementing such
compensation.
(b) Before commencing any activities on any portion of the
leased premises, Lessees shall pay to Tribe all of the
compensation required under this Section 6A for all
individual Navajos entitled to compensation under this
Section 6A. Lessees shall then be deemed to have
discharged its obligations to pay compensation to
individual Navajos under this Section 6A. The individual
Navajos entitled to compensation under this Section 6A
may, at their option, either (a) immediately relocate
and receive from the Tribe the funds to which they are
entitled under this Section 6A or (b) remain on the
leased premises until they are given notice to relocate
by Lessees, at which time they shall be removed from the
leased premises, and upon completion of such removal
they shall receive from the Tribe the funds to which
they are entitled under this Section 6A. Notwithstanding
anything to the contrary herein, the Tribe shall not be
required to pay any compensation to individual Navajos
from funds other than those provided by Lessees under
this Section 6A."
- 22 -
<PAGE>
8. FUTURE RIGHTS-OF-WAY:
A new Section 6B is hereby added to the Supplemental Lease to read as
follows:
"6B. COMPENSATION FOR FUTURE RIGHTS-OF-WAY:
If during the remaining term of this Supplemental Lease any
Lessee on behalf of itself or a joint venture project in which
it is a participant applies to the Tribe for a permit or grant
of right-of-way or easement to construct and operate an
electric transmission line over or across Reservation Lands,
if the Lessor in its sole discretion determines such
right-of-way or easement should be granted, and if during the
twelve-month period preceding the date of the application
Lessees' fuel supplier has paid royalties to the Tribe on not
less than six (6) million tons of coal sold to be Lessees, the
amount of the initial and annually adjusted payment for said
permit or grant of right-of-way or easement shall be
determined in accordance with the formulas established as
follows:
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<PAGE>
(a) For each such right-of-way or easement, Lessee shall
pay the Secretary for the use and benefit of the
Tribe a one-time payment computed on the basis of the
following formula:
Ra1 = (R1) X (Ic1) WHEREIN:
(Ib1)
R1 = The adjusted one-time payment for
such right-of-way or easement.
Ic1 = The final quarterly index of the Index
of Implicit Price Deflators for Gross National
Product (as presently published in Table
7.1-7.2 of the National Income and Product
Tables, in publication by the United States
Department of Commerce entitled Survey of
Current Business, hereinafter referred to as
"IPD") last published immediately preceding
the date of the grant of the right-of-way or
easement is effective, provided that in no
event shall 1cl be less than the value of Ib1.
Ib1 = The final quarterly index of IPD last
published before the Effective Date.
- 24 -
<PAGE>
(b) In addition to the payments set forth in (a) hereof,
as consideration for each such right-of-way or
easement, Lessee shall pay the Secretary for the use
and benefit of the Tribe an annually adjusted payment
of $10 per acre. The payment shall be calculated on
the basis of the following formula:
Ra2 = (Ic1) X $10 WHEREIN:
(Ib2)
Ra2 = The adjusted annual payment for each acre.
Ic2 = The final quarterly index of IPD
last published preceding the date
each annual payment is due, provided
that in no event shall Ic2 less than
the value of Ib2.
Ib2 = The final quarterly index of IPD
last published before the Effective
Date.
The foregoing formula shall not apply to renewals of or to
rights-of-way or easements for which application was submitted
to the Lessor before the effective date of Amendment No.1, nor
to any rights-of-way or easements for which application is
made by an entity, or joint venture project which will wholly
own the transmission lines for which the application is made,
- 25 -
<PAGE>
and in which the Lessor, its political subdivisions, or its
enterprises have an ownership interest.
9. RENTAL FOR ADDITIONAL LAND:
Section 11 of the Supplemental Lease is hereby amended by adding the
following Subsection (f):
"(f) Pursuant to Section (b), 725.68 acres of additional land have
been leased to Lessees by this Amendment No. 1, as additions to
the Common and Related Facilities Area and the Ash Disposal Area,
all as reflected on Amended Exhibits 5 and 6A, respectively. Said
additions shall result in the following additional rental payments
to the Tribe:
(i) With respect to the addition to the Common and Related
Facilities Area, an initial one-time payment of $35,206,
payable by the Lessees on the Effective Date, said payment to
be made as provided in Section 11(d) hereof.
(ii) With respect to the addition to the Ash Disposal Area,
an initial, one-time payment of $109,930, payable by Arizona
on the Effective Date.
(iii)With respect to the addition to Common and Related facilities
Area,a monthly rental of $146.70 effective for the first full
- 26 -
<PAGE>
month subsequent to the Effective Date and each month
thereafter through December 31, 1985 to be paid by Lessees
within thirty (30) days after the Effective Date, said
payment to be made as provided in Section 11(d) hereof.
(iv) With respect to the addition to the Ash Disposal Area, a
monthly rental of $458.05 effective for the first full month
subsequent to the Effective Date and each month thereafter
through December 31, 1985 to be paid by Arizona within thirty
(30) days after the Effective Date.
(v) With respect to the addition to the Common and Related
Facilities Area, an annual rental of $1,760.30 for the twelve
(12) month period ending December 31, 1985, to be paid by the
Lessees on or before January 1, 1985, said payment to be made
as provided in Section 11(d) hereof.
(vi) With respect to the addition to the Ash Disposal Area,
an annual rental of $5,496.50 for the twelve (12) month
period ending December 31, 1985, to be paid by Arizona on or
before January 1.
- 27 -
<PAGE>
(vii) Annual payments thereafter with respect to (v) and (vi)
above shall be payable in advance on or before January 1 of
each year and shall be calculated on the basis of the
following formula:
Ra3 = (Ic3) X $1760.30, and 45,496.50,
respectively, (Ib3) WHEREIN:
Ra3 = The adjusted annual payment for
such additional leased land.
Ic3 = The final quarterly index of IPD
last published preceding the date
each annual payment is due, provided
that in no event shall Ic3 be less
than the value of Ib3.
Ib3 = The final quarterly index of IPD last published
before the Effective Date."
The Tribe hereby waives its right to receive consideration and damages
for the conforming amendments to the Arizona ss. 323 Grant and to the
ss. 323 Grant, as provided in 25 C.F.R. ss.ss. 169.12 and 169.13.
10. LEASE RENTALS:
Section 11(e) of the Supplemental Leases is hereby amended to read as
follows:
"(e) The lease rentals for the New Lease and the Amended Original
Lease are to be in lieu of all taxes, assessments, levies, exactions or
charges of any kind made or imposed by the Tribe, and the Tribe
covenants that it will not tax or assess, in any manner whatever,
directly or indirectly, the ss. 323 Grant, the Arizona ss. 323 Grant,
the New Lease, the Amended Original Lease, or the property of the
Lessees located on the Leased Lands or located on Reservation Lands
pursuant to the Related Rights leased in the New Lease or Amended
- 28 -
<PAGE>
Original Lease, or Lessee's activities under the New Lease or Arizona's
activities under the Amended Original Lease, or their ownership,
construction, operation or removal of the Four Corners Project by
Lessees, pursuant to the New Lease, or the Initial Four Corners Plant
by Arizona under the Amended Original Lease, or the power generated
thereon or the transmission, sale, or disposal of such power, their
income, or otherwise, or the sale or delivery of fuel to the Lessees by
the suppliers of their fuel, or the severance or extraction thereof by
such suppliers (other than royalties provided in their leases from the
Tribe) or the diversion or use of water; provided, however, that after
July 6, 2001, the foregoing covenants shall lapse. By agreeing to the
amended Section 11(e), the Tribe does not intend to ratify or otherwise
reaffirm the provisions of Section 11(e) as amended, nor otherwise give
any validity, effectiveness or scope to said provisions which they
would not have as originally written. In addition, this amended Section
11(e) shall not prejudice or constitute a waiver of the right of the
Tribe to contest the validity, applicability or enforceability of
Section 11(e) as amended. Likewise, by agreeing to the amended Section
11(e), the Lessees do not intend to repudiate, invalidate or diminish
the effectiveness, enforceability or scope of Section 11(e) as amended,
except as specifically provided herein."
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<PAGE>
11. WATER RIGHTS:
Section 21 of the Supplemental Lease is hereby amended by adding the
following sentence at the end of said Section:
"In the event the rights of the Tribe to take water from the
San Juan River are quantified judicially or otherwise in a
manner that impairs or adversely affects the ability of
Lessees or of Arizona under said Permit 2838 to remove a
supply of water from the San Juan River in sufficient
quantities to meet the requirements of the Enlarged Four
Corners Generating Station and the mining operations of Utah
Mining, the Tribe hereby agrees not to interrupt or cause the
interruption of said water supply and to sell to the Lessees
an annual amount of water equal to the amount by which Permit
2838 is so impaired or adversely affected. The annual payment
shall be calculated on the basis of $50 (in 1985 dollars) per
acre foot per year adjusted annually on January 1 of the year
following the Effective Date of Amendment No. 1 and each
January 1 thereafter on the basis of the following formula:
R1 = R(1+i)
Where: R1 = the adjusted rate per acre-foot per
year for the current year;
R = the adjusted rate per acre-foot per
year for the previous year; and
i = the 10-year constant maturity
United States Treasury interest
rate for the year preceding the
year the adjustment is made.
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<PAGE>
Nothing in this Supplemental Lease shall be construed or used
as an admission against the interest of either the Tribe or
Lessees in connection with any pending or future litigation or
adjudication involving water rights in the basin of the
Colorado River, the San Juan River or their tributaries."
12. LABOR POLICY:
Section 25 of the Supplemental Lease is hereby amended to read as
follows:
"25. LABOR POLICY - PREFERENTIAL EMPLOYMENT OF INDIANS:
Lessee shall provide preference in employment to Indians
living within or near the Reservation in connection with
construction and operation of the facilities contemplated in
this Supplemental Lease, all in accordance with the terms and
provisions of the Letter Agreement relating to said employment
which is attached hereto as Exhibit 15, as said Exhibit 15 may
be amended from time to time in accordance with its terms."
13. NAVAJO SCHOLARSHIPS:
A new Section 51 is hereby added to the Supplemental Lease to read as
follows:
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<PAGE>
"51. NAVAJO SCHOLARSHIPS: Lessees shall contribute to a foundation
to be established jointly by the Lessees and to the Tribe for
a term of ten years of not less than TWENTY-FIVE THOUSAND
DOLLARS ($25,000) annually, the first payment of which shall
be made within thirty (30) days after the Effective Date, for
the sole and exclusive purpose of providing scholarship aid to
Navajo recipients. Said foundation shall be jointly
administered by the Tribe's and Lessees' representatives. For
the initial five years, 80% of such contributions shall be
invested to generate future funds for scholarships and 20% may
be used for direct scholarship aid to Navajo recipients. For
the second five year period the joint administrators shall
determine how the contributed funds are to be used. Such
scholarships shall be awarded to recipients and used at
colleges and universities as the joint administrators shall
determine. Annual payments shall be calculated on the basis of
the following formula:
AASP = (Ic4) X $25,000 WHEREIN:
-----
(Ib4)
AASP = The adjusted annual scholarship payment.
Ic4 = The final quarterly index of IPD
last published preceding the date
each annual payment is due, provided
that in no event shall Ic4 be less
than the value of Ib4.
Ib4 = The final quarterly index of IPD las published
before the Effective Date."
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<PAGE>
14. SUPPLEMENTAL LEASE AND AMENDED ORIGINAL LEASE TO
REMAIN IN EFFECT:
Except as specifically amended herein, the Supplemental Lease and the
Amended Original Lease shall remain in full force and effect in
accordance with their terms.
IN WITNESS WHEREOF, the Parties havecaused this Amendment No. 1 to be
signed in their behalf by their duly authorized officers as of this _____ day of
__________, 1985.
THE NAVAJO TRIBE OF INDIANS
By: ______________________________________
/S/ Peterson Zah, Chairman
Navajo Tribal Chairman
ARIZONA PUBLIC SERVICE COMPANY
By: ______________________________________
/S/
Title: President
ATTEST:
/S/ Suzanne W. D
Secretary Associate
- 33 -
<PAGE>
EL PASO ELECTRIC COMPANY
By: ______________________________________
/S/
Title: Assistant Vice President
ATTEST:
/S/ Theta S. Fields
Secretary
PUBLIC SERVICE COMPANY OF NEW MEXICO
By: /S/ J. L. Wilkins
-----------------------------------
Title: Senior Vice President, Power Supply
ATTEST:
/S/ D. E. Peckham
Secretary
SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT
By: ______________________________________
/S/
Title: Vice President
ATTEST:
- -------------------------
/S/ Don E. Smith
Asst. Secretary
- 34 -
<PAGE>
SOUTHERN CALIFORNIA EDISON COMPANY
By: ______________________________________
Title: Vice President
ATTEST:
- -------------------------
Secretary
TUCSON ELECTRIC POWER COMPANY
By: ______________________________________
/S/
Title: Senior Vice President
ATTEST:
- -------------------------
/S/ Jean E. Kettlewell
Secretary
APPROVED this 25 day of April , 1985.
UNITED STATES DEPARTMENT OF THE
INTERIOR
By: /S/ Wilson Barber
---------------------------------
Secretary by
Navajo Area Director,
Mr. Wilson Barber, Pursuant
to the Commissioner's
Redelegation Order 10
BIAM, Section 3.1.
- 35 -
<PAGE>
STATE OF ARIZONA )
) SS
COUNTY OF APACHE )
The foregoing instrument was acknowledged before me this 25 day of
April, 1985, by PETERSON ZAH, Chairman of the Navajo Tribal Council of the
Navajo Tribe of Indians, on behalf of the Navajo Tribe of Indians.
/S/ Linda A Scott
------------------------------------------
Notary Public
My Commission Expires:
/S/ My Commission Expires Feb. 14, 1988
STATE OF ARIZONA )
) SS
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this 18 day of
March, 1985, by /S/ _________________________, President of ARIZONA PUBLIC
SERVICE COMPANY, a corporation, on behalf of said corporation.
/S/
---------------------------------------
Notary Public
My Commission Expires:
Nov. 13, 1986
- 36 -
<PAGE>
STATE OF TEXAS )
) SS
COUNTY OF EL PASO )
The foregoing instrument was acknowledged before me this 20th day of
March , 1985, by /S/ Joseph E. Wasiak , Asst. Vice President
of EL PASO ELECTRIC COMPANY, a corporation, on behalf of said corporation.
/S/ Cecilia R. Jyea
--------------------------------
Notary Public
My Commission Expires:
/S/ 7-3-85
STATE OF NEW MEXICO )
) SS
COUNTY OF BERNALILLO )
The foregoing instrument was acknowledged before me this 20th day of
March 1985, by J. L. Wilkins, Senior Vice President, Power Supply of PUBLIC
SERVICE COMPANY OF NEW MEXICO, on behalf of said corporation.
/S/ Sherry Leeson
---------------------------------
Notary Public
My Commission Expires:
July 1, 1988
- 37 -
<PAGE>
STATE OF CALIFORNIA )
) SS
COUNTY OF LOS ANGELES )
The foregoing instrument was acknowledged before me this 21st day of
March, 1985, by /S/ ____________________, Vice President, of SOUTHERN CALIFORNIA
EDISON COMPANY, a corporation, on behalf of said corporation.
/S/ Ven
-------------------------------
Notary Public
My Commission Expires:
Aug. 19, 1987
STATE OF ARIZONA )
) SS
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this 19th day of
March, 1985, by Marcel J. Boulais & Don E. Smith, Vice President & Asst.
Secretary of SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT, a
political subdivision of the State of Arizona, on behalf of said SALT RIVER
PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT.
/S/ Ken Lynn M. Franszczak
------------------------------
Notary Public
My Commission Expires:
Feb. 7, 1987
- 38 -
<PAGE>
STATE OF ARIZONA )
) SS
COUNTY OF PIMA )
The foregoing instrument was acknowledged before me this 19th day of
March , 1985, H. A. Heim, Senior Vice President of TUCSON ELECTRIC POWER
COMPANY, a corporation, on behalf of said corporation.
/S/ Katharine Snell
---------------------------------
Notary Public
My Commission Expires:
November 4, 1986
- 39 -
<PAGE>
EXHIBIT NOS. 1 - 13 are maps describing Four Corners Generating Station Plant
site and related area adjacent to the plant.
- 40 -
<PAGE>
EXHIBIT NO. 15
March 8, 1985
The Honorable Peterson Zah
Chairman
The Navajo Nation
Window Rock, AZ 86513
Dear Chairman Zah:
Since 1962, when the Four Corners Generating Station became
operational, Arizona Public Service Company ("APS") has been dedicated to the
employment of Indians within the plant. We have made a concerted and consistent
effort to adhere to and advance the concept of "Indian Preference," which can be
demonstrated by the following statistics:
1977 1984
--------- --------
Total Number of Indian Employees 312 (49%) 696 (65.7%)
In addition, APS has made a significant contribution to the upward
mobility of qualified Indians in numerous classifications, as evidenced by the
following information:
1977 1984
--------- --------
Maintenance Mechanics 11 (41%) 66 (52%)
Journeyman Classification 20 (19%) 108 (45%)
Auxiliary Operators 25 (61%) 50 (91%)
Control Operators 6 (35%) 15 (63%)
First Line Supervisors 3 (10%) 32 (36%)
APS is committed to the continued pursuit of preferential employment of
Indians at the Four Corners Generating Station pursuant to the provisions of
this Lette Agreement, subject to any limitations contained in applicable
provisions of the Labor Agreement in effect between APS and the I.B.E.W. Local
Union No. 387. Qualifications for employment and promotion shall be determined
by APS. In all instances, qualifications for positions will be job-related and
nondiscriminatory, and will be reviewed on an ongoing basis to ensure validity
and relevance of such qualifications. A list of the current positions is
attached as Appendix A.
In support of this commitment, APS proposes the following program to
enhance the employment status of Indians:
- 41 -
<PAGE>
The Honorable Peterson Zah
March 8, 1985
Page 2
1. Employment Preference
A. Subject to meeting its established minimum qualifications, APS
shall give preference in hiring and promotion to Indians whose
qualifications are equal to or better than those of non-Indian
Candidates.
B. When hiring temporary student employees, preference will be
given to Indians, where qualified.
2. Training
Training Programs shall be designed and implemented where cost
effective to enable the Four Corners Generating Station to meet its
manpower requirements. With respect to training courses which may be
implemented at the Four Corners Generating Station in the future,
preferential selection will be extended to Indian candidates.
A. Training courses APS has conducted at the Four Corners
Generating Station in the past, including the following:
Auxiliary Operator Power Plant Fundamentals
Basic Mechanics Safety Training
Control Operator Supervisory Skills
Lubeman Management Training
Mobile Equipment Training Water Analyst
Welder
B. With respect to training programs, APS will encourage its
Indian employees to take advantage of such opportunities to
enhance their upward mobility potential.
3. Promotions, Transfers and Work Force Reduction
A. Performance Review: Preference shall be given to Indian
employees with respect to reductions in force for performance
review positions subject to job requirements, employee
qualifications, and past work history. Should a transfer be
desired by performance review employees and required by APS,
preference shall be given to the best qualified Indian
employee as provided in Paragraph 1 hereof, depending on the
position into which the transfer is sought.
B. Bargaining Unit: With respect to bargaining unit positions
involved in promotions, transfers, reductions in force and
- 43 -
<PAGE>
The Honorable Peterson Zah
March 8, 1985
Page 3
recalls, seniority establishing by the Labor Agreement will be
the deciding factor where qualifications and physical fitness
are substantially equal. However, if not in conflict with such
Labor Agreement, such seniority shall first be applied to the
Indian applicants or candidates. If after APS has met its
preference obligations and no Indians are available, then
seniority may be applied among the non-Indian applicants or
candidates.
4. Grievance Procedure:
A. Bargaining unit employees will utilize the Grievance Procedure
agreed to between APS and I.B.E.W. Local Union No. 387.
B. Performance review employees will utilize the established APS
Equity Procedure to resolve grievances.
C. APS shall make a good faith effort to negotiate with the
I.B.E.W. to include a provision in the Labor Agreement
requiring the inclusion of Navajo employees in the grievance
procedure.
5. Hiring Notification, Recruiting and Advertising
A. When it is necessary for APS to hire outside applicants to
fill job openings, APS shall utilize Navajo personnel in its
recruitment process and shall provide notification to the
Navajo Nation and other agencies as indicated below. Such
notifications shall state that preference will be given to
qualified American Indians as provided in Paragraph 1 hereof,
depending on the position being filled:
(i) Director of the Office of Navajo Labor Relations
("ONLR") in Window Rock, Arizona,
(ii) BIA Employment Assistance Offices in Window Rock and
Farmington,
(iii) Farmington Inter-Tribal Organization,
(iv) Denver National Indian Employment Resource Center, and
- 44 -
<PAGE>
The Honorable Peterson Zah
March 8, 1985
Page 4
B. When advertising is required for an outside hire, the
following newspapers will be utilized in addition to others as
appropriate:
(i) Navajo Times, Window Rock, Arizona
(ii) Gallup Independent, Gallup, New Mexico
(iii) Farmington Daily Times, Farmington, New Mexico
(iv) Lake Powell Chronicle, Page, Arizona.
C. APS will recruit Indian candidates at Northern Arizona
University, University of Arizona, Arizona State University,
University of New Mexico, and New Mexico State University, in
addition to other educational institutions as appropriate.
6. Reporting
The Four Corners Power Plant will report manpower and furnish a
statistical breakdown by race of all new hires, promotions and
transfers, on a quarterly basis to the ONLR.
7. Contractor/Hiring Preference
A. Contractors will be required to agree that Indian preference
will apply to employment at the Four Corners Generating
Station. Contractors will be instructed to notify the Union
Hall that Indians, where qualified and available, are to be
dispatched before non-Indians.
B. Contractors and APS shall not be responsible for dispatching
of personnel by the Union Hall, but only for the proper
notification of the Union Hall. Problems, if any, in
dispatching, shall be addressed by the Navajo Nation to the
Union Hall, rather than to contractors or APS. The parties
shall use their best efforts to insure that job completion,
productivity and/or costs will not be impacted by dispatching
problems.
C. Contractors will be instructed by APS to notify the ONLR as
soon as practical (and to provide copies of such notice to
APS) of anticipated manpower requirements and qualifications
needed before placing a call to the Union Hall.
- 45 -
<PAGE>
The Honorable Peterson Zah
March 8, 1985
Page 5
D. Contractors will be required to report manpower monthly to
ONLR (and provide copies of such reports to APS), indicating
numbers of Indians and non-Indians personnel by job
classification.
8. Contractor/Vendor Preference
APS shall give contracting preference to members of the Navajo Nation
and Navajo firms, certified by the Commerce Department of the Navajo
Nation, in all contract work to be performed on leased lands including
but not limited to construction contracts, procurement and personal
service contracts, provided that the requisite experience and
competence to perform such contractual work and procure material and
equipment of comparable quality and price in accordance with standard
practices in the electric utility industry can be demonstrated. Subject
to the foregoing, where two or more bids are received by APS for a
given item of contractual work and where one of such bids is submitted
by a member of the Navajo Nation or a certified Navajo Firm, such
contract shall be awarded to such member of the Navajo Nation or Navajo
firm, if their bids are equal to or less in price than the bids of
non-members or uncertified firms and their qualifications are equal to
or better than those of such non-members and firms. More specifically:
A. APS shall extend preference to Indian contractors/vendors and
where they are qualified and/or supply a quality product and
are evaluated equal to or better than non-Indian
contractor/vendor, the Indian contractor/vendor will be
selected.
B. All contractors/vendors must be qualified by APS before
being placed on an approved bidders list. Qualification
includes commercial and financial viability as well as product
and/or service quality.
C. Potential contractors/vendors should be directed to call
the Four Corners Power Plant for an appointment to apply for
consideration as a qualified bidder. Appointments are normally
scheduled Tuesday, Wednesday, and/or Thursday 8:30 a.m.
- 46 -
<PAGE>
The Honorable Peterson Zah
March 8, 1985
Page 6
through 3:00 p.m. The following is a general list of products
and services utilized at Four Corners:
Products: Services:
Boiler equipment Mobile demineralizer
Turbine and auxiliary equip. Landscaping
Safety items Weed control
Sanitary supplies Temporary personnel
Paper products Truck scale maintenance
Personal consumable items Survey and monitoring
Office supplies Contract labor
Furniture Sandblasting
Auto parts Non-destructive testing
Chemicals Painting
Fuels Scrubber coating
Fire equipment Exterminating
Hardware Office equipment repair
Bottle water Coal belt repair
Consulting work
Fence repair/installation
Janitorial service
Ash haul
Asphalting
Tire repair
Vacuum service
Elevator-crane inspection
D. Goods and services shall be purchased on the basis of
competitive bidding where practical. Invitations to bid will
be issued to individuals and firms on the approved bidders
list.
9. Community Programs
APS will actively support community programs as they relate to the Four
Corners Generating Station and Career Days/educational programs
sponsored by schools located on the Navajo Reservation. These programs
will be supported with printed materials, speakers, and audiovisual
material as appropriate.
- 47 -
<PAGE>
The Honorable Peterson Zah
March 8, 1985
Page 7
10. Navajo Preference
In the event the Navajo Nation secures a judgement upholding APS' right
to grant "Navajo" as distinguished from "Indian" preference in
employment, APS agrees thereafter to grant Navajo preference in
employment in accordance with this Letter Agreement.
11. Resolution of Disputes Between Parties
In the event of a claimed breached of this Letter Agreement or a
dispute between the parties arising out of this Letter Agreement, at
the request of either the Chairman of the Navajo Nation or the
President of APS, each of the parties shall submit to a compulsory
minitrial for the resolution of any such claim or dispute.
The purpose of the minitrial is to inform management representatives
for the parties of the theories, strengths and weaknesses of the
parties' respective positions so that the parties may amicably resolve
the claim or dispute at issue.
A. Business representatives of each of the parties empowered to
decide the issues shall attend the minitrial to be conducted
for one business day within 60 days after written notice of
the claim or dispute is delivered to the other party at a
mutually convenient location. In addition, an individual
mutually selected by counsel for the parties will attend as a
"neutral advisor."
B. The fees and expenses of the neutral advisor shall be borne
equally by the parties. Each of the parties shall otherwise
pay its own costs.
C. The neutral advisor shall be provided with copies of this
Letter Agreement. Neither of the parties nor anyone on its
behalf shall unilaterally approach, contact or communicate
with the neutral advisor after his or her selection.
D. Shortly after appointment of the neutral advisor, each of
the parties shall in good faith attempt to agree to produce
documents requested by the other party in as expeditious a
manner as possible. The production of documents shall be
subject to the successful negotiation by the parties of an
acceptable arrangement regarding the protection of proprietary
or other confidential information. In the event that after the
minitrial the parties submit their dispute to litigation as
provided in Subsection I below, the parties shall in good
faith attempt to agree to the entry of an appropriate
protective order with respect to the documents produced.
- 48 -
<PAGE>
The Honorable Peterson Zah
March 8, 1985
Page 8
The neutral advisor will be required to be a party of any
confidentiality agreement or protective order.
E. Shortly after appointment of the neutral advisor, mutually
agreed upon source material will be jointly sent to the
neutral advisor to assist him/her in familiarizing him/herself
with the basic issues of the case. Seven days before the
minitrial is to be held, the parties shall exchange all
exhibits they plan to use at the minitrial. Shortly before the
scheduled minitrial, if the neutral advisor so suggests and if
the parties agree, the neutral advisor may confer jointly with
counsel for the parties to resolve any outstanding procedural
questions. If the neutral advisor wishes to consult with the
parties' technical experts on substantive issues prior or
after the meeting, he/she may outline the general areas of
inquiry and, on agreement by the parties, the neutral advisor
may submit written questions to the parties' technical
experts.
F. Within three (3) days before the minitrial is to be held, the
parties shall exchange and submit to the neutral advisor
introductory statements which are not to be longer than ten
8-1/2" x 11" double-spaced pages.
G. The presentations at the minitrial shall be informal, the time
for which presentations will be equally divided between the
parties. Rules of evidence will not apply. While permitted to
ask clarifying questions, the neutral advisor shall not
preside like a judge or arbitrator, nor have the power to
limit the scope or substance of the Parties' presentations.
The presentations will not be transcribed or recorded, but
either of the parties may take notes of the proceedings.
H. At the conclusion of the presentations and to the extent
reasonable, the parties will make their business
representatives available for discussions. If the parties are
unable to resolve the disputes themselves based upon a good
faith evaluation of the presentations, to assist the parties
in further discussions, the neutral advisor will render
his/her comments orally on the issues. Thereafter, the
business representatives of the parties shall meet and be
available for discussions at least once.
I. In the event that upon conclusion of the minitrial the parties
are unable to amicably resolve their disputes, each party
shall be free to litigate such disputes in the courts of the
United States. Litigation shall be limited to the issues
considered at the minitrialan shall be conducted to the extent
possible on the same terms as the minitrial. The parties agree
to waive any applicable statute of limitations for three years
following the minitrial defense with respect to subsequent
litigation of these disputes between the parties.
- 49 -
<PAGE>
The Honorable Peterson Zah
March 8, 1985
Page 9
J. The advisory comments of the neutral advisor will be
inadmissible for all purposes in this or any other dispute
involving the parties.
12. Term
The program outlined herein will be in effect for a period of not less
than four years. At any time following the anniversary of the fourth
year, the terms of this Letter Agreement may be reopened by either
Party, and upon reaching any new agreements, this Letter Agreement
shall be amended without amending the Four Corners Plant Site Leases.
If you approve our program as outlined herein, please indicate by
signing in the space provided below and by returning this Letter Agreement to
the undersigned.
Sincerely,
/S/ O. Mark De Michele
---------------------------
OMD:TEP/fp
Approved this _____ day of __________, 1985.
/S/ Peterson Zah, Chairman
The Navajo Nation
- 50 -
<PAGE>
APPENDIX A
*Accounting Clerk *Industrial Nurse
*Accounting Specialist *Insp./Planner Mtc.
*Analyst Admin. Inst. Repairman Journeyman
*Analyst Contract 4-C *Instructor - Ops., Mtc.
Appren. Electrician Insulator Refractoryman
Appren. Instr. Repairman *Inventory Control Analyst
Appren. Mach. *Inventory Control Specialist
*Auditor Janitor
Auto Mechanic *Labor Relations Analyst
Aux. Oper. Scrubber 4-5 Laborer
*Betterment Specialist Lubeman
Building Equipmentman Machinist Journeyman
*Chemical Analyst *Manager 4-C Adm. Services
*Chemical Engineer *Manager 4-C Emp. Relations
*Computer Technician *Manager 4-C Engineering
*Cost Analyst *Manager 4-C Power Plant
*Data Entry Operator *Material Analyst
*Designer *Materials Foreman
*Electrical Engineer Mech. Pwr. Plt. Mtc.
Electrician Journeyman *Mechanical Engineer
*Employee Relations Analyst Oper. Aux.
*Eng. Elec. Test Sr. 4-C Oper. Aux. Scrubber
*Eng. Mech. Bettermt. Oper. Aux. Trn.
*Eng. Mech. Test Oper. Baghouse
*Eng. Mtc. Oper. Control
*Environmental Technician Oper. Control Trn.
*Facilities Foreman Oper Scrubber 4-C
*Facilities Supervisor Painter
*Food Service Coordinator *Personnel Clerk
*Foreman Mtc. 4-C *Placement Specialist
*Foreman Mtc. 4-C Overhaul *Placement Supervisor
Foreman Mtc. 4-C SO2 *Planner Scheduler
*Foreman Shift 4-C 1-2-3 *Planning Expeditor
*Foreman Shift 4-C 4-5 *Receptionist
*Foreman Shift 4-C Scrubber *Record Clerk
Fuel Handler *Safety Analyst
Fuel Handler Trn. *Secretary
Fuel Specialist *Security Supervisor
Helper Pwer. Plt. Mtc. *Shift Supv. 4-C 1-2-3
*Industrial Engineer *Shift Supv. 4-C 4-5
A-1
<PAGE>
APPENDIX A
*Shift Supv. Scrubber 4-C 4-5 *Supv. 4-C Mech. 1-2-3
*Spec. Chemical Con. 4-C *Supv. 4-C Oper. 1-2-3
Storekeeper *Supv. 4-C Oper. 4-5
*Summer Employee *Supv. 4-C Overhaul Mtc.
*Supply Expeditor *Supv. 4-C Planning 1-2-3
*Supt. 4-C Elec. inst. Mtc. *Supv. 4-C Planning 4-5
*Supt. 4-C Mech. Mtc. *Supv. 4-C Planning SO2
*Supt. 4-C Mtc. *Supv. 4-C Scrubber 1-2-3
*Supt. 4-C Oper. *Supv. 4-C Scrubber 4-5
*Supt. 4-C Planning *Tech Computer Lead 4-C
*Supv. 4-C Accounting *Training Supervisor
*Supv. 4-C Betterment Eng. Truck Driver
*Supv. 4-C Betterment Eng. Utility Equipment Operator
*Supv. 4-C Chem. Measure *Utility Foreman
*Supv. 4-C Materials Warehouseman
*Supv. 4-C Mtc. E-I 1-2-3 *Water Analyst
*Supv. 4-C Mtc. E-I 4-5 Welder Chrome Mold
*Supv. 4-C Mtc. E-I SO2 Welder Combination
*Supv. 4-C Mtc. Mech 4-5 *Word Processing Operator
*Supv. 4-C Mtc. Mech SO2
- --------------------
*Performance review employee
A-2
EXHIBIT 28(a)
<PAGE>
CERTAIN RIGHTS OF THE LESSOR UNDER THIS FACILITY
LEASE HAVE BEEN ASSIGNED TO, AND ARE SUBJECT TO A SECURITY INTEREST IN
FAVOR OF, CHEMICAL BANK, AS INDENTURE TRUSTEE UNDER A TRUST INDENTURE,
MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS DATED AS OF
DECEMBER 16, 1985. THIS FACILITY LEASE HAS BEEN EXECUTED IN SEVERAL
COUNTERPARTS. SEE SECTION 22(e) OF THIS FACILITY LEASE FOR INFORMATION
CONCERNING THE RIGHTS OF HOLDERS OF VARIOUS COUNTERPARTS HEREOF.
THIS COUNTERPART IS NOT THE ORIGINAL
COUNTERPART.
================================================================================
FACILITY LEASE
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,
Lessor
and
PUBLIC SERVICE COMPANY OF NEW MEXICO,
Lessee
================================================================================
Sale and Leaseback of an Undivided Interest in
Palo Verde Nuclear Generating Station Unit 1
and Certain Common Facilities
================================================================================
6091.20.2898.47:1
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1 Definitions . . . . . . . . . . 1
SECTION 2 Lease of Undivided
Interest; Term; Personal
Property. . . . . . . . . . . . 1
a Lease of Undivided
Interest. . . . . . . . . . . . 1
b Term. . . . . . . . . . . . . . 2
c Personal Property . . . . . . . 2
SECTION 3 Rent; Adjustments to
Rent. . . . . . . . . . . . . . 2
a Basic Rent. . . . . . . . . . . 2
b Supplemental Rent . . . . . . . 3
c Form of Payment . . . . . . . . 4
d Adjustments to Rent . . . . . . 4
e Further Adjustments . . . . . . 5
f Computation of
Adjustments . . . . . . . . . . 5
g Sufficiency of Basic
Rent and Supplemental
Rent. . . . . . . . . . . . . . 6
6091.20.2898.47:1
-- i --
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
h Rent Differential . . . . . . . 6
SECTION 4 Net Lease . . . . . . . . . . . 7
SECTION 5 Return of the Undivided
Interest. . . . . . . . . . . . 9
a Return of the Undivided
Interest. . . . . . . . . . . . 9
b Disposition Services. . . . . . 11
SECTION 6 Warranty of the Lessor. . . . . 11
a Quiet Enjoyment . . . . . . . . 11
b Disclaimer of Other
Warranties. . . . . . . . . . . 11
c Enforcement of Certain
Warranties. . . . . . . . . . . 12
SECTION 7 Liens . . . . . . . . . . . . . 13
SECTION 8 Operation and Mainten-
ance; Capital Improve-
ments . . . . . . . . . . . . . 13
a Operation and
Maintenance . . . . . . . . . . 13
b Inspection. . . . . . . . . . . 14
6091.20.2898.47:1
-- ii --
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
c Capital Improvements. . . . . . 14
d Reports . . . . . . . . . . . . 15
e Title to Capital
Improvements. . . . . . . . . . 16
f Funding of the Cost of
Capital Improvements. . . . . . 17
g Useful Life . . . . . . . . . . 19
SECTION 9 Event Of Loss; Deemed
Loss Event. . . . . . . . . . . 19
a Damage or Loss. . . . . . . . . 19
b Repair. . . . . . . . . . . . . 19
c Payment of Casualty
Value . . . . . . . . . . . . . 20
d Payment of Special
Casualty Value. . . . . . . . . 21
e Requisition of Use. . . . . . . 21
f Termination of
Obligation. . . . . . . . . . . 22
g Application of Payments
of an Event of Loss . . . . . . 22
6091.20.2898.47:1
-- iii --
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
h Application of Payments
Not Relating to an Event
of Loss . . . . . . . . . . . . 23
i Other Dispositions. . . . . . . 23
j Assumption of Notes;
Creation of Lien on
Undivided Interest. . . . . . . 23
SECTION 10 Insurance . . . . . . . . . . . 24
a Required Insurance. . . . . . . 24
b Permitted Insurance . . . . . . 25
SECTION 11 Rights to Assign or
Sublease. . . . . . . . . . . . 25
a Assignment or Sublease
by the Lessee . . . . . . . . . 25
b Assignment by Lessor as
Security for Lessor's
Obligations . . . . . . . . . . 25
SECTION 12 Lease Renewal . . . . . . . . . 26
SECTION 13 Notices for Renewal or
Purchase; Purchase
Options . . . . . . . . . . . . 26
6091.20.2898.47:1
-- iv --
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
a Notice; Determination of
Values; Appraisal
Procedure . . . . . . . . . . . 26
b Purchase Option at
Expiration of the Lease
Term. . . . . . . . . . . . . . 27
c Special Purchase Option . . . . 27
d Purchase of the
Undivided Interest;
Payment, Etc. . . . . . . . . . 27
SECTION 14 Termination for
Obsolescence. . . . . . . . . . 28
a Termination Notice. . . . . . . 28
b Right of Lessor to
Retain Undivided
Interest upon
Termination . . . . . . . . . . 28
c Events on the
Termination Date. . . . . . . . 29
d Early Termination
Notice. . . . . . . . . . . . . 30
e Events on the Early
Termination Date. . . . . . . . 30
6091.20.2898.47:1
-- v --
<PAGE>
TABLE OF CONTENTS (Continued)
Page
SECTION 15 Events of Default . . . . . . . 31
SECTION 16 Remedies. . . . . . . . . . . . 35
a Remedies. . . . . . . . . . . . 35
b No Release. . . . . . . . . . . 40
c Remedies Cumulative . . . . . . 40
d Exercise of Other Rights
or Remedies . . . . . . . . . . 41
e Special Cure Right of
Lessee. . . . . . . . . . . . . 41
SECTION 17 Notices . . . . . . . . . . . . 42
SECTION 18 Successors and Assigns. . . . . 42
SECTION 19 Right to Perform for
Lessee. . . . . . . . . . . . . 43
SECTION 20 Additional Covenants. . . . . . 43
SECTION 21 Lease of Real Property
Interest. . . . . . . . . . . . 44
SECTION 22 Amendments and
Miscellaneous . . . . . . . . . 44
6091.20.2898.47:1
-- vi --
<PAGE>
TABLE OF CONTENTS (Continued)
Page
----
a Amendments in Writing . . . . . 44
b Survival. . . . . . . . . . . . 44
c Severability of
Provisions. . . . . . . . . . . 45
d True Lease. . . . . . . . . . . 45
e Original Lease. . . . . . . . . 45
f Governing Law . . . . . . . . . 46
g Headings. . . . . . . . . . . . 46
h Concerning the Owner
Trustee . . . . . . . . . . . . 46
i Disclosure. . . . . . . . . . . 47
j Counterpart Execution . . . . . 47
APPENDIX A Definitions
SCHEDULE 1 Owner Participant Information
SCHEDULE 2 Basic Rent Percentages
SCHEDULE 3 Casualty Values
SCHEDULE 4 Special Casualty Values
SCHEDULE 5 Termination Values
6091.20.2898.47:1
-- vii --
<PAGE>
FACILITY LEASE
FACILITY LEASE, dated as of December 16, 1985, between THE
FIRST NATIONAL BANK OF BOSTON, a national banking association, not in its
individual capacity, but solely as Owner Trustee under a Trust Agreement, dated
as of December 16, 1985, with Burnham Leasing Corporation (the Lessor), and
PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico, corporation (the Lessee).
W I T N E S S E T H :
WHEREAS, the Lessor owns the Undivided Interest and the Real
Property Interest;
WHEREAS, the Lessee desires to lease the Undivided Interest
and the Real Property Interest from the Lessor on the terms and conditions set
forth herein; and
WHEREAS, the Lessor is willing to lease the Undivided Interest
and the Real Property Interest to the Lessee on the terms and conditions set
forth herein;
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 shall have
the meanings assigned to such terms in Appendix A and Schedule 1 hereto.
References in this Facility Lease to sections, paragraphs and clauses are to
sections, paragraphs and clauses in this Facility Lease unless otherwise
indicated.
SECTION 2. Lease of Undivided Interest; Term; Personal
Property.
(a) Lease of Undivided Interest. Upon the terms and subject to
the conditions of this Facility Lease, the Lessor hereby agrees to lease to the
Lessee, and the Lessee hereby agrees to lease from the Lessor, the Undivided
Interest.
6091.20.2898.47:1
- 1 -
<PAGE>
(b) Term. The term of this Facility Lease shall begin on the
Closing Date and shall end on the last day of the Lease Term.
(c) Personal Property. It is the express intention of the
Lessor and the Lessee that title to the Undivided Interest and every portion
thereof is severed, and shall be and remain severed, from title to the real
estate constituting the Real Property Interest and the PANGS Site. The Lessor
and the Lessee intend that the Undivided Interest shall constitute personal
property to the maximum extent permitted by Applicable Law.
SECTION 3. Rent; Adjustments to Rent.
(a) Basic Rent. The Lessee shall pay to the Lessor, as basic
rent (herein referred to as Basic Rent) for the Undivided Interest, the
following amounts:
(i) on January 15, 1986, an amount equal to the daily
equivalent of Basic Rent (set forth in Schedule 1) payable
pursuant to clause (ii) below, from and including December 31,
1985 to but excluding January 15, 1986 plus or minus the Rent
Differential, if any, referred to in Section 3(h);
(ii) on July 15, 1986 and on each Basic Rent payment
Date thereafter to and including January 15, 2015, an amount
equal to the percentage of facility Cost set forth opposite
such Basic Rent Payment Date on Schedule 2 plus or minus the
Rent Differential, if any, referred to in Section 3(h); and
(iii) if the Lessee shall elect the Renewal Term, on
July 15, 2015 and on each Basic Rent Payment Date thereafter
during the Renewal Term, an amount equal to one-half of an
amount determined by dividing the amount of all payments of
Basic Rent payable with respect to the Basic Lease Term
pursuant to clause (ii) of this Section 3(a) (taking into
account any adjustments pursuant to Sections 3(d) and 3(e) and
any increases and decreases pursuant to Section 3(h)), by 58.
If an interest payment on the Initial Series Note (and the Releveraging Note, if
then outstanding) shall be due on a date other than a Basic Rent Payment Date,
the Lessee shall pay additional Basic Rent on such date equal to such interest
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payment and such payment of additional Basic Rent shall be credited against the
Basic Rent due on the Basic Rent Payment Date next succeeding the date that such
additional Basic Rent shall have been paid.
(b) Supplemental Rent. The Lessee shall pay the following
amounts (herein referred to as Supplemental Rent):
(i) when due or, where no due date is specified, on
demand, any amount (other than Basic Rent, Casualty Value,
Termination Value and Special Casualty Value) which the Lessee
assumes the obligation to pay or agrees to pay to the Lessor,
the Owner Participant, the Indenture Trustee, the Collateral
Trust Trustee or any Indemnitee under this Facility Lease, any
other Transaction Document or the Collateral Trust Indenture
and any amount which the Lessor is obligated to pay under
Section 6.9, 7.6 or 8.7 of the Indenture;
(ii) when due any amount payable hereunder as
Casualty Value, Termination Value or Special Casualty Value,
and any premium or prepayment penalty with respect to the
Notes;
(iii) on demand and in any event on the Basic Rent
Payment Date next succeeding the date such amounts shall be
due and payable hereunder, to the extent permitted by
Applicable Law, interest (computed on the same basis as
interest on the Notes is computed) at a rate per annum equal
to (A) the Overdue Interest Rate, on that portion of the
payment of Basic Rent or Supplemental Rent distributable
pursuant to clause "first" of Section 5.1 or clause "second"
of Section 5.3 of the Indenture (determined prior to the
computation of interest on overdue payments referred to in
such clauses), and (B) the Penalty Rate, on the balance of any
such payment of Basic Rent or Supplemental Rent (including, in
the case of both clause (i) and clause (ii) above, but without
limitation, to the extent permitted by Applicable Law,
interest payable pursuant to this clause (iii)) not paid when
due (without regard to any period of grace) for any period for
which the same shall be overdue.
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The Lessor shall have all rights, powers and remedies provided for in this
Facility Lease, at law, in equity orotherwise, in the case of non-payment of
Basic Rent or Supplemental Rent.
(c) Form of Payment. Subject to Section 11(b), each payment of
Rent under this Facility Lease shall be made in immediately available funds no
later than 11:00 a.m., local time at the place of receipt, on the date each such
payment shall be due and payable hereunder and shall be paid either (A) in the
case of payments other than Expected Payments, to the Lessor at its address
determined in accordance with Section 17, or at such other address as the Lessor
may direct by notice in writing to the Lessee, or (B) in the case of Excepted
Payments, to such Person as shall be entitled to receive such payment at such
address as such Person may direct by notice in writing to the Lessee. If the
date on which any payment of Rent is due hereunder shall not be a Business Day,
the payment otherwise due thereon shall be due and payable on the preceding
Business Day, with the same force and effect as if paid on the normal date
provided in this Facility Lease.
(d) Adjustments to Rent. Basic Rent and the schedules of
Casualty Values, Termination Values and Special Casualty Values attached hereto
shall be adjusted (upward or downward) to preserve Net Economic Return if there
is any change in the Code or successor legislation enacted by the Ninety-ninth
Congress or if there is adopted, promulgated, issued or published, prior to
January 15, 1997, proposed, temporary or final regulations resulting therefrom
(regardless of the effective date of such regulations) herein referred to as a
Change in Tax Law). Adjustments under this paragraph (d) shall be (1) made not
more than once a year and (2) limited in the aggregate to the extent, if any,
necessary such that aggregate amount of Basic Rent theretofore and thereafter
payable throughout the Basic Lease Term (computed for such purpose only without
regard to any adjustments theretofore made pursuant to Section 3(e) or 3(h)
shall not be more than 11% upward and 10% downward from the aggregate amount of
Basic Rent payable throughout the Basic Lease Term (computed as aforesaid) prior
to any adjustment theretofore made pursuant to this Section 3(d); provided,
however, that no downward adjustment shall be made hereunder unless and until
the aggregate amount of all such downward adjustments shall exceed 1% and then
only to the extent such aggregate exceeds 1% (resulting in a maximum downward
adjustment of 10%). The foregoing 11% maximum, 10% minimum and 1% "deadband"
limitations were determined on the basis of an assumed interest rate on the
Notes set forth in Schedule 1 hereunto and are subject to adjustment in
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connection with any refunding of the Initial Series Note to provide the same
protection to the Owner Participant and the Lessee as provided in the original
calculations thereof by the Owner Participant.
The provisions of this Section 3(d) to the contrary
notwithstanding, if any Change in Tax Law is, or becomes, applicable to the
transaction contemplated by this Facility Lease in consequence of the transfer
of the Owner Participant's beneficial interest in the Trust (whether or not
permitted by Section 15 of the Participation Agreement) or if such Change in Tax
Law would not have been applicable to such transaction had no such transfer
occurred, then no adjustment shall be, or be required to be, made pursuant to
this paragraph (d); provided, however, that this sentence shall not apply to the
initial transfer of the Owner Participants's beneficial interest to one of its
Affiliates.
(e) Further Adjustments. Basic Rent and the schedules of
Casualty Values, Special Casualty Values and Termination Values attached hereto
shall be adjusted (upward or downward) to preserve Net Economic Return if there
is (i) issuance of the Releveraging Note or the Fixed Rate Note, (ii) any
Supplemental Financing, (iii) the payment of Transaction Expenses in an amount
which is other than 1.1% of the Purchase Price or (iv) any change in the pricing
assumptions set forth in Schedule 2 to the Participation Agreement.
(f) Computation of Adjustments. Upon the occurrence of an
event requiring an adjustment to Basic Rent payable pursuant to clause (ii) of
Section 3(a), and the schedules of Casualty Values, Special Casualty Values and
Termination Values attached hereto, pursuant to paragraph (d) or (e) of this
Section 3, the Owner Participant shall make the necessary computations and
furnish to the Lessee, the Loan Participant, the Lessor and the Indenture
Trustee the revised amounts and percentages, which amounts and percentages shall
be implemented upon delivery thereof and effective as of the date of occurrence
of the event requiring such adjustment (taking into account any payment of Basic
Rent already made) and shall remain effective until changed in consequence of
any verification procedure set forth below. Such revised amounts and percentages
shall be subject to verification (at the Lessee's request) by the Owner
Participant's nationally recognized independent public accountants, in which
case such accountants shall either (i) confirm to the Lessee in writing that
such revised amounts were computed on a basis consistent with the original
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calculations, or (ii) compute and provide to the Lessee, the Lessor, the Owner
Participant, the Loan Participant and the Indenture Trustee revised amounts and
percentages which are on such a basis. The revised amounts and percentages, as
so confirmed or computed if applicable, shall be conclusive and binding upon the
Lessee, the Lessor, the Owner Participant, the Loan Participant and the
Indenture Trustee. The cost of any such verification shall be borne by the
Lessee unless such accountants shall require an adjustment to the revised
amounts and percentages originally provided by the Owner Participant which
greater than 10% of the adjustment so provided, in which case such cost shall be
divided and paid by the Lessee and the Owner Participant in equal amounts. Each
adjustment pursuant to paragraph (d) or (e) of this Section 3 may, but need not,
be evidenced by the execution and delivery of a supplement to this Facility
Lease in form and substance satisfactory to the Lessee and the Owner
Participant, but shall be effective as provided herein without regard to the
date on which such implement to this Facility Lease is so executed and
delivered. Any adjustment referred to in this Section 3 shall satisfy the
provisions of Revenue Procedure 75-21, Revenue Procedure 75-28 and any other
applicable statute, regulation, revenue procedure, revenue ruling or technical
information release relating to the subject matter of Revenue Procedure 75-21 or
Revenue Procedure 75-28, but, in the case of any upward adjustment, shall be no
less than the adjustment otherwise required pursuant to this Section 3.
(g) Sufficiency of Basic Rent and Supplemental Rent.
Notwithstanding any other provision of this Facility Lease, any other
Transaction Document or any Financing Document, (i) the amount of Basic Rent
payable on each Basic Rent Payment Date shall be at least equal to the aggregate
amount of principal, premium, if any, and accrued interest payable on al Notes
then Outstanding and (ii) each payment of Casualty Value, Special Casualty Value
and Termination Value shall in no event be less (when added to all other amounts
required to be paid by the Lessee under this Facility Lease in respect of any
Event of Loss or Deemed Loss Event or termination of this Facility Lease) than
an amount sufficient, as of the date of payment, to pay in full the principal
of, and premium, if any, and interest on all Notes Outstanding on and as of such
date of payment (taking into account any assumption of the Notes by the Lessee).
(h) Rent Differential. So long as the Initial Series Note
shall be outstanding, each installment of Basic Rent shall be increased or
decreased, as the case may be, by the Rent Differential. For purposes hereof,
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Rent Differential shall mean, as of any Basic Rent Payment Date, the difference
between (i) the aggregate amount of interest due and payable on each Basic Rent
Payment Date on the Initial Series Note (and the Releveraging Note, if then
outstanding), and (ii) the aggregate amount of interest that would have been due
and payable on such Basic Rent Payment Date on such Note or Notes if such Note
or Notes had at all times during the relevant period borne interest at a rate
equal to 9.5% per annum (computed on the basis of a 360-day year of twelve
30-day months). If, as of any Basic Rent Payment Date, (A) the amount determined
in accordance with clause (i) of the immediately preceding sentence shall be
greater than the amount determined in accordance with clause (ii) of such
sentence, the amount of Basic Rent due on such Basic Rent Payment Date shall be
increased by the Rent Differential, and (B) the amount determined in accordance
with such clause (ii) shall exceed the amount determined in accordance with such
clause (i), the amount of Basic Rent due on such Basic Rent Payment Date shall
be decreased by the Rent Differential.
SECTION 4. Net Lease.
This Facility Lease (as originally executed and as modified,
supplemented and amended from time to time) is a net lease and the Lessee hereby
acknowledges and agrees that the Lessee's obligation to pay all Rent hereunder,
and the rights of the Lessor in and to such Rent, shall be absolute,
unconditional and irrevocable and shall not be affected by any circumstances of
any character, including, without limitation, (i) any set-off, abatement,
counterclaim, suspension, recoupment, reduction, defense or other right or claim
which the Lessee may have against the Lessor, the Owner Participant, the
Indenture Trustee, the Collateral Trust Trustee, the Loan Participant, the
Operating Agent, any ANPP Participant, any vendor or manufacturer of any
equipment or assets included in the Undivided Interest, Unit 1, any Capital
Improvement, the Real Property Interest, the PANGS Site, PANGS, or any part of
any thereof, or any other Person for any reason whatsoever, (ii) any defect in
or failure of the title merchantability, condition, design, compliance with
specifications, operation or fitness for use of all or any part of the Undivided
Interest, Unit 1, any Capital Improvement, the Real Property Interest, the PANGS
Site or PANGS, (iii) any damage to, or removal, abandonment, shutdown, salvage,
scrapping, requisition, taking, loss, theft or destruction of all or any part of
the Undivided Interest, Unit 1, any Capital Improvement, the Real Property
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Interest, the PANGS Site or PANGS, or any interference, interruption or
cessation in the use or possession thereof or of the Undivided Interest by the
Lessee or by any other Person (including, but without limitation, the Operating
Agent or any other ANPP Participant) for any reason whatsoever or of whatever
duration, (iv) any restriction, prevention or curtailment of or interference
with any use of all or any part of the Undivided Interest, Unit 1, any Capital
Improvement, the Real Property Interest, the PANGS Site or PANGS, (v) any
insolvency, bankruptcy, reorganization or similar proceeding by or against the
Lessee, the Lessor, the Owner Participant, the Indenture Trustee, the Collateral
Trust Trustee, the Loan Participant, the Operating Agent, any other ANPP
Participant or any other Person, (vi) the invalidity, illegality or
unenforceabilty of this Facility Lease, any other Transaction Document, any
Financing Document, the ANPP Participation Agreement or any other instrument
referred to herein or therein or any other infirmity herein or therein or any
lack of right, power or authority of the Lessor, the Lessee, the Owner
Participant, the Indenture Trustee, the Collateral Trust Trustee, the Loan
Participant or any other Person to enter into this Facility Lease, any other
Transaction Document or any Financing Document, or any doctrine of force
majeure, impossibility, frustration, failure of consideration, or any similar
legal or equitable doctrine that the Lessee's obligation to pay Rent is excused
because the Lessee has not received or will not receive the benefit for which
the Lessee bargained, it being the intent of the Lessee to assume all risks from
all causes whatsoever that the Lessee does not receive such benefit, (vii) the
breach or failure of any warranty or representation made in this Facility Lease
or any other Transaction Document or any Financing Document by the Lessor, the
Owner Participant, the Indenture Trustee, the Collateral Trust Trustee, the Loan
Participant or any other Person, (viii) any amendment or other change of, or any
assignment of rights under, this Facility Lease, any other Transaction Document,
any Financing Document or any ANPP Project Agreement, or any waiver, action or
inaction under or in respect of this Facility Lease, any other Transaction
Document, any Financing Document or any ANPP Project Agreement, or any exercise
or non-exercise of any right or remedy under this Facility Lease, any other
Transaction Document, any Financing Document or any ANPP Project Agreement,
including, without limitation, the exercise of any foreclosure or other remedy
under the Indenture, the Collateral Trust Indenture or this Facility Lease, or
the sale of Unit 1, any Capital Improvement, the Undivided Interest, the Real
Property Interest, the PANGS Site or PANGS, or any part thereof of any interest
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therein, or (ix) any other circumstance or happening whatsoever whether or not
similar to any of the foregoing. The Lessee acknowledges that by conveying the
leasehold estate created by this Facility Lease to the Lessee and by putting the
Lessee in possession of the Undivided Interest and the Real Property Interest,
the Lessor has performed all of the Lessor's obligations under and in respect of
this Facility Lease, except the covenant that the Lessor and Persons acting for
the Lessor will not interfere with the Lessee's quiet enjoyment of the Undivided
Interest and the Real Property Interest. The Lessee hereby waives, to the extent
permitted by Applicable Law, any and all rights which it may now have or which
at any time hereafter may be conferred upon it, by statute or otherwise, to
terminate, cancel, quit or surrender this Facility Lease or to effect or claim
any diminution or reduction of Rent payable by the Lessee hereunder, including
without limitation the provisions of Arizona Revised Statutes Section 33-343,
except in accordance with the express terms hereof. If for any reason whatsoever
this Facility Lease shall be terminate in whole or in part by operation of law
or otherwise, except as specifically provided herein, the Lessee nonetheless
agrees to pay to the Lessor or other Person entitled thereto an amount equal to
each installment of Basic Rent and all Supplemental Rent at the time such
payment would have become due and payable in accordance with the terms hereof
had this Facility Lease not been terminated in whole or in part. Each payment of
Rent made by the Lessee hereunder shall be final and the Lessee shall not seek
or have any right to recover all or any part of such payment from the Lessor or
any other Person for any reason whatsoever. All covenants, agreements and
undertakings of the Lessee herein shall be performed at its cost, expense and
risk unless expressly otherwise stated. Nothing in this Section 4 shall be
construed as a guaranty by the Lessee of any residual value in the Undivided
Interest or as a guaranty of the Notes. Any provisions of Section 7(b) (2) or
8(c) of the Participation Agreement to the contrary notwithstanding, if the
Lessee shall fail to make any payment of Rent to any Person when and as due
(taking into account applicable grace periods), such Person shall have the right
at all times, to the exclusion of the ANPP Participants, to demand, collect, sue
for, enforce obligations relating to and otherwise obtain all amounts due in
respect of such Rent.
SECTION 5. Return of the Undivided Interest.
(a) Return of the Undivided Interest. On the Lease Termination
Date, the Lessee will surrender possession of the Undivided Interest and the
Real
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Real Property Interest to the Lessor. At the time of such return the Lessee
shall pay or have paid all amounts due and payable, or to become due and
payable, by it as an ANPP Participant under each and every ANPP Project
Agreement allocable or chargeable (whether or not payable during or after the
Lease Term) to the Undivided Interest or the Real Property Interest in respect
of any period or periods ending on or prior to the Lease Termination Date
(including, but without limitation, all amounts payable with respect to any and
all discretionary Capital Improvements to Unit 1 or the PANGS Site approved or
authorized (without the concurrence of the Owner Participant) within the 3-year
period preceding the end of the Lease Term, whether or not implementation
thereof has been completed on or prior to the Lease Termination Date), and the
Undivided Interest shall be free and clear of all Liens (other than Permitted
Liens described in clauses (i), (v) (other than those arising by, through or
under the Lessee alone), (vi), (vii) (other than as aforesaid), (viii) (other
than as aforesaid), (ix) and (x) of the definition of such term) and in the
condition and state of repair by Section 8. The Lessor shall not abandon the
Undivided the Undivided Interest. In the event that on or prior to the Lease
Termination Date there shall have occurred a default by any ANPP Participant
(other than PNM) under the ANPP Participation Agreement and such default shall
not have been cured by the defaulting ANPP Participant, then (i) the Lessee
agrees to indemnify and hold the Lessor (and each successor, assign and
transferee thereof) harmless against and all obligations under the ANPP
Participation Agreement with respect to contributions or payments required to be
made thereby as a result of such default and (ii) the Lessor (and each
successor, assign and transferee thereof) agrees to reimburse the Lessee for all
amounts paid by the Lessee pursuant to the foregoing clause (i) to the extent,
but only to the extent, that the Lessor (or such successor, assign or
transferee) shall have actually received proceeds from the sale of the
Generation Entitlement Share of the defaulting ANPP Participant as a result of
the payment made by the Lessee pursuant to the foregoing clause (i), and, to the
extent the Lessor (or such successor, assign or transferee) shall have received
such proceeds, the amount to be reimbursed to the Lessee pursuant to this clause
(ii) shall include interest at the Prime Rate from the date of any payment by
the Lessee pursuant to the foregoing clause (i) through the date of
reimbursement of such amount pursuant to this clause (ii).
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(b) Disposition Services. The Lessee agrees that if it does
not exercise its option to renew or purchase as provided in Sections 12 and 13,
respectively, then during the last thirty-six months of the Lease Term, the
Lessee will fully cooperate with the Lessor in connection with the Lessor's
efforts to lease or dispose of the Undivided Interest including using the
Lessee's reasonable efforts to lease or dispose of the Undivided Interest. The
Lessor agrees to reimburse the Lessee for reasonable out-of-pocket costs and
expenses of the Lessee incurred at the request of the Lessor or the Owner
Participant in connection with such cooperation and such efforts.
SECTION 6. Warranty of the Lessor.
(a) Quiet Enjoyment. The Lessor warrants that until the Lease
Termination Date, if the Lessee is in compliance with each and every term and
provision of this Facility Lease and each other Transaction Document to be
compiled with by the Lessee, the Lessee's use and possession of Unit 1,
including the Undivided Interest, shall not be interrupted by the Lessor or any
Person claiming by, through or under the Lessor, and their respective successors
and assigns.
(b) Disclaimer of Other Warranties. The warranty set forth in
Section 6(a) is in the lieu of all other warranties of the Lessor or the Owner
Participant, whether written, oral or implied, with respect to this Facility
Lease, Unit 1, any Capital Improvement, the Undivided Interest, PANGS, the Real
Property Interest or the PANGS Site. As among the Owner Participant, the Loan
Participant, the Indenture Trustee, the Collateral Trust Trustee, the Lessor and
the Lessee, execution by the Lessee of this Facility Lease shall be conclusive
proof of the compliance of Unit 1 (including any Capital Improvement), the
Undivided Interest and the Real Property Interest with all requirements of this
Facility Lease, and the Lessee acknowledges and agrees that (i) NEITHER THE
LESSOR NOR THE OWNER PARTICIPANT IS A MANUFACTURER OR A DEALER IN PROPERTY OF
SUCH KIND AND (ii) THE LESSOR LEASES AND THE LESSEE TAKES THE UNDIVIDED INTEREST
AND THE REAL PROPERTY INTEREST, AND SHALL TAKE EACH CAPITAL IMPROVEMENT, AND ANY
PART THEREOF, AS IS AND WHERE IS, and neither the Lessor nor the Owner
Participant shall be deemed to have made, and THE LESSOR AND THE OWNER
PARTICIPANT EACH HEREBY DISCLAIMS, ANY OTHER REPRESENTATION OR WARRANTY, EITHER
EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION,
THE DESIGN OR CONDITION OF UNIT 1, ANY CAPITAL IMPROVEMENT, THE UNDIVIDED
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INTEREST, THE REAL PROPERTY INTEREST, THE PANGS SITE OR PANGS, OR ANY PART
THEREOF, THE MERCHANTABILITY THEREOF OR THE FITNESS THEREOF FOR ANY PARTICULAR
PURPOSE, TITLE TO UNIT 1, ANY CAPITAL IMPROVEMENT, THE UNDIVIDED INTEREST, THE
REAL PROPERTY INTEREST, THE PANGS SITE OR PANGS, OR ANY PART THEREOF, THE
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO
SPECIFICATIONS, FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT OR THE ABSENCE OF
ANY LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, NOR SHALL THE LESSOR
OR THE OWNER PARTICIPANT BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES
(INCLUDING LIABILITY IN TORT, STRICT OR OTHERWISE), it being agreed that all
such risks, as among the Owner Participant, the Loan Participant, the Collateral
Trust Trustee, the Indenture Trustee, the Lessor and the Lessee, are to be borne
by the Lessee. The provisions of this Section 6(b) have been negotiated, and,
except to the extent otherwise expressly provided in Section 6(a), the foregoing
provisions are intended to be a complete exclusion and negation of any
representations or warranties by the Lessor, the Owner Participant, the Loan
Participant, the Collateral Trust Trustee or the Indenture Trustee, express or
implied, with respect to Unit 1 (including any Capital Improvement), the
Undivided Interest, PANGS, the Real Property Interest or the PANGS Site that may
arise pursuant to any law now or hereafter in effect, or otherwise.
(c) Enforcement of Certain Warranties. The Lessor authorizes
the Lessee (directly or through agents, including the Operating Agent), at the
Lessee's expense, to assert for the Lessor's account, during the Lease Term, all
of the Lessor's rights (if any) under any applicable warranty and any other
claims (under this Facility Lease or any Purchase Document) that the Lessee or
the Lessor may have against any vendor or manufacturer with respect to Unit 1
(including any Capital Improvement) or the Undivided Interest, and the Lessor
agrees to cooperate, at the Lessee's expense, with the Lessee and the Operating
Agent in asserting such rights. Any amount receivable (without regard to any
right of setoff or other similar right of any Person against the Lessee) by the
Lessee as payment under any such warranty or other claim against any vendor or
manufacturer (or, if such warranty or claim relates to the Undivided Interest
and the Retained Assets, the portion of such received amount appropriately
allocable to the Undivided Interest) shall be applied in accordance with
Sections 9(g), (h) and (i).
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SECTION 7. Liens.
The Lessee will not directly or indirectly create, incur,
assume or permit to exist any Lien on or with respect to the Undivided Interest,
the Real Property Interest, the Lessor's title thereto or any interest of the
Lessor or Lessee therein (and the Lessee will promptly, at its own expense, take
such action as may be necessary duly to discharge any such Lien), except
Permitted Liens.
SECTION 8. Operation and Maintenance; Capital Improvements.
(a) Operation and Maintenance. The Lessee agrees that it will
exercise its rights, powers, elections and options as an ANPP Participant under
the ANPP Project Agreements to cause the Operating Agent to (A) maintain Unit 1
in such condition that Unit 1 will have the capacity and functional ability to
perform, on a continuing basis (ordinary wear and tear excepted), in normal
commercial operation, the functions and substantially at the ratings for which
it was designed, (B) operate, service, maintain and repair Unit 1 and replace
all necessary or useful parts and components thereof so that the condition and
operating efficiency will be maintained and preserved, ordinary wear and tear
excepted, in all material respects in accordance with (1) prudent utility
practice for items of similar size and nature, (2) such operating standards as
shall be required to take advantage of an enforce all available warranties and
(3) the terms and conditions if all insurance policies maintained in effect at
any time with respect thereto, (C) use, possess, operate and maintain Unit 1 in
compliance with all material applicable Governmental Actions (including the
License) affecting PANGS or Unit 1 or the use, possession, operation and
maintenance thereof and (D) otherwise act in accordance with the standards set
forth in the ANPP Participation Agreement. The Lessee will comply with all its
obligations under Applicable Law affecting Unit 1, the Undivided Interest,
PANGS, the Real Property Interest and the PANGS Site, and the use, operation and
maintenance thereof. The Lessee agrees to (i) exercise its rights under the ANPP
Participation Agreement so that there will always be an Operating Agent under
the ANPP Participation Agreement and (ii) maintain in full force and effect a
license from the NRC adequate to possess the Undivided Interest and the Real
Property Interest under the circumstances contemplated by the ANPP Participation
Agreement. The Lessee will keep and maintain proper books and records (i)
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relating to all Operating Funds (as defined in the ANPP Participation Agreement)
provided by it to the Operating Agent under the ANPP Participation Agreement and
(ii) upon receipt of the requisite information from the Operating Agent,
relating to the application of such Operating Funds to the operation and
maintenance of Unit 1 and the acquisition, construction and installation of
Capital Improvements, all in accordance with the Uniform System of Accounts. The
Lessor shall not be obliged in any way to maintain, alter, repair, rebuild or
replace Unit 1, any Capital Improvement, the Undivided Interest or the Real
Property Interest, or any part thereof, or, except as provided in Section 8(f),
to pay the cost of alteration, rebuilding, replacement, repair or maintenance of
Unit 1, any Capital Improvement, the Undivided Interest or the Real Property
Interest, or any part thereof, and the Lessee expressly waives the right to
perform any such action at the expense of the Lessor pursuant to any law at any
time in effect.
(b) Inspection. The Lessor, the Owner Participant, the
Indenture Trustee and the Collateral Trust Trustee shall have the right to
inspect PANGS (subject, in each event, to the ANPP Participation Agreement,
Applicable Law, applicable confidentiality undertakings and procedures
established by the Operating Agent) at their expense. The Lessor and the Owner
Participant shall have the right to inspect, at their expense, the books and
records of the Lessee relating to PANGS, and make copies of and extracts
therefrom (subject as aforesaid) and may, at their expense, discuss the Lessee's
affairs, finances and accounts with its executive officers and its independent
public accountants (and by this provision, the Lessee authorizes such
accountants, in the presence of the Lessee, to discuss with the Lessor and the
Owner Participant and their respective authorized representatives the affairs,
finances and accounts of the Lessee), all at such times and as often as may be
reasonably requested. None of the Lessor, the Owner Participant, the Indenture
Trustee and the Collateral Trust Trustee shall have any duty whatsoever to make
any inspection or inquiry referred to in this Section 8(b) and shall not incur
any liability or obligation by reason of not making any such inspection or
inquiry.
(c) Capital Improvements. If and to the extent required by the
ANPP Participation Agreement, the Lessee shall, at its sole expense, promptly
participate in the making of any Capital Improvement to Unit 1. The Undivided
Interest Percentage of the net proceeds of any sale or other disposition of
property removed from Unit 1 receivable (without regard to any right of setoff
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or other similar right of any Person against the Lessee) by or credited to the
account of the Lessee in accordance with the ANPP Participation Agreement and
any insurance proceeds receivable (without regard to any right of setoff or
other similar right of any Person against the Lessee) for the account of the
Lessor or the Lessee in respect of the loss or destruction of, or damage or
casualty to, any such property shall be applied as provided in Section 9(g), (h)
or (i), as the case may be. An undivided interest equal to the Undivided
Interest Percentage in property at any time removed from Unit 1 shall remain the
property of the Lessor, no matter where located, until such time as a Capital
Investment constituting a replacement of such property shall have been installed
in Unit 1 or such removed property has been disposed of by the Operating Agent
in accordance with the ANPP Participation Agreement. Simultaneously with such
disposition by the Operating Agent, title to the Lessor's undivided interest in
the removed property shall vest in the Person designated by the Operating Agent,
free and clear of any and all claims or rights of the Lessor. Unless
subparagraph (3) of Section 8(e) shall be applicable, upon the incorporation of
a Capital Improvement in Unit 1, without further act, (i) title to an undivided
interest equal to the Undivided Interest Percentage in such Capital Improvement
shall vest in the Lessor and (ii) such undivided interest in such Capital
Improvement shall become subject to this Facility Lease and be deemed to be part
of the Undivided Interest for all purposes hereof to the same extent that the
Lessor had an undivided interest in the property originally incorporated or
installed in Unit 1. The Lessee warrants and agrees that the Lessor's interest
in all Capital Improvements shall be free and clear of all Liens, except
Permitted Liens other than the type specified in clauses (ii), (iii) and (xii)
of the definition thereof.
(d) Reports. To the extent permissible, the Lessee shall
prepare and file in timely fashion, or, where the Lessor shall be required to
file, the Lessee shall prepare and deliver to the Lessor within a reasonable
time prior to the date for filing, any reports with respect to Unit 1, the
Undivided Interest or the Real Property Interest or the condition or operation
thereof that shall be required to be filed with any governmental or regulatory
authority. On or before March 1 of each year and on the Lease Termination Date,
the Lessee shall furnish the Lessor and the Owner Participant with a report
stating the total cost of all Capital Improvements and describing separately and
in reasonable detail each Capital Improvement (or related group of Capital
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Improvements) made during the period from the date hereof to December 31, 1986
in the case of the first such report or during the period from the end of the
period covered by the last previous report to the December 31 prior to such
report in the case of subsequent reports. On or before March 1 in each year
(commencing March 1, 1986) and at such other times as the Lessor or the Owner
Participant shall reasonably request in writing (which request shall provide a
reasonable period for response), the Lessee will report in writing to the Lessor
with respect to (i) the most recent annual capital expenditure budget submitted
by the Operating Agent to the Lessee in accordance with the ANPP Participation
Agreement and (ii) the then plans (if any) which the Lessee may have for the
financing of the same under Section 8(f).
(e) Title to Capital Improvements. Title to an undivided
interest, equal to the Undivided Interest Percentage, in each Capital
Improvement to Unit 1 shall vest as follows:
(1) in the case of each Nonseverable Capital Improvement,
whether or not the Lessor shall have financed or provided financing (in whole or
in part) for such undivided interest in such Capital Improvement by an
Additional Equity Investment or a Supplemental Financing, or both, effective on
the date such Capital Improvement shall have been incorporated or installed in
Unit 1, the Lessor shall, without further act, acquire title to such undivided
interest in such Capital Improvement;
(2) in the case of each Severable Capital Improvement, if the
Lessor shall have financed (by an Additional Equity Investment or a Supplemental
Financing, or both) the Undivided Interest Percentage of the cost of such
Capital Improvement, the Lessor shall, without further act, acquire title to
such undivided interest in such Capital Improvement; and
(3) in the case of each Severable Capital Improvement, if the
Lessor shall not have financed (by either an Additional Equity Investment or a
Supplemental Financing, or both) the Undivided Interest Percentage of the cost
of such Capital Improvement, the Lessee shall retain title to such undivided
interest.
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Immediately upon title to such undivided interest in any
Capital Improvement vesting in the Lessor pursuant to sub-paragraph (1) or
sub-paragraph (2) of this Section 8(e), such undivided interest in such Capital
Improvement shall, without further act, become subject to this Facility Lease
and be deemed part of the Undivided Interest and Unit 1 and for all purposes
hereof.
(f) Funding of the Cost of Capital Improvements. Before
placing in service any Capital Improvement to Unit 1 the cost of which exceeds
$100,000,000 in respect of the interests of all ANPP Participants, the Lessee
shall give the Lessor and the Owner Participant reasonable advance notice
thereof. The Owner Participant shall have the option, in its sole discretion, of
financing through the Lessor the cost of any such Capital Improvement, or any
other Capital Improvement presented to the Owner Participation for financing,
including or not including the making of an investment by the Owner Participant
(an Additional Equity Investment) and the issuance of one or more Additional
Notes, all on terms acceptable to the Lessee and the Owner Participant. If the
Owner Participant does not finance, or arrange the financing of, the cost of
such Capital Improvement, the Lessee may cause the Lessor to issue, if and to
the extent permitted by the Indenture, to one or more Persons (other than any
Person affiliated with the Lessee within the meaning of Section 318 of the Code)
one or more Additional Notes and to use the proceeds thereof to pay the cost of
such Capital Improvement, subject to satisfaction of the following conditions:
(i) there shall be no more than one Supplemental Financing in
any calendar year;
(ii) the sum of the Supplemental Financing Amounts in any
calendar year shall equal or exceed the Undivided Interest Percentage of
$5,000,000;
(iii) the Lessee may include in any request for a Supplemental
Financing only Capital Improvements not previously financed in any Supplemental
Financing and which have been installed or affixed no earlier than three
calendar years before the beginning of the calendar year in which such
Supplemental Financing occurs;
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(iv) the total amount of all Supplemental Financing during the
Basic Lease Term shall not exceed the Undivided Interest Percentage of
$100,000,000;
(v) unless waived by the Owner Participant, the Bonds issued and
outstanding under the Collateral Trust Indenture shall be rated no less than
"investment grade", as determined by Standard & Poor's Corporation and Moody's
Investors Service, Inc.;
(vi) the Supplemental Financing Amount shall not exceed that
portion of the cost of Capital Improvements which, when financed, will
constitute an addition to the Owner Participant's basis under section 1012 of
the Code;
(vii) in the opinion of independent tax counsel to the Owner
Participant, such Supplemental Financing shall not result in adverse tax
consequences to the Owner Participant or adversely affect the status of this
Facility Lease as a "true lease" for Federal tax purposes, and the Owner
Participant and the Lessor shall have agreed upon the amount and manner of
payment of any indemnity (if any) payable by the Lessee as a consequence of such
Supplemental Financing;
(viii) the Additional Notes shall have a final maturity date
no later than January 15, 2015;
(if) the Lessee shall have made such representations, warranties
and covenants regarding the tax characteristics of each undivided interest in
each Capital Improvement as the Owner Participant requests and the Tax
Indemnification Agreement shall have been appropriately modified;
(x) appropriate adjustments to Basic Rent and the schedules of
Casualty Values, Special Casualty Values and Termination Values shall have been
agreed to by the Owner Participant;
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(xi) The Lessee shall pay to the Lessor an amount equal to all
out-of-pocket costs and expenses reasonably incurred by the Lessor or the Owner
Participant not financed as a part of such Supplemental Financing or reflected
in adjustments to Basic Rent;
(xii) no Default or Event of Default shall have occurred and
be continuing; and
(xiii) the Lessee shall enter into such agreements and shall
provide such tax indemnities, representations, warranties, covenants, opinions,
certificates and other documents as the Owner Participant shall reasonably
request.
(g) Useful Life. If the Lessee shall not theretofore have
exercised its option under Section 13 to purchase the Undivided Interest and the
Real Property Interest, then (i) if the Lessee shall not theretofore have
exercised its option to renew the Lease pursuant to Section 12, on January 15,
2014, the Lessee shall initiate the Appraisal Procedure to determine the
remaining economic useful life of Unit 1 as of July 15, 2014 and (ii) on the
Rent Payment Date occurring one year prior to the end of the Renewal Term, if
any, the Lessee shall initiate the Appraisal Procedure to determine the
remaining economic useful life of Unit 1 as of the date six months prior to the
end of the Renewal Term. The Lessee and the Lessor agree to use their best
efforts to ensure that such determination of remaining economic useful life is
made no later than July 15, 2014 (in the case of the first such determination)
and six months prior to the end of the Renewal Term (in the case of the second
such determination).
SECTION 9. Event of Loss; Deemed Loss Event.
(a) Damage or Loss. In the event that Section 16.2 of the ANPP
Participation Agreement (as in effect on the date hereof) shall become
applicable, or an Event of Loss, a Requisition of Use or a Requisition of Title
shall occur, or Unit 1 or any substantial part thereof shall suffer destruction,
damage, loss, condemnation, confiscation, theft or seizure for any reason
whatsoever, such fact shall promptly, and in any case within five Business Days
of any such event, be reported by the Lessee to the Lessor and the Owner
Participant.
(b) Repair. The Lessee shall promptly make any and all
payments required of the Lessee under the provisions of the ANPP Participation
Agreement relating to damage or destruction or the like to Unit 1 or any portion
thereof; provided, however, that the Lessee shall
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in no event be obligated to make or join in any agreement under Section 16.2 of
the ANPP Participation Agreement (as in effect on the date hereof) concerning
repairs to or reconstruction of Unit 1.
(c) Payment of Casualty Value. On the Basic Rent Payment Date
next following the occurrence of an Event of Loss, the Lessee shall pay to the
Lessor all Basic Rent due on such Basic Rent Payment Date, plus an amount equal
to the excess of (i) Casualty Value determined as of such Basic Rent Payment
Date, plus an amount equal to the execww of (i) Casualty Value determined as of
such Basic Rent Payment Date over (ii) the unpaid principal amount of the Notes
Outstanding on such date after giving effect to the payment, if any, of the
principal installment due and payable on such date. Upon compliance in full by
the Lessee with the foregoing provisions of this Section 9(c) and assumption by
the Lessee of all the obligations and liabilities of the Owner Trustee under the
Indenture and the Notes pursuant to Section 3.9(b) of the Indenture, the Lessor
shall (so long as no Default or Event of Default shall have occurred and be
continuing), and at any time after the occurrence of an Event of Loss, the
Lessor may:
(1) in the case of an Event of Loss arising from a Final
Shutdown, if the Lessee shall have declined, but one or more of the other ANPP
Participants shall have elected, to reconstruct or restore Unit 1, as permitted
by the ANPP Participation Agreement, Transfer the Undivided Interest and the
Real Property Interest to such electing ANPP Participants, as required by and in
the proportions set forth in the ANPP Participation Agreement, in which case the
Lessee shall be entitled to receive the portion of the "salvage value" purchase
price allocable to the Undivided Interest; or
(2) if clause (1) shall not be applicable, Transfer the
Undivided Interest and the Real Property Interest to the Lessee.
If the Lessee shall not have assumed all the obligations and liabilities of the
Owner Trustee under the Indenture and the Notes in accordance with Section
3.9(b) of the Indenture, but shall have paid all amounts required by this
Section 9(c), the Lessor shall retain the Undivided Interest and the Real
Property Interest subject to the terms of this Facility Lease and Section 7(b)
(4) of the Participation Agreement; provided, however, that (i) the obligation
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of the Lessee to pay further Basic Rent shall be reduced to an amount on each
Basic Rent Payment Date equal to the aggregate amount of the principal, premium,
if any, and accrued interest then payable on all Notes then Outstanding and (ii)
this Facility Lease shall become a security agreement for all purposes of
Applicable Law.
(d) Payment of Special Casualty Value. If a Deemed Loss Event
occurs, the party hereto having knowledge thereof and, at the Lessor's option,
on the day of the month (specified in Schedule 4) next following the month
during which the Deemed Loss Event occurs, the Lessee shall pay to the Lessor on
such day an amount equal to the excess of (i) Special Casualty Value determined
as of the date such payment is due over (ii) the principal amount of the Notes
Outstanding on such date after giving effect to the payment, if any, of the
principal instalment due and payable on such day. Upon compliance in full by the
Lessee with the foregoing provisions of this Section 9(d) and assumption by the
Lessee of all the obligations and liabilities of the Owner Trustee under the
Indenture and the Notes pursuant to Section 3.9(b) of the Indenture, the Lessor
shall (so long as no Default or Event of Default shall have occurred and be
continuing), and at any time after the occurrence of a Deemed Loss Event, the
Lessor may, Transfer the Undivided Interest and the Real Property Interest to
the Lessee. If the Lessee shall not have assumed all the liabilities and
obligations of the Owner Trustee under the Indenture and the Notes in accordance
with Section 3.9(b) of the Indenture but shall have paid all amounts required by
this Section 9(d), the Lessor shall retain the Undivided Interest and the Real
Property Interest subject to the terms of this Facility Lease and Section 7(b)
(4) of the Participation Agreement; provided, however, that (i) the obligation
of the Lessee to pay further Basic Rent shall be reduced to an amount on each
Basic Rent Payment Date equal to the aggregate amount of principal, premium, if
any, and accrued interest then payable on all Notes Outstanding and (ii) this
Facility Lease shall become a security agreement for all purposes of Applicable
Law.
(e) Requisition of Use. In the case of a Requisition of Use
not constituting an Event of Loss, this Facility Lease shall continue, and each
and every obligation of the Lessee hereunder and under each Transaction Document
shall remain in full force and effect. So long as no Default or Event of Default
shall have occurred and be continuing, the Lessee shall be entitled to all sums
received by reason of any such Requisition of Use for the period ending on the
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Lease Termination Date, and the Lessor shall be entitled to all sums received by
reason of any such Requisition of Use for the period after the Lease Termination
Date.
(f) Termination of Obligation. Until the Lessee shall have
made the payments specified in Section 9(c) or 9(d), the Lessee shall make all
payments of Rent when due; and the Lessee shall thereafter be required to make
all payments of Supplemental Rent as and when due. In the event that the Lessee
shall assume all the obligations and liabilities of the Owner Trustee under the
Indenture and the Notes pursuant to Section 3.9(b) of the Indenture, upon
payment by the Lessee of the payments specified in Section 9(c) or 9(d) and all
Rent due and owing through and including the date of payment (including Basic
Rent due on or accrued through such date, as the case may be), the Lease Term
shall end and the Lessee's obligation to pay further Basic Rent shall cease.
(g) Application of Payments on an Event of Loss. Any payments
receivable (without regard to any right of setoff or other similar right of any
Person against the Lessee) at any time by the Lessor or the Lessee (other than
insurance placed by the Owner Trustee or the Owner Participant pursuant to
Section 10(b)) from any governmental authority, insurer or other Person (except
the Lessee) as a result of the occurrence of an Event of Loss shall be applied
as follows:
(i) all such payments received at any time by the Lessee shall
be promptly paid to the Lessor for application pursuant to the following
provisions of this Section 9(g), except that the Lessee may retain any amounts
that would at the time be payable to the Lessee as reimbursement under the
provisions of clause (ii) below;
(ii) so much of such payments as shall not exceed the amount
required to be paid by the Lessee pursuant to Section 9(c) (ignoring, for this
purpose, clause (ii) of the first sentence thereof) shall be applied in
reduction of the Lessee's obligation to pay such amount if not already paid by
the Lessee or, if already paid by the Lessee, shall be applied to reimburse the
Lessee for its payment of such amount; and
(iii) the balance, if any, of such payments remaining
thereafter shall be divided between the Lessor and the Lessee as their interests
may appear.
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(h) Application of Payments Not Relating to an Event of Loss.
Payments receivable (without regard to any right of setoff or other similar
right of any Person against the Lessee) at any time by the Lessor (other than
insurance placed by the Owner Trustee or the Owner Participant pursuant to
Section 10(b)) or the Lessee from any Governmental Authority, insurer or other
Person with respect to any destruction, damage, loss, condemnation,
confiscation, theft or seizure of or Requisition of Title to or Requisition of
Use of Unit 1 or any part thereof not constituting an Event of Loss shall be
applied first to reimburse the Lessee for all amounts expended in respect of the
repair, replacement or reconstruction of Unit 1 or any part thereof as provided
in Section 9(b), and second the balance, if any, of such payments shall be
divided between the Lessor and the Lessee as their interests may appear.
(i) Other Dispositions. Notwithstanding the foregoing
provisions of this Section 9, so long as a Default or Event of Default shall
have occurred and be continuing, any amount that would otherwise be payable to
or for the account of, or that would otherwise be retained by, the Lessee
pursuant to Section 10 or this Section 9 shall be paid to the Lessor as security
for the obligations of the Lessee under this Facility Lease and, at such time
thereafter as no Default or Event of Default shall be continuing, such amount
shall be paid promptly to the Lessee unless this Facility Lease shall have
theretofore been declared to be in default, in which event such amount shall be
disposed of in accordance with the provisions hereof, of the Indenture and of
the Trust Agreement.
(j) Assumption of Notes; Creation of Lien on Undivided
Interest. In connection with an Event of Loss, a Deemed Loss Event or the
exercise of the Cure Option, (i) the Lessee agrees to use its best efforts to
comply with the conditions respecting its assumption of all the obligations and
liabilities of the Owner Trustee under the Indenture and the Notes set forth in
Section 3.9(b) of the Indenture, and (ii) the Lessor agrees that, if the Lessee
fails to assume all the obligations and liabilities of the Owner Trustee under
the Indenture and the Notes in accordance with Section 3.9(b) of the Indenture,
not later than two Business Days prior to the date on which the Lessee is to
acquire the Owner Participant's interest in the Trust Estate pursuant to Section
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7(b) (4) of the Participation Agreement, the Lessor will cause the Undivided
Interest and the Real Property Interest to be subjected to the Lien of the
Indenture by executing and delivering to the Indenture Trustee the Undivided
Interest Indenture Supplement.
SECTION 10. Insurance.
(a) Required Insurance. The Lessee will use its best efforts
to cause the Operating Agent to carry and maintain insurance required under the
ANPP Participation Agreement and will make all payments required of the Lessee
under the ANPP Participation Agreement in respect of such insurance. The Lessee
will at all times maintain, directly or through the Operating Agent, policies of
casualty and liability insurance with respect to the Undivided Interest and the
Real Property Interest in such amounts and with such coverage as shall be
adequate in accordance with prudent utility practice. Any policies of insurance
in respect of destruction, damage, loss, theft or other casualty to the
Undivided Interest, the Real Property Interest, Unit 1 or any part thereof shall
name the Lessor (and, to the extent practicable, the Owner Participant) as
additional insured, as its interests may appear, and any policies with respect
to nuclear liability insurance shall include all Indemnities as additional
insureds; provided, however, that if the Operating Agent, as trustee, shall
become the loss payee under any policy of insurance constituting Project
Insurance, then the Lessor and the Owner Participant shall be and be made
beneficiaries of the trust arrangement under which the Operating Agent acts as
trustee. The Lessee shall, on or before March 1 of each year, commencing March
1, 1986, furnish to the Lessor and the Owner Participant (A) a certificate
signed by an independent insurance broker showing the insurance then maintained
under the ANPP Participation Agreement and hereunder, stating that all premiums
then due have been paid and stating that the insurance then carried and
maintained under the ANPP Participation Agreement and hereunder is in accordance
with the terms of the ANPP Participation Agreement and this Section 10, and (B)
upon the request of the Lessor or the Owner Participant, copies (to the extent
permitted by the issuers of such policies) of policies so maintained. All
insurance proceeds paid in respect of damage, destruction, loss, theft or other
casualty to the Undivided Interest or the Real Property Interest shall be
applied as provided in Section 9(g) (h) or (i), as the case may be.
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(b) Permitted Insurance. Nothing in this Section 10 shall
prohibit the Lessee from placing, at its expense, insurance on or with respect
to the cost of purchasing replacement power, naming the Lessee as insured and/or
loss payee, unless such insurance would conflict with or otherwise limit the
availability of insurance to be provided or maintained in accordance with
Section 10(a). Nothing in this Section 10 shall prohibit the Lessor or the Owner
Participant from placing at its expense other insurance on or with respect to
Unit 1, the Undivided Interest or the Real Property Interest or the operation of
Unit 1, naming the Lessor or the Owner Participant as insured and/or loss payee,
unless such insurance would conflict with or otherwise limit the insurance to be
provided or maintained in accordance with Section 10(a).
SECTION 11. Rights to Assign or Sublease.
(a) Assignment or Sublease by the Lessee. Without the prior
written consent of the Lessor, the Lessee shall not assign, sublease, transfer
or encumber (except for Permitted Liens) its leasehold interest in the Undivided
Interest or the Real Property Interest under this Facility Lease. The Lessee
shall not, without the prior written consent of the Lessor and the Owner
Participant, part with the possession of, or suffer or allow to pass out of its
possession, the Undivided Interest, the Real Property Interest or any interest
therein, except to the extent required pursuant to the ANPP Participation
Agreement or expressly permitted by the provisions of this Facility Lease or any
other Transaction Document.
(b) Assignment by Lessor as Security for Lessor's Obligations.
To secure the indebtedness evidenced by the Notes, the Lessor will assign to the
Indenture Trustee its right, title and interest to receive certain payments of
Rent (not including, in any event, Excepted Payments), to the extent provided in
the Indenture and may assign to the Indenture Trustee its right, title and
interest in the Undivided Interest and the Real Property Interest as
contemplated by Section 9(j). The Lessee hereby (a) consents to such assignment
pursuant to the terms of the Indenture, (b) agrees to pay directly to the
Indenture Trustee at the Indenture Trustee's Office (so long as the lien of the
Indenture has not been satisfied and discharged and the Lessor is obligated
thereunder) all amounts of Rent (other than Excepted Payments) due or to become
due to the Lessor that shall be required to be paid to the Indenture Trustee
pursuant to the Indenture, (c) agrees that the
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right of the Indenture Trustee to any such payments shall be absolute and
unconditional and shall not be affected by an circumstances whatsoever,
including, without limitation, those circumstances set forth in Section 4 and
(d) agrees that, to the extent provided in the Indenture and until the Indenture
is discharged in accordance with its terms, the Indenture Trustee shall have all
the rights of the Lessor hereunder with respect to Assigned Payments as if the
Indenture Trustee had originally been named herein as the Lessor.
SECTION 12. Lease Renewal.
Subject to the notice requirements set forth in Section 13(a),
at the end of the Basic Lease Term provided that no Default, Event of Default,
event of Loss or Deemed Loss Event shall have occurred and be continuing and the
Notes shall have been paid in full, the Lessee shall have the right to renew the
term of this Facility Lease for a period commencing January 15, 2015, and ending
on the later of January 15, 2017 and the end of the Maximum Option Period (the
Renewal Term), during which the Basic Rent payable shall be the rental provided
in Section 3(a) (iii) and Section 21.
SECTION 13. Notices for Renewal or Purchase;
Purchase Options.
(a) Notice; Determination of Values; Appraisal Procedure. Not
later than three years nor earlier than five years prior to the expiration date
of the Basic Lease Term, and not later than three years nor earlier than five
years prior to the expiration date of the Renewal Term, as the case may be, the
Lessee shall give to the Lessor written notice of its election either to (A)
return the Undivided Interest and the Real Property Interest to the Lessor
pursuant to Section 5, or (B) exercise the renewal option permitted by Section
12 (in the case of the notice delivered in respect of the expiration date of the
Basic Lease Term) or the purchase option permitted by Section 13(b). If the
notice specified in clause (B) of the preceding sentence is given three years
prior to the expiration of the Basic Lease Term, then not later than two years
prior to the expiration date of the Basic Lease Term, the Lessee will give the
Lessor written notice of its election either to exercise the renewal option
permitted by Section 12 or the purchase option permitted by Section 13(b). Any
such election shall be irrevocable as to the Lessee, but no such election shall
be binding on the Lessor if, on the effective date thereof, a Default or an
Event of Default shall have occurred and be continuing or an Event of Loss
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or a Deemed Loss Event shall have occurred. Promptly after giving notice, (i) in
case the renewal option has been elected, the Maximum Option Period shall be
determined by the Appraisal Procedure, or (ii) in case the purchase option
permitted by Section 13(b) has been elected, the Lessee and the Owner
Participant shall agree upon the Fair Sales Value of the Undivided Interest and
the Real Property Interest, or, if within three months after the date of the
Lessee's notice the Lessee and the Owner Participant shall be unable so to
agree, such value shall be determined by the Appraisal Procedure.
(b) Purchase Option at Expiration of the Lease Term. Subject
to the notice requirements set forth in Section 13(a), unless a Default or an
Event of Default shall have occurred and be continuing or an Event of Loss or
Deemed Loss Event shall have occurred, on the date of the expiration of the
Basic Lease Term or the Renewal Term (if elected), the Lessee shall have the
right to purchase the Undivided Interest and the Real Property Interest for a
purchase price equal to the Fair Market Sales Value thereof.
(c) Special Purchase Option. Upon 30 days' prior written
notice to the Lessor, unless a Default or an Event of Default shall have
occurred or be continuing or an Event of Loss or Deemed Loss Event shall have
occurred, if the Lessee shall determine that upon a refunding of the Initial
Series Note (and the Releveraging Note, if theretofore issued) such refunding
would violate any limitation then imposed by the NMPSC, the Lessee shall have
the right to purchase the Undivided Interest and the Real Property Interest for
a purchase price equal to the greater of (i) the Fair Market Sales Value thereof
and (ii) Casualty Value as of the Basic Rent Payment Date first preceding the
date of such purchase (or as of the date of such purchase, if such date shall be
a Basic Rent Payment Date) plus, if such date shall not be a Basic Rent Payment
Date, a pro ration of Basic Rent to the date of purchase.
(d) Purchase of the Undivided Interest; Payment, Etc. If the
Lessee shall have elected to purchase the Undivided pursuant to Section 13(b) or
Section (c), payment by the Lessee of the purchase price for the Undivided
Interest and the Real Property Interest shall be made in immediately available
funds, whereupon the Lessor shall Transfer the Undivided Interest and the Real
Property Interest to the Lessee.
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SECTION 14. Termination for Obsolescence.
(a) Termination Notice. Notwithstanding any provision herein
contained to the contrary, unless a Default or an Event of Default shall have
occurred and be continuing or an Event of Loss or a Deemed Loss Event shall have
occurred, the Lessee shall have the option (provided that the Lessee shall have
delivered to the Lessor an Officers' Certificate to the effect that the Lessee's
Board of Directors has adopted and there is in effect a resolution determining
that Unit 1 is (A) uneconomic to the Lessee or (B) economically obsolete for any
reason; and provided that the Lessee shall be disposing of all its other leased
interests in Unit 1, on at least 360 days' prior written notice (a Termination
Notice) to the Lessor, the Owner Participant and the Indenture Trustee (which
notice shall be irrevocable)) to terminate this Facility Lease on any Basic Rent
Payment Date after January 15, 1998, and prior to January 15, 2012 (the
Termination Date). If the Lessee shall give the Lessor a Termination Notice, the
Lessee shall, as agent for the Lessor, use its best efforts to obtain cash bids
for the purchase of the Undivided Interest and the Real Property Interest,
together with the interest of the Lessor under the Assignment and Assumption.
The Lessor shall also have the right to obtain such cash bids, either directly
or through agents other than the Lessee. The Lessee shall certify to the Lessor
within ten days after the Lessee's receipt of each bid (and, in any event, prior
to the Termination Date) the amount and terms thereof and the name and address
of the party (which shall not be the Lessee or any Affiliate of the Lessee)
submitting such bid.
(b) Right of Lessor to Retain Undivided Interest upon
Termination. The Lessor may elect to retain, rather than sell, the Undivided
Interest and the Real Property Interest by giving notice to the Lessee and to
the Indenture Trustee prior to the Termination Date. It shall be a condition
precedent to the Lessor's right to retain the Undivided Interest and the Real
Property Interest that on or prior to the Termination Date the Lessor shall have
paid (or made provision for payment) to the Indenture Trustee, the unpaid
principal amount of all Notes Outstanding on such date and all premium, if any,
and interest accrued and unpaid on the date of payment. If the Lessor elects to
retain the Undivided Interest and the Real Property Interest pursuant to this
Section 14(b), the Lessee shall pay to the Lessor on the Termination Date the
Basic Rent and any other Rent due or accrued, as the case may be, to and
including the Termination Date, together with an amount equal to the
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excess, if any, of the Termination Value as of the Termination Date over the
highest bona fide offer received pursuant to Section 14(a).
(c) Events on the Termination Date. If the Lessor has not
elected to retain the Undivided Interest and the Real Property Interest as
provided in Section 14(b), on the Termination Date the Lessor shall (upon
receipt of the sale price and all additional payments specified in the next
sentence) Transfer the Undivided Interest and the Real Property Interest for
cash to the bidder (which shall not be the Lessee or an Affiliate of the Lessee)
that shall have submitted the highest bid on or before the Termination Date. The
total sale price realized at such sale shall be retained by the Lessor (subject,
however, to the terms of the Indenture and the requirement that there shall have
been paid, or provision for payment made, to the Indenture Trustee the unpaid
principal of all Notes Outstanding on the Termination Date and all premium, if
any, and interest accrued and unpaid on the date of payment) and, in addition,
on the Termination Date the Lessee shall pay to the Lessor (A) the excess, if
any, of the Termination Value as of the Termination Date over the net sale price
of the Undivided Interest and the Real Property Interest and (B) any Basic Rent
due or accrued, as the case may be, to and including the Termination Date and
shall pay to the Person or Persons entitled thereto all Supplemental Rent (other
than Termination Value). Upon compliance by the Lessee with the applicable
provisions of this Section 14, the obligation of the Lessee to pay Basic Rent
due hereunder for any period after the Termination Date shall cease and the
Basic Lease Term shall end on the Termination Date; provided, however, that, in
the event of termination of this Facility Lease pursuant to this Section 14, the
obligations of the Lessee under the ANPP Participation Agreement (except as
therein expressly provided) and the Assignment and Assumption shall continue in
full force and effect and shall not be impaired by reason of any such
termination. If, other than as a result of the Lessor's election to retain the
Undivided Interest and the Real Property Interest as provided in Section 14(b),
on or as of the Termination Date no such sale shall occur or the Lessee shall
not have complied in full with this Section 14, this Facility Lease shall
continue in full force and effect in accordance with its terms without prejudice
to the Lessee's right to exercise its rights under this Section 14 thereafter,
except that the Lessee shall not be entitled to deliver another Termination
Notice during the 3-year period following such Termination Date. The Lessor
shall be under no duty to solicit bids, to inquire into the efforts of the
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Lessee to obtain bids or otherwise take any action in connection with any such
sale other than, if the Lessor has not elected to retain the Undivided Interest
and the Real Property Interest, to Transfer the Undivided Interest and the Real
Property Interest to the purchaser named in the highest bid certified by the
Lessee to the Lessor or obtained by the Lessor, against receipt of the payments
provided for herein.
(d) Early Termination Notice. In the event that the Lessee
shall fail to exercise its renewal option or purchase option within the time
limit provided by Section 13(a), the Lessor shall have the option, on any Basic
Rent Payment Date thereafter, on at least 120 days prior written notice (an
Early Termination Notice) to the Lessee and the Indenture Trustee, to terminate
this Facility Lease on the Basic Rent Payment Date specified in such notice (the
Early Termination Date). Any Early Termination Notice may be revoked by the
Lessor at any time on or prior to the Early Termination Date.
(e) Events on the Early Termination Date. On the Early
Termination Date the Lessor shall, at its option, (i) Transfer the Undivided
Interest and the Real Property Interest to the bidder (other than the Lessee or
any Affiliate of the Lessee) selected by the Lessor or (ii) retain the Undivided
Interest and the Real Property Interest. It shall be a condition precedent to
the Lessor's right to sell or retain the Undivided Interest and the Real
Property Interest that on or prior to the Early Termination Date the Lessor
shall have paid (or made provision for payment) to the Indenture Trustee on such
date the unpaid principal amount of all Notes Outstanding on such date and all
premium, if any, and interest accrued and unpaid on the date of payment. The
total sale price realized at any such sale shall be retained by the Lessor and,
in addition, on the Early Termination Date the Lessee shall pay to the Lessor
any Basic Rent due or accrued, as the case may be, to and including the Early
Termination Date, and shall pay to the Person or Persons entitled thereto all
Supplemental Rent (other than Termination Value). Upon compliance the Lessee
with the applicable provisions of this Section 14, the obligation of the Lessee
to pay Basic Rent due hereunder for any period after the Early Termination Date
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shall cease and the Lease Term shall end on the Early Termination Date;
provided, however, that in the event of the termination of this Facility Lease
pursuant to this Section 14, the obligations of the Lessee under the ANPP
Participation Agreement (except as therein expressly provided) and the
Assignment and Assumption shall continue in full force and effect and shall not
be impaired by reason of any such termination.
SECTION 15. Events of Default.
The term Event of Default, wherever used herein, shall mean
any of the following events (whatever the reason for such Event of Default and
whether it shall be voluntary, or come about or be effected by operation of law,
or be pursuant to or in compliance with any Applicable Law or Governmental
Action):
(i) the Lessee shall fail to make, or cause to be made, (x)
payment of Casualty Value, Termination Value, Special Casualty Value or payment
due pursuant to exercise of the Cure Option when due, (y) any payment of Basic
Rent within 5 Business Days after the same shall become due or (z) any payment
of Supplemental Rent (other than Casualty Value, Termination Value, Special
Casualty Value or payment due pursuant to exercise of the Cure Option) within 20
days after the same shall become due or demanded, as the case may be; or
(ii) the Lessee shall fail to perform or observe any covenant,
condition or agreement to be performed or observed by it under Section 10(b) (3)
(i), 10(b) (3) (ii), 10(b) (3) (iii) or 10(b) (3) (v) of the Participation
Agreement or Section 7, 10 (other than failure of the Lessee to cause to be
delivered the insurance broker's certificate described therein) or 11 of this
Facility Lease; or
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(iii) the remaining economic useful life of Unit 1, as
determined under Section 8(g) (if required thereby to be so determined), shall
be less than 5-1/2 years as of July 15, 2014, or less than 3-1/2 years as of the
date six months prior to the end of the Renewal Term; or
(iv) the Lessee shall fail to perform or observe any covenant or
agreement to be performed or observed by it under Section 10(b) (3) (viii) of
the Participation Agreement and such failure shall continue for a period of 30
days after there shall have been given to the Lessee by the Lessor or the Owner
Participant a notice specifying such failure and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(v) the Lessee shall fail to perform or observe any covenant,
condition or agreement (other than those referred to in clauses (i) through (iv)
above) to be performed or observed by it under this Facility Lease or any other
Transaction Document, and such failure shall continue for a period of 30 days
after there shall have been given to the Lessee by the Lessor or the Owner
Participant a notice specifying such failure and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(vi) any representation or warranty made by the Lessee in this
Facility Lease, any other Transaction Document (other than the Tax
Indemnification Agreement) or any agreement, document or certificate delivered
by the Lessee in connection herewith or therewith shall prove to have been
incorrect in any material respect when any such representation or warranty was
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made or given and shall remain material and materially incorrect at the time
in question; or
(vii) the Lessee shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking of possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall take any corporate action to authorize any of the
foregoing; or an involuntary case or other proceeding shall be commenced against
the Lessee seeking liquidation, reorganization or other relief with respect to
it or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case of other proceeding shall remain
undismissed or unstayed for a period of 60 consecutive days; or
(viii) final judgement for the payment of money in excess of
$1,000,000 shall be rendered against the Lessee and the Lessee shall not have
discharged the same or provided for its discharge in accordance with its terms
or bonded the same or procured a stay of execution thereof within 60 days from
the entry thereof; or
(ix) (1) a default by the Lessee under the ANPP Participation
Agreement in consequence of which the Lessee's right to receive its Generation
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Entitlement Share in PVNGS is suspended by the other ANPP Participants, or (2)
the giving by any ANPP Participant of a notice under Section 23.2 (or any
comparable successor provision) of the ANPP Participation Agreement respecting a
default thereunder by the Lessee and the lapse of 20 Business Days from the
giving of such notice without the Lessee having cured such default; provided,
however, that for purposes of this clause (2) if the Lessee shall have disputed
the existence or nature of a default and such dispute shall have become the
subject of an arbitration under Section 24 (or any comparable successor
provision) of the ANPP Participation Agreement, such 20 Business Day period
shall commence on the date of the final determination of the board of
arbitrators under such Section 24; or
(x) (1) the Lessee shall fail to pay when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) any
Debt (which term shall mean (A) indebtedness for borrowed money, (B) obligations
as lessee under leases and (C) obligations under direct or indirect guarantees
in respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clause (A) or
(B) above, in each case if the principal amount (or equivalent) thereof is
greater than $20,000,000) of the Lessee, and such failure shall continue after
the applicable grace period, if any, specified in the agreement or instrument
relating to such Debt, but only if the Lessee shall have received notice of such
failure or a Responsible Officer of the Lessee shall have actual acknowledge of
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such failure; or (2) any other default under any agreement or instrument
relating to any such Debt, or any other event, shall occur and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such default or event is to accelerate, or to
permit the acceleration of, the maturity of such Debt, but only if the Lessee
shall have received notice of such default or a Responsible Officer of the
Lessee shall have actual knowledge of such default.
SECTION 16. Remedies.
(a) Remedies. Upon the occurrence of any Event of Default and
so long as the same shall be continuing, the Lessor may, at its option, declare
this Facility Lease to be in default by written notice to such effect given to
the Lessee, and may exercise one more of the following remedies as the Lessor in
its sole discretion shall elect:
(i) the Lessor may, by notice to the Lessee, rescind or
terminate this Facility Lease;
(ii) the Lessor may (x) demand that the Lessee, and thereupon
the Lessee shall, return possession of the Undivided Interest and the Real
Property Interest promptly to the Lessor in the manner and condition required
by, and otherwise in accordance with the provisions of, this Facility Lease as
if they Undivided Interest and the Real Property Interest were being returned at
the end of the Lease Term and the Lessor shall not be liable for the
reimbursement of the Lessee for any costs and expenses incurred by the Lessee in
connection therewith and (y) enter upon the PANGS Site and take immediate
possession of (to the exclusion of the Lessee) the Undivided Interest and the
Real Property Interest, by summary proceedings or otherwise, all without
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liability to the Lessee for or by reason of such entry or taking of possession,
whether for the restoration of damage to property caused by such taking or
otherwise;
(iii) the Lessor may sell the Undivided Interest and the Real
Property Interest, or any part thereof, together with any interest of the Lessor
under the Assignment and Assumption, at public or private sale, as the Lessor
may determine, free and clear of any rights of the Lessee in the Undivided
Interest and the Real Property Interest and without any duty to account to the
Lessee with respect to such action or inaction or any proceeds with respect
thereto (except to the extent required by clause (v) or (vi) below if the Lessor
shall elect to exercise its rights thereunder), in which event the Lessee's
obligation to pay Basic Rent hereunder for periods commencing after the date of
such sale shall be terminated or proportionately reduced, as the case may be
(except to the extent that Basic Rent is to be included in computations under
clause (v) or (vi) below if the Lessor shall elect to exercise its rights
thereunder);
(iv) the Lessor may hold, keep idle or lease to others all or
any part of the Undivided Interest and the Real Property Interest, as the Lessor
in its sole discretion may determine, free and clear of any rights of the Lessee
and without any duty to account to the Lessee with respect to such action or
inaction or for any proceeds with respect to such action or inaction, except
that the Lessee's obligation to pay Basic Rent for periods commencing after the
Lessee shall have been deprived of use of the Undivided Interest and the Real
Property Interest pursuant to this clause (iv) shall be reduced by the net
proceeds, if any, received by the Lessor from leasing the Undivided Interest and
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the Real Property Interest to any Person other than the Lessee for the same
periods or any portion thereof;
(v) except in the case of an Event of Default specified in
clause (iii) of Section 15, the Lessor may, whether or not the Lessor shall have
exercised or shall thereafter at any time exercise its rights under clause (i),
(ii), (iii) or (iv) above, demand, by written notice to the Lessee specifying a
payment date which shall be a Basic Rent Payment Date not earlier than 10 days
after the date of such notice, that the Lessee pay to the Lessor, and the Lessee
shall pay to the Lessor, on the Basic Rent Payment Date specified in such
notice, as liquidated damages (in lieu of the Basic Rent due after the Basic
Rent Payment specified in such notice), any unpaid Rent due through the Basic
Rent Payment Date specified in such notice plus whichever of the following
amounts the Lessor, in its sole discretion, shall specify in such notice
(together with interest on such amount at the interest rate specified in Section
3(b) (iii) from the Basic Rent Payment Date specified in such notice to the date
of actual payment) (and upon receipt of such payment the Lessor shall Transfer
to the Lessee the Undivided Interest and the Real Property Interest):
(A) an amount equal to the excess, if any, of Casualty Value,
computed as of the Basic Rent Payment Date specified in such notice, over the
Fair Market Rental Value of the Undivided Interest and the Real Property
Interest (determined on the basis of the then actual condition of Unit 1) until
the end of the remaining useful life of Unit 1, after discounting
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such Fair Market Rental Value semi-annually to present value as of the Basic
Rent Payment Date specified in such notice at a rate of 12% per annum;
(B) an amount equal to the excess, if any, of such Casualty
Value over the Fair Market Sales Value of the Undivided Interest and the Real
Property Interest (determined on the basis of the then actual condition of Unit
1) as of the Basic Rent Payment Date specified in such notice; or
(C) an amount equal to the excess, if any, of (1) the present
value as of the Basic Rent Payment Date specified in such notice of all
installments of Basic Rent until the end of the Basic Lease Term or the Renewal
Term, as the case may be, discounted semi-annually at a rate of 10% per annum,
over (2) the present value as of such Basic Rent Payment Date of the Fair Market
Rental Value of the Undivided Interest and the Real Property Interest
(determined on the basis of the then actual condition of Unit 1) until the end
of the Basic Lease Term or the Renewal Term, as the case may be, discounted
semi-annually at a rate of 10% per annum;
(vi) if the Lessor shall have sold all the Undivided Interest
and the Real Property Interest pursuant to clause (iii) above, the Lessor, in
lieu of exercising its rights under clause (v) above with respect to the
Undivided Interest and the Real Property Interest may, if it shall so elect,
demand that the Lessee pay to the Lessor and the Lessee shall pay to the Lessor
on the date of such sale, as liquidated damages for loss of a bargain and not as
a penalty (in lieu of Basic Rent due for periods commencing after the next Basic
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Rent Payment Date following the date of such sale), any unpaid Basic Rent due
through such Basic Rent Payment Date, plus the amount of any deficiency between
the Sale Proceeds and Casualty Value, computed as of such Basic Rent Payment
Date, together with interest at the interest rate specified in Section 3(b)(iii)
on the amount of such Rent and such deficiency from the date of such sale until
the date of actual payment;
(vii) in the case of an Event of Default specified in clause
(iii) of Section 15, the Lessor may demand, by written notice of the Lessee
specifying a payment date which shall be the last Basic Rent Payment Date of the
Lease Term, that the Lessee pay to the Lessor, and the Lessee shall pay to the
Lessor, on such Basic Rent Payment Date, as liquidated damages for loss of a
bargain and not as a penalty, any unpaid Rent due through such Basic Rent
Payment Date plus an amount equal to the Fair Market Sales Value (without regard
to the obligations of the Lessee under Section 10(b)(3)(xi) of the Participation
Agreement) of the Undivided Interest and the Real Property Interest (determined
on the basis of the then actual condition of Unit 1) deter-mined as of such
Basic Rent Payment Date (together with interest on such amount at the interest
rate specified in Section 3(b)(iii) from such Basic Rent Payment Date specified
in such notice to the date of actual payment) (and upon receipt of such payment
the Lessor shall transfer to the Lessee the Undivided Interest and the Real
Property Interest); or
(viii) the Lessor may exercise any other right or remedy that
may be available to it under any Applicable Law or proceed by appropriate court
action to enforce the terms hereof or to recover damages for the breach hereof.
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(b) No Release. No restriction or termination of this Facility
Lease, in whole or in part, or repossession of the Undivided Interest or the
Real Property Interest or exercise of any remedy under paragraph (a) of this
Section 16 shall, except as specifically provided therein, relieve the Lessee of
any of its liabilities and obligations hereunder. In addition, the Lessee shall
be liable, except as otherwise provided above, for any and all unpaid Rent due
hereunder before, after or during the exercise of any of the foregoing remedies,
including all reasonable legal fees and other costs and expenses incurred by the
Lessor or the Owner Participant by reason of the occurrence of any Event of
Default or the exercise of the Lessor's remedies with respect thereto. At any
sale of the Undivided Interest, the Real Property Interest or any part thereof
pursuant to this Section 16, the Owner Participant, the Lessor or the Indenture
Trustee may bid for and purchase such property.
(c) Remedies Cumulative. No remedy under paragraph (a) of this
Section 16 is intended to be exclusive, but each shall be cumulative and in
addition to any other remedy provided under such paragraph (a) or otherwise
available to the Lessor at law or in equity. No express or implied waiver by the
Lessor of any Default or Event of Default hereunder shall in any way be, or be
construed to be, a waiver of any future or subsequent Default or Event of
Default. The failure or delay of the Lessor in exercising any right granted it
hereunder upon any occurrence of any of the contingencies set forth herein shall
not constitute a waiver of any such right upon the continuation or recurrence of
any such contingencies or similar contingencies and any single or partial
exercise of any particular right by the Lessor shall not exhaust the same or
constitute a waiver of any other right provided herein. To the extent permitted
by Applicable Law, the Lessee hereby waives any rights now or hereafter
conferred by statute or otherwise which may require the Lessor to sell, lease or
otherwise use the Undivided Interest or Unit 1 in mitigation of the Lessor's
damages as set forth in paragraph (a) of this Section 16 or which may otherwise
limit or modify any of the Lessor's rights and remedies provided in this
Section 16.
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(d) Exercise of Other Rights or Remedies. In addition to all
other rights and remedies provided in this Section 16, the Lessor 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.
(e) Special Cure Right of Lessee. In the event a "Notice of
Default" is given under Section 15 (iv), the Lessee may, on or prior to the
occurrence of an Event of Default resulting therefrom, give written notice to
the Lessor stating that the Lessee has elected to exercise the option (the Cure
Option) provided in this Section 16(e), which election shall be irrevocable as
to the Lessee. Promptly after the giving of such notice, the Lessee and the
Owner Participant shall agree upon the Fair Market Sales Value of the Undivided
Interest and the Real Property Interest or, if they shall be unable so to agree
within one month after the date of the Lessee's notice, such value shall be
determined by the Appraisal Procedure. On the Basic Rent Payment Date next
following the date that such Fair Market Sales Value shall have been determined,
the Lessee shall pay to the Lessor all Rent due on such Basic Rent Payment Date,
plus an amount equal to the excess of (i) the greater of such Fair Market Sales
Value and the Casualty Value determined as of such Basic Rent Payment Date over
(ii) the unpaid principal amount of the Notes Outstanding on such date after
giving effect to the payment, if any, of the principal installment and payable
on such date. Upon compliance in full by the Lessee with the foregoing
provisions of this paragraph (e) and assumption by the Lessee of all the
obligations and liabilities of the Owner Trustee under the Indenture and the
Notes pursuant to Section 3.9(b) of the Indenture, the Lessor shall Transfer the
Undivided Interest and the Real Property Interest to the Lessee. If the Lessee
shall not have assumed all the obligations and liabilities of the Owner
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Trustee under the Indenture and the Notes in accordance with Section 3.9(b) of
the Indenture, but shall have paid all amounts required by this paragraph (e),
the Lessor shall retain the Undivided Interest and the Real Property Interest
subject to the terms of this Facility Lease and Section 7(b)(4) of the
Participation Agreement; provided, however, that the obligation of the Lessee to
pay further Basic Rent shall be reduced to an amount on each Basic Rent Payment
Date equal to the aggregate amount of principal, premium, if any, and accrued
interest then payable on all Notes then Outstanding and this Facility Lease
shall become a security agreement for all purposes of Applicable Law. The Lessee
agrees to use its best efforts to comply with the conditions respecting its
assumption set forth in Section 3.9(b) of the Indenture and, failing such
assumption, agrees to accept a transfer of the Owner Participant's right, title
and interest in the Trust Estate pursuant to Section 7(b)(4) of the
Participation Agreement.
SECTION 17. Notices.
All communications and notices provided for in this Facility
Lease shall be in writing and shall be given in person or by means of telex,
telecopy, or other wire transmission, or mailed by registered or certified mail,
addressed as provided in the Participation Agreement. All such communications
and notices given in such manner shall be effective on the date of receipt of
such communication or notice.
SECTION 18. Successors and Assigns.
This Facility Lease, including all agreements, covenants,
indemnities, representations and warranties, shall be binding upon and inure to
the benefit of the Lessor and its successors and permitted assigns, and the
Lessee and its successors and, to the extent permitted hereby, assigns.
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SECTION 19. Right to Perform for Lessee.
If the Lessee shall fail to make any payment of Rent to be
made by it, or shall fail to perform or comply with any of its other agreements
contained herein, or fail to make any payment to be made by it under any ANPP
Project Agreement, or shall fail to perform or comply with any of its other
agreements contained in any ANPP Project Agreement, either the Lessor or the
Owner Participant may, but shall not be obligated to, tender such payment, or
effect such performance or compliance, and the amount of such payment and the
amount of all costs and expenses (including, without limitation, attorneys' and
other professionals' fees and expenses) of the Lessor or the Owner Participant,
as the case may be, incurred in connection with such payment or the performance
of or compliance with such agreement, as the case may be, together with interest
thereon at the Penalty Rate, shall be deemed Supplemental Rent, payable by the
Lessee upon demand. In the event that the Lessor or the Owner Participant shall
cure any default by the Lessee under the ANPP Participation Agreement, then (so
long as an Event of Default has occurred and is continuing) the Lessor, together
with each other Person contributing to such cure, shall be entitled (to the full
extent enforceable in accordance with Applicable Law) to receive the Generation
Entitlement Share of the Lessee under the ANPP Participation Agreement (not
limited to Unit 1), with each contributor to receive a percentage of such
Generation Entitlement Share equal to the percentage of the cure contributed
thereby.
SECTION 20. Additional Covenants.
The Lessee agrees to comply with and to pay, as Supplemental
Rent, all amounts payable by it under the provisions of Section 13 of the
Participation Agreement and under the provisions of the Tax Indemnification
Agreement, which provisions are incorporated herein by this reference as fully
as if set forth in full at this place. The Lessee agrees to comply with its
covenants and agreements set forth in Sections 10(b), 14 and 16 of
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the Participation Agreement and Articles III, IV, V and VI of the Assignment and
Assumption which covenants and agreements are incorporated herein by this
reference as fully as if set forth in full at this place.
SECTION 21. Lease of Real Property Interest.
Pursuant to the Deed and the Assignment of Beneficial
Interest, the Lessee has sold to the Lessor the Real Property Interest. The
Lessor hereby grants to the Lessee a leasehold interest in the Real Property
Interest, such leasehold to be coterminous with the lease of the Undivided
Interest hereunder and to be at a rent per annum equal to 12.42% of the Real
Estate Investment payable by the Lessee to the Lessor in arrears in equal
semiannual installments on each Basic Rent Payment Date during the Lease Term.
SECTION 22. Amendments and Miscellaneous.
(a) Amendments in Writing. The terms of this Facility Lease
may not be waived, altered, modified, amended, supplemented or terminated in any
manner whatsoever except by written instrument signed by the Lessor and the
Lessee.
(b) Survival. (1) All indemnities, representations and
warranties contained in this Facility Lease and the other Transaction Documents
and the Financing Documents and in any agreement, document or certificate
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive, and continue in effect following, the execution and delivery of
this Facility Lease and the expiration or other termination of this Facility
Lease.
(2) The obligations of the Lessee to pay Supplemental Rent and
the obligations of the Lessee under Sections 5, 16, 19 and 20 hereof shall
survive the expiration or termination of this Facility Lease. The extension of
any applicable statute of limitations by the Owner Trustee, the Indenture
Trustee, the Lessee, the Owner Participant, the Loan Participant or any
6091.20.2898.47:1
- 44 -
<PAGE>
Indemnitee shall not affect such survival. The obligations of the Lessee under
Section 20 are expressly made for the benefit of, and shall be enforceable by,
any Indemnitee, separately or together, without declaring this Facility Lease to
be in default and notwithstanding any assignment by the Lessor of this Facility
Lease or any of its rights thereunder or any disposition of all or any part of
any interest in the Undivided Interest, the Real Property Interest, Unit 1 or
any other property referred to in this Facility Lease or in this Facility Lease
or any other Transaction Document or Financing Document. All payments required
to be made pursuant to Section 20 shall be made directly to, or as otherwise
requested by, the Indemnitee entitled thereto upon written demand by such
Indemnitee.
(c) Severability of Provisions. Any provision of this Facility
Lease which may be determined by competent authority to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforce-ability without invalidating the
remaining provisions hereof or thereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by Applicable Law, the Lessee hereby waives any provision of law which renders
any provision hereof prohibited or unenforceable in any respect.
(d) True Lease. This Facility Lease shall constitute an
agreement of lease and nothing herein or therein shall be construed as conveying
to the Lessee any right, title or interest in or to the Undivided Interest or
the Real Property Interest, except as lessee only.
(e) Original Lease. The single executed original of this
Facility Lease marked "THIS COUNTERPART IS THE ORIGINAL COUNTERPART" and
containing the receipt of the Indenture Trustee thereon shall be the "Original"
of this Facility Lease. To the extent that this Facility Lease constitutes
6091.20.2898.47:1
- 45 -
<PAGE>
chattel paper, as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction, no security interest in this Facility
Lease may be created through the transfer or possession of any counterpart other
than the "Original".
(f) Governing Law. This Facility Lease shall be governed by
and construed in accordance with the law of the State of New York, except to the
extent that pursuant to the law of the State of Arizona the law of the State of
Arizona is mandatorily applicable thereto.
(g) Headings. The division of this Facility Lease into
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 Facility Lease.
(h) Concerning the Owner Trustee. FNB is entering into this
Facility Lease solely as Owner Trustee under the Trust Agreement and not in its
individual capacity. Anything herein to the contrary notwithstanding, all and
each of the representations, war-ranties, undertakings and agreements herein
made on the part of the Owner Trustee are made and intended not as personal
representations, warranties, undertakings and agreements by or for the purpose
or with the intention of binding FNB personally but are made and intended for
the purpose of binding only the Trust Estate, and this Facility Lease is
executed and delivered by the Owner Trustee solely in the exercise of the powers
expressly conferred upon it as trustee under the Trust Agreement; and no
personal liability or responsibility is assumed hereunder by or shall at any
time be enforceable against FNB or any successor in trust or the Owner
Participant on account of any representations, warranty, undertaking or
agreement hereunder of the Owner Trustee, either expressed or implied, all such
personal liability, if any, being expressly waived by the Lessee, except that
the Lessee or any Person claiming by, through or under it, making claim
hereunder, may look to the Trust Estate for satisfaction of the same and the
6091.20.2898.47:1
- 46 -
<PAGE>
Owner Trustee or its successor in trust, as applicable, shall be personally
liable for its own gross negligence or willful misconduct. If a successor owner
trustee is appointed in accordance with the terms of the Trust Agreement, such
successor owner trustee shall, without any further act, succeed to all the
rights, duties, immunities and obligations of the Owner Trustee hereunder and
the predecessor owner trustee shall be released from all further duties and
obligations hereunder.
(i) Disclosure. Pursuant to Arizona Revised Statutes Section
33-401, the beneficiary of the Trust Agreement is the Owner Participant
described in Schedule 1 hereto. The address of the beneficiary is also therein
described. 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.
(j) Counterpart Execution. This Facility Lease may be executed
in any number of counterparts and by each of the parties hereto or thereto on
separate counterparts, all such counterparts together constituting but one and
the same instrument.
6091.20.2898.47:1
- 47 -
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Facility Lease to be duly executed in New York, New York by an officer thereunto
duly authorized.
THE FIRST NATIONAL BANK OF BOSTON, not in
its individual capacity, but solely as
Owner Owner Trustee under a Trust
Agreement, dated as of December 16, 1985,
with Burnham Leasing Corporation
By: /S/
Vice President
PUBLIC SERVICE COMPANY OF NEW
MEXICO,
By: /S/
Senior Vice President and
Chief Financial Officer
6091.BURNHAM.2898.47A:2
- 48 -
<PAGE>
State of New York )
) ss:
County of New York )
The foregoing instrument was acknowledged before me this 31st
day of December, 1985, by A.J. ROBISON, the Senior Vice President and Chief
Financial Officer of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico
corporation, on behalf of the
corporation.
/S/
Notary Public
State of New York )
) ss:
County of New York )
The foregoing instrument was acknowledged before me this 31st
day of December, 1985, by CLARK M. WHITCOMB, a Vice President of THE FIRST
NATIONAL BANK OF BOSTON, a national banking association, on behalf of the
banking association as trustee under that certain Trust Agreement dated as of
December 16, 1985.
/S/
Notary Public
6091.BURNHAM.2898.47A:2
<PAGE>
SCHEDULE 1
to
LEASE
OWNER PARTICIPANT INFORMATION
1. The Owner Participant is Burnham Leasing Corporation, a New
York corporation, whose address is 60 Broad Street, New York, New York 10004,
Attention: Chief Financial Officer.
2. The daily equivalent rate is .0242685% of Facility Cost.
3. The assumed interest rate on the Notes utilized in
determining the limitations set forth in Section 3(d) is 11.84%.
6091.BURNHAM.2898.47A:2
<PAGE>
SCHEDULE 2
TO LEASE
BASIC RENT PERCENTAGES
On each Basic Rent Payment Date the percentage of Facility Cost is 4.3683233%.
<PAGE>
SCHEDULE 4
to
LEASE
SCHEDULE OF SPECIAL CASUALTY VALUES
SCHEDULE 3
to
LEASE
SCHEDULE TO CASUALTY VALUES
Basic Basic
Rent Percentage Rent Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
---- ---- ---- ----
1/15/1986 104.9449929 1/15/2010 45.6329355
7/15/1986 104.9449929 7/15/2010 42.8476191
1/15/1987 106.7906349 1/15/2011 40.2065051
7/15/1987 108.3567602 7/15/2011 37.6968572
1/15/1988 109.6453406 1/15/2012 35.3513537
7/15/1988 110.7459963 7/15/2012 33.1926801
1/15/1989 111.6684070 1/15/2013 31.0385731
7/15/1989 112.4079070 7/15/2013 28.6298750
1/15/1990 112.9478299 1/15/2014 26.0153606
7/15/1990 113.2823292 7/15/2014 23.1718185
1/15/1991 113.3934703 1/15/2015 20,000000
7/15/1991 113.2872211
1/15/1992 112.9615662
7/15/1992 112.4099531
1/15/1993 111.6146188
7/15/1993 111.8178282
1/15/1994 113.2588791
7/15/1994 115.1747439
1/15/1995 116.4172103
7/15/1995 114.9036415
1/15/1996 112.4507038
7/15/1996 109.6691084
1/15/1997 106.9772870
7/15/1997 103.8909368
1/15/1998 100.9371133
7/15/1998 97.5501383
1/15/1999 95.3829528
7/15/1999 94.0642048
1/15/2000 91.7972204
7/15/2000 90.4161433
1/15/2001 88.0435117
7/15/2001 86.6035347
1/15/2002 84.1210666
7/15/2002 82.6204585
1/15/2003 80.0238785
7/15/2003 78.4609530
1/15/2004 75.7459084
7/15/2004 74.1190412
1/15/2005 71.2811124
7/15/2005 68.5579027
1/15/2006 66.2116454
7/15/2006 63.8258487
1/15/2007 61.3746389
7/15/2007 58.8892024
1/15/2008 56.3361083
7/15/2008 53.7482788
1/15/2009 51.0906065
7/15/2009 48.3977741
<PAGE>
Percentage Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
---- ---- ---- ----
30 JAN 1986 102.54722 30 DEC 1989 116.00042
30 FEB 1986 103.64809 30 JAN 1990 112.41168
30 MAR 1986 104.75644 30 FEB 1990 113.20895
30 APR 1986 105.85531 30 MAR 1990 114.00891
30 MAY 1986 106.90920 30 APR 1990 114.79379
30 JUN 1986 107.99805 30 MAY 1990 115.55060
30 JUL 1986 104.66690 30 JUN 1990 116.32934
30 AUG 1986 105.70480 30 JUL 1990 112.70049
30 SEP 1986 106.76439 30 AUG 1990 113.45689
30 OCT 1986 107.77067 30 SEP 1990 114.21556
30 NOV 1986 108.81131 30 OCT 1990 114.93740
30 DEC 1986 109.85732 30 NOV 1990 115.68063
30 JAN 1987 106.48278 30 DEC 1990 116.42596
30 FEB 1987 107.47676 30 JAN 1991 112.76362
30 MAR 1987 108.49187 30 FEB 1991 113.48483
30 APR 1987 109.48584 30 MAR 1991 114.20996
30 MAY 1987 110.44763 30 APR 1991 114.91859
30 JUN 1987 111.43881 30 MAY 1991 115.60346
30 JUL 1987 108.01763 30 JUN 1991 116.30691
30 AUG 1987 108.95994 30 JUL 1991 112.60692
30 SEP 1987 109.92276 30 AUG 1991 113.28852
30 OCT 1987 110.83991 30 SEP 1991 113.97163
30 NOV 1987 111.78590 30 OCT 1991 114.62245
30 DEC 1987 112.73605 30 NOV 1991 115.29131
30 JAN 1988 109.27090 30 DEC 1991 115.96152
30 FEB 1988 110.19466 30 JAN 1992 112.22826
30 MAR 1988 111.12455 30 FEB 1992 112.87585
30 APR 1988 112.03624 30 MAR 1992 113.52462
30 MAY 1988 112.92193 30 APR 1992 114.15949
30 JUN 1988 113.83156 30 MAY 1992 114.76960
30 JUL 1988 110.33408 30 JUN 1992 115.39710
30 AUG 1988 111.22450 30 JUL 1992 111.62095
30 SEP 1988 112.11852 30 AUG 1992 112.22479
30 OCT 1988 112.97559 30 SEP 1992 112.82939
30 NOV 1988 113.85615 30 OCT 1992 113.40186
30 DEC 1988 114.74020 30 NOV 1992 113.99113
30 JAN 1989 111.21711 30 DEC 1992 114.58097
30 FEB 1989 112.08135 30 JAN 1993 110.76709
30 MAR 1989 112.94895 30 FEB 1993 111.33238
30 APR 1989 113.80184 30 MAR 1993 111.89806
30 MAY 1989 114.62675 30 APR 1993 112.44941
30 JUN 1989 115.47466 30 MAY 1993 112.97597
30 JUL 1989 111.91523 30 JUN 1993 113.51859
30 AUG 1989 112.74245 30 JUL 1993 109.68773
30 SEP 1989 113.57265 30 AUG 1993 110.22027
30 OCT 1989 114.36596 30 SEP 1993 110.75290
30 NOV 1989 115.18177 30 OCT 1993 111.28561
30 NOV 1993
30 DEC 1993
<PAGE>
SCHEDULE 4
to
LEASE
SCHEDULE OF SPECIAL CASUALTY VALUES
30 NOV 1993 111.81840 30 JAN 1998 96.86932
30 DEC 1993 112.35127 30 FEB 1998 97.30108
30 JAN 1994 108.51231 30 MAR 1998 97.73297
30 FEB 1994 109.03561 30 APR 1998 98.16499
30 MAR 1994 109.55900 30 MAY 1998 98.59715
30 APR 1994 110.08248 30 JUN 1998 99.02943
30 MAY 1994 110.60604 30 JUL 1998 95.08740
30 JUN 1994 111.12969 30 AUG 1998 95.50515
30 JUL 1994 107.28128 30 SEP 1998 95.92304
30 AUG 1994 107.79490 30 OCT 1998 96.34107
30 SEP 1994 108.30862 30 NOV 1998 96.75923
30 OCT 1994 108.82242 30 DEC 1998 97.17753
30 NOV 1994 109.33632 30 JAN 1999 93.24199
30 DEC 1994 109.85031 30 FEB 1999 93.64041
30 JAN 1995 105.99200 30 MAR 1999 94.04822
30 FEB 1995 106.49549 30 APR 1999 94.45618
30 MAR 1995 106.99907 30 MAY 1999 94.88336
30 APR 1995 107.50275 30 JUN 1999 95.30138
30 MAY 1995 108.00652 30 JUL 1999 91.36876
30 JUN 1995 108.51040 30 AUG 1999 91.75200
30 JUL 1995 104.64171 30 SEP 1999 92.15473
30 AUG 1995 105.13459 30 OCT 1999 92.55760
30 SEP 1995 105.62756 30 NOV 1999 92.96063
30 OCT 1995 106.12063 30 DEC 1999 93.36381
30 NOV 1995 106.61380 30 JAN 2000 89.41386
30 DEC 1995 107.10708 30 FEB 2000 89.79616
30 JAN 1996 103.22754 30 MAR 2000 90.18837
30 FEB 1996 103.70929 30 APR 2000 90.58073
30 MAR 1996 104.19115 30 MAY 2000 90.99331
30 APR 1996 104.67311 30 JUN 2000 91.39628
30 MAY 1996 105.15518 30 JUL 2000 87.44946
30 JUN 1996 105.63736 30 AUG 2000 87.81585
30 JUL 1996 101.74645 30 SEP 2000 88.20275
30 AUG 1996 102.21656 30 OCT 2000 88.58982
30 SEP 1996 102.68678 30 NOV 2000 88.97705
30 OCT 1996 103.15711 30 DEC 2000 89.36446
30 NOV 1996 103.62755 30 JAN 2001 85.39946
30 DEC 1996 104.09811 30 FEB 2001 85.76492
30 JAN 1997 100.19529 30 MAR 2001 86.14081
30 FEB 1997 100.65320 30 APR 2001 86.51687
30 MAR 1997 101.11123 30 MAY 2001 86.91421
30 APR 1997 101.56938 30 JUN 2001 87.30144
30 MAY 1997 102.02764 30 JUL 2001 83.33981
30 JUN 1997 102.48602 30 AUG 2001 83.68859
30 JUL 1997 98.57073 30 SEP 2001 84.05895
30 AUG 1997 99.01587 30 OCT 2001 84.42950
30 SEP 1997 99.46114 30 NOV 2001 84.80023
30 OCT 1997 99.90652 30 DEC 2002 85.17115
30 NOV 1997 100.35203 30 JAN 2002 81.19045
30 DEC 1997 100.79767 30 FEB 2002 81.53831
30 JAN 1998 96.86932
<PAGE>
SCHEDULE 4
to
LEASE
SCHEDULE OF SPECIAL CASUALTY VALUES
30 MAR 2002 81.89715 30 APR 2006 63.09828
30 APR 2002 82.25618 30 MAY 2006 63.41309
30 MAY 2002 82.63761 30 JUN 2006 63.71494
30 JUN 2002 83.00841 30 JUL 2006 59.67209
30 JUL 2002 79.03131 30 AUG 2006 59.90959
30 AUG 2002 79.36168 30 SEP 2006 60.18114
30 SEP 2002 79.71478 30 OCT 2006 60.48094
30 OCT 2002 80.06807 30 NOV 2006 60.76741
30 NOV 2002 80.42157 30 DEC 2006 61.05437
30 DEC 2002 80.77528 30 JAN 2007 56.99607
30 JAN 2003 76.77818 30 FEB 2007 57.22714
30 FEB 2003 77.10766 30 MAR 2007 57.46705
30 MAR 2003 77.44869 30 APR 2007 57.75958
30 APR 2003 77.78994 30 MAY 2007 58.05516
30 MAY 2003 78.15476 30 JUN 2007 58.33713
30 JUN 2003 78.50841 30 JUL 2007 54.27558
30 JUL 2003 74.51517 30 AUG 2007 54.46990
30 AUG 2003 74.82632 30 SEP 2007 54.74005
30 SEP 2003 75.16138 30 OCT 2007 55.01992
30 OCT 2003 75.49667 30 NOV 2007 55.28580
30 NOV 2003 75.83218 30 DEC 2007 55.55220
30 DEC 2003 76.16792 30 JAN 2008 51.47450
30 JAN 2004 72.15371 30 FEB 2008 51.68218
30 FEB 2004 72.46399 30 MAR 2008 51.92020
30 MAR 2004 72.78644 30 APR 2008 52.17150
30 APR 2004 73.10912 30 MAY 2008 52.44706
30 MAY 2004 73.45662 30 JUN 2008 52.70833
30 JUN 2004 73.79237 30 JUL 2008 48.62731
30 JUL 2004 69.78229 30 AUG 2008 48.81749
30 AUG 2004 70.07337 30 SEP 2008 49.04536
30 SEP 2004 70.38961 30 OCT 2008 49.30450
30 OCT 2004 70.70610 30 NOV 2008 49.54894
30 NOV 2004 71.02284 30 DEC 2008 49.79396
30 DEC 2004 71.33983 30 JAN 2009 45.69606
30 JAN 2005 67.30778 30 FEB 2009 45.87938
30 FEB 2005 67.59802 30 MAR 2009 46.09461
30 MAR 2005 67.90107 30 APR 2009 46.32383
30 APR 2005 68.20439 30 MAY 2009 46.57857
30 MAY 2005 68.53381 30 JUN 2009 46.81831
30 JUN 2005 68.85090 30 JUL 2009 42.71705
30 JUL 2005 64.82101 30 AUG 2009 42.88209
30 AUG 2005 65.08662 30 SEP 2009 43.08677
30 SEP 2005 65.37871 30 OCT 2009 43.32435
30 OCT 2005 65.69764 30 NOV 2009 43.54650
30 NOV 2005 66.00389 30 DEC 2009 43.76927
30 DEC 2005 66.31059 30 JAN 2010 39.64990
30 JAN 2006 62.27094 30 FEB 2010 39.81258
30 FEB 2006 62.52446 30 MAR 2010 40.00605
30 MAR 2006 62.80539 30 APR 2010 40.21428
<PAGE>
SCHEDULE 4
to
LEASE
SCHEDULE OF SPECIAL CASUALTY VALUES
30 MAY 2010 40.44946 30 JUN 2014 17.82200
30 JUN 2010 40.66889 30 JUL 2014 13.69703
30 JUL 2010 36.54160 30 AUG 2014 13.71950
30 AUG 2010 36.75182 30 SEP 2014 13.84269
30 SEP 2010 36.96306 30 OCT 2014 14.00862
30 OCT 2010 37.21023 30 NOV 2014 14.15552
30 NOV 2010 37.44141 30 DEC 2014 14.30390
30 DEC 2010 37.67386 30 JAN 2015 14.45385
30 JAN 2011 33.56106 30 FEB 2015 10.36392
30 FEB 2011 33.78481
30 MAR 2011 34.01011
30 APR 2011 34.25218
30 MAY 2011 34.52503
30 JUN 2011 34.78171
30 JUL 2011 30.69470
30 AUG 2011 30.94344
30 SEP 2011 31.19440
30 OCT 2011 31.48591
30 NOV 2011 31.76102
30 DEC 2011 32.03866
30 JAN 2012 27.97434
30 FEB 2012 28.24479
30 MAR 2012 28.51811
30 APR 2012 28.81105
30 MAY 2012 29.13901
30 JUN 2012 29.45044
30 JUL 2012 25.42895
30 AUG 2012 25.66442
30 SEP 2012 25.94466
30 OCT 2012 26.26950
30 NOV 2012 26.57742
30 DEC 2012 26.88890
30 JAN 2013 22.87848
30 FEB 2013 23.01696
30 MAR 2013 23.25765
30 APR 2013 23.51922
30 MAY 2013 23.81622
30 JUN 2013 24.09586
30 JUL 2013 20.05318
30 AUG 2013 20.15899
30 SEP 2013 20.36659
30 OCT 2013 20.61801
30 NOV 2013 20.85150
30 DEC 2013 21.08759
30 JAN 2014 17.00080
30 FEB 2014 17.06193
30 MAR 2014 17.22429
30 APR 2014 17.40681
30 MAY 2014 17.62360
<PAGE>
Basic
Percentage Rent Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
---- ---- ---- ----
7/15/1986 104.3596781 1/15/2010 39.5550496
1/15/1987 106.1754379 7/15/2010 36.4594370
7/15/1987 107.7101553 1/15/2011 33.4921851
1/15/1988 108.9657244 7/15/2011 30.6397490
7/15/1988 110.0316834 1/15/2012 27.9339567
1/15/1989 110.9176260 7/15/2012 25.3966003
7/15/1989 111.6187962 1/15/2013 22.8444777
1/15/1990 112.1184324 7/15/2013 20.0174438
7/15/1990 112.4105882 1/15/2014 16.9632363
1/15/1991 112.4772241 7/15/2014 13.6575533
7/15/1991 112.3241974 1/15/2015 10.0000000
1/15/1992 111.9493769
7/15/1992 111.3460882
1/15/1993 110.4964402
7/15/1993 110.6425629
1/15/1994 112.0236126
7/15/1994 113.8764128
1/15/1995 115.0525952
7/15/1995 113.4693583
1/15/1996 110.9431956
7/15/1996 108.0846369
1/15/1997 105.3119231
7/15/1997 102.1405505
1/15/1998 99.0973640
7/15/1998 95.6164637
1/15/1999 93.3505577
7/15/1999 91.9280492
1/15/2000 89.5520069
7/15/2000 88.0563043
1/15/2001 85.5631951
7/15/2001 83.9965897
1/15/2002 81.3810284
7/15/2002 79.7405323
1/15/2003 76.9969225
7/15/2003 75.2794608
1/15/2004 72.4019905
7/15/2004 70.6044053
1/15/2005 67.5870427
7/15/2005 64.6752385
1/15/2006 62.1307583
7/15/2006 59.5366188
1/15/2007 56.8664297
7/15/2007 54.1508341
1/15/2008 51.3558306
7/15/2008 48.5137414
1/15/2009 45.5888287
7/15/2009 42.6151122
<PAGE>
EXHIBIT 28.1
<PAGE>
EXHIBIT B
When Recorded, Return to: Gregg R. Neilsen
Snell & Wilmer
3100 Valley Bank Center
Phoenix, Arizona 85073
CERTAIN RIGHTS OF THE LESSOR UNDER THE FACILITY LEASE AS AMENDED BY
THIS AMENDMENT NO. 1 THERETO HAVE BEEN ASSIGNED TO, AND ARE SUBJECT TO A
SECURITY INTEREST IN FAVOR OF, CHEMICAL BANK, AS INDENTURE TRUSTEE UNDER A TRUST
INDENTURE, MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS DATED AS OF
DECEMBER 16, 1985, AS AMENDED. THIS AMENDMENT NO. 1 HAS BEEN EXECUTED IN SEVERAL
COUNTERPARTS. SEE SECTION 3(f) OF THIS AMENDMENT NO. 1 FOR INFORMATION
CONCERNING THE RIGHTS OF HOLDERS OF VARIOUS COUNTERPARTS HEREOF.
THIS COUNTERPART IS NOT THE ORIGINAL COUNTERPART.
================================================================================
AMENDMENT NO. 1
Dated as of July 15, 1986
to
FACILITY LEASE
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
Lessor
and
PUBLIC SERVICE COMPANY OF NEW MEXICO,
Lessee
================================================================================
Original Facility Lease recorded December 31, 1985,
as Instrument No. 85-623268, re-recorded April 17,
1986, as Instrument No. 86-187558 and confirmed by
document recorded April 25, 1986, as Instrument
No. 86-203239, in Maricopa County, Arizona Recorder's
Office.
================================================================================
<PAGE>
AMENDMENT NO. 1 dated as of July 15, 1986 (Amendment No. 1),
to the Facility Lease dated as of December 16, 1985, between THE FIRST NATIONAL
BANK OF BOSTON, a national banking association, not in its individual capacity,
but solely as Owner Trustee under a Trust Agreement, dated as of December 16,
1985, with Burnham Leasing Corporation (the Lessor), and PUBLIC SERVICE COMPANY
OF NEW MEXICO, a New Mexico corporation (the Lessee).
W I T N E S S E T H :
WHEREAS, the Lessee and the Lessor have heretofore entered
into a Facility Lease dated as of December 16, 1985 (the Facility Lease),
providing for the lease by the Lessor to the Lessee of the Undivided Interest
and the Real Property Interest;
WHEREAS, Section 3(e) of the Facility Lease provides for an
adjustment to Basic Rent and to the schedules of Casualty Values, Special
Casualty Values and Termination Values in the event, among other things, that
the Fixed Rate Note is issued; and
WHEREAS, the Fixed Rate Notes are being issued pursuant to
Supplemental Indenture No. 1, dated as of July 15, 1986, to the Indenture;
NOW, THEREFORE, in consideration of the premises and of other
good and valuable consideration, the 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 or in the recitals shall have the meanings assigned to
such terms in Appendix A and Schedule 1 to the Facility Lease.
SECTION 2. Amendments.
(a) Section 3(a)(ii) of the Facility Lease is amended to read
in its entirety as follows:
"(ii) (1) on July 15, 1986 an amount equal to 4.3683233% of the
Facility Cost and (2) on January 15, 1987 and on each Basic Rent
- 1 -
<PAGE>
Payment Date thereafter to and including January 15, 2015, an amount equal to
4.57322% of Facility Cost; and".
(b) Section 10(a) of the Facility Lease is amended to read in
its entirety as follows:
"(a) Required Insurance. The Lessee will use its best efforts to cause
the Operating Agent to carry and maintain insurance required under the ANPP
Participation Agreement and will make all payments required of the Lessee under
the ANPP Participation Agreement in respect of such insurance. The Lessee will
at all times maintain, directly or through the Operating Agent, policies of
casualty and liability insurance with respect to the Undivided Interest and the
Real Property Interest in such amounts and with such coverage as shall be
adequate in accordance with prudent utility practice. Any policies of insurance
in respect of destruction, damage, loss, theft or other casualty to the
Undivided Interest, the Real Property Interest, Unit 1 or any part thereof shall
name the Lessor (and, to the extent practicable, the Owner Participant) as
additional insured, as its interest (or their interests) may appear, and any
policies with respect to nuclear liability insurance with respect to the
Undivided Interest, the Real Property Interest, Unit 1, or any part thereof,
shall include all Indemnities as "insureds" or through endorsement; provided,
however, that if the Operating Agent, as trustee, shall become the loss payee
under any policy of insurance constituting Project Insurance, then the Lessor
and the Owner Participant shall be and be made beneficiaries of the trust
arrangement under which the Operating Agent acts as trustee. The Lessee shall,
- 2 -
<PAGE>
on or before March 1 of each year, commencing March 1, 1987, furnish to the
Lessor and the Owner Participant (A) a report signed by the broker or brokers
for the PVNGS insurance (or if insurance is placed directly by the Operating
Agent, a certificate signed by the Operating Agent) (i) showing the insurance
then maintained by the ANPP Participants with respect to PVNGS, (ii) stating
that no premiums are then delinquent, and (iii) stating that the insurance
maintained by the ANPP Participants with respect to PVNGS is in accordance with
the terms of (1) the ANPP Participation Agreement and (2) this Section 10, (B) a
report signed by the broker or brokers for the Lessee's insurance (of if
insurance is placed directly by the Lessee, a certificate signed by the Lessee)
showing the separate insurance, if any, then maintained by the Lessee with
respect to its interest in PVNGS and stating that no premium under such
insurance are delinquent; (C) a certificate signed by the Lessee stating that
the insurance maintained by the ANPP Participants and by the Lessee, identified
on the reports to be delivered pursuant to clauses (A) and (B), is in accordance
with prudent utility practice within the nuclear industry, the ANPP
Participation Agreement and this Section 10; and (D) upon the request of the
Lessor or the Owner Participant, copies (to the extent permitted by the issuers
of such policies) of policies so maintained. Any report by an insurance broker
with respect to clause (A)(iii)(1) may be made in reliance upon a schedule
provided by the Lessee (a copy of which shall be attached) identifying the
insurance (by coverage, limits, insureds and other pertinent details) required
to be maintained under the ANPP Participation Agreement. Any report with respect
to clause (A)(ii)(2) may be made in reliance upon a similar schedule provided by
- 3 -
<PAGE>
the Lessee (a copy of which shall be attached) identifying the insurance
required to be maintained under this Section 10. All insurance proceeds paid in
respect of damage, destruction, loss, theft or other casualty to the Undivided
Interest or the Real Property Interest shall be applied as provided in Section
9(g), (h) or (i), as the case may be, subject, however, to any priority
allocations of such proceeds to decontamination and debris removal set forth in
the insurance policies or required under Applicable Law. In the event that
either the Operating Agent or the Lessee delivers a certificate pursuant to
clause (A) or (B) of the foregoing, the Owner Participant shall be entitled to
receive (if it so requests and if the insurer will issue the same) a report from
any insurer listed in such certificate."
(c) Section 16(a)(v) of the Facility Lease is hereby amended
to insert the words "may, if it shall so elect in its sole discretion," in lieu
of the word "shall" in the parenthetical phrase first preceding clause A of
Section 16(a)(v).
(d) Schedule 3 to the Facility Lease (Schedule of Casualty
Values) is hereby replaced with Schedule 1 hereto.
(e) Schedule 4 to the Facility Lease (Schedule of Special
Casualty Values) is hereby replaced with Schedule 2 hereto.
(f) Schedule 5 to the Facility Lease (Schedule of Termination
Values) is hereby replaced with Schedule 3 hereto.
(g) Schedule 2 to the Facility Lease (Basic Rent Percentage)
is hereby deleted in its entirety.
- 4 -
<PAGE>
SECTION 3. Miscellaneous.
(a) Partial Prepayment of Rent. In accordance with the last
sentence of Section 3(a) of the Facility Lease, the Lessee shall pay an amount
equal to $42,191.78 on July 17, 1986, such amount (i) being equal to the
interest payment due on the Initial Series Note on such date and (ii) to be
credited against Basic Rent due on January 15, 1987.
(b) Effective Date of Amendments. The amend- ments set forth
in Section 2 hereof shall be and become effective upon the execution hereof by
the parties hereto.
(c) Counterpart Execution. This Amendment No. 1 may be
executed in any number of counterparts and by each of the parties hereto on
separate counterparts; all such counterparts shall together constitute but one
and the same instrument.
(d) Governing Law. This Amendment No. 1 has been negotiated
and delivered in the State of New York and shall be governed by, and be
construed in accordance with, the laws of the State of New York, except to the
extent that pursuant to the law of the State of Arizona such law is mandatorily
applicable hereto.
(e) 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.
(f) Amendment No. 1. The single executed orig- inal of this
Amendment No. 1 marked "THIS COUNTERPART IS THE ORIGINAL COUNTERPART" and
containing the receipt of the Indenture Trustee thereon shall be the "Original"
- 5 -
<PAGE>
of this Amendment No. 1. To the extent that this Amendment No. 1 constitutes
chattel paper, as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction, no security interest in this Amendment
No. 1 may be created or continued through the transfer or possession of any
counterpart other than the "Original".
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 1 to Facility Lease to be duly executed in New York, New York by
an officer thereunto duly authorized.
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
PUBLIC SERVICE COMPANY OF NEW
MEXICO,
By: _______________________________
Vice President and Corporate
Controller
- 6 -
<PAGE>
State of New York )
) ss.
County of New York )
The foregoing instrument was acknowledged before me this 16th
day of July, by B. D. LACKEY, the Vice President and Corporate Controller of
PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation, on behalf of the
corporation.
-------------------------------
Notary Public
State of New York )
) ss.
County of New York )
The foregoing instrument was acknowledged before me this 16th
day of July, by _____________________, an Authorized Officer of THE FIRST
NATIONAL BANK OF BOSTON, a national banking association, on behalf of the
banking association as trustee under that certain Trust Agreement dated as of
December 16, 1985 with Burnham Leasing Corporation.
-------------------------------
Notary Public
<PAGE>
SCHEDULE
to
AMENDMENT NO. 1
Basic Basic
Rent Percentage Rent Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
---- ---- ---- ----
7/15/1986 106.6269350 7/15/2005 72.4819062
1/15/1987 108.4620154 1/15/2006 70.1272653
7/15/1987 110.0191648 7/15/2006 67.7223143
1/15/1988 111.3308106 1/15/2007 65.2424137
7/15/1988 112.4699820 7/15/2007 62.7159973
1/15/1989 113.4394230 1/15/2008 60.1110508
7/15/1989 114.2371946 7/15/2008 57.4576292
1/15/1990 114.8476467 1/15/2009 54.7218716
7/15/1990 115.2657844 7/15/2009 51.9355999
1/15/1991 115.4747706 1/15/2010 49.0630858
7/15/1991 115.4811581 7/15/2010 46.1380045
1/15/1992 115.2837367 1/15/2011 43.1255891
7/15/1992 114.8727613 7/15/2011 40.2351879
1/15/1993 114.2315094 1/15/2012 37.4545358
7/15/1993 113.3518165 7/15/2012 34.8021269
1/15/1994 114.2544464 1/15/2013 32.3125759
7/15/1994 116.2447321 7/15/2013 29.6407060
1/15/1995 117.5625418 1/15/2014 26.7123360
7/15/1995 116.1352724 7/15/2014 23.5329689
1/15/1996 113.7700741 1/15/2015 20.00000000
7/15/1996 111.0905234
1/15/1997 108.5017094
7/15/1997 105.5182863
1/15/1998 102.6512304
7/15/1998 100.7617481
1/15/1999 98.6890884
7/15/1999 97.4270097
1/15/2000 95.2439805
7/15/2000 93.9169144
1/15/2001 91.6175245
7/15/2001 90.2230831
1/15/2002 87.8022117
7/15/2002 86.3380175
1/15/2003 83.7888657
7/15/2003 82.2508222
1/15/2004 79.5667924
7/15/2004 77.9527950
1/15/2005 75.1293462
<PAGE>
SCHEDULE 2
to
AMENDMENT NO. 1
Basic Basic
Rent Percentage Rent Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
---- ---- ---- ----
12/30/1985 103.0588289 5/30/1989 116.4477567
1/30/1986 103.7923344 6/30/1989 117.3018730
2/30/1986 104.8971263 7/30/1989 113.6020990
3/30/1986 105.9917542 8/30/1989 114.4759270
4/30/1986 107.0426922 9/30/1989 115.3137944
5/30/1986 108.1278120 10/30/1989 116.1738092
6/30/1086 109.1610390 11/30/1989 117.0367257
7/30/1986 106.4046445 12/30/1989 117.8635975
8/30/1086 107.4943009 1/30/1990 114.1360496
9/30/1986 108.5322101 2/30/1990 114.9817059
10/30/1986 109.6035084
11/30/1986 110.6800137
12/30/1986 111.7037517
1/30/1987 108.1973982
2/30/1987 109.2430627
3/30/1987 110.2680052
4/30/1987 111.2613874
5/30/1987 112.2835284
6/30/1987 113.2612975
7/30/1987 109.6713452
8/30/1987 110.6691026
9/30/1987 111.6223008
10/30/1987 112,6037248
11/30/1987 113.5892757
12/30/1987 114.5301317
1/30/1988 110.9230965
2/30/1988 111.8909093
3/30/1988 112.8409945
4/30/1988 113.7658191
5/30/1988 114.7141103
6/30/1988 115.6262660
7/30/1988 111.9856774
8/30/1988 112.9194747
9/30/1988 113.8172844
10/30/1988 114.7381525
11/30/1988 115.6625315
12/30/1988 116.5508531
1/30/1989 112.8859043
2/30/1989 113.7950233
3/30/1989 114.6898951
4/30/1989 115.5575279
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO UNIT 1
Basic Basic Basic
Rent Percentage Rent Percentage Rent Percentage
Payment of Facility Payment Facility Payment of Facility
Date Cost Date Cost Date Cost
---- ---- ---- ---- ---- ----
12/30/2002 84.1549965 3/30/2007 60.8010191 6/30/2011 37.2438571
1/30/2002 80.2852074 4/30/2007 61.1255136 7/30/2011 32.9061843
2/30/2003 80.6651963 5/30/2007 61.4365804 8/30/2011 33.1276222
3/30/2003 80.7182764 6/30/2007 61.7764532 9/30/2011 33.3880555
4/30/2003 81.1219511 7/30/2007 57.4524084 10/30/2011 33.6315938
5/30/2003 81.5148273 8/30/2007 57.7307275 11/30/2011 33.8768170
6/30/2003 81.9306252 9/30/2007 58.0382460 12/30/2011 34.1616107
7/30/2002 78.5870581 10/30/2007 58.3319272 1/30/2012 29.8377510
8/30/2003 78.9602796 11/30/2007 58.6260648 2/30/2012 30.0727675
9/30/2003 78.4586946 12/30/2007 58.9497026 3/30/2012 30.3261358
10/30/2003 78.8331087 1/30/2008 54.6183102 4/30/2012 30.6131522
11/30/2003 79.2077209 2/30/2008 54.8827187 5/30/2012 30.8829984
12/30/2003 79.6055938 3/30/2008 55.1601300 6/30/2012 31.1950184
1/30/2004 75.7324981 4/30/2008 55.4614318 7/30/2012 26.8972285
2/30/2004 76.0917968 5/30/2008 55.7485590 8/30/2012 27.1582177
3/30/2004 76.1066169 6/30/2008 56.0661201 9/30/2012 27.4635357
4/30/2004 76.4909708 7/30/2008 51.7146639 10/30/2012 27.7513591
5/30/2004 76.8639177 8/30/2008 51.9672357 11/30/2012 28.0422598
6/30/2004 77.2610948 9/30/2008 52.2506558 12/30/2012 28.3781693
7/30/2004 73.9447211 10/30/2008 52.5194695 1/30/2013 23.9710573
8/30/2004 74.2969169 11/30/2008 52.7887736 2/30/2013 24.2071394
9/30/2004 73.7250314 12/30/2008 53.0892439 3/30/2013 24.4638829
10/30/2004 74.0785035 1/30/2009 48.7301015 4/30/2013 24.7568327
11/30/2004 74.4321905 2/30/2009 48.9680452 5/30/2013 25.0318253
12/30/2004 74.8104651 3/30/2009 49.2197313 6/30/2013 25.3523356
1/30/2005 70.9362855 4/30/2009 49.4966581 7/30/2013 20.8753173
2/30/2005 71.2738234 5/30/2009 49.7586230 8/30/2013 21.0756993
3/30/2005 71.2459504 6/30/2009 50.0527397 9/30/2013 21.3207056
4/30/2005 71.6099603 7/30/2009 45.6724792 10/30/2013 21.5471233
5/30/2005 71.9619216 8/30/2009 45.8979902 11/30/2013 21.7759750
6/30/2005 72.3394936 9/30/2009 46.1560906 12/30/2013 22.0497917
7/30/2005 68.0730056 10/30/2009 46.3987735 1/30/2014 17.5254847
8/30/2005 68.3991238 11/30/2009 46.6419836 2/30/2014 17.6779874
9/30/2005 68.7513806 12/30/2009 46.9181187 3/30/2014 17.8508931
10/30/2005 69.0912309 1/30/2010 42.5298259 4/30/2014 18.0586319
11/30/2005 69.4314766 2/30/2010 42.7399638 5/30/2014 18.2473113
12/30/2005 69.7981485 3/30/2010 42.9646252 6/30/2014 18.4804514
1/30/2006 65.5182775 4/30/2010 43.2159533 7/30/2014 13.9149576
2/30/2006 65.8318202 5/30/2010 43.4514896 8/30/2014 14.0257567
3/30/2006 66.1569719 6/30/2010 43.7209919 9/30/2014 14.1800593
4/30/2006 66.5035386 7/30/2010 39.3115246 10/30/2014 14.3146384
5/30/2006 66.8373860 8/30/2010 39.5089879 11/30/2014 14.4505026
6/30/2006 67.1984976 9/30/2010 39.7408968 1/15/2015 10.00000000
7/30/2006 62.9005129 10/30/2010 39.9565359
8/30/2006 63.2033238 11/30/2010 40.1727495
9/30/2006 63.5337717 12/30/2010 40.4237658
10/30/2006 63.8511120 1/30/2011 36.0685335
11/30/2006 64.1688770 2/30/2011 36.2725758
12/30/2006 64.5145639 3/30/2011 36.4924178
1/30/2007 60.2095553 4/30/2011 36.7415607
2/30/2007 60.4991358 5/30/2011 36.9741664
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO UNIT 1
Basic Basic Basic
Rent Percentage Rent Percentage Rent Percentage
Payment of Facility Payment of Facility Payment of Facility
Date Cost Date Cost Date Cost
---- ---- ---- ---- ---- ----
3/30/1990 115.8127529 6/30/1994 118.7185007 9/30/1998 98.7191253
4/30/1990 116.6164370 7/30/1994 114.7053342 10/30/1998 99.1836346
5/30/1990 117.4417493 8/30/1994 115.2593247 11/30/1998 99.6482756
6/30/1990 118.2309505 9/30/1994 117.0587606 12/30/1998 100.1305252
7/30/1990 114.4650598 10/30/1994 117.6129279 1/30/1999 96.2683714
8/30/1990 115.2718567 11/30/1994 118.1671845 2/30/1999 96.7212981
9/30/1990 116.0426987 12/30/1994 119.9634413 3/30/1999 96.9133184
10/30/1990 116.8346756 1/30/1995 115.9405816 4/30/1999 97.3851756
11/30/1990 117.6288686 2/30/1995 116.4850345 5/30/1999 97.8483679
12/30/1990 118.3870062 3/30/1995 117.5872129 6/30/1999 98.3299062
1/30/1991 114.5894174 4/30/1995 117.7524901 7/30/1999 94.8909132
2/30/1991 115.3640914 5/30/1995 118.2972203 8/30/1999 95.3382772
3/30/1991 116.1237373 6/30/1995 118.4608819 9/30/1999 95.0840806
4/30/1991 116.8602001 7/30/1995 114.4272433 10/30/1999 95.5323608
5/30/1991 117.6150972 8/30/1995 114.9617173 11/30/1999 95.9807840
6/30/1991 118.3382255 9/30/1995 114.9557537 12/30/1999 96.4478272
7/30/1991 114.5027974 10/30/1995 115.4904197 1/30/2000 92.5846993
8/30/1991 115.2391186 11/30/1995 116.0251828 2/30/2000 93.0207655
9/30/1991 115.9438590 12/30/1995 116.0157395 3/30/2000 93.1798883
10/30/1991 116.6665461 1/30/1996 111.9723237 4/30/2000 93.6359865
11/30/1991 117.3907609 2/30/1996 112.4963634 5/30/2000 94.0829283
12/30/1991 118.0833047 3/30/1996 112.8154630 6/30/2000 94.5492687
1/30/1992 114.2162646 4/30/1996 112.7730131 7/30/2000 91.1324130
2/30/1992 114.9202294 5/30/1996 113.2973541 8/30/2000 91.5626405
3/30/1992 115.6107262 6/30/1996 113.2531361 9/30/2000 91.2511704
4/30/1992 116.2770454 7/30/1996 109.1992437 10/30/2000 91.6823733
5/30/1992 116.9607136 8/30/1996 109.7123720 11/30/2000 92.1137312
6/30/1992 117.6127239 9/30/1996 109.6335828 12/30/2000 92.5647764
7/30/1992 113.7043410 10/30/1996 110.1469197 1/30/2001 88.6994113
8/30/1992 114.3663954 11/30/1996 110.6603621 2/30/2001 89.1177331
9/30/1992 114.9970243 12/30/1996 110.5777674 3/30/2001 89.2434354
10/30/1992 115.6444469 1/30/1997 106.5121035 4/30/2001 89.6829422
11/30/1992 116.2926665 2/30/1997 107.0122704 5/30/2001 90.1127742
12/30/1992 116.9093610 3/30/1997 107.2543773 6/30/2001 90.5631159
1/30/1993 112.9649228 4/30/1997 107.1309959 7/30/2001 87.1690624
2/30/1993 113.5903921 5/30/1997 107.6314901 8/30/2001 87.5812494
3/30/1993 114.2020066 6/30/1997 107.5058970 9/30/2001 87.2100140
4/30/1993 114.7894113 7/30/1997 103.4261335 10/30/2001 87.6232475
5/30/1993 115.3929380 8/30/1997 103.9126619 11/30/2001 88.0366492
6/30/1993 115.9649496 9/30/1997 103.7441158 12/30/2001 88.4708653
7/30/1993 111.9749265 10/30/1997 104.2308709 1/30/2002 84.6032660
8/30/1993 112.5541938 11/30/1997 104.7177404 2/30/2002 85.0029110
9/30/1993 113.7975464 12/30/1997 104.5444217 3/30/2002 85.0933045
10/30/1993 114.3695393 1/30/1998 100.4521334 4/30/2002 85.5153514
11/30/1993 114.9416143 2/30/1998 100.9243217 5/30/2002 85.9271766
12/30/1993 116.7990391 3/30/1998 101.1115772 6/30/2002 86.3606848
1/30/1994 112.7942485 4/30/1998 100.9416046 7/30/2002 82.9915632
2/30/1994 113.3573574 5/30/1998 101.4147395 8/30/2002 83.3847667
3/30/1994 114.4969708 6/30/1998 101.9049255 9/30/2002 82.9496808
4/30/1994 116.3267919 7/30/1998 98.4546107 10/30/2002 83.3439963
5/30/1994 116.8901562 8/30/1998 98.9182646 11/30/2002 83.7384943
<PAGE>
SCHEDULE 3
to
AMENDMENT NO. 1
SCHEDULE OF TERMINATION VALUES
Basic Basic
Rent Percentage Rent Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
- ---- ---- ---- ----
7/15/1986 105.6802338 7/15/2005 67.9242911
1/15/1987 107.4753404 1/15/2006 65.3772083
7/15/1987 108.9908282 7/15/2006 62.7716897
1/15/1988 110.2590532 1/15/2007 60.0827526
7/15/1988 111.3529705 7/15/2007 57.3384734
1/15/1989 112.2752465 1/15/2008 54.5064650
7/15/1989 113.0238617 7/15/2008 51.6163938
1/15/1990 113.5830816 1/15/2009 48.6339944
7/15/1990 113.9478241 7/15/2009 45.5906667
1/15/1991 114.1011603 1/15/2010 42.4502425
7/15/1991 114.0495482 7/15/2010 39.2459388
1/15/1992 113.7916781 1/15/2011 35.9425111
7/15/1992 113.3177017 7/15/2011 32.7488097
1/15/1993 112.6107885 1/15/2012 29.6520508
7/15/1993 111.6626619 7/15/2012 26.6701878
1/15/1994 112.4939685 1/15/2013 23.8372717
7/15/1994 114.4099193 7/15/2013 20.8075384
1/15/1995 115.6502554 1/15/2014 17.5061945
7/15/1995 114.1422412 7/15/2014 13.9381049
1/15/1996 111.6928886 1/15/2015 10.00000000
7/15/1996 108.9256303
1/15/1997 106.2454052
7/15/1997 103.1667114
7/15/1998 100.2003619
1/15/1998 98.2073936
7/15/1999 96.0268782
1/15/1999 94.6523896
7/15/2000 92.3522041
1/15/2000 90.9030350
7/15/2001 88.4763863
1/15/2001 86.9493125
7/15/2002 84.3902087
1/15/2002 82.7819452
7/15/2003 80.0826409
1/15/2003 78.3881048
7/15/2004 75.5409746
1/15/2004 73.7569900
7/15/2005 70.7563765
<PAGE>
EXHIBIT 28.1
<PAGE>
When Recorded, Return to: Gregg R. Neilsen
Snell & Wilmer
3100 Valley Bank Center
Phoenix, Arizona 85073
CERTAIN RIGHTS OF THE LESSOR UNDER THE FACILITY LEASE AS HERETOFORE
AMENDED AND AS AMENDED BY THIS AMENDMENT NO. 2 THERETO HAVE BEEN ASSIGNED TO,
AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, CHEMICAL BANK, AS INDENTURE
TRUSTEE UNDER A TRUST INDENTURE, MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF
RENTS DATED AS OF DECEMBER 16, 1985, AS AMENDED. THIS AMENDMENT NO. 2 HAS BEEN
EXECUTED IN SEVERAL COUNTERPARTS. SEE SECTION 3(e) OF THIS AMENDMENT NO. 2 FOR
INFORMATION CONCERNING THE RIGHTS OF HOLDERS OF VARIOUS COUNTERPARTS HEREOF AND
OF THE FACILITY LEASE.
THIS COUNTERPART IS NOT THE ORIGINAL COUNTERPART.
================================================================================
AMENDMENT NO. 2
Dated as of November 18, 1986
to
FACILITY LEASE
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
Lessor
and
PUBLIC SERVICE COMPANY OF NEW MEXICO,
Lessee
================================================================================
Original Facility Lease recorded December 31, 1985,
as Instrument No. 85-623268, re-recorded April 17,
1986, as Instrument No. 86-187558 confirmed by docu-
ment recorded April 25, 1986, as Instrument No.
86-203239, and amended by Amendment No. 1 thereto
recorded July 17, 1986, as Instrument No. 86-367462,
in Maricopa County, Arizona Recorder's Office.
================================================================================
6091.BURNHAMU1.DEBT.71:1
<PAGE>
AMENDMENT NO. 2 dated as of November 18, 1986 (Amendment No.
2), to the Facility Lease dated as of December 16, 1985, as heretofore amended
between THE FIRST NATIONAL BANK OF BOSTON, a national banking association, not
in its individual capacity, but solely as Owner Trustee under a Trust Agreement,
dated as of December 16, 1985, with Burnham Leasing Corporation (the Lessor),
and PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation (the Lessee).
W I T N E S S E T H :
WHEREAS, the Lessee and the Lessor have heretofore entered
into a Facility Lease dated as of December 16, 1985 as heretofore amended (the
Facility Lease), providing for the lease by the Lessor to the Lessee of the
Undivided Interest and the Real Property Interest;
WHEREAS, Section 3(e) of the Facility Lease provides for an
adjustment to Basic Rent and to the schedules of Casualty Values, Special
Casualty Values and Termination Values in the event, among other things, that a
Releveraging Note is issued; and
WHEREAS, a Releveraging Note is being issued pursuant to
Supplemental Indenture No. 2 dated as of November 18, 1986, to the Indenture;
WHEREAS, Section 3(d) of the Facility Lease provides for an
adjustment to Basic Rent and to the schedules of Casualty Values, Special
Casualty Values and Termination Values in the event of a Change in Tax Law;
WHEREAS, a Change in Tax Law has occurred; and
WHEREAS, pursuant to Amendment No. 2 to the Participation
Agreement and the Indenture, the Trustee has consented to this Amendment No. 2;
NOW, THEREFORE, in consideration of the premises and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
6091.BURNHAMU1.DEBT.71:1
- 1 -
<PAGE>
SECTION 1. Definitions.
For purposes hereof, capitalized terms used herein and not
otherwise defined herein or in the recitals shall have the meanings assigned to
such terms in Appendix A to the Facility Lease.
SECTION 2. Amendments.
(a) Section 3(a)(ii) of the Facility Lease is amended to read
in its entirety as follows:
"(ii) (1) on July 15, 1986 an amount equal to 4.3683233% of
Facility Cost and (2) on January 15, 1987 and on each Basic Rent
Payment Date thereafter to and including January 15, 2015, an amount
equal to 4.70354% of Facility Cost; and".
(b) Section 3(e)(iii) of the Facility Lease is hereby amended
to replace "1.1% of the Purchase Price" with "1.7% of the Purchase Price".
(c) Section 3(e)(iv) of the Facility Lease is hereby amended
(x) to insert "(except for a change in items 4, 5, 8 (as to the basis for
amortization of Transaction Expenses) 15, 16 and 18 that arises from a change in
tax law; provided, however, that this exception will not limit the effect of
Section 3(d) hereof)" immediately following the word "change" and (y) to insert
the phrase "Current Pricing Assumptions" in lieu of the phrase "pricing
assumptions set forth in Schedule 2 to the Participation Agreement".
(d) Section 3(e) of the Facility Lease is hereby amended to
insert at the end thereof the following new sentence: "Current Pricing
Assumptions shall mean the assumptions attached to the letter from the Lessee to
the Owner Participant dated November 25, 1986, as such letter may be replaced
from time to time with the consent of the Owner Participant."
(e) Schedule 1 to Amendment No. 1 to the Facility Lease
(Schedule of Casualty Values), is hereby replaced with Schedule 1 hereto.
(f) Schedule 2 to Amendment No. 1 to the Facility Lease
(Schedule of Special Casualty Values), is hereby replaced with Schedule 2
hereto.
6091.BURNHAMU1.DEBT.71:1
- 2 -
<PAGE>
(g) Schedule 3 to Amendment No. 1 to the Facility Lease
(Schedule of Termination Values), is hereby replaced with Schedule 3 hereto.
SECTION 3. Miscellaneous.
(a) Effective Date of Amendments. The amend- ments set forth
in Section 2 hereof shall be and become effective upon the execution hereof by
the parties hereto.
(b) Counterpart Execution. This Amendment No. 2 may be
executed in any number of counterparts and by each of the parties hereto on
separate counterparts; all such counterparts shall together constitute but one
and the same instrument.
(c) Governing Law. This Amendment No. 2 has been negotiated
and delivered in the State of New York and shall be governed by, and be
construed in accordance with, the laws of the State of New York, except to the
extent that pursuant to the law of the State of Arizona such law is mandatorily
applicable hereto.
(d) 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.
(e) Amendment No. 2. The single executed orig- inal of this
Amendment No. 2 marked "THIS COUNTERPART IS THE ORIGINAL COUNTERPART" and
containing the receipt of the Indenture Trustee thereon shall be the "Original"
of this Amendment No. 2. To the extent that the Facility Lease constitutes
chattel paper, as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction, no security interest in the Facility
Lease as amended by this Amendment No. 2 may be created or continued through the
transfer or possession of any counterpart of this Amendment No. 2 other than the
"Original".
(f) The Facility Lease. The Facility Lease, as amended, is a
lease of the property described in and conveyed to the Lessor by (i) the Deed
6091.BURNHAMU1.DEBT.71:1
- 3 -
<PAGE>
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 an 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, which property is the
Undivided Interest and the Real Property Interest subject to the Facility Lease.
6091.BURNHAMU1.DEBT.71:1
- 4 -
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 2 to Facility Lease to be duly executed in New York, New York by
an officer thereunto duly authorized.
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: /S/
Authorized Officer
PUBLIC SERVICE COMPANY OF NEW
MEXICO,
By: _______________________________
B.D. Lackey
Vice President and
Corporate Controller
6091.BURNHAMU1.DEBT.71:1
- 5 -
<PAGE>
State of New York )
) ss.
County of New York )
The foregoing instrument was acknowledged before me this 24th
day of November, 1986, by B.D. LACKEY, the Vice President and Corporate
Controller of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation, on
behalf of the corporation.
/S/ Delia T. Santiago
Notary Public
State of New York )
) ss.
County of New York )
The foregoing instrument was acknowledged before me this 16th
day of November, 1986 by Martin P. Henry, an Assistant Vice President of THE
FIRST NATIONAL BANK OF BOSTON, a national banking association, on behalf of the
banking association as trustee under that certain Trust Agreement dated as of
December 16, 1985 with Burnham Leasing Corporation.
/S/ David A. Spivak
Notary Public
6091.BURNHAMU1.DEBT.71:1
<PAGE>
SCHEDULE 1
to
AMENDMENT NO. 2
Basic Basic
Rent Percentage Rent Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
---- ---- ---- ----
7/15/1986 106.4518467 1/15/2005 72.3307960
1/15/1987 105.4650524 7/15/2005 70.4213019
7/15/1987 106.5112367 1/15/2006 68.4489361
1/15/1988 104.0277290 7/15/2006 66.4145594
7/15/1988 104.6099981 1/15/2007 64.2963730
1/15/1989 105.0871009 7/15/2007 62.1154375
7/15/1989 105.4593212 1/15/2008 59.8430745
1/15/1990 105.7172712 7/15/2008 57.5008480
7/15/1990 105.8582489 1/15/2009 55.0587786
1/15/1991 105.8721938 7/15/2009 52.5391836
7/15/1991 105.7636214 1/15/2010 49.9100924
1/15/1992 105.5322749 7/15/2010 47.1947679
7/15/1992 105.1710850 1/15/2011 44.3613272
1/15/1993 104.6701325 7/15/2011 41.3668272
7/15/1993 104.0248972 1/15/2012 38.7931788
1/15/1994 103.2247011 7/15/2012 36.0501745
7/15/1994 102.2640136 1/15/2013 33.4464656
1/15/1995 101.2202252 7/15/2013 27.2579072
7/15/1995 99.9075530 1/15/2014 23.7924770
1/15/1996 96.6558769 7/15/2014 20.6510073
7/15/1996 97.4026782 1/15/2015
1/15/1997 96.1548205
7/15/1997 94.9069467
1/15/1998 93.6659207
7/15/1998 92.4358234
1/15/1999 91.1586840
7/15/1999 89.8656106
1/15/2000 88.4993884
7/15/2000 87.1233160
1/15/2001 85.6689341
7/15/2001 84.2031059
1/15/2002 82.6533673
7/15/2002 81.0902492
1/15/2003 79.4370651
7/15/2003 77.7682653
1/15/2004 76.0026833
7/15/2004 74.2188324
6091.BURNHAMU1.DEBT.11:2
<PAGE>
SCHEDULE 2
to
AMENDMENT NO. 2
Basic Basic
Rent Percentage Rent Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
---- ---- ---- ----
12/30/1985 102.7542310 11/30/1988 107.3861219
1/30/1986 103.4952377 12/30/1988 108.2252291
2/30/1986 104.6078078 1/30/1989 104.3721936
3/30/1986 105.7108970 2/30/1989 105.2227569
4/30/1986 106.7688424 3/30/1989 106.0648901
5/30/1986 107.8619358 4/30/1989 106.8905469
6/30/1086 108.9018907 5/30/1989 107.7306007
7/30/1986 106.1524169 6/30/1989 108.5486893
8/30/1086 107.2495920 7/30/1989 104.6742270
9/30/1986 108.2948285 8/30/1989 105.5030562
10/30/1986 109.3738757 9/30/1989 106.3100259
11/30/1986 110.3486578 10/30/1989 107.1311334
12/30/1986 111.3422972 11/30/1989 107.9544649
1/30/1987 105.0370031 12/30/1989 108.7558981
2/30/1987 106.0146695 1/30/1990 104.8644349
3/30/1987 106.9727922 2/30/1990 105.6759956
4/30/1987 107.9070757 3/30/1990 106.4789497
5/30/1987 108.8643302 4/30/1990 107.2653992
6/30/1987 109.7860350 5/30/1990 108.0656946
7/30/1987 106.0034229 6/30/1990 108.8440754
8/30/1987 106.9411928 7/30/1990 104.9291197
9/30/1987 107.8412366 8/30/1990 105.7168476
10/30/1987 108.7637925 9/30/1990 106.4827708
11/30/1987 109.6895801 10/30/1990 107.2622556
12/30/1987 110.5795269 11/30/1990 108.0435915
1/30/1988 103.4415899 12/30/1990 108.8030753
2/30/1988 104.3295725 1/30/1991 104.8688029
3/30/1988 105.2045795 2/30/1991 105.6369351
4/30/1988 106.0654587 3/30/1991 106.3962554
5/30/1988 106.9412314 4/30/1991 107.1417191
6/30/1988 107.7949807 5/30/1991 107.8991040
7/30/1988 103.9569412 6/30/1991 108.6373247
8/30/1988 104.8227101 7/30/1991 104.6800108
9/30/1988 105.6665574 8/30/1991 105.4247639
10/30/1988 106.5250618
6091.BURNHAMU1.DEBT.11:2
Page 1 of 5
<PAGE>
SCHEDULE 2
to
AMENDMENT NO. 2
SCHEDULE OF SPECIAL CASUALTY VALUES
Basic Basic
Rent Percentage Rent Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
---- ---- ---- ----
9/30/1991 106.1504846 11/30/1994 102.9714486
10/30/1991 106.8878496 12/30/1994 103.6158088
11/30/1991 107.6266990 1/30/1995 99.4920797
12/30/1991 108.3464775 2/30/1995 100.0576103
1/30/1992 104.3699150 3/30/1995 100.9598708
2/30/1992 105.0948215 4/30/1995 101.2948499
3/30/1992 105.8119470 5/30/1995 101.8606539
4/30/1992 106.5146636 6/30/1995 102.2347013
5/30/1992 107.2286934 7/30/1995 98.0918042
6/30/1992 107.9236935 8/30/1995 98.6477409
7/30/1992 103.9218114 9/30/1995 99.2119925
8/30/1992 104.6210185 10/30/1995 99.7723369
9/30/1992 105.3013575 11/30/1995 100.3328385
10/30/1992 105.9926942 12/30/1995 100.9017657
11/30/1992 106.6851316 1/30/1996 96.7571646
12/30/1992 107.3386585 2/30/1996 97.3112887
1/30/1993 103.3348127 3/30/1996 97.8687424
2/30/1993 104.0116958 4/30/1996 98.4335007
3/30/1993 104.6806310 5/30/1996 98.9942961
4/30/1993 105.3352104 6/30/1996 99.5640259
5/30/1993 106.0004160 7/30/1996 95.4199158
6/30/1993 106.6467554 8/30/1996 95.9744426
7/30/1993 102.5951179 9/30/1996 96.5383215
8/30/1993 103.2438009 10/30/1996 97.0981759
9/30/1993 103.8737902 11/30/1996 97.6584525
10/30/1993 104.5140593 12/30/1996 98.2282138
11/30/1993 105.1550022 1/30/1997 94.0829564
12/30/1993 105.7771970 2/30/1997 94.6355097
1/30/1994 101.7008528 3/30/1997 95.1924846
2/30/1994 102.3244396 4/30/1997 95.7575271
3/30/1994 102.9398914 5/30/1997 96.3184853
4/30/1994 103.5410327 6/30/1997 96.8895581
5/30/1994 104.1520389 7/30/1997 92.7452084
6/30/1994 104.7443471 8/30/1997 93.2985153
7/30/1994 100.6374641 9/30/1997 93.8624570
8/30/1994 101.2300504 10/30/1997 94.4222385
9/30/1994 101.8041551 11/30/1997 94.9827830
10/30/1994 102.3876948 12/30/1997 95.5541283
6091.BURNHAMU1.DEBT.11:2
Page 2 of 5
<PAGE>
SCHEDULE 2
to
AMENDMENT NO. 2
Basic Basic
Rent Percentage Rent Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
---- ---- ---- ----
1/30/1998 91.4095520 2/30/2001 83.1945370
2/30/1998 91.9624841 3/30/2001 83.7100504
3/30/1998 92.5206088 4/30/2001 84.2365386
4/30/1998 93.0879868 5/30/2001 84.7579923
5/30/1998 93.6511613 6/30/2001 85.2931965
6/30/1998 94.2258566 7/30/2001 81.0638904
7/30/1998 90.0587394 8/30/2001 81.5615927
8/30/1998 90.6061628 9/30/2001 82.0730587
9/30/1998 91.1653160 10/30/2001 82.5792563
10/30/1998 91.7201086 11/30/2001 83.0865199
11/30/1998 92.2758974 12/30/2001 83.6077022
12/30/1998 92.8435688 1/30/2002 79.3875913
1/30/1999 88.6758122 2/30/2002 79.8782822
2/30/1999 89.2178183 3/30/2002 80.3756506
3/30/1999 89.7655484 4/30/2002 80.8845744
4/30/1999 90.3231803 5/30/2002 81.3881339
5/30/1999 90.8763696 6/30/2002 81.9061812
6/30/1999 91.4419321 7/30/2002 77.6562150
7/30/1999 87.2494322 8/30/2002 78.1345529
8/30/1999 87.7815320 9/30/2002 78.6273903
9/30/1999 88.3260203 10/30/2002 79.1146137
10/30/1999 88.8658606 11/30/2002 79.6029164
11/30/1999 89.4067242 12/30/2002 80.1058807
12/30/1999 89.9601180 1/30/2003 75.8653785
1/30/2000 85.7762220 2/30/2003 76.3360404
2/30/2000 86.3024327 3/30/2003 76.8137097
3/30/2000 86.8346937 4/30/2003 77.3035400
4/30/2000 87.3773736 5/30/2003 77.7876507
5/30/2000 87.9153256 6/30/2003 78.2870200
6/30/2000 88.4663236 7/30/2003 74.0146875
7/30/2000 84.2561120 8/30/2003 74.4720081
8/30/2000 84.7716834 9/30/2003 74.9445974
9/30/2000 85.3003149 10/30/2003 75.4112001
10/30/2000 85.8239993 11/30/2003 75.8788887
11/30/2000 86.3487305 12/30/2003 76.3620151
12/30/2000 86.8866703 1/30/2004 72.0993762
1/30/2001 82.6853819 2/30/2004 72.5482737
6091.BURNHAMU1.DEBT.11:2
Page 3 of 5
<PAGE>
SCHEDULE 2
to
AMENDMENT NO. 2
Basic Basic
Rent Percentage Rent Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
---- ---- ---- ----
3/30/2004 73.0045186 4/30/2007 60.3747600
4/30/2004 73.4730509 5/30/2007 60.7655813
5/30/2004 73.9364902 6/30/2007 61.1752418
6/30/2004 74.4154887 7/30/2007 56.8077588
7/30/2004 70.1188601 8/30/2007 57.1682150
8/30/2004 70.5533154 9/30/2007 57.5476840
9/30/2004 71.0038427 10/30/2007 57.9194339
10/30/2004 71.4479811 11/30/2007 58.2923563
11/30/2004 71.8932032 12/30/2007 58.6845124
12/30/2004 72.3546734 1/30/2008 54.3068099
1/30/2005 68.0679036 2/30/2008 54.6513134
2/30/2005 68.4930799 3/30/2008 55.0047423
3/30/2005 68.9259528 4/30/2008 55.3738747
4/30/2005 69.3722741 5/30/2008 55.7350693
5/30/2005 69.8120779 6/30/2008 56.1160563
6/30/2005 70.2687886 7/30/2008 51.7156640
7/30/2005 65.9646993 8/30/2008 52.0444855
8/30/2005 66.3803907 9/30/2008 52.3932782
9/30/2005 66.8132731 10/30/2008 52.7338096
10/30/2005 67.2394018 11/30/2008 53.0754684
11/30/2005 67.6667438 12/30/2008 53.4373277
12/30/2005 68.1114926 1/30/2009 49.0255076
1/30/2006 63.7934138 2/30/2009 49.3368286
2/30/2006 64.1957571 3/30/2009 49.6574593
3/30/2006 64.6062534 4/30/2009 49.9945557
4/30/2006 65.0310108 5/30/2009 50.3231497
5/30/2006 65.4488770 6/30/2009 50.6725248
6/30/2006 65.8845650 7/30/2009 46.2360503
7/30/2006 61.5471496 8/30/2009 46.5301055
8/30/2006 61.9364581 9/30/2009 46.8451255
9/30/2006 62.3438562 10/30/2009 47.1512939
10/30/2006 62.7440346 11/30/2009 47.4585240
11/30/2006 63.1454130 12/30/2009 47.7869559
12/30/2006 63.5650940 1/30/2010 43.3376742
1/30/2007 59.2185145 2/30/2010 43.6124904
2/30/2007 59.5932443 3/30/2010 43.8970027
3/30/2007 59.9765196
6091.BURNHAMU1.DEBT.11:2
Page 4 of 5
<PAGE>
SCHEDULE 2
to
AMENDMENT NO. 2
SCHEDULE OF SPECIAL CASUALTY VALUES
Basic Basic
Rent Percentage Rent Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
---- ---- ---- ----
4/30/2010 44.1987658 5/30/2013 25.9554947
5/30/2010 44.4914112 6/30/2013 26.2400600
6/30/2010 44.8058611 7/30/2013 21.6371751
7/30/2010 40.3305967 8/30/2013 21.8253254
8/30/2010 40.5866417 9/30/2013 22.0416242
9/30/2010 40.8646922 10/30/2013 22.2468204
10/30/2010 41.1332506 11/30/2013 22.4539730
11/30/2010 41.4027867 12/30/2013 22.6895049
12/30/2010 41.6945747 1/30/2014 18.0369516
1/30/2011 37.2563200 2/30/2014 18.1747973
2/30/2011 37.5081100 3/30/2014 18.3254751
3/30/2011 37.7703691 4/30/2014 18.4979519
4/30/2011 38.0514945 5/30/2014 18.6587608
5/30/2011 38.3230213 6/30/2014 18.8473546
6/30/2011 38.6182686 7/30/2014 14.1472611
7/30/2011 34.1825064 8/30/2014 14.2369575
8/30/2011 34.4364524 9/30/2014 14.3535414
9/30/2011 34.7153309 10/30/2014 14.4577454
10/30/2011 34.9844358 11/30/2014 14.5626126
11/30/2011 35.2553148 12/30/2014 14.6943496
12/30/2011 35.5515126
1/30/2012 31.1156137
2/30/2012 31.3690299
3/30/2012 31.6346125
4/30/2012 31.9218743
5/30/2012 32.1992631
6/30/2012 32.5036487
7/30/2012 28.0749204
8/30/2012 28.3351926
9/30/2012 28.6238310
10/30/2012 28.9024516
11/30/2012 29.1838391
12/30/2012 29.4940500
1/30/2013 24.9617093
2/30/2013 25.1910404
3/30/2013 25.4338865
4/30/2013 25.6999140
6091.BURNHAMU1.DEBT.11:2
Page 5 of 5
<PAGE>
SCHEDULE 3
to
AMENDMENT NO. 2
SCHEDULE OF TERMINATION VALUES
Basic Basic
Rent Percentage Rent Percentage
Payment of Facility Payment of Facility
Date Cost Date Cost
---- ---- ---- ----
7/15/1986 103.4212361 1/15/2005 67.8255614
1/15/1987 104.3925241 7/15/2005 65.7328276
7/15/1987 105.3950859 1/15/2006 63.5697692
1/15/1988 102.8661814 7/15/2006 61.3369441
7/15/1988 103.4012074 1/15/2007 59.0124377
1/15/1989 103.8291454 7/15/2007 56.6163826
7/15/1989 104.1502014 1/15/2008 54.1203585
1/15/1990 104.3549060 7/15/2008 51.5453742
7/15/1990 104.4404728 1/15/2009 48.8610801
1/15/1991 104.3967530 7/15/2009 46.0894084
7/15/1991 104.2281706 1/15/2010 43.1979879
1/15/1992 103.9343733 7/15/2010 40.2096646
7/15/1992 103.5081925 1/15/2011 37.0921214
1/15/1993 102.9396058 7/15/2011 34.0019638
7/15/1993 102.2239855 1/15/2012 30.9206325
1/15/1994 101.3505415 7/15/2012 27.8574311
7/15/1994 100.3136271 1/15/2013 24.8316940
1/15/1995 99.1905114 7/15/2013 21.5737285
7/15/1995 97.7952853 1/15/2014 18.0242927
1/15/1996 96.4576977 7/15/2014 14.1833071
7/15/1996 95.1150933 1/15/2015 10.6510073
1/15/1997 93.7741936
7/15/1997 92.4294935
1/15/1998 91.0877029
7/15/1998 89.7527428
1/15/1999 88.3664754
7/15/1999 86.9598355
1/15/2000 85.4754279
7/15/2000 83.9763631
1/15/2001 82.3939863
7/15/2001 80.7949574
1/15/2002 79.1066005
7/15/2002 77.3992261
1/15/2003 75.5959184
7/15/2003 73.7708891
1/15/2004 71.8427233
7/15/2004 69.8896959
6091.BURNHAMU1.DEBT.11:2
<PAGE>
EXHIBIT 10.21.3
<PAGE>
When Recorded, Return to: Gregg R. Neilsen
Snell & Wilmer
3100 Valley Bank Center
Phoenix, Arizona 85073
CERTAIN RIGHTS OF THE LESSOR UNDER THE FACILITY LEASE AS
HERETOFORE AMENDED AND AS AMENDED BY THIS AMENDMENT NO. 2 THERETO HAVE
BEEN ASSIGNED TO, AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF,
CHEMICAL BANK, AS INDENTURE TRUSTEE UNDER A TRUST INDENTURE, MORTGAGE,
SECURITY AGREEMENT AND ASSIGNMENT OF RENTS DATED AS OF DECEMBER 16,
1985, AS AMENDED. THIS AMENDMENT NO. 3 HAS BEEN EXECUTED IN SEVERAL
COUNTERPARTS. SEE SECTION 3(e) OF THIS AMENDMENT NO. 3 FOR INFORMATION
CONCERNING THE RIGHTS OF HOLDERS OF VARIOUS COUNTERPARTS HEREOF AND OF
THE FACILITY LEASE.
THIS COUNTERPART IS NOT THE ORIGINAL COUNTERPART.
================================================================================
AMENDMENT NO. 3
Dated as of March 30, 1987
to
FACILITY LEASE
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,
Lessor
and
PUBLIC SERVICE COMPANY OF NEW MEXICO,
Lessee
================================================================================
Original Facility Lease recorded December 31, 1985, as
Instrument No. 85-623268, re-recorded April 17, 1986, as Instrument No.
86-187558 confirmed by document recorded April 25, 1986, as Instrument
No. 86-203239, amended by Amendment No. 1 thereto recorded July 17,
1986, as Instrument No. 86-367462, and amended by Amendment No. 2
thereto recorded on November 25, 1986, as Instrument No. 86-650739, in
Maricopa County, Arizona Recorder's Office.
================================================================================
6091.BURNHAMU1.DEBT.71:1
<PAGE>
AMENDMENT NO. 3 dated as of March 30, 1987 (Amendment No. 3),
to the Facility Lease dated as of December 16, 1985, between THE FIRST NATIONAL
BANK OF BOSTON, a national banking association, not in its individual capacity,
but solely as Owner Trustee under a Trust Agreement, dated as of December 16,
1985, with Burnham Leasing Corporation (the Lessor), and PUBLIC SERVICE COMPANY
OF NEW MEXICO, a New Mexico corporation (the Lessee).
W I T N E S S E T H :
WHEREAS, the Lessee and the Lessor have heretofore entered
into a Facility Lease dated as of December 16, 1985, as heretofore amended (the
Facility Lease), providing for the lease by the Lessor to the Lessee of the
Undivided Interest and the Real Property Interest;
WHEREAS, the Lessee and the Lessor desire to amend the
Facility Lease as set forth in Section 2 hereof; and
WHEREAS, the Indenture Trustee has consented to this Amendment
No. 3 pursuant to the Request, Instruction and Consent effective on March 30,
1987;
NOW, THEREFORE, in consideration of the premises and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
6091.BURNHAMU1.DEBT.71:1
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<PAGE>
SECTION 1. Definitions.
For purposes hereof, capitalized terms used herein and not
otherwise defined herein or in the recitals shall have the meanings assigned to
such terms in Appendix A to the Facility Lease.
SECTION 2. Amendments.
(a) Section 3(a)(ii) of the Facility Lease (as amended by
Amendment No. 2 thereto) is hereby amended to read in its entirety as follows:
"(ii) (1) on July 15, 1986 an amount equal to 4.3683233% of Facility
Cost (2) on January 15, 1987 an amount equal to 4.70354% of Facility Cost and"
(3) on July 15, 1987 and on each Basic Rent Payment Date thereafter to and
including January 15, 2015, an amount equal to 4.7006080% of Facility Cost;
and".
(b) Section 16(a)(v) of the Facility Lease is hereby amended
by (i) striking the "or" at the end of clause (B) thereof, (ii) inserting an
"or" at the end of clause (C) thereof and (iii) inserting at the end of such
Section 16(a)(v) the following new clause (D):
"(D) an amount equal to the higher of (1) the Casualty Value (Special
Casualty Value if the Event of Default is an event specified in clause (v),
(viii) or (x)(2) of Section 15 hereof), computed as of the Basic Rent Payment
Date specified in such notice or (2) the Fair Market Sales Value of the
Undivided Interest and the real Property Interest;"
(c) Section 16(a)(v) of the Facility Lease, as amended by
Amendment No. 1 thereto, is hereby further amended by deleting the parenthetical
phrase first preceding clause (A) of such Section 16(a)(v) and inserting in lieu
thereof ("and, in the case of (D) below, upon receipt of such payment the Lessor
shall (or, prior to receipt of such payment, may) Transfer to the Lessee the
Undivided Interest and the Real Property Interest)".
6091.BURNHAMU1.DEBT.71:1
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<PAGE>
(d) Section 16(a)(vi) of the Facility Lease is hereby amended
by inserting the phrase", but not in the case of an Event of Default specified
in clause (iii) of Section 15," immediately following the words "if it shall so
elect".
(e) The definitions of "Event of Loss" and "Final Shutdown"
set forth in Appendix A to the Facility Lease are hereby amended to read in
their entirety as set forth in Appendix A-1 hereto.
(f) The definition of "Undivided Interest Percentage" set
forth in Appendix A to the Facility Lease is hereby amended in its entirety to
read as follows:
"Undivided Interest Percentage shall, when used with respect to Unit 1 (not
including Common Facilities), mean an undivided 2.266667% interest therein and
shall, when used with respect to Common Facilities, mean an undivided .755556%
interest therein."
SECTION 3. Miscellaneous.
(a) Effective Date of Amendments. The amend- ments set forth
in Section 2 hereof shall be and become effective upon the execution hereof by
the parties hereto.
(b) Counterpart Execution. This Amendment No. 3 may be
executed in any number of counterparts and by each of the parties hereto on
separate counterparts; all such counterparts shall together constitute but one
and the same instrument.
(c) Governing Law. This Amendment No. 3 has been negotiated
and delivered in the State of New York and shall be governed by, and be
construed in accordance with, the laws of the State of New York, except to the
extent that pursuant to the law of the State of Arizona such law is mandatorily
applicable hereto.
6091.BURNHAMU1.DEBT.71:1
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<PAGE>
(d) 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.
(e) Amendment No. 3. The single executed orig- inal of this
Amendment No. 3 marked "THIS COUNTERPART IS THE ORIGINAL COUNTERPART" and
containing the receipt of the Indenture Trustee thereon shall be the "Original"
of this Amendment No. 3. To the extent that the Facility Lease constitutes
chattel paper, as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction, no security interest in the Facility
Lease as amended by this Amendment No. 3 may be created or continued through the
transfer or possession of any counterpart of this Amendment No. 3 other than the
"Original".
6091.BURNHAMU1.DEBT.71:1
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 3 to Facility Lease to be duly executed in Boston, Massachusetts,
or Albuquerque, New Mexico, as the case may be, by an officer thereunto duly
authorized.
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: /S/
Assistant Cashier
PUBLIC SERVICE COMPANY OF NEW
MEXICO
By: /S/ B. D. Lackey
Vice President and Corporate
Controller
6091.BURNHAMU1.DEBT.71:1
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 3 to Facility Lease to be duly executed in Boston, Massachusetts,
or Albuquerque, New Mexico, as the case may be, by an officer thereunto duly
authorized.
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: /S/
Assistant Cashier
PUBLIC SERVICE COMPANY OF NEW
MEXICO
By:
Vice President and Corporate
Controller
6091.BURNHAMU1.DEBT.71:1
- 6 -
<PAGE>
State of New Mexico )
) ss.
County of Bernalillo)
The foregoing instrument was acknowledged before me this 27th
day of March, 1987, by B.D. Lackey, the Vice President and Corporate Controller
of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation, on behalf of
the corporation.
/S/
Notary Public
Commonwealth of Massachussets)
) ss.
County of Suffolk )
The foregoing instrument was acknowledged before me this 27th
day of March, 1987 by James E. Mogavero, an Assistant Cashier of THE FIRST
NATIONAL BANK OF BOSTON, a national banking association, on behalf of the
banking association as trustee under that certain Trust Agreement dated as of
December 16, 1985 with Burnham Leasing Corporation.
Notary Public
6091.BURNHAMU1.DEBT.71:1
<PAGE>
State of New Mexico )
) ss.
County of Bernalillo)
The foregoing instrument was acknowledged before me this 27th
day of March, 1987, by B.D. Lackey, the Vice President and Corporate Controller
of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation, on behalf of
the corporation.
Notary Public
Commonwealth of Massachussets)
) ss.
County of Suffolk )
The foregoing instrument was acknowledged before me this 27th
day of March, 1987 by James E. Mogavero, an Assistant Cashier of THE FIRST
NATIONAL BANK OF BOSTON, a national banking association, on behalf of the
banking association as trustee under that certain Trust Agreement dated as of
December 16, 1985 with Burnham Leasing Corporation.
/S/ Julie E. Comeau
Notary Public
6091.BURNHAMU1.DEBT.71:1
<PAGE>
SCHEDULE A-1
to
AMENDMENT NO. 3
Amendment to Definitions of
"Event of Loss" and "Final Shutdown"
Event of Loss shall mean any of the following events: (a) a Final
Shutdown, (b) a Requisition of Title, or (c) a Requisition of Use for an
indefinite period which can be reasonably expected to exceed, or a stated period
which ends on the last day of or after, the Lease Term (including the Renewal
Term only if the Renewal Term shall have been elected prior to such Requisition
of Use by the exercise of the renewal option provided in Section 12 of the
Facility Lease).
Final Shutdown shall mean the earlier to occur of:
(1) the expiration or revocation of the License or that
portion of the License that permits the operation of Unit 1 or the expiration,
suspension or revocation of the License or that portion of the License that
permits the possession by the Lessee of the Undivided Interest and the Real
Property Interest; or
(2) the suspension (pursuant to 10 C.F.R. Section 2.202, as
amended, and any successor provision) of the License or that portion of the
License that permits the operation of Unit 1, which suspension remains in effect
for three consecutive calendar months; or
(3) the permanent or temporary cessation of operation of Unit
1 as a result of a Nuclear Incident at Unit 1 (or if Unit 1 is not in operation
immediately prior to the occurrence of such Nuclear Incident, the failure to
resume operation thereof as a result of such Nuclear Incident) if (A) the Period
of such cessation or failure equals or exceeds twenty-four consecutive calendar
months, or (B) such Nuclear Incident causes the radiation level in the
containment building of Unit 1, as measured by the average of two high range
radiation monitors in such containment building of Unit 1 (or if only one such
monitor is operating at such time, such monitor) over one hour to equal or
exceed 500 rads per hour; provided, however, this subsection (B) shall not apply
in respect of a Nuclear Incident arising solely from a fuel handling accident;
or
6091.BURNHAMU1.DEBT.71:1
<PAGE>
(4) the permanent or temporary cessation of operation of Unit
1 as a result of a Nuclear Incident at Unit 2 or 3 (the Affected Unit) (or if
Unit 1 is not in operation immediately prior to the occurrence of such Nuclear
Incident, the failure to resume operation thereof as a result of such Nuclear
Incident) if (A) the Period of such cessation or failure equals or exceeds
thirty-six consecutive calendar months; or (B) such Nuclear Incident causes the
radiation level in the containment building of the Affected Unit, as measured by
the average of two high range radiation monitors in such containment building
(or if only one such monitor is operating at such time, such monitor) over one
hour to equal or exceed 500 rads per hour; provided, however, this subsection
(B) shall not apply in respect of a Nuclear Incident arising solely from a fuel
handling accident;
(5) the occurrence of a Nuclear Incident at Unit 1, 2 or 3
causing (A) substantial injury or death to any person on or off the PVNGS Site
or (B) a discharge or dispersal of Source, Special Nuclear or Byproduct Material
from its intended place of confinement in amounts off the PVNGS Site or causing
radiation levels off the PVNGS Site such that, in the case of (B) above (x) the
NRC declares the occurrence of an Extraordinary Nuclear Occurrence or declares
any other event connoting an equivalent level of accident or (y) the surface
contamination dose rate measured off the PVNGS Site by a radiation monitor at 1
meter above the surface level equals or is greater at any time than 10
millirads/hour (0.10 milligray/hour) or in the case of noble gas plume passage,
the radiation dose rate equals or is greater than 10 rads (0.10 gray) integrated
over 24 hours, (or if the NRC shall at any time lower the radiation levels
required for the occurrence of an Extraordinary Nuclear Occurrence, such lower
levels as shall be consistent with such change by the NRC); or
(6) damage to or destruction of any portion of Unit 1 and,
unless Lessee theretofore shall have exercised its purchase option under Section
13(b) of the Facility Lease, the failure of the Lessee, or of the Lessee and one
more other ANPP Participants, (A) to agree within eighteen calendar months of
such damage or destruction (or prior to such earlier date as of which one or
more other ANPP Participants shall agree to restore or reconstruct any damaged
portion of Unit 1 in accordance with Section 16.2 of the ANPP Participation
6091.BURNHAMU1.DEBT.71:1
<PAGE>
Agreement) to restore or reconstruct Unit 1 to completion prior to the day sixty
calendar months after the date of such agreement and (B) thereafter to complete
the restoration and reconstruction of Unit 1 within a period of sixty calendar
months after the date of such agreement, provided that no Final Shutdown shall
be deemed to have occurred pursuant to this clause (6) if and so long as Unit 1
is in operation at a rated core power level of at least 1900 megawatts thermal;
or
(7) the non-operation of Unit 1 or the operation of Unit 1 at
a net rated power level below 630 megawatts electric or any combination thereof
for any reason (including, without limitation, the occurrence of any Nuclear
Incident at any generating facility located anywhere in the world) for a Period
of thirty-six consecutive calendar months (or a period through the penultimate
day of the Lease Term if the Lessee shall have given notice of its intent to
exercise the purchase option permitted by Section 13(b) of the Facility Lease)
other than as a result of damage to or destruction of Unit 1.
For purposes of this definition, a Final Shutdown resulting from the occurrence
of an event described in clause (5) above shall be deemed to have occurred
immediately and automatically upon the decline of the water coolant within Unit
1 to a level three feet above the nuclear fuel.
For purposes of the definition of "Final Shutdown" only, the
following capitalized terms set forth therein shall have the following meanings
(other capitalized terms having the respective meanings set forth in Appendix A
to the Facility Lease):
Extraordinary Nuclear Occurrence shall have its meaning as
defined in Section 11 of the Atomic Energy Act and the related NRC regulations,
as amended to the date hereof, and as the meaning of such term shall be expanded
from time to time by future amendments thereof. The definition of "extraordinary
nuclear occurrence" contained in Section 11 of the Atomic Energy Act on the date
hereof is: "any event causing a discharge dispersal of source, special nuclear,
or byproduct material from its place of confinement in amounts offsite, or
causing radiation levels offsite, which the Commission determines to be
6091.BURNHAMU1.DEBT.71:1
<PAGE>
substantial, and which the Commission determines has resulted or will probably
result in substantial damages to persons offsite or property offsite. Any
determination by the Commission that such an event has, or has not, occurred
shall be final and conclusive, and no other official or any court shall have
power or jurisdiction to review any such determination. The Commission shall
establish criteria in writing setting forth the basis upon which such
determination shall be made. As used in this subsection, 'offsite' means away
from 'the location' or 'the contract location' as defined in the applicable
Commission indemnity agreement, entered into pursuant to section 2210 of this
title."
Nuclear Incident shall have its meaning as defined in Section
11 of the Atomic Energy Act, as amended to the date hereof and as the meaning of
such term may be expanded from time to time by future amendments thereof. The
definition of "nuclear incident" contained in the Atomic Energy Act on the date
hereof is: "any occurrence, including an extraordinary nuclear occurrence,
within the United States causing, within or outside the United States, bodily
injury, sickness, disease, or death, or loss of or damage to property, or loss
of use of property, arising out of or resulting from the radioactive, toxic,
explosive, or other hazardous properties of source, special nuclear, or
byproduct material: Provided, however, that as the term is used in section
2210(1) of this title, it shall include any such occurrence outside the United
States: And provided further, That as the term is used in section 2210(d) of
this title, it shall include any such occurrence outside the United States if
such occurrence involves source, special nuclear, or byproduct material owned
by, and used by or under contract with, the United States: And provided further,
That as the term is used in section 2210(c) of this title, it shall include any
such occurrence outside both the United States and any other nation if such
occurrence arises out of or results from the radioactive, toxic, explosive, or
other hazardous properties of source, special nuclear, or byproduct material
licensed pursuant to subchapters V, VI, VII, and IX of this chapter, which is
used in connection with the operation of a licensed stationary production or
utilization facility or which moves outside the territorial limits of the United
States in transit from one person licensed by the Commission to another person
licensed by the Commission."
6091.BURNHAMU1.DEBT.71:1
<PAGE>
Period of a stated duration in respect of any event shall mean
an indefinite period which can reasonably be expected to exceed the lesser of
such duration and the period remaining to the date which is three years prior to
the end of the remaining Basic Lease Term (or if such event occurs after the
date three years prior to the end of the remaining Basic Lease Term, the lesser
of six months and the period remaining to the day next preceding the end of the
Basic Lease Term) or a stated period in excess of the lesser thereof or an
actual period which continues in excess of the lesser thereof.
Source, Special Nuclear or Byproduct Material shall have their
respective defined meanings as defined in Section 11 of the Atomic Energy Act of
1954, as amended to the date hereof and as the meanings of such terms may be
expanded by future amendments thereof.
6091.BURNHAMU1.DEBT.71:1
<PAGE>
EXHIBIT 10.54
<PAGE>
When Recorded, Return to: Gregg R. Neilsen, Esq.
Snell & Wilmer
3100 Valley Bank Center
Phoenix, Arizona 85073
CERTAIN RIGHTS OF THE LESSOR UNDER THE FACILITY LEASE AS HERETOFORE
AMENDED AND AS AMENDED BY THIS AMENDMENT NO. 3 THERETO HAVE BEEN ASSIGNED TO,
AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, CHEMICAL BANK, AS INDENTURE
TRUSTEE UNDER A TRUST INDENTURE, MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF
RENTS DATED AS OF DECEMBER 16, 1985, AS AMENDED. THIS AMENDMENT NO. 3 HAS BEEN
EXECUTED IN SEVERAL COUNTERPARTS. SEE SECTION 3(e) OF THIS AMENDMENT NO. 3 FOR
INFORMATION CONCERNING THE RIGHTS OF HOLDERS OF VAR- IOUS COUNTERPARTS HEREOF
AND OF THE FACILITY LEASE.
THIS COUNTERPART IS NOT THE ORIGINAL COUNTERPART.
================================================================================
AMENDMENT NO. 3
Dated as of March 30, 1987
to
FACILITY LEASE
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 Chrysler
Financial Corporation,
Lessor
and
PUBLIC SERVICE COMPANY OF NEW MEXICO,
Lessee
================================================================================
Original Facility Lease recorded December 31, 1985, as Instrument No. 85-623282,
amended by Amendment No. 1 thereto recorded July 17, 1986, as Instrument No. 86-
367464 and amended by Amendment No. 2 thereto recorded on November 25, 1986, as
Instrument 86-650763, in Maricopa County, Arizona Recorder's Office.
================================================================================
6091.CHRYSLER.DEBT.71:1
<PAGE>
AMENDMENT NO. 3, dated as of March 30, 1987 (Amendment No. 3),
to the Facility Lease dated as of December 16, 1985, between THE FIRST NATIONAL
BANK OF BOSTON, a national banking association, not in its individual capacity,
but solely as Owner Trustee under a Trust Agreement, dated as of December 16,
1985, with Chrysler Financial Corporation (the Lessor), and PUBLIC SERVICE
COMPANY OF NEW MEXICO, a New Mexico corporation (the Lessee).
W I T N E S S E T H :
WHEREAS, the Lessee and the Lessor have heretofore entered
into a Facility Lease dated as of December 16, 1985, as heretofore amended (the
Facility Lease), providing for the lease by the Lessor to the Lessee of the
Undivided Interest and the Real Property Interest;
WHEREAS, the Lessee and the Lessor desire to amend the
Facility Lease as set forth in Section 2 hereof; and
WHEREAS, the Indenture Trustee has consented to this Amendment
No. 3 pursuant to the Request, Instruction and Consent effective on March 30,
1987;
NOW, THEREFORE, in consideration of the premises and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
6091.CHRYSLER.DEBT.71:1
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<PAGE>
SECTION 1. Definitions.
For purposes hereof, capitalized terms used herein and not
otherwise defined herein or in the recitals shall have the meanings assigned to
such terms in Appendix A to the Facility Lease.
SECTION 2. Amendments.
(a) Section 3(a)(ii) of the Facility Lease (as amended by
Amendment No. 2 thereto) is hereby amended to read in its entirety as follows:
"(ii)(1) on July 15, 1986 an amount equal to 4.3683233% of
Facility Cost (2) on January 15, 1987 an amount equal to 4.755716% of
Facility Cost and (3) on July 15, 1987 and on each Basic Rent Payment
Date thereafter to and including January 15, 2015, an amount equal to
4.7527840% of Facility Cost; and".
(b) Section 16(a)(v) of the Facility Lease is hereby amended
by (i) striking the "or" at the end of clause (B) thereof, (ii) inserting an
"or" at the end of clause (C) thereof and (iii) inserting at the end of such
Section 16(a)(v) the following new clause (D):
"(D) an amount equal to the higher of (1) the Casualty Value
(Special Casualty Value if the Event of Default is an event specified
in clause (v), (viii) or (x)(2) of Section 15 hereof), computed as of
the Basic Rent Payment Date specified in such notice or (2) the Fair
Market Sales Value of the Undivided Interest and the Real Property
Interest;"
(c) Section 16(a)(v) of the Facility Lease, as amended by
Amendment No. 1 thereto, is hereby further amended by deleting the parenthetical
phrase first preceding clause (A) of such Section 16(a)(v) and inserting in lieu
thereof ("and, in the case of (D) below, upon receipt of such payment the Lessor
shall (or, prior to receipt of such payment, may) Transfer to the Lessee the
Undivided Interest and the Real Property Interest)".
6091.CHRYSLER.DEBT.71:1
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<PAGE>
(d) Section 16(a)(vi) of the Facility Lease is hereby amended
by inserting the phrase", but not in the case of an Event of Default specified
in clause (iii) of Section 15," immediately following the words "if it shall so
elect".
(e) The definitions of "Event of Loss" and "Final Shutdown"
set forth in Appendix A to the Facility Lease are hereby amended to read in
their entirety as set forth in Appendix A-1 hereto.
(f) The definition of "Undivided Interest Percentage" set
forth in Appendix A to the Facility Lease is hereby amended in its entirety to
read as follows:
"Undivided Interest Percentage shall, when used with respect to Unit 1
(not including Common Facilities), mean an undivided 3.74% interest
therein and shall, when used with respect to Common Facilities, mean an
undivided 1.246667% interest therein."
SECTION 3. Miscellaneous.
(a) Effective Date of Amendments. The amend- ments set forth
in Section 2 hereof shall be and become effective upon the execution hereof by
the parties hereto.
(b) Counterpart Execution. This Amendment No. 3 may be
executed in any number of counterparts and by each of the parties hereto on
separate counterparts; all such counterparts shall together constitute but one
and the same instrument.
(c) Governing Law. This Amendment No. 3 has been negotiated
and delivered in the State of New York and shall be governed by, and be
construed in accordance with, the laws of the State of New York, except to the
extent that pursuant to the law of the State of Arizona such law is mandatorily
applicable hereto.
6091.CHRYSLER.DEBT.71:1
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<PAGE>
(d) Disclosure. Pursuant to Arizona Revised Statutes Section
33-401, the beneficiary of the Trust Agreement is Chrysler Financial
Corporation, a Michigan corporation. The address of the beneficiary is Greenwich
Office Park I, Greenwich, Connecticut 06836. 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.
(e) Amendment No. 3. The single executed orig- inal of this
Amendment No. 3 marked "THIS COUNTERPART IS THE ORIGINAL COUNTERPART" and
containing the receipt of the Indenture Trustee thereon shall be the "Original"
of this Amendment No. 3. To the extent that the Facility Lease constitutes
chattel paper, as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction, no security interest in the Facility
Lease as amended by this Amendment No. 3 may be created or continued through the
transfer or possession of any counterpart of this Amendment No. 3 other than the
"Original".
6091.CHRYSLER.DEBT.71:1
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 3 to Facility Lease to be duly executed in Boston, Massachusetts,
or Albuquerque, New Mexico, as the case may be, by an officer thereunto duly
authorized.
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
Chrysler Financial Corporation
By: /S/
Assistant Cashier
PUBLIC SERVICE COMPANY OF NEW
MEXICO
By:
Vice President and Corporate
Controller
6091.CHRYSLER.DEBT.71:1
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 3 to Facility Lease to be duly executed in Boston, Massachusetts,
or Albuquerque, New Mexico, as the case may be, by an officer thereunto duly
authorized.
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
Chrysler Financial Corporation
By:
Assistant Cashier
PUBLIC SERVICE COMPANY OF NEW
MEXICO
By: /S/ B. D. Lackey
Vice President and Corporate
Controller
6091.CHRYSLER.DEBT.71:1
- 6 -
<PAGE>
State of New Mexico )
) ss.
County of Bernalillo)
The foregoing instrument was acknowledged before me this 27th
day of March, 1987, by B.D. Lackey, the Vice President and Corporate Controller
of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation, on behalf of
the corporation.
/S/
Notary Public
Commonwealth of Massachussets)
) ss.
County of Suffolk )
The foregoing instrument was acknowledged before me this 27th
day of March, 1987, by James E. Mogavero, an Assistant Cashier of THE FIRST
NATIONAL BANK OF BOSTON, a national banking association, on behalf of the
banking association as trustee under that certain Trust Agreement dated as of
December 16, 1985 with Chrysler Financial Corporation.
Notary Public
6091.CHRYSLER.DEBT.71:1
<PAGE>
State of New Mexico )
) ss.
County of Bernalillo)
The foregoing instrument was acknowledged before me this 27th
day of March, 1987, by B.D. Lackey, the Vice President and Corporate Controller
of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation, on behalf of
the corporation.
Notary Public
Commonwealth of Massachussets)
) ss.
County of Suffolk )
The foregoing instrument was acknowledged before me this 27th
day of March, 1987 by James E. Mogavero, an Assistant Cashier of THE FIRST
NATIONAL BANK OF BOSTON, a national banking association, on behalf of the
banking association as trustee under that certain Trust Agreement dated as of
December 16, 1985 with Chrysler Financial Corporation.
/S/ Julie E. Comeau
Notary Public
6091.CHRYSLER.DEBT.71:1
<PAGE>
SCHEDULE A-1
to
AMENDMENT NO. 3
Amendment to Definitions of
"Event of Loss" and "Final Shutdown"
Event of Loss shall mean any of the following events: (a) a
Final Shutdown, (b) a Requisition of Title, (c) a Requisition of Use which can
reasonably be expected to exceed, or for a stated period which ends on or after,
the penultimate day of the Lease Term, (d) any degradation of the rated capacity
of Unit 1 to below 630 megawatts electric for an indefinite period which can
reasonably be expected to exceed the lesser of 5 years and the remaining Lease
Term or for a stated period in excess of the lesser of five years and the
remaining Lease Term (other than as a result of damage to or destruction of Unit
1), or (e) any degradation of the rated capacity of Unit 1 to below, or the
inability of Unit 1 to produce electricity at a level above, 630 megawatts
electric for the Minimum Period (other than as a result of damage to or
destruction of Unit 1, Governmental Action or an event referred to in part
(10)(x) or (10)(y) of the definition of "Final Shutdown"). For purposes of this
definition, Minimum Period shall mean the shorter of (x) the shorter of (1) an
indefinite period unless such period can reasonably be expected to be shorter
than the applicable Benchmark Period and (2) an actual period in excess of the
applicable Benchmark Period and (y) a period beginning on the date of
determination through and including the penultimate day of the Lease Term, and
Benchmark Period shall mean a period equal to any 60 consecutive calendar months
except that a period of 36 consecutive calendar months shall be applicable with
respect to events specified in part 10(y) of the definition of "Final Shutdown".
The period specified in the foregoing clause (x)(1) shall be determined by an
independent nuclear consultant agreed to by the Lessee and the Owner Participant
or, failing prompt agreement upon such consultant, appointed by the American
Arbitration Association (or comparable or successor organization).
6091.CHRYSLER.DEBT.71:1
<PAGE>
Final Shutdown shall mean the earlier to occur of:
(1) (i) the expiration, suspension (for an indefinite period
which can reasonably be expected to exceed the lesser of five years and the
remaining Lease Term or for a stated period in excess of the lesser of five
years and the remaining Lease Term) or revocation of that portion of the License
that permits the operation of Unit 1 or the possession by the Lessee of the
Undivided Interest and the Real Property Interest, (ii) the cessation of
operation of Unit 1 as a result of a nuclear incident relating to PVNGS for an
indefinite period which can reasonably be expected to exceed the lesser of five
years and the remaining Lease Term or for a stated period in excess of the
lesser of five years and the remaining Lease Term, (iii) damage to or
destruction of Unit 1 and the failure of the Lessee, or of the Lessee and one or
more other ANPP Participants, to agree within five years of such damage or
destruction to restore and reconstruct Unit 1 and (iv) damage to or destruction
of Unit 1, without restoration or reconstruction having been completed by the
end of the Lease Term, such that Unit 1 will have a rated capacity as of the
penultimate day of the Lease Term of at least 630 megawatts electric; or
(2) the suspension of the License or that portion of the
License that permits the possession by the Lessee of the Undivided Interest and
the Real Property Interest; or
(3) the suspension (pursuant to 10 C.F.R. Section 2.202, as
amended, any successor provision) of the License or that portion of the License
that permits the operation of Unit 1, which suspension remains in effect for
three consecutive calendar months; or
(4) the permanent or temporary cessation of operation of Unit
1 as a result of a Nuclear Incident at Unit 1 (or if Unit 1 is not in operation
immediately prior to the occurrence of such Nuclear Incident, the failure to
resume operation thereof as a result of such Nuclear Incident) if (A) the Period
of such cessation or failure equals or exceeds twenty-four consecutive calendar
months, or (B) such Nuclear Incident causes the radiation level in the
6091.CHRYSLER.DEBT.71:1
<PAGE>
containment building of Unit 1 (or if only one such monitor is operating at such
time, such monitor) over one hour to equal or exceed 500 rads per hour;
provided, however, this clause (B) shall not apply in respect of a Nuclear
Incident arising solely from a fuel handling accident;
(5) the permanent or temporary cessation of operation of Unit
1 as a result of a Nuclear Incident at Unit 2 or 3 (the Affected Unit) (or if
Unit 1 is not in operation immediately prior to the occurrence of such Nuclear
Incident, the failure to resume operation thereof as a result of such Nuclear
Incident) if (A) the Period of such cessation or failure equals or exceeds
thirty-six consecutive calendar months; or (B) such Nuclear Incident causes the
radiation level in the containment building of the Affected Unit, as measured by
the average of two high range radiation monitors in such containment building
(or if only one such monitor is operating at such time, such monitor) over one
hour to equal or exceed 500 rads per hour; provided, however, this clause (B)
shall not apply in respect of a Nuclear Incident arising solely from a fuel
handling accident; or
(6) the occurrence of a Nuclear Incident at Unit 1, 2 or 3
causing (A) substantial injury or death to any person on or off the PVNGS Site
or (B) a discharge or dispersal of Source, Special Nuclear or Byproduct Material
from its intended place of confinement in amounts off the PVNGS Site or causing
radiation levels off the PVNGS Site such that, in the case of this clause (B)
(x) the NRC declares the occurrence of an Extraordinary Nuclear Occurrence or
declares any other event connoting an equivalent level of accident or (y) the
surface contamination dose rate measured off the PVNGS Site by a radiation
monitor at 1 meter above the surface level equals or is greater at any time than
10 millirads/hour (0.10 milligray/hour) or, in the case of noble gas plume
passage, the radiation dose rate equals or is greater than 10 rads (0.10 gray)
integrated over 24 hours, (or if the NRC shall at any time lower the radiation
levels required for the occurrence of an Extraordinary Nuclear Occurrence, such
lower levels as shall be consistent with such change by the NRC); or
(7) damage to or destruction of any portion of Unit 1 and,
unless Lessee theretofore shall have exercised its purchase option under Section
13(b) of the Facility Lease, the failure of the Lessee, or of the Lessee and one
6091.CHRYSLER.DEBT.71:1
<PAGE>
more other ANPP Participants, (A) to agree within eighteen calendar months of
such damage or destruction (or prior to such earlier date as of which one or
more other ANPP Participants shall agree to restore or reconstruct any damaged
portion of Unit 1 in accordance with Section 16.2 of the ANPP Participation
Agreement) to restore or reconstruct Unit 1 to completion prior to the day sixty
calendar months after the date of such agreement and (B) thereafter to complete
the restoration and reconstruction of Unit 1 within a period of sixty calendar
months after the date of such agreement, provided that no Final Shutdown shall
be deemed to have occurred pursuant to this clause (6) if and so long as Unit 1
is in operation at a rated core power level of at least 1900 megawatts thermal;
or
(8) the non-operation of Unit 1 or the operation of Unit 1 at
a net rated power level below 630 megawatts electric or any combination thereof
for any reason (including, without limitation, the occurrence of any Nuclear
Incident at any generating facility located anywhere in the world) for a Period
of thirty-six consecutive calendar months (or a period through the penultimate
day of the Lease Term if the Lessee shall have given notice of its intent to
exercise the purchase option permitted by Section 13(b) of the Facility Lease)
other than as a result of damage to or destruction of Unit 1; or
(9) the taking of any Governmental Action or the adoption or
making of any interpretations, directives or requests by any Governmental
Authority (including, without limitation, the staff thereof) or the concurrence
by any Governmental Authority in the voluntary action of the operator thereof,
in each such case whether formal or informal, by reason of which Unit 1 shall
cease to operate, or shall be unable under Applicable Law to resume operation,
at a capacity level of at least 630 megawatts electric for the Minimum Period;
or
(10) the cessation of operation of Unit 1 as a result of
either (x) the occurrence of an Extraordinary Nuclear Occurrence or an Incipient
Extraordinary Nuclear Occurrence relating to Unit 1 or (y) a Nuclear Incident
relating to Unit 1 and, in the case of this clause (y), the continuation of such
cessation for the Minimum Period; or
6091.CHRYSLER.DEBT.71:1
<PAGE>
(11) damage to Unit 1, without restoration or reconstruction
having been completed by the expiration of the Minimum Period, such that Unit 1
has a rated capacity of at least 630 megawatts electric; or
(12) destruction of Unit 1.
For purposes of clause (iii) of part (1) of this definition,
Final Shutdown will be deemed to have occurred upon the earlier of (x) the
written declaration of the Lessee of its intent not so to agree and (y) the
expiration of such five-year period without written agreement, and pursuant to
the foregoing clause (iv) of part (1), Final Shutdown will be deemed to have
occurred on the day preceding the Lease Termination Date. For purposes of part
(6) of this definition, a Final Shutdown shall be deemed to have occurred
immediately and automatically upon the decline of the water coolant within Unit
1 to a level three fee above the nuclear fuel and for purposes of parts (9),
(10)(y) and (11) of this definition, on the last day of the Minimum Period.
For purposes of parts (9), (10) and (11) of this definition,
Minimum Period shall have the same meaning assigned to it in the definition of
"Event of Loss".
For purposes of part (6) of this definition, Extraordinary
Nuclear Occurrence shall have its meaning as defined in Section 11 of the Atomic
Energy Act and the related NRC regulations, as amended to the date hereof, and
as the meaning of such term shall be expanded from time to time by future
amendments thereof. The definition of "extraordinary nuclear occurrence"
contained in Section 11 of the Atomic Energy Act on the date hereof is: "any
event causing a discharge or dispersal of source, special nuclear, or byproduct
material from its intended place of confinement in amounts offsite, or causing
radiation levels offsite, which the Commission determines to be substantial, and
which the Commission determines has resulted or will probably result in
substantial damages to persons offsite or property offsite. Any determination by
the Commission that such an event has, or has not, occurred shall be final and
conclusive, and no other official or any court shall have power or jurisdiction
to review any such determination. The Commission shall establish criteria in
writing setting forth the basis upon which such determination shall be made. As
6091.CHRYSLER.DEBT.71:1
<PAGE>
used in this subsection, 'offsite' means away from 'the location' or 'the
contract location' as defined in the applicable Commission indemnity agreement,
entered into pursuant to section 2210 of this title."
For purposes of part (10) of this definition: the term
"Extraordinary Nuclear Occurrence" shall have its meaning as defined in Section
11 of the Atomic Energy Act of 1954, as amended to the Closing Date; the term
"Incipient Extraordinary Nuclear Occurrence" shall mean an event causing a
discharge or dispersal of nuclear source, special nuclear or nuclear by-product
material from its intended place of confinement in amounts off site or on site
or causing a radiation level off site or on site which an independent nuclear
consultant agreed to by the Lessee and the Owner Participant (or, failing prompt
agreement, appointed by the American Arbitration Association) determines to be
substantial and which such consultant determines has resulted in substantial
injury to persons on or off the PVNGS Site or substantial damage to property off
the PVNGS Site; and the term "Nuclear Incident" shall mean any occurrence
causing bodily injury, sickness, disease or death, or loss of or damage to
property, or the loss of use of property, arising out of or resulting from the
radioactive, toxic, explosive or other hazardous properties of nuclear source,
special nuclear or nuclear by-product material.
For purposes of parts (4), (5), (6) and (8) of this
definition, Nuclear Incident shall have its meaning as defined in Section 11 of
the Atomic Energy Act, as amended to the date hereof and as the meaning of such
term may be expanded from time to time by future amendments thereof. The
definition of "nuclear incident" contained in the Atomic Energy Act on the date
hereof is: "any occurrence, including an extraordinary nuclear occurrence,
within the United States causing, within or outside the United States, bodily
injury, sickness, disease, or death, or loss of or damage to property, or loss
of use of property, arising out of or resulting from the radioactive, toxic,
explosive, or other hazardous properties of source, special nuclear, or
byproduct material: Provided, however, that as the term is used in section
2210(1) of this title, it shall include any such occurrence outside the United
States: And provided further, That as the term is used in section 2210(d) of
this title, it shall include any such occurrence outside the United States if
6091.CHRYSLER.DEBT.71:1
<PAGE>
such occurrence involves source, special nuclear, or byproduct material owned
by, and used by or under contract with, the United States: And provided further,
That as the term is used in section 2210(c) of this title, it shall include any
such occurrence outside both the United States and any other nation if such
occurrence arises out of or results from the radioactive, toxic, explosive, or
other hazardous properties of source, special nuclear, or byproduct material
licensed pursuant to subchapters V, VI, VII, and IX of this chapter, which is
used in connection with the operation of a licensed stationary production or
utilization facility or which moves outside the territorial limits of the United
States in transit from one person licensed by the Commission to another person
licensed by the Commission."
For purposes of parts (4), (5) and (8) of this definition,
Period of a stated duration in respect of any event shall mean an indefinite
period which can reasonably be expected to exceed the lesser of such duration
and the period remaining to the date which is three years prior to the end of
the remaining Basic Lease Term (or if such event occurs after the date three
years prior to the end of the remaining Basic Lease Term, the lesser of six
months and the period remaining to the day next preceding the end of the Basic
Lease Term) or a stated period in excess of the lesser thereof or an actual
period which continues in excess of the lesser thereof.
For purposes of part (6) of this definition, Source, Special
Nuclear or Byproduct Material shall have their respective defined meanings as
defined in Section 11 of the Atomic Energy Act of 1954, as amended to the date
hereof and as the meanings of such terms may be
expanded by future amendments thereof.
6091.CHRYSLER.DEBT.71:1
<PAGE>
EXHIBIT 10.39
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO
MANAGEMENT LIFE INSURANCE PLAN
(July 17, 1985)
- --------------------------------------------------------------------------------
ARTICLE 1
TITLE AND PURPOSE
1.01 The Company hereby establishes a plan as set forth herein, which
shall be known as the Public Service Company of New Mexico Management Life
Insurance Plan (the "Plan").
1.02 The purpose of the Plan is to provide additional life insurance
for selected management employees.
1.03 Participation in the Plan by an Employee does not and shall be
deemed to constitute a contract of employment between the Company and the
Employee, nor shall any provision hereunder restrict the right of the Company to
discharge the Employee or restrict the right of the Employee to terminate
employment.
ARTICLE II
DEFINITIONS
The following terms as used herein shall have the meaning specified below
unless the context otherwise requires. The masculine pronoun, where used, shall
include the feminine, and the singular shall, where appropriate, include plural.
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2.01 "Accelerated Management Performance Plan" shall mean the Public
Service Company of New Mexico Accelerated Management Performance Plan, as
amended from time to time.
2.02 "Annual Earnings" shall mean the annual rate of base earnings of
an Employee as of the date of death, exclusive of overtime pay, bonuses,
commissions, or other special payments, before deductions, including any and all
federal, state and other taxes.
2.03 "Authorized Leave of Absence" means a leave of absence approved by
the Company.
2.04 "Beneficiary" shall mean that person or persons or fiduciary which
the Employee has designated in writing, and which designation has been filed
with the Plan Administrator, to receive the benefits payable upon the Employee's
death. Until a written designation to the contrary is filed, if the Employee has
an Eligible Spouse, the Employee shall be deemed to have designated such
Eligible Spouse as Beneficiary, or if the Employee has no Eligible Spouse, the
Employee shall be deemed to have designated the Employee's estate as
Beneficiary.
2.05 "Board of Directors" means the Board of Directors of the Company.
2.06 "Company" means Public Service Company of New Mexico or any
successor thereto and any company affiliated with Public Service Company of New
Mexico which adopts the Plan.
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2.07 "Effective Date" of the Plan shall be July 17, 1985.
2.08 "Eligible Spouse" means the wife or husband to whom an Employee
has been legally married continuously for at least one (1) year prior to the
date of such Employee's death.
2.09 "Employee" shall mean any person who is receiving compensation for
personal services rendered to the Company or would be receiving such
compensation except for an Authorized Leave of Absence.
2.10 "Management Pay Group" means a management group of employees
designated by the President of the Company.
2.11 "Maximum Performance Credits" shall mean a total of thirty (30)
Performance Credits as defined in and earned in accordance with the terms of the
Company's Accelerated Management Performance Plan.
2.12 "Plan" means the Public Service Company of New Mexico Management
Life Insurance Plan.
2.13 "Plan Administrator" shall mean the person designated by the
President of the Company as a Plan Administrator of the Plan.
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<PAGE>
2.14 "Service Group Life Insurance Plan" shall mean the Public Service
Company of New Mexico Service Group Term Life Insurance Plan, as amended from
time to time.
2.15 "Year" means the period of twelve (12) consecutive calendar
months.
ARTICLE III
PARTICIPATION
3.01 Eligibility for Participation. Each Employee shall become a
Participant under the Plan of the Employee.
3.01.1 Is a member of the Management Pay Group, and 3.01.2 Has
completed six (6) months of service.
3.02 Date of Participation.
3.02.1 Each Employee who on July 17, 1985, fulfills the
requirements of Section 3.01 shall become a Participant under the Plan or the
Effective Date of the Plan.
3.02.2 Each other Employee shall become a Participant on the
date he fulfills the requirements of Section 3.01.
3.03 Duration of Participation. An Employee shall be continued to be
covered under the Plan until the date on which an Employee is no longer a member
of the Management Pay Group.
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<PAGE>
ARTICLE IV
INSURANCE BENEFITS
4.01 Amount of Life Insurance. The amount of life insurance that each
Employee will have shall be determined as follows:
4.01.1 Employees Accumulating Less Than Maximum Performance
Credits and Thirty Years of Service. An Employee who dies prior to accumulating
a total of thirty (30) Performance Credits under the terms of the Accelerated
Management Performance Plan or thirty (30) Years of Service, shall have life
insurance benefits in an amount equal to three (3) times his Annual Earnings,
reduced by the amount of life insurance payable to Employee's Beneficiary under
the Service Group Term Life Insurance Plan, if any.
4.01.2 Employee With Maximum Performance Credits or Thirty
Years of Service. An Employee who dies after accumulating a total of thirty (30)
Performance Credits under the terms of the Accelerated Management Performance
Plan, or thirty (30) Years of Service, shall have life insurance benefits in an
amount equal to one (1) times his Annual Earnings, reduced by the amount of life
insurance payable to Employee's Beneficiary under the Service Group Life
Insurance Plan, if any.
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<PAGE>
4.02 Maximum Benefits. The maximum amount of life insurance benefits
that may be provided under the Plan, including the amount of life insurance
payable under the Service Group Life Insurance Plan, is Four Hundred Thousand
Dollars ($400,000.00).
ARTICLE V
PAYMENT OF PREMIUMS
5.01 Payment of Premiums. The cost of each Employee's life insurance
coverage shall be paid by the Company.
ARTICLE VI
PLAN ADMINISTRATION
6.01 Administration of the Plan. The Board of Directors hereby vest the
Plan Administrator with all powers and authority necessary to administer the
Plan as herein provided, and with the authority to make such rules and
regulations of uniform application as the Plan Administrator may deem necessary
to carry out the provisions of the Plan. The Plan Administrator shall have the
exclusive right to interpret the provisions of the Plan and to determine any
questions arising thereunder or in connection with the administration thereof.
Any decision or action of the Plan Administrator shall be conclusive and binding
upon the Employees and Beneficiaries.
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6.02 Reliance on Reports and Certificates. The Plan Administrator may
rely conclusively upon all tables, certificates, opinions and reports furnished
by the insurance company, accountant, counsel or person who may from time to
time be employed or engaged for such purposes.
ARTICLE VII
AMENDMENT AND TERMINATION
7.01 General. The Board of Directors of the Company may, at any time,
amend or terminate the Plan except as set forth in Section 7.01 hereof.
7.02 Restrictions on Amendment or Termination. The Board of Directors
in terminating or amending the Plan shall require that payments be made to a
Beneficiary of a deceased Employee entitled to benefits as if such Plan had not
been amended or terminated.
ARTICLE VIII
MISCELLANEOUS
8.01 No Alienation. The benefits provided hereunder shall not be
subject to alienation, assignment, pledge, anticipation, attachment,
garnishment, receivership, execution or levy of any kind, including liability or
alimony or support payments, and any attempt to cause such benefits to be
subject shall not be recognized, except to the extent as may be required by law.
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8.02 Construction and Governing Law. In any question or interpretation
or other matter of doubt, the Plan Administrator and the Company may rely upon
the counsel for the Company. The Provisions of this Plan shall be construed,
administered and enforced in accordance with the laws of the State of New
Mexico.
IN WITNESS WHEREOF, the Company has caused this Plan to be adopted this
23rd day of July, 1985.
PUBLIC SERVICE COMPANY OF
NEW MEXICO
By: /S/ Jerry D. Geist
JERRY D. GEIST,
Chairman and President
ATTEST:
/S/ J. B. Mulcock Jr.
Secretary
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EXHIBIT 10.5.1
<PAGE>
MODIFICATION NO. 4 TO
CO-TENANCY AGREEMENT
BETWEEN
PUBLIC SERVICE COMPANY OF NEW MEXICO
AND
TUCSON ELECTRIC POWER COMPANY
This Modification No. 4 to the Co-Tenancy Agreement Between PUBLIC
SERVICE COMPANY OF NEW MEXICO ("New Mexico") and TUCSON ELECTRIC POWER COMPANY
("Tucson"), hereinafter sometimes referred to as the "Parties" or
"Participants", is hereby entered into an executed this 25 day of October, 1984.
WITNESSETH:
WHEREAS, the Parties entered into an agreement described as the
Co-Tenancy Agreement Between New Mexico and Tucson effective July 1, 1969, as
modified by Modification No. 1 on May 16, 1979, Modification No. 2 on December
31, 1983, and Modification No. 3 on July 17, 1984 ("Co-Tenancy Agreement"),
which establishes certain terms and conditions relating to their ownership and
operation of the San Juan Project Agreements; and
WHEREAS, the Parties desire to clarify their rights, title and
interests in the San Juan Project as a result of the contemplated October 31,
1984 conveyance of Tucson's San Juan Unit 3 ownership interest to Alamito
Company ("Alamito") pursuant to the purchase agreement between Tucson and
Alamito dated October 1, 1984 ("San
Juan Unit No. 3 Purchase Agreement").
NOW THEREOF, the Parties agree as follows:
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1.0 Effective Date. This Modification No. 4 shall become effective
immediately upon Tucson's conveyance of its San Juan Unit No. 3 ownership
interest to Alamito.
2.0 Compliance With Section 6.7. Section 6.7 of the Co-Tenancy
Agreement requires that in the event either Participant transfers any of its
rights, title or interest in the San Juan Project, the Participants shall
jointly execute a Supplement to this Co-Tenancy Agreement, in recordable form,
which describes the rights, titles and interests of each Participant following
such transfer or assignment. On November 17, 1981, New Mexico sold and
transferred an 8.475 percent undivided ownership interest in San Juan Unit 4 to
the City of Farmington, New Mexico. On December 31, 1981, Tucson and the M-S-R
Public Power Agency ("M-S-R") entered into the Tucson/M-S-R Agreement--Option to
Acquire Ownership Interest in San Juan Unit 4, wherein Tucson agreed to sell to
M-S-R and M-S-R agreed to purchase from Tucson, pursuant to the terms and
conditions of such agreement, on or before November 30, 1982, the Tucson Option
(also referred to as the "Option to Repurchase" in the May 16, 1979, San Juan
Unit 4 Purchase Agreement between New Mexico and Tucson). On November 29, 1982,
New Mexico and M-S-R executed the San Juan Unit 4 Purchase and Participation
Agreement, and on September 26, 1983, New Mexico and M-S-R executed the San Juan
Unit 4 Early Purchase and Participation Agreement under which New Mexico sold
and transferred a 28.8 percent undivided ownership interest in San Juan Unit 4
to M-S-R effective December 31, 1983. As of October 1, 1984, Tucson and Alamito
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<PAGE>
entered into the San Juan Unit No. 3 Purchase Agreement which provides that
Tucson will sell and transfer to Alamito its 50 percent undivided ownership
interest in Unit 3 on October 31, 1984. In accordance with the requirements of
Section 6.7, the following sections of the Co-Tenancy Agreement are hereby
amended to read as follows:
Amended Section 6.3:
6.3 Subsequent to execution of the Co-Tenancy Agreement, conveyances
and assignments or agreements, as described in paragraphs 2.3, 2.5, 5.2, 5.19
and 5.20, and subject to the requirements of such sections, have been made or
will be made dated as of a date prior to the Transfer Date so that each
Participant will have title to an equal undivided one-half (1/2) interest in the
San Juan Site, water rights, FC Line, rights-of-way, leases, River Water
Diversion and Pumping Station, and all San Juan Project improvements on such
sites. The generating units of the San Juan Project, Capital Additions, Capital
Betterments and Capital Replacements placed into service prior to the Transfer
Date shall be owned in undivided one-half (1/2) interest by each Participant.
The generating units of the San Juan Project, Capital Additions, and Capital
Betterments thereto, and Capital Replacements thereof, placed into service on
the Transfer Date and thereafter shall be owned and title held by the
Participants and Unit Participants in the following percentages:
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Amended Section 3.1.1:
6.3.1 For San Juan Units 1 and 2 and for all equipment and facilities
directly related to the Units 1 and 2, in accordance with the following
percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Alamito - 0 percent
New Section 6.3.1.1:
A new Section 6.3.1.1 shall be added to Section 6, after Section 6.3.1,
to read in its entirety as follows:
6.3.1.1 For San Juan Unit 3 and for all equipment and facilities
directly related to Unit 3 only, in accordance with the following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Alamito - 50 percent
Amended Section 6.3.2:
6.3.2 For San Juan Unit 4 and for all equipment and
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facilities directly related to Unit 4 only, in accordance with the following
percentages:
A. Participants
1. New Mexico - 62.725 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - 28.8 percent
2. City of Farmington - 8.475 percent
3. Alamito - 0 percent
Amended Section 6.3.3:
6.3.3 For equipment and facilities common only to Units 1 and 2, in
accordance with the following percentages:
A. Participants
1. New Mexico - 50 percent
2. City of Farmington 0 percent
B. Unit Participants
1. M-S-R - 0 percent
2. Tucson - 50 percent
3. Alamito - 0 percent
Amended Section 6.3.4:
6.3.4 For equipment and facilities common only to Units 3 and 4, in
accordance with the following percentages:
A. Participants
1. New Mexico - 56.351 percent
2. Tucson - 0 percent
B. Unit Participants
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1. M-S-R - 14.4 percent
2. City of Farmington - 4.249 percent (ownership
interest is with respect to common facilities not in
service on November 17, 1981; the City of Farmington
was granted an Easement and License for use of common
facilities which were in service on November 17,
1981).
3. Alamito - 25 percent
Amended Section 6.3.5:
6.3.5 For equipment and facilities common to all of the units in
accordance with the following percentages:
A. Participants
1. New Mexico - 53.741 percent
2. Tucson - 19.8 percent
B. Unit Participants
1. M-S-R - 8.7 percent
2. City of Farmington - 2.559 percent (ownership
interest is with respect to common facilities not in
service on November 17, 1981; the City of Farmington
was granted an Easement and License for use of common
facilities which were in service on November 17,
1981).
3. Alamito - 15.2 percent
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Amended Section 6.3.6:
6.3.6 For the Switchyard Facilities except as otherwise provided in
Section 15 hereof, in accordance with the following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Alamito - 0 percent
Sections 6.3.7, 6.3.8 and 6.3.9: Unchanged
3.0 Amended Section 8.1. Section 8.1 shall be amended to
read in its entirety as follows:
8.1 Subject to the provisions of paragraphs 10.1 and 10.2
hereof, the Participants shall be entitled to share the Net Effective
Generating Capacity of the San Juan Project in equal, undivided
one-half (1/2) interests for Units 1 and 2. New Mexico and Alamito
shall be entitled to share the Net Effective Generating Capacity of the
San Juan Project in equal undivided one-half (1/2) interests for Unit
3. New Mexico and Unit Participants to which New Mexico conveys or has
conveyed ownership interests and generation entitlements in San Juan
Unit 4 shall have a 100 percent (100%) interest in the Net Effective
Generating Capacity of Unit 4.
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4.0 New Section 9.5.2. A new Section 9.5.2 shall be added to Section 9,
after Section 9.5.1 to read in its entirety as follows:
9.5.2 With respect to matters involving and not solely related
to San Juan Unit 3, Tucson, as a Participant holding voting rights on
the Coordination Committee, shall retain such voting rights for
Alamito, with the obligation to consult with Alamito on all matters
involving the San Juan Project which affect San Juan Unit 3, as set
forth in the San Juan Unit No. 3 Purchase Agreement.
5.0 Amended Section 9.7. Section 9.7 shall be amended to
read in its entirety as follows:
9.7 In the event the Coordination Committee fails to reach
agreement on a matter that has earlier been determined to relate solely
to a specific San Juan generating unit, which such committee is
authorized to determine, approve, or otherwise act upon after a
reasonable opportunity to do so, then the Project Manager or Operating
Agent (as said terms are respectively defined in the San Juan Project
Construction Agreement and San Juan Project Operating Agreement) shall
be authorized and obligated to take such action as in its discretion it
deems to be necessary to the successful and proper construction,
operation and maintenance of such unit, pending the resolution, by
arbitration or otherwise, of any such inability or failure to agree.
6.0 Amended Exhibit V. Exhibit V (a-g) shall be amended to read in its
entirety as shown on the attached.
- 9 -
<PAGE>
7.0 Amended Section 25.8. Section 25.8 shall be amended to
read in its entirety as follows:
25.8 Except as modified by the provisions set forth in
Modification No. 4, all of the terms and conditions of this Co-Tenancy
Agreement, effective as of July 1, 1969, as modified by Modification
No. 1 as of May 16, 1979, Modification No. 2 as of December 31, 1983
and Modification No. 3 as of July 17, 1984, shall remain in full force
and effect.
IN WITNESS WHEREOF, the Parties hereto have caused this
Modification No. 4 to be executed as of this _____ day _________,
1984.
- 10 -
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO
Attest: By: /S/ J. L. Wilkins
-------------------------------
/S/ D. E. Peckham Its: Senior Vice President
- -------------------------
Secretary
TUCSON ELECTRIC POWER COMPANY
Attest: By: /S/
------------------------------
/S/ Jean E. Kettlewell Its: Executive Vice President
- -------------------------
STATE OF NEW MEXICO )
) ss.
COUNTY OF BERNALILLO)
The foregoing instrument was acknowledged before me this 25th day of
October, 1984, by J. L. Wilkins, Senior Vice President of Public Service Company
of New Mexico, a New Mexico corporation, on behalf of said corporation.
/S/ Sherry Leeson
----------------------
Notary Public
My Commission Expires:
July 1, 1988
STATE OF ARIZONA )
) ss.
COUNTY OF PIMA )
The foregoing instrument was acknowledged before me this 22nd day of
October, 1984, by Einar Greve, of Tucson Electric Power Company, an Arizona
corporation, on behalf of said corporation.
-------------------------------
Notary Public
My Commission Expires:
4/14/87
- 11 -
<PAGE>
Exhibit V(a)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 1
Ownership
New Mexico - 50%; Tucson - 50%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler, including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Start-up, Unit Auxiliary, and SO2 Scrubber Transformers
11. Bottom Ash Systems (up to but not including Dewatering Tank or
Ash Water Pump Building and Equipment)
12. Fly Ash System
13. Building HVAC System
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans and
Flue Gas Reheat System
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. SSR Protection System
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems and Hydrogen
- 12 -
<PAGE>
Exhibit V(b)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 2
Ownership
New Mexico - 50%; Tucson - 50%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler, including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Start-up, Unit Auxiliary, and SO2 Scrubber Transformers
11. Bottom Ash System (up to but not including Dewatering Tank or
Ash Water Pump Building and Equipment)
12. Fly Ash System
13. Building HVAC System
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans and
Flue Gas Reheat System
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
- 13 -
<PAGE>
Exhibit V(c)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 3
Ownership
New Mexico - 50%; Alamito - 50%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler, including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Unit Auxiliary 3A and 3B Transformers
11. Bottom Ash System including: Hopper, Dewatering Tank,
Settling Tank, Surge Tank, Storage Tank, and Pump House
12. Fly Ash System
13. Building HVAC System
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. Fuel Oil Ignitor Heaters and Unit Specific Piping
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
- 14 -
<PAGE>
Exhibit V(c)
(Continued)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 3
Ownership
New Mexico - 50%; Alamito - 50%
19. Coal Reclaim Hoppers, Feeders, Feeder Belts, Belt Scales, Fire
Protection System, and 3C Conveyor to the Secondary Crusher
Building
20. SSR Protection System
- 15 -
<PAGE>
Exhibit V(d)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 4
Ownership
New Mexico - 62.725; Tucson - 0%; M-S-R -
28.8%; City of Farmington - 8.475%; Alamito - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler Including Air Heaters and Pulverizers, Bunkers and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Unit Auxiliary 4A and 4B Transformers
11. Bottom Ash System including: Hopper, Dewatering Tank,
Settling Tank, Surge Tank, Storage Tank, and Pump House
12. Fly Ash System
13. Building HVAC System
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System
15. Emergency Diesel Generator
16. Electrical and Control Systems
- 16 -
<PAGE>
Exhibit V(d)
(Continued)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 4
Ownership
New Mexico - 62.725; Tucson - 0%; M-S-R -
28.8%; City of Farmington - 8.475%; Alamito - 0%
17. Fuel Oil Ignitor Heaters and Unit Specific Piping
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
19. Coal Reclaim Hoppers, Feeders, Feeder Belts, Belt Scales, Fire
Protection System, and 3D Conveyor to the Secondary Crusher
Building
- 17 -
<PAGE>
Exhibit V(e)
FACILITIES AND EQUIPMENT
COMMON TO SAN JUAN UNITS 1 AND 2
Ownership
New Mexico - 50%; Tucson - 50%
1. Bearing Cooling Water System
2. Bottom Ash Dewatering Facility, Including Dewatering Tank,
Settling Tank, Surge Tank, Storage Tank, and Pump House
3. Demineralizer System, including: Clarifier, Storage Tanks,
and Sump Pump
4. Fuel Oil System (No. 2 Oil for Ignition and Flame
Stabilization)
5. Premix Tank Facility (formerly Wastewater Neutralizer
Facility, now Operated as part of the Water Management System)
6. Instrument Air System, except Unit Piping
7. Chemical Feed System, except Unit Piping
a. Condensate and Feedwater System
b. Boiler
c. Bearing Cooling Water System
d. Cooling Tower Systems
e. Chlorination System
8. Plant Air System, except Unit Piping
9. Sootblowing Air System, except Unit Piping
10. Hydrogen Storage System, except Unit Piping
11. Coal Handling Reclaim Systems A and B including: Hoppers,
Feeders, Reclaim Conveyors, Belt Scales and Sprinkler System
12. Coal Tripper System South of Column, Line 12, including Dust
Collection System
13. Turbine Lube Oil Storage and Transfer System
14. Control Room, Equipment Rooms, and Associated HVAC System
15. Building South of Column Line 12
16. Turbine Crane South of Column Line 12
17. Fuel Oil, Ash, and Water Pipe Racks
- 18 -
<PAGE>
Exhibit V(e)
(Continued)
FACILITIES AND EQUIPMENT
COMMON TO SAN JUAN UNITS 1 AND 2
Ownership
New Mexico - 50%; Tucson - 50%
18. Boiler Fill System for Units 1 and 2
19. SO2 Backup Scrubber - Absorber Transformer
20. SAR Multiplexer Control System
- 19 -
<PAGE>
Exhibit V(f)
FACILITIES AND EQUIPMENT
COMMON TO SAN JUAN UNITS 3 AND 4
Ownership
NewMexico - 56.351%; Tucson - 0%; M-S-R -
14.4%; City of Farmington - 4.249%*; Alamito - 25%
1. Bearing Cooling Water System
2. Demineralizer System including: Sump Pumps, Filter Beds, and
Storage Tanks
3. Fuel Oil System (No. 6 Oil for Ignition and Flame
Stabilization, except Igniter Heaters and Unit Specific
Piping)
4. Wastewater Neutralizer Facility (formerly operated as part of
Water Management System)
5. Instrument Air System, except Unit Piping
6. Chemical Feed Systems, except Unit Piping
a. Condensate & Feedwater System
b. Boiler
c. Bearing Cooling Water System
d. Cooling Tower System
e. Chlorination System
7. Plant Air System, except Unit Piping
8. Sootblowing Air System, except Unit Piping
9. Start-Up Transformers and Iso-Phase Bus to Units 3 and 4
Switchgear
10. Hydrogen Storage System, except Unit Piping
11. Coal Tripper System serving Units 3 and 4 including Dust
Collection Systems
- 20 -
<PAGE>
Exhibit V(f)
(continued)
FACILITIES AND EQUIPMENT
COMMON TO SAN JUAN UNITS 3 AND 4
Ownership
NewMexico - 56.351%; Tucson - 0%; M-S-R -
14.4%; City of Farmington - 4.249%*; Alamito - 25%
12. Turbine Lube Oil Storage and Transfer System
13. Control Room, Equipment Rooms, and Associated HVAC System
14. Boiler Fill System for Units 3 and 4
15. Auxiliary Cooling Systems including Auxiliary Cooling Tower
No. 1 and Pumps, but excepting No. 4 Tower and Pumps and
Piping which is Unit Specific
16. CO2 Storage System
17. Start-up Boiler Feed Pump
18. Turbine Bay Crane North of Column Line 12
19. Fuel Oil, Ash, and Water Pipe Racks
20. Fire Water Booster and Jockey Pumps
21. Halon Fire Protection System
22. Cooling Tower Multiplex Control System
23. All spare parts common to either Unit
*City of Farmington's ownership interest is with respect to Common Facilities
not in service on November 17, 1981; the City of Farmington was granted an
Easement and License for use of Common Facilities which were in service on
November 17, 1981.
- 21 -
<PAGE>
Exhibit V(g)
FACILITIES AND EQUIPMENT
COMMON TO ALL FOUR SAN JUAN UNITS
Ownership
New Mexico - 53.741%; Tucson - 19.8% M-S-R -
8.7% City of Farmington - 2.559%*; Alamito - 15.2%
1. River and Raw Water System including:
a. Diversion and intake structures, including all equipment
and pump building
b. Raw water line to reservoir
c. Reservoir, pump building, and all equipment
d. Raw water lines to plant yard
e. All underground and above ground fire protection system
to each vendor supplied or unit specific fire
distribution system
2. Auxiliary boiler
3. SO2 System Chemical Plant, except Absorbers
a. double effect evaporator train systems
b. fly ash filter system
c. absorber product and feed tanks
d. condensate collection, storage, and transfer systems
e. soda ash storage, mixing, and distribution systems
f. sulfur plant
g. sulfate purge system including: crystallizers,
centrifuges, evaporators, and salt cake system
h. sulfuric acid plant system including: storage tanks and
load out system
i. auxiliary No. 2 cooling tower, pumps, and systems
4. Spare Main Transformer 345/24 kV, for all Units
5. Part of the Maintenance, Office, and Warehousing Facilities
- 22 -
<PAGE>
Exhibit V(g)
(Continued)
FACILITIES AND EQUIPMENT
COMMON TO ALL FOUR SAN JUAN UNITS
Ownership
New Mexico - 53.741%; Tucson - 19.8% M-S-R -
8.7% City of Farmington - 2.559%*; Alamito - 15.2%
6. Chemical Laboratory
7. Coal and Ash Handling control facilities
8. Roads and grounds such as fencing, yard lighting, guard
facilities, drainage, and dikes
9. Potable Water System
10. Environmental Monitoring including: Air, Water, and Ground
11. Transportation such as trucks, cars, and dozers
12. Water Management System
a. Wastewater Recovery System - Northside
(1) Reverse osmosis system including lime/soda
softening clarifier system
(2) Brine concentrator Nos. 4 and 5
(3) Centrifuge dewatering system
(4) Effluent Pond No. 3 and pumping system
(5) North Evaporation Ponds 1, 2, and 3
b. SO2 Waste Treatment System - Southside
(1) Effluent Ponds 1A, 1B, 2 and pumping system
(2) Clarifier system
(3) Oxidation Towers
(4) Brine concentrator Nos. 1, 2, and 3
(5) Centrifuge dewatering system
(6) South evaporation pond Nos. 1, 2, 3, 4, and 5
c. Data Acquisition System
d. Plant Sludge Pit
- 23 -
<PAGE>
Exhibit V(g)
(Continued)
FACILITIES AND EQUIPMENT
COMMON TO ALL FOUR SAN JUAN UNITS
Ownership
New Mexico - 53.741%; Tucson - 19.8% M-S-R -
8.7% City of Farmington - 2.559%*; Alamito - 15.2%
13. Coal transfer facilities from the reclaim conveyors to the
head-end of plant belts 4A and 4B and dust suppression systems
14. Maintenance Bay Facilities including: Bay Bridge Crane, all
Offices, and Support Facilities
15. Sewage Treatment Facilities
*City of Farmington's ownership interest is with respect to Common Facilities
not in service on November 17, 1981; the City of Farmington was granted an
Easement and License for use of Common Facilities which were in service on
November 17, 1981.
- 24 -
<PAGE>
EXHIBIT 10.5.2
<PAGE>
MODIFICATION NO. 5
TO
CO-TENANCY AGREEMENT
BETWEEN
PUBLIC SERVICE COMPANY OF NEW MEXICO
AND
TUCSON ELECTRIC POWER COMPANY
This Modification No. 5 to the Co-Tenancy Agreement Between PUBLIC
SERVICE COMPANY OF NEW MEXICO ("New Mexico") and TUCSON ELECTRIC POWER COMPANY
("Tucson"), hereinafter sometimes referred to collectively as the "Parties" or
"Participants", is hereby entered into and executed as of the 1st day of July,
1985.
WITNESSETH:
WHEREAS, the Parties entered into an agreement described as the
Co-Tenancy Agreement Between New Mexico and Tucson effective July 1, 1969, as
modified by Modification No. 1 on May 16, 1979, Modification No. 2 on December
31, 1983, Modification No. 3 on July 17, 1984, and Modification No. 4 on October
25, 1984 ("Co-Tenancy Agreement"), which establishes certain terms and
conditions relating to their ownership and operation of the San Juan Project and
Project Agreements; and
WHEREAS, on December 28, 1984, New Mexico and the Incorporated County
of Los Alamos, New Mexico ("Los Alamos County") entered into the Amended and
- 2 -
<PAGE>
Restated San Juan Unit 4 Purchase and Participation Agreement ("County PPA"),
whereby Los Alamos County agreed to purchase from New Mexico a 7.20 percent
undivided ownership interest in Unit 4; and
WHEREAS, the County PPA provides, among other things, that Los Alamos
County, upon closing of the transaction provided for in the County PPA, will
have the voting rights and obligations of a Unit Participant on San Juan Project
Committees as said rights and obligations are set forth in the Project
Agreements; and
WHEREAS, New Mexico and Tucson desire to clarify the rights and
responsibilities of Participants and Unit Participants in the San Juan Project
as a result of Los Alamos County's purchase of a 7.20 percent undivided interest
in Unit 4 pursuant to the County PPA.
NOW, THEREFORE, the Parties agree that the Co-Tenancy Agreement is
hereby amended as follows:
1.0 Effective Date. This Modification No. 5 shall become effective
immediately upon the closing of Los Alamos County's purchase of the 7.20 percent
undivided interest in Unit 4 pursuant to the County PPA, currently anticipated
to be July 1, 1985.
2.0 Compliance With Section 6.7. Section 6.7 of the Co-Tenancy
Agreement requires that in the event either Participant transfers any of its
rights, title or interest in the San Juan Project, the Participants shall
jointly execute a Supplement to the Co-Tenancy Agreement, in recordable form,
which describes the rights, titles, and interests of each Participant following
such transfer or assignment. On November 17, 1981, New Mexico sold and
transferred an 8.475 percent undivided ownership interest in Unit 4 to the City
of Farmington, New Mexico ("City of Farmington"). On December 31, 1981, Tucson
and the M-S-R Public Power Agency ("M-S-R") entered into the Tucson/M-S-R
Agreement--Option to Acquire Ownership Interest in San Juan Unit 4, wherein
Tucson agreed to sell to M-S-R and M-S-R agreed to purchase from Tucson,
pursuant to the terms and conditions of such agreement, on or before November
30, 1982, the Tucson Option (also referred to as the "Option to Repurchase" in
the May 16, 1979, San Juan Unit 4 Purchase Agreement between New Mexico and
Tucson). On November 29, 1982, New Mexico and M-S-R executed the San Juan Unit 4
Purchase and Participation Agreement, and on September 26, 1983, New Mexico and
M-S-R executed the San Juan Unit 4 Early Purchase and Participation Agreement
under which New Mexico sold and transferred a 28.8 percent undivided ownership
interest in Unit 4 to M-S-R effective December 31, 1983. On October 31, 1984,
Tucson transferred its 50 percent undivided ownership interest in Unit 3 to the
Alamito Company ("Alamito"). On December 28, 1984, New Mexico and Los Alamos
County entered into the County PPA which provides that New Mexico will sell and
transfer to Los Alamos County a 7.20 percent
- 3 -
<PAGE>
undivided ownership interest in Unit 4 which transfer is expected to occur as of
July 1, 1985. In accordance with the requirements of Section 6.7, the following
sections of the Co-Tenancy Agreement are hereby amended to read as follows:
Amended Section 6.3.1:
6.3.1 For Units 1 and 2 and for all equipment and facilities directly
related to Units 1 and 2, in accordance with the following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Alamito - 0 percent
4. Los Alamos County - 0 percent
6.3.1.1 For Unit 3 and for all equipment and facilities directly
related to Unit 3 only, in accordance with the following percentages:
- 4 -
<PAGE>
A. Participants
1. New Mexico - 50 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - percent
2. City of Farmington - 0 percent
3. Alamito - 50 percent
4. Los Alamos County - 0 percent
Amended Section 6.3.2:
6.3.2 For Unit 4 and for all equipment and facilities directly related
to Unit 4 only, in accordance with the following percentages:
A. Participants
1. New Mexico - 55.525 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - 28.8 percent
2. City of Farmington - 8.475 percent
- 5 -
<PAGE>
3. Alamito - 0 percent
4. Los Alamos County - 7.20 percent
Amended Section 6.3.3:
6.3.3 For equipment and facilities common only to Units 1 and 2, in
accordance with the following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Alamito - 0 percent
4. Los Alamos County - 0 percent
Amended Section 6.3.4:
6.3.4 For equipment and facilities common only to Units 3 and 4, in
accordance with the following percentages:
A. Participants
- 6 -
<PAGE>
1. New Mexico - 52.739 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - 14.4 percent
2. City of Farmington - 4.249 percent (ownership
interest is with respect to common facilities not in
service on November 17, 1981; the City of Farmington
was granted an Easement and License for use of common
facilities which were in service on November 17,
1981).
3. Alamito - 25 percent
4. Los Alamos County - 3.612 percent
Amended Section 6.3.5:
6.3.5 For equipment and facilities common to all of the units in
accordance with the following percentages:
A. Participants
1. New Mexico - 51.566 percent
2. Tucson - 19.8 percent
B. Unit Participants
- 7 -
<PAGE>
1. M-S-R - 8.7 percent
2. City of Farmington - 2.559 percent (ownership
interest is with respect to common facilities not in
service on November 17, 1981; the City of Farmington
was granted an Easement and License for use of common
facilities which were in service on November 17,
1981).
3. Alamito - 15.2 percent
4. Los Alamos County - 2.175 percent Amended
Section 6.3.6:
6.3.6 For the Switchyard Facilities except as otherwise provided in
Section 15 hereof, in accordance with the following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
- 8 -
<PAGE>
3. Alamito - 0 percent
4. Los Alamos County - 0 percent
3.0 Amended Section 8.1: Section 8.1 shall be amended to
read in its entirety as follows:
8.1 Subject to the provisions of paragraphs 10.1 and 10.2
hereof, the Participants shall be entitled to share the Net Effective
Generating Capacity of Units 1 and 2 in equal, undivided one-half (1/2)
interests. New Mexico and Alamito shall be entitled to share the Net
Effective Generating Capacity of Unit 3 in equal undivided one-half
(1/2) interests. New Mexico and Unit Participants to which New Mexico
conveys or has conveyed ownership interests and generation entitlements
in Unit 4 shall have a 100 percent (100%) interest in the Net Effective
Generating Capacity of Unit 4.
4.0 New Section 9.5.3. A new Section 9.5.3 shall be added to Section 9
to read in its entirety as follows:
9.5.3 With respect to matters involving and not solely related
to Unit 4, New Mexico will in good faith solicit the views of the City
of Farmington and Los Alamos County on matters involving the San Juan
Project which affect Unit 4.
- 9 -
<PAGE>
5.0 Amended Exhibit V. Exhibit V (a-h) shall be amended to read in its
entirety as shown on the attached.
6.0 Amended Section 25.8. Section 25.8 shall be amended to read in its
entirety as follows:
25.8 Except as modified by the provisions set forth in
Modification No. 5, all of the terms and conditions of the Co- Tenancy
Agreement, effective as of July 1, 1969, as modified by Modification
No. 1 on May 16, 1979, Modification No. 2 on December 31, 1983,
Modification No. 3 on July 17, 1984, and Modification No. 4 on October
25, 1984, shall remain in full force and effect.
6.0 Amended Section 26. Section 26 shall be amended to read as follows:
26.0 RECOGNITION OF M-S-R, THE CITY OF FARMINGTON, ALAMITO AND LOS
ALAMOS COUNTY ACKNOWLEDGEMENT.
26.1 The Parties recognize that M-S-R, the City of Farmington, Alamito,
and Los Alamos County, each has acknowledged that it is familiar with the
Project Agreements as amended between New Mexico and Tucson and such agreements
govern the activities of the San Juan Project. Where a specific provision of the
EPPA, the Farmington PAPA, or the County PPA, is in conflict with the provision
in one or more of the Project Agreements, then (a) as
- 10 -
<PAGE>
between New Mexico and M-S-R, the provisions of the EPPA shall govern, all as
provided in Section 5.2 of such EPPA, and (b) as between New Mexico and the City
of Farmington, the provisions of the Farmington PAPA shall govern, all as
provided in Section 8.2 of the Farmington PAPA, and (c) as between New Mexico
and Los Alamos County, the provisions of the County PPA shall govern, all as
provided in Section 5.2 of the County PPA. "EPPA" shall mean the San Juan Unit 4
Early Purchase and Participation Agreement entered into by New Mexico and M-S-R
on September 26, 1983. "Farmington PAPA" shall mean the San Juan Unit 4 Purchase
Agreement and Participation Agreement entered into by New Mexico and Farmington
on November 17, 1981. "County PPA" shall mean the Amended and Restated San Juan
Unit 4 Purchase and Participation Agreement entered into by New Mexico and Los
Alamos County on December 28, 1984.
- 11 -
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Modification
No. 5 to the Co-Tenancy Agreement to be executed as of the 1st day of July,
1985.
PUBLIC SERVICE COMPANY OF NEW MEXICO
Attest: By: /S/ J. L. Wilkins
-------------------------------
/S/ M. Mason-Plunkett Its: Senior Vice President,
- -------------------------- Power Supply
Assistant Secretary
TUCSON ELECTRIC POWER COMPANY
Attest: By: /S/
------------------------------
/S/ Its: President
- --------------------------
Assistant Secretary
- 12 -
<PAGE>
STATE OF NEW MEXICO )
) ss.
COUNTY OF BERNALILLO )
The foregoing instrument was acknowledged before this 24th day of June,
1985, by J. L. Wilkins, a Senior Vice President of Public Service Company of New
Mexico, a New Mexico corporation on behalf of said corporation.
My Commission Expires:
July 1, 1988 /S/ Sherry Leeson
-----------------------
Notary Public
STATE OF ARIZONA )
) ss.
COUNTY OF PIMA )
The foregoing instrument was acknowledged before me this 14th day of
June, 1985, by Einar Greve, President of Tucson Electric Power Company, an
Arizona corporation, on behalf of said corporation.
My Commission Expires:
January 9, 1987 /S/
- 13 -
<PAGE>
Exhibit V(a)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 1
Ownership
New Mexico - 50% Tucson - 50%
M-S-R - 0% City of Farmington - 0%
Alamito - 0% Los Alamos County - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Start-up, Unit Auxiliary, and SO2 Scrubber Transformers
11. Bottom Ash System (Up to but not including Dewatering Tank or
Ash Water Pump building and equipment.)
12. Fly Ash System
13. Building HVAC System
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System including the 650-pound Reheat Steam
Line and Desuperheater from the Plant Main Steam Line but not
including the 165-pound Control Valve and Branch Line to the
Chemical Plant
15. Emergency Diesel Generator
- 1 -
<PAGE>
Exhibit V(a)
(continued)
16. Electrical and Control Systems
17. SSR Protection System
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
- 2 -
<PAGE>
Exhibit V(b)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 2
Ownership
New Mexico - 50% Tucson - 50%
M-S-R - 0% City of Farmington - 0%
Alamito - 0% Los Alamos County - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Start-up, Unit Auxiliary, and SO2 Scrubber
Transformers
11. Bottom Ash System (Up to but not including Dewatering Tank
or Ash Water Pump building and equipment.)
12. Fly Ash System
13. Building HVAC System
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System including the 650-pound Reheat Steam
Line and Desuperheater from the Plant Main Steam Line but
not including the 165-pound Control Valve and Branch Line to
the Chemical Plant
15. Emergency Diesel Generator
- 3 -
<PAGE>
Exhibit V(b)
(continued)
16. Electrical and Control Systems
17. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
- 4 -
<PAGE>
Exhibit V(c)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 3
Ownership
New Mexico - 50% Alamito - 50%
M-S-R - 0% City of Farmington - 0%
Tucson - 0% Los Alamos County - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Unit Auxiliary 3A and 3B Transformers
11. Bottom Ash System including: Hopper, Dewatering Tank,
Settling Tank, Surge Tank, and Pump House
12. Fly Ash System
13. Building HVAC System
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System
15. Emergency Diesel Generator
16. Electrical and Control Systems
- 5 -
<PAGE>
Exhibit V(c)
(continued)
17. Fuel Oil Ignitor Heaters and Unit Specific Piping
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
19. Coal Reclaim Hoppers, Feeders, Feeder Belts, Belt Scales, Fire
Protection System, and 3C Conveyor to the Secondary Crusher
Building
20. SSR Protection System
21. Auxiliary Steam Header Piping System:
a. Including the Unit Specific Branch Line to the Reheat
System
b. Not included is the Branch Line to the Chemical Plant
- 6 -
<PAGE>
Exhibit V(d)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 4
Ownership
New Mexico - 55.525% Tucson - 0%
M-S-R - 28.8% City of Farmington - 8.475%
Alamito - 0% Los Alamos County - 7.20%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Unit Auxiliary 4A and 4B Transformers
11. Bottom Ash System including: Hopper, Dewatering Tank,
Settling Tank, Surge Tank, Storage Tank, and Pump House
12. Fly Ash System
13. Building HVAC System
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System
15. Emergency Diesel Generator
16. Electrical and Control Systems
- 7 -
<PAGE>
Exhibit V(d)
(continued)
17. Fuel Oil Ignitor Heaters and Unit Specific Piping
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
19. Coal Reclaim Hoppers, Feeders, Feeder Belts, Belt Scales, Fire
Protection System, and 3D Conveyor to the Secondary Crusher
Building
20. Auxiliary Steam Header Piping System:
a. Including the Unit Specific Branch Line to the Reheat
System
b. Not included is the Branch Line to the Chemical Plant
- 8 -
<PAGE>
Exhibit V(e)
FACILITIES AND EQUIPMENT
COMMON TO SAN JUAN UNITS 1 AND 2
Ownership
New Mexico - 50% Tucson - 50%
M-S-R - 0% City of Farmington - 0%
Alamito - 0% Los Alamos County - 0%
1. Bearing Cooling Water System
2. Bottom Ash Dewatering Facility including: Dewatering Tank,
Settling Tank, Surge Tank, Storage Tank, and Pump House
3. Demineralizer System including: Clarifier, Storage Tanks, and
Sump Pump
4. Fuel Oil System (No. 2 Oil for Ignition and Flame
Stabilization)
5. Premix Tank Facility (This was the wastewater neutralizer
facility and is now operated as part of the Water Management
System.)
6. Instrument Air System, except Unit Piping
7. Chemical Feed System, except Unit Piping
a. Condensate and Feedwater System
b. Boiler
c. Bearing Cooling Water System
d. Cooling Tower Systems
e. Chlorination System
8. Plant Air System, except Unit Piping
9. Sootblowing Air System, except Unit Piping
10. Hydrogen Storage System, except Unit Piping
11. Coal Handling Reclaim Systems A and B including: Hoppers,
Feeders, Reclaim Conveyors, Belt Scales, and Sprinkler System
12. Coal Tripper System south of column, Line 12 including Dust
Collection System
13. Turbine Lube Oil Storage and Transfer System
14. Control Room, Equipment Rooms, and Associated HVAC System
- 9 -
<PAGE>
Exhibit V(e)
(continued)
15. Turbine Crane south of column, Line 12
16. Fuel Oil, Ash, and Water Pipe Racks
17. Boiler Fill System for Units 1 and 2
18. All spare parts common to either unit.
19. SO2 Backup Scrubber-Absorber Transformer
20. SAR Multiplexer Control System
- 10 -
<PAGE>
Exhibit V(f)
FACILITIES AND EQUIPMENT
COMMON TO SAN JUAN UNITS 3 AND 4
Ownership
New Mexico - 52.739% Tucson - 0%
M-S-R - 14.4% City of Farmington - 4.249%*
Alamito - 25% Los Alamos County - 3.612%
1. Bearing Cooling Water System
2. Demineralizer System: including Sump Pumps, Filter Beds, and
Storage Tanks
3. Fuel Oil System (No. 6 Oil for Ignition and Flame
Stabilization except Ignitor Heaters and Unit Specific Piping)
4. Wastewater Neutralizer Facility (This facility is operated as
part of Water Management System.)
5. Instrument Air System except Unit Piping
6. Chemical Feed System except Unit Piping
a. Condensate and Feedwater System
b. Boiler
c. Bearing Cooling Water System
d. Cooling Tower Systems
e. Chlorination System
7. Plant Air System except Unit Piping
8. Sootblowing Air System except Unit Piping
9. Start-Up Transformers and Nonseg Bus to Units 3 and 4
Switchgear
10. Hydrogen Storage System except Unit Piping
11. Coal Tripper System Serving Units 3 and 4 including Dust
Collection Systems
12. Turbine Lube Oil Storage and Transfer System
13. Control Room, Equipment Rooms, and Associated HVAC System
14. Boiler Fill System for Units 3 and 4
- 11 -
<PAGE>
Exhibit V(f)
(continued)
15. Auxiliary Cooling Systems including Auxiliary Cooling Tower
No. 1 and Pumps, but excepting No. 4 Tower Pumps and Piping
which is Unit Specific
16. CO2 Storage System
17. Start-Up Boiler Feed Pump
18. Turbine Bay Crane north of column, Line 12
19. Fuel Oil, Ash, and Water Pipe Racks
20. Fire Water Booster and Jockey Pumps
21. Halon Fire Protection System
22. Cooling Tower Multiplex Control System
23. All spare parts common to either unit.
*City of Farmington's ownership interest is with respect to Common Facilities
not in service on November 17, 1981; the City of Farmington was granted an
Easement and License for use of Common Facilities which were in service on
November 17, 1981.
- 12 -
<PAGE>
Exhibit V(g)
FACILITIES AND EQUIPMENT
COMMON TO ALL SAN JUAN UNITS
Ownership
New Mexico - 51.566% Tucson - 19.8%
M-S-R - 8.7% City of Farmington - 2.559%*
Alamito - 15.2% Los Alamos County - 2.175%
1. River and Raw Water System including:
a. Diversion and intake structures including all equipment
and pump building.
b. Raw water line to reservoir.
c. Reservoir and pump building and all equipment
d. Raw water lines to plant and yard.
e. All underground and above ground fire protection system
to each vendor supplied or unit specific fire
distribution system.
2. Auxiliary Boiler
3. SO2 System Chemical Plant except Absorbers
a. Double effect evaporator train systems.
b. Fly ash filter system.
c. Absorber product and feed tanks.
d. Condensate collection, storage, and transfer systems.
e. Soda ash storage, mixing, and distribution system.
f. Sulfur plant.
g. Sulfate purge system including crystallizers,
centrifuges, evaporators, and salt cake system.
h. Sulfuric acid plant system including storage tanks and
load out system.
i. Auxiliary No. 2 cooling tower, pumps, and system.
4. Spare Main Transformer 345/24 kV for all units
5. Maintenance, Office, and Warehousing Facilities
6. Chemical Laboratory
7. Coal and Ash Handling Control Facilities
8. Roads and grounds such as fencing, yard lighting, guard
facilities, drainage, and dikes.
9. Potable Water System
- 13 -
<PAGE>
Exhibit V(g)
(continued)
10. Environmental Monitoring Systems including Air, Water, and
Ground. Excludes Stack Monitoring Systems which are unit
specific.
11. Transportation such as trucks, cars, and dozers
12. Water Management System
a. Wastewater Recovery System - Northside
1) Reverse osmosis system including lime/soda
softening clarifier system.
2) Brine concentrator Nos. 4 and 5.
3) Centrifuge dewatering system.
4) Effluent pond No. 3 and pumping system.
5) North evaporation ponds 1, 2, and 3.
b. SO2 Waste Treatment System - Southside
1) Effluent ponds 1A, 1B, 2, and pumping system.
2) Clarifier system.
3) Oxidation towers.
4) Brine concentrator Nos. 1, 2, and 3.
5) Centrifuge dewatering system.
6) South evaporation pond Nos. 1, 2, 3, 4, and 5.
c. Data Acquisition System
d. Solid Waste Disposal Pit
13. Coal Transfer Facilities from the Reclaim Conveyors to the
Head-End of Plant Belts 4A and 4B and Dust Suppression Systems
14. Maintenance Bay Facilities including: Bay Bridge Crane, all
Offices, and Support Facilities
15. Sewage Treatment Facilities
16. On each of Units 1 and 2, the Chemical Plant 165-pound Control
Valve, and Branch Line from the Unit Specific 650-pound Reheat
Steam Line
17. On each of Units 3 and 4, the Chemical Plant Branch Steam Line
from the Unit Specific Auxiliary Steam Header System
*City of Farmington's ownership interest is with respect to Common Facilities
not in service on November 17, 1981; the City of Farmington was granted an
Easement and License for use of Common Facilities which were in service on
November 17, 1981.
- 14 -
<PAGE>
Exhibit V(h)
SAN JUAN PROJECT
SWITCHYARD FACILITIES
Cost Allocation (%)
Replacement/Improvements
Installed Cost Betterments
-------------- -----------
New Mexico Tucson New Mexico Tucson
---------- ------ ---------- ------
345 kV Bus 1 & 3 (East Bus) 50 50 50 50
Bus 2 (West Bus) 50 50 50 50
Circuit Breakers
- ----------------
06582 (345/230) 50 50 50 50
05482 50 50 50 50
04382 (OJO) 50 50 50 50
12982 (McKinley) 50 50 50 50
11882 50 50 50 50
10782 (Unit 4) 50 50 50 50
09882 (McKinley) 58.33 41.67 62.5 37.5
08782 54.16 45.84 56.25 43.75
07682 (Unit 3) 50 50 50 50
15282 (Corers) 50 50 50 50
14182 50 50 50 50
13082 (Unit 2) 50 50 50 50
18582 (West Mesa) 50 50 50 50
17482 50 50 50 50
16382 (Unit 1) 50 50 50 50
20782 50 50 50 50
- 15 -
<PAGE>
Exhibit V(h)
(continued)
Shunt Reactors
- --------------
Ojo 100 0 100 0
McKinley 1 5.36 94.64 5.36 94.64
McKinley 2 16.67 83.33 25 75
WW (BA) 100 0 100 0
Transformers
- ------------
Station Aux. No. 2 100 0 100 0
400 MVA, 345/230-12.5
Station Aux. No. 1 50 50 50 50
345/4.16-12.5
Station Aux. No. 3 50 50 50 50
Future Facilities
- -----------------
345/69/12 kV 66.67 33.33 66.67 33.33
2-345 kV Bkrs (Durango) 50 50 50 50
Lower Voltage
- -------------
230 kV Control Hse 83.33 16.67 83.33 16.67
230/69 kV Trf 66.67 33.33 66.67 33.33
Shiprock 230 kV line 100 0 100 0
- 16 -
<PAGE>
MODIFICATION NO. 10
TO
CO-TENANCY AGREEMENT
BETWEEN
PUBLIC SERVICE COMPANY OF NEW MEXICO
AND
TUCSON ELECTRIC POWER COMPANY
This Modification No. 10 to the Co-Tenancy Agreement between PUBLIC
SERVICE COMPANY OF NEW MEXICO ("New Mexico") and TUCSON ELECTRIC POWER COMPANY
("Tucson"), hereinafter sometimes referred to collectively as the "Parties" or
"Participants", is hereby entered into and executed as of the 30th day of
November, 1995.
WITNESSETH:
WHEREAS, the Parties entered into an agreement described as the
Co-Tenancy Agreement between New Mexico and Tucson effective July 1, 1969, as
modified by Modification No. 1 on May 16, 1979, Modification No. 2 on December
31, 1983, Modification No. 3 on July 17, 1984, Modification No. 4 on October 25,
1984, Modification No. 5 on July 1, 1985, Modification No. 6 on April 1, 1993,
Modification No. 7 on April 1, 1993, Modification No. 8 on September 15, 1993,
and Modification No. 9 on January 12, 1994 ("Co-Tenancy Agreement"), which
establishes certain terms and conditions relating to their ownership and
operation of the San Juan Project and Project Agreements; and
WHEREAS, on June 1, 1994, Century Power Corporation ("Century") and
Tri-State Generation and Transmission Association, Inc., a Colorado nonprofit
cooperative corporation ("Tri-State"), entered into the San Juan Unit 3 Purchase
Agreement ("Tri-State Purchase Agreement"), whereby Tri-State agreed to purchase
from Century an undivided 8.2 percent interest in Unit 3; and
<PAGE>
WHEREAS, the Tri-State Purchase Agreement provides, among other things,
that Tri-State, upon closing of the transaction provided for in the Tri-State
Purchase Agreement, will have the voting rights and obligations of a Unit
Participant on San Juan Project Committees as said rights and obligations are
set forth in the Project Agreements; and
WHEREAS, New Mexico and Tucson desire to clarify the rights and
responsibilities of Participants and Unit Participants in the San Juan Project
as a result of Tri-State's purchase of an 8.2 percent undivided interest in Unit
3 pursuant to the Tri-State Purchase Agreement.
NOW, THEREFORE, the Parties agree that the Co-Tenancy Agreement is
hereby amended as follows:
1.0 Effective Date. This Modification No. 10 shall become effective
immediately upon the closing of Tri-State's purchase of the 8.2 percent
undivided interest in Unit 3 pursuant to the Tri-State Purchase Agreement.
2.0 Compliance With Section 6.7. Section 6.7 of the Co-Tenancy
Agreement requires that in the event either Participant transfers any of its
rights, title or interest in the San Juan Project, the Participants shall
jointly execute a Supplement to the Co-Tenancy Agreement, in recordable form,
which describes the rights, titles and interests of each Participant following
such transfer or assignment. On May 16, 1979, Tucson and New Mexico entered into
a Purchase Option whereby on that date (the "Transfer Date") Tucson conveyed to
New Mexico Tucson's 50 percent undivided interest in Unit 4. On November 17,
-1-
<PAGE>
1981, New Mexico sold and transferred an 8.475 percent undivided ownership
interest in Unit 4 to the City of Farmington, New Mexico ("City of Farmington").
On December 31, 1981, Tucson and the M-S-R Public Power Agency ("M-S-R") entered
into the Tucson/M S-R Agreement-Option to Acquire Ownership Interest in San Juan
Unit 4, wherein Tucson agreed to sell to M-S-R and M-S-R agreed to purchase from
Tucson, pursuant to the terms and conditions of such agreement, on or before
November 30, 1982, the Tucson Option (also referred to as the "Option to
Repurchase" in the May 16, 1979, San Juan Unit 4 Purchase Agreement between New
Mexico and Tucson). On November 29, 1982, New Mexico and M-S-R executed the San
Juan Unit 4 Purchase and Participation Agreement, and on September 26, 1983, New
Mexico and M-S-R executed the San Juan Unit 4 Early Purchase and Participation
Agreement under which New Mexico sold and transferred a 28.8 percent undivided
ownership interest in Unit 4 to M-S-R effective December 31, 1983. On October
31, 1984, Tucson transferred its 50 percent undivided ownership interest in Unit
3 to Century (formerly Alamito Company). On December 28, 1984, New Mexico and
the Incorporated County of Los Alamos, New Mexico ("Los Alamos County") entered
into the Amended and Restated San Juan Unit 4 Purchase and Participation
Agreement ("County PPA") which provided that New Mexico would sell and transfer
to Los Alamos County a 7.2 percent undivided ownership interest in Unit 4 which
transfer occurred as of July 1, 1985. On March 25, 1993, Century and Southern
California Public Power Authority ("SCPPA") entered into the San Juan Unit 3
Purchase Agreement ("SCPPA PA") which provided that Century would sell and
transfer to SCPPA a 41.8 percent undivided interest in Unit 3 which transfer
occurred as of July 1, 1993. On April 26, 1991, New Mexico and the City of
Anaheim, California ("City of Anaheim") entered into the San Juan Unit 4
-2-
<PAGE>
Purchase and Participation Agreement ("Anaheim PPA") which provided that New
Mexico would sell and transfer to City of Anaheim a 10.04 percent undivided
interest in Unit 4 which transfer occurred as of August 12, 1993. As of May 27,
1993, New Mexico and Utah Associated Municipal Power Systems ("UAMPS") entered
into the UAMPS Purchase and Participation Agreement ("UAMPS PPA") which provided
that New Mexico would sell and transfer to UAMPS a 7.028 percent undivided
ownership interest in Unit 4, which transfer occurred on June 2, 1994. In
accordance with the requirements of Section 6.7, the following sections of the
Co-Tenancy Agreement are hereby amended to read as follows:
Amended Section 6.3.1:
6.3.1 For Units 1 and 2 and for all equipment and facilities directly
related to Units 1 and 2, in accordance with the following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Tri-State - 0 percent
4. Los Alamos County - 0 percent
5. SCPPA - 0 percent
6. City of Anaheim - 0 percent
7. UAMPS - 0 percent
-3-
<PAGE>
6.3.1.1 For Unit 3 and for all equipment and facilities directly
related to Unit 3 only, in accordance with the following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Tri-State - 8.2 percent
4. Los Alamos County - 0 percent
5. SCPPA - 41.8 percent
6. City of Anaheim - 0 percent
7. UAMPS - 0 percent
Amended Section 6.3.2:
6.3.2 For Unit 4 and for all equipment and facilities directly related
to Unit 4 only, in accordance with the following percentages:
A. Participants
1. New Mexico - 38.457 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - 28.8 percent
2. City of Farmington - 8.475 percent
3. Tri-State - 0 percent
-4-
<PAGE>
4. Los Alamos County - 7.20 percent
5. SCPPA - 0 percent
6. City of Anaheim - 10.04 percent
7. UAMPS - 7.028 percent
Amended Section 6.3.3:
6.3.3 For equipment and facilities common only to Units 1 and 2, in
accordance with the following percentages:
A. Participants
1. New Mexico -- 50 percent
2. Tucson -- 50 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Tri-State - 0 percent
4. Los Alamos County - 0 percent
5. SCPPA - 0 percent
6. City of Anaheim - 0 percent
7. UAMPS - 0 percent
Amended Section 6.3.4:
6.3.4 For equipment and facilities common only to Units 3 and 4, in
accordance with the following percentages:
A. Participants
1. New Mexico - 44.119 percent
2. Tucson - 0 percent
-5-
<PAGE>
B. Unit Participants
1. M-S-R -14.4 percent
2. City of Farmington - 4.249 percent (ownership interest is
with respect to common facilities not in service on
November 17, 1981; the City of Farmington was granted an
Easement and License for use of common facilities which
were in service on November 17, 1981).
3. Tri-State-4.1 percent
4. Los Alamos County - 3.612 percent
5. SCPPA - 20.9 percent
6. City of Anaheim - 5.07 percent
7. UAMPS - 3.55 percent
Amended Section 6.3.5:
6.3.5 For equipment and facilities common to all of the units in
accordance with the following percentages:
A. Participants
1. New Mexico - 46.297 percent
2. Tucson -19.8 percent
B. Unit Participants
1. M-S-R - 8.7 percent
2. City of Farmington - 2.559 percent (ownership interest is
with respect to common facilities not in service on
November 17, 1981; the City of Farmington was granted an
Easement and License for use of common facilities which
were in service on November 17, 1981).
-6-
<PAGE>
3. Tri-State - 2.49 percent
4. Los Alamos County - 2.175 percent
5. SCPPA - 12.71 percent
6. City of Anaheim - 3.10 percent
7. UAMPS - 2.169 percent
Amended Section 6.3.6:
6.3.6 For the Switchyard Facilities except as otherwise provided in
Section 15 hereof, in accordance with the following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Tri-State - 0 percent
4. Los Alamos County - 0 percent
5. SCPPA - 0 percent
6. City of Anaheim - 0 percent
7. UAMPS - 0 percent
3.0 Amended Section 8.1. Section 8.1 shall be amended to read in its
entirety as follows:
-7-
<PAGE>
8.1 Subject to the provisions of paragraphs 10.1 and 10.2 hereof, the
Participants shall be entitled to share the Net Effective Generating Capacity of
Units 1 and 2 in equal, undivided one-half (1/2) interests. New Mexico, SCPPA
and Tri-State shall be entitled to share the Net Effective Generating Capacity
of Unit 3 in undivided interests in proportion to their percentage ownership of
Unit 3 as set forth in Section 6 hereof. New Mexico and Unit Participants to
which New Mexico conveys or has conveyed ownership interests and generation
entitlements in Unit 4 shall have a 100 percent (100%) interest in the Net
Effective Generating Capacity of Unit 4.
4.0 Amended Exhibit V. Exhibit V (a-h) shall be amended to read in its
entirety as shown on the attached Exhibit V(a-h).
5.0 Amended Section 9.5.2. Section 9.5.2 shall be amended to read in
its entirety as follows:
9.5.2 With respect to matters involving and not solely related to San
Juan Unit 3, Tucson, as a Participant holding voting rights on all San Juan
Project Committees, including, without limitation, the Coordination Committee,
the Engineering and Operating Committee and the Auditing Committee, shall retain
such voting rights for SCPPA and Tri-State in accordance with their respective
interests, with the obligation to consult with SCPPA and Tri-State on all
matters involving the San Juan Project which affect San Juan Unit 3 as set forth
in the San Juan Unit No. 3 Purchase Agreement, the SCPPA PA (Century having
transferred to SCPPA an undivided 41.8 percent interest in San Juan Unit 3) and
the Tri-State Purchase Agreement (Century having transferred to Tri-State an
undivided 8.2 percent interest in San Juan Unit 3).
-8-
<PAGE>
6.0 Amended Section 25.8. Section 25.8 shall be amended to read in its
entirety as follows:
25.8 Except as modified by the provisions set forth in this
Modification No. 10, all of the terms and conditions of the Co-Tenancy
Agreement, effective as of July 1, 1969, as modified by Modification No. 1 on
May 16, 1979, Modification No. 2 on December 31, 1983, Modification No. 3 on
July 17, 1984, Modification No. 4 on October 25, 1984, Modification No. 5 on
July 1, 1985, Modification No. 6 on April 1, 1993, Modification No. 7 on April
1, 1993, Modification No. 8 on September 15, 1993, and Modification No. 9 on
January 12, 1994 shall remain in full force and effect.
7.0 Amended Section 26. Section 26 shall be amended to read in its
entirety as follows:
26.0 RECOGNITION OF M-S-R, THE CITY OF FARMINGTON, TRI-STATE, LOS
ALAMOS COUNTY, SCPPA, THE CITY OF ANAHEIM AND UAMPS ACKNOWLEDGEMENT.
26.1 The Parties recognize that M-S-R, the City of Farmington,
Tri-State, Los Alamos County, SCPPA, the City of Anaheim and UAMPS each has
acknowledged that it is familiar with the Project Agreements as amended between
New Mexico and Tucson and such agreements govern the activities of the San Juan
Project. Where a specific provision of the EPPA, the Farmington PAPA, the County
PPA, the Anaheim PPA or the UAMPS PPA is in conflict with a provision in one or
more of the Project Agreements, then (a) as between New Mexico and M-S-R, the
provisions of the EPPA shall govern, all as provided in Section 5.2 of such
EPPA, and (b) as between New Mexico and the City of Farmington, the provisions
of the Farmington PAPA shall govern, all as provided in Section 8.2 of the
Farmington PAPA, and (c) as between New Mexico and Los Alamos County, the
-9-
<PAGE>
provisions of the County PPA shall govern, all as provided in Section 5.2 of the
County PPA, (d) as between New Mexico and the City of Anaheim, the provisions of
the Anaheim PPA shall govern, all as provided in Section 7.2 of the Anaheim PPA,
and (e) as between New Mexico and UAMPS, the provisions of the UAMPS PPA shall
govern, all as provided in Section 7.2 of the UAMPS PPA. "EPPA" shall mean the
San Juan Unit 4 Early Purchase and Participation Agreement entered into by New
Mexico and M-S-R on September 26, 1983. "Farmington PAPA" shall mean the San
Juan Unit 4 Purchase Agreement and Participation Agreement entered into by New
Mexico and the City of Farmington on November 17, 1981. "County PPA" shall mean
the Amended and Restated San Juan Unit 4 Purchase and Participation Agreement
entered into by New Mexico and Los Alamos County on December 28, 1984. "Anaheim
PPA" shall mean the San Juan Unit 4 Purchase Agreement and Participation
Agreement entered into by New Mexico and the City of Anaheim on April 26, 1991.
"UAMPS PPA" shall mean the Restated and Amended San Juan Unit 4 Purchase and
Participation Agreement entered into by New Mexico and UAMPS as of May 27, 1993.
IN WITNESS WHEREOF, the Parties hereto have caused this Modification
No. 10 to the Co-Tenancy Agreement to be executed as of the 30th day of
November, 1995.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By /s/ Jeffry E. Sterba
--------------------------------
Its' Senior Vice President
TUCSON ELECTRIC POWER COMPANY
By /s/ Steven Glaser
--------------------------------
Its' Vice President
-10-
<PAGE>
EXHIBIT V(a)
FACILITIES AND EQUIPMENT SPECIFIC
TO SAN JUAN UNIT No. 1
Ownership
New Mexico - 50% Tucson - 50%
M-S-R - 0% City of Farmington - 0%
Tri-State - 0% Los Alamos County - 0%
SCPPA - 0% City of Anaheim - 0%
UAMPS- 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, Feeders and Blow-
down Tanks
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Start-Up, Unit Auxiliary, and SO2 Scrubber Transformers
11. Bottom Ash System (Up to but not including Dewatering Tank or Ash Water
Pump building and equipment)
-11-
<PAGE>
EXHIBIT V(a)
(continued)
12. Fly Ash System
13. Building HVAC System
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and Flue Gas
Reheat System including the 650-pound Reheat Steam Line and Desuperheater
from the Plant Main Steam Line but not including the 1 65-pound Control
Valve and Branch Line to the Chemical Plant
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. SSR Protection System
18. Unit Specific Piping for all Air Systems, Chemical Feed Systems, and
Hydrogen
-12-
<PAGE>
EXHIBIT V(b)
FACILITIES AND EQUIPMENT SPECIFIC
TO SAN JUAN UNIT NO. 2
Ownership
New Mexico - 50% Tucson - 50%
M-S-R - 0% City of Farmington - 0%
Tri-State - 0% Los Alamos County - 0%
SCPPA - 0% City of Anaheim - 0%
UAMPS- 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, Feeders and Blowdown
Tanks
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Start-Up, Unit Auxiliary, and SO2 Scrubber Transformers
11. Bottom Ash System (Up to but not including Dewatering Tank or Ash Water
Pump building and equipment.)
-13-
<PAGE>
EXHIBIT V(b)
(continued)
12. Fly Ash System
13. Building HVAC System
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and Flue Gas
Reheat System including the 650-pound Reheat Steam Line and Desuperheater
from the Plant Main Steam Line but not including the 1 65-pound Control
Valve and Branch Line to the Chemical Plant
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. Unit Specific Piping for all Air Systems, Chemical Feed Systems, and
Hydrogen
-14-
<PAGE>
EXHIBIT V(C)
FACILITIES AND EQUIPMENT SPECIFIC
TO SAN JUAN UNIT NO. 3
Ownership
New Mexico- 50% Tucson- 0%
M-S-R - 0% City of Farmington - 0%
Tri-State - 8.2% Los Alamos County - 0%
SCPPA - 41.8% City of Anaheim - 0%
UAMPS- 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, Feeders and Blowdown
Tanks
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Unit Auxiliary 3A and 3B Transformers*
11. Bottom Ash System including: Hopper, Dewatering Tank, Settling Tank,
Surge Tank, Storage Tank, and Pump House
-15-
<PAGE>
EXHIBIT v(c)
(continued)
12. Fly Ash System
13. Building HVAC System
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and Flue Gas
Reheat System
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. Fuel Oil Ignitor Heaters and Unit Specific Piping
18. Unit Specific Piping for all Air Systems, Chemical Feed Systems, and
Hydrogen
19. Coal Reclaim Hoppers, Feeders, Feeder Belts, Belt Scales, Fire Protection
System, and 3C Conveyor to the Secondary Crusher Building
20. SSR Protection System
21. Auxiliary Steam Header Piping System:
a. Including the Unit Specific Branch Line to the Reheat System
b. Not included is the Branch Line to the Chemical Plant
* New Mexico and Tucson each owns a 50% interest in the main unit transformer
-16-
<PAGE>
EXHIBIT V(d)
FACILITIES AND EQUIPMENT SPECIFIC
To SAN JUAN UNIT No. 4
Ownership
New Mexico - 38.457% Tucson- 0%
M-S-R - 28.8% City of Farmington - 8.475%
Tri-State - 0% Los Alamos County - 7.2%
SCPPA - 0% City of Anaheim -10.4%
UAMPS- 7.028%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, Feeders and Blowdown
Tanks
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Unit Auxiliary 4A and 4B Transformers
11. Bottom Ash System including: Hopper, Dewatering Tank, Settling Tank,
Surge Tank, Storage Tank, and Pump House
12. Fly Ash System
-17-
<PAGE>
EXHIBIT V(d)
(continued)
13. Building HVAC System
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and Flue Gas
Reheat System
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. Fuel Oil Ignitor Heaters and Unit Specific Piping
18. Unit Specific Piping for all Air Systems, Chemical Feed Systems, and
Hydrogen
19. Coal Reclaim Hoppers, Feeders, Feeder Belts, Belt Scales, Fire Protection
System, and 3D Conveyor to the Secondary Crusher Building
20. Auxiliary Steam Header Piping System:
a. Including the Unit Specific Branch Line to the Reheat System
b. Not included is the Branch Line to the Chemical Plant
-18-
<PAGE>
EXHIBIT V(e)
FACILITIES AND EQUIPMENT COMMON
TO SAN JUAN UNITS 1 AND 2
Ownership
New Mexico - 50% Tucson - 50%
M-S-R - 0% City of Farmington - 0%
Tri-State - 0% Los Alamos County - 0%
SCPPA - 0% City of Anaheim - 0%
UAMPS- 0%
1. Bearing Cooling Water System
2. Bottom Ash Dewatering Facility including: Dewatering Tank, Settling Tank,
Surge Tank, Storage Tank, and Pump House
3. Demineralizer System including: Clarifier, Storage Tanks, and Sump Pump
4. Fuel Oil System (Fuel Oil for Ignition and Flame Stabilization)
5. Premix Tank Facility (This was the wastewater neutralizer facility and is
now operated as part of the Water Management System.)
6. Instrument Air system, except Unit Piping
7. Chemical Feed System, except Unit Piping
a. Condensate and Feedwater System
b. Boiler
c. Bearing Cooling Water System
d. Cooling Tower Systems
e. Chlorination System
8. Plant Air System, except Unit Piping
9. Sootblowing Air System, except Unit Piping
10. Hydrogen Storage System, except Unit Piping
11. Coal Handling Reclaim Systems A and B including: Hoppers, Feeders,
Reclaim Conveyors, Belt Scales, and Sprinkler System
-19-
<PAGE>
EXHIBIT V(e)
(continued)
12. Coal Tripper System south of column, Line 12 including Dust Collection
System
13. Turbine Lube Oil Storage and Transfer System
14. Control Room, Equipment Rooms, and Associated HVAC System
15. Turbine Crane south of column, Line 12
16. Fuel Oil, Ash, and Water Pipe Racks
17. Boiler Fill System for Units 1 and 2
18. All spare parts common to either unit
19. SO2 Backup Scrubber-Absorber Transformer
20. SAR Multiplexer Control System
-20-
<PAGE>
EXHIBIT V(f)
FACILITIES AND EQUIPMENT COMMON
TO SAN JUAN UNITS 3 AND 4
Ownership
New Mexico - 44.119% Tucson - 0% M-S-R - 14.4% City of Farmington - 4.249%*
Tri-State - 4.1% Los Alamos County - 3.612% SCPPA - 20.9% City of Anaheim
- 5.07% UAMPS- 3.55%
1. Bearing Cooling Water System
2. Demineralizer System: including Sump Pumps, Filter Beds, and Storage
Tanks
3. Fuel Oil System (Fuel Oil for Ignition and Flame Stabilization except
Ignitor Heaters and Unit Specific Piping)
4. Wastewater Neutralizer Facility (This facility is operated as part of
Water Management System.)
5. Instrument Air System except Unit Piping
6. Chemical Feed System except Unit Piping
a. Condensate and Feedwater System
b. Boiler
c. Bearing Cooling Water System
d. Cooling Tower Systems
e. Chlorination System
7. Plant Air System except Unit Piping
8. Sootblowing Air System except Unit Piping
9. Start-Up Transformers and Nonseg Bus to Units 3 and 4 Switchgear
10. Hydrogen Storage System except Unit Piping
11. Coal Tripper System Serving Units 3 and 4 including Dust Collection
Systems
-21-
<PAGE>
EXHlBlT V(f)
(continued)
12. Turbine Lube Oil Storage and Transfer System
13. Control Room, Equipment Rooms, and Associated HVAC System
14. Boiler Fill System for Units 3 and 4
15. Auxiliary Cooling Systems including Auxiliary Cooling Tower No. 1 and
Pumps, but excepting No. 4 Tower Pumps and Piping which is Unit Specific
16. CO2 Storage System
17. Start-Up Boiler Feed Pump
18. Turbine Bay Crane north of column, Line 12
19. Fuel Oil, Ash, and Water Pipe Racks
20. Fire Water Booster and Jockey Pumps
21. Halon Fire Protection System
22. Cooling Tower Multiplex Control System
23. All spare parts common to either unit.
* City of Farmington's ownership interest is with respeci to Common Facilities
not in service on November 17, 1981; the City of Farmington was granted an
Easement and License for use of Common Facilities which were in service on
November 17, 1981
-22-
<PAGE>
EXHIBIT V(g)
FACILITIES AND EQUIPMENT COMMON
TO ALL FOUR SAN JUAN UNITS
Ownership
New Mexico - 46.297% Tucson - 19.8%
M-S-R - 8.7% City of Farmington - 2.559%*
Tri-State - 2.49% Los Alamos County - 2.175%
SCPPA - 12.71% City of Anaheim - 3.1%
UAMPS- 2.169%
1. River and Raw Water System including:
a. Diversion and intake structures including all equipment and pump
building
b. Raw water line to reservoir
c. Reservoir and pump buildings and all equipment
d. Raw water lines to plant yard
e. All underground and above ground fire protection system to each
vendor supplied or unit specific fire distribution system
2. Auxiliary Boiler
3. SO2 System Chemical Plant except Absorbers
a. Double effect evaporator train systems
b. Fly ash filter system
c. Absorber product and feed tanks
d. Condensate collection, storage, and transfer systems
e. Soda ash storage, mixing, and distribution systems
f. Sulfate purge system including crystallizers, centrifuges,
evaporators, and salt cake system
g. Sulfuric acid plant system including storage tanks and load out
system
h. Auxiliary No. 2 cooling tower, pumps, and systems
4. Spare Main Transformer 345/24 kV for all units
5. Maintenance, Office, and Warehousing Facilities
6. Chemical Laboratory
7. Coal and Ash Handling Control Facilities
-23-
<PAGE>
EXHIBIT V(g)
(continued)
8. Roads and grounds such as fencing, yard lighting, guard facilities,
drainage and dikes
9. Potable Water System
10. Environmental Monitoring Systems including Air, Water, and Ground.
Excludes Stack Monitoring Systems which are unit specific.
11. Transportation such as trucks, cars, and dozers
12. Water Management System
a. Wastewater Recovery System - Northside
1) Reverse osmosis system including lime/soda softening clarifier
system
2) Brine concentrator Nos. 4 and 5
3) Process pond No. 3 and pumping system
4) North evaporation ponds 1, 2, and 3
b. SO2 Waste Treatment System - Southside
1) Process ponds 1 A, 1 B, 2, and pumping system
2) Clarifier system
3) Oxidation towers
4) Brine concentrator Nos. 2 and 3
5) South evaporation pond Nos. 1, 2, 3, 4, and 5
c. Data Acquisition System
d. Solid Waste Disposal Pit
e. Coal Pile Runoff Ponds
13. Coal Transfer Facilities from the Reclaim Conveyors to the Head-End of
Plant Belts 4A and 4B and Dust Suppression Systems
14. Maintenance Bay Facilities including: Bay Bridge Crane, all Offices, and
Support Facilities
15. Sewage Treatment Facilities
16. On each of Units 1 and 2, the Chemical Plant 165-pound Control Valve, and
Branch Line from the Unit Specific 650-pound Reheat Steam Line
-24-
<PAGE>
17. On each of Units 3 and 4, the Chemical Plant Branch Steam Line from the
Unit Specific Auxiliary Steam Header System
* City of Farmington's ownership interest is with respect to Common Facilities
not in service on November 17, 1981; the City of Farmington was granted an
Easement and License for use of Common Facilities which were in service on
November 17, 1981.
-25-
<PAGE>
EXHIBIT V(h)
SAN JUAN PROJECT
SVVITCHYARD FACILITIES
Cost Allocation (%)
Replacements/lmprovements
Installed Cost Betterments
-------------- -----------
New Mexico Tucson New Mexico Tucson
---------- ------ ---------- ------
345 kV Bus 1 & 3 (East Bus) 50 50 50 50
Bus 2 (West Bus) 50 50 50 50
Circuit Breakers
- ----------------
06582 (345/230) 50 50 50 50
05482 50 50 50 50
04382 (OJO) 50 50 50 50
12982 (McKinley) 50 50 50 50
11882 50 50 50 50
10782 (Unit 4) 50 50 50 50
09882 (McKinley) 58.33 41.67 62.5 37.5
08782 54.16 45.84 56.25 43.75
07682 (Unit 3) 50 50 50 50
15282 (Four Corners) 50 50 50 50
14182 50 50 50 50
13082 (Unit 2) 50 50 50 50
18582 (West Mesa) 50 50 50 50
17482 50 50 50 50
16382 (Unit 1) 50 50 50 50
20782 50 50 50 50
Shunt Reactors
- --------------
Ojo 100 0 100 0
McKinley 1 5.36 94.64 5.36 94.64
McKinley 2 16.67 83.33 25 75
WW (BA) 100 0 100 0
-26-
<PAGE>
EXHIBIT V(h)
(continued)
Replacements/lmprovements
Installed Cost Betterments
-------------- -----------
New Mexico Tucson New Mexico Tucson
---------- ------ ---------- ------
Transformers
- ------------
Station Aux. No. 2 100 0 100 0
400 MVA, 345/230- 12.5
Station Aux. No. 1 50 50 50 50
345/4.16-12.5
Station Aux. No. 3 50 50 50 50
90 MVA, 345 /69- 12.5
Future Facilities
- -----------------
345169/12 kV 66.67 33.33 66.67 33.33
2-345 kV Bkrs (Durango) 50 50 50 50
Lower Voltage
- -------------
230 kV Control Hse 83.33 16.67 83.33 16.67
230/69 kV Trf 66.67 33.33 66.67 33.33
Shiprock 230 kV line 100 0 100 0
-27-
<PAGE>
DEFERRED COMPENSATION AGREEMENT
BETWEEN
JEFFRY E. STERBA
AND
PUBLIC SERVICE COMPANY OF NEW MEXICO
It is hereby agreed by Jeffry E. Sterba and Public Service Company of
New Mexico (PNM) that payment for Mr. Sterba services as an employee of
PNM for the pay period ending 11/17/95 through the pay period ending
12/15/95 will be deferred and will be paid on January 5, 1996.
The amount of employee compensation subject to this agreement will be
$11,450.25. No interest will be paid on the $11,450.25.
The parties agree that, during the time this agreement is in effect,
Mr. Sterba will be an unsecured creditor of PNM and will have no claims
on the Company beyond those of any other unsecured creditor.
It is further agreed that PNM will be held harmless, and that Mr.
Sterba will be solely at risk for any unanticipated adverse tax
consequences arising to either party as a result of this agreement, and
that appropriate income and payroll taxes will be withheld at the time
of payment.
/s/ Jeffry E. Sterba /s/ Donna M. Burnett
-------------------- ----------------------------
Jeffry E. Sterba Name and Title of Public
Service Company of New
Mexico
State of New Mexico
County of Bernalillo
Subscribed and sworn before me on this 13th day of
-------------
November 1995 by Jeffry E. Sterba.
----------------
May 31, 1998 /s/ Pamela M. Ragsdale
------------------ ----------------------
Commission Expires Notary Signature
Pamela M. Ragsdale
<PAGE>
EXHIBIT 10.7.1
<PAGE>
MODIFICATION NO. 4
TO
SAN JUAN PROJECT OPERATING AGREEMENT
BETWEEN
PUBLIC SERVICE COMPANY OF NEW MEXICO
AND
TUCSON ELECTRIC POWER COMPANY
This Modification No. 4 to the San Juan Project Operating Agreement
between PUBLIC SERVICE COMPANY OF NEW MEXICO ("New Mexico") and TUCSON ELECTRIC
POWER COMPANY ("Tucson"), hereinafter referred to collectively as the "Parties"
or "Participants," is hereby entered into and executed this 25 day of October,
1984.
WITNESSETH:
WHEREAS, the Parties hereto entered into an agreement described as the
San Juan Project Operating Agreement effective January 1, 1973, as modified by
Modification No. 1 on May 16, 1979, Modification No. 2 on December 31, 1983 and
Modification No. 3 on July 17, 1984 ("Operating Agreement"), which establishes
certain terms and conditions relating to their participation and responsibility
in the operation of the San Juan Project;
- 1 -
<PAGE>
WHEREAS, the Parties desire to clarify operation and maintenance cost
responsibilities associated with the San Juan Project as a result of the
contemplated October 31, 1984 conveyance of Tucson's San Juan Unit 3 ownership
interest to Alamito Company ("Alamito") pursuant to the purchase agreement
between Tucson and Alamito dated October 1, 1984 ("San Juan Unit No. 3 Purchase
Agreement").
NOW THEREFORE, the Parties agree that the Operating Agreement is hereby
amended as follows:
1.0 Effective Date. This Modification No. 4 shall become
effective immediately upon Tucson's conveyance of its San Juan Unit
3 ownership interest to Alamito.
2.0 Amended Section 5.38. Section 5.38 shall be amended to
read as follows:
5.38 PARTICIPATION SHARE: Each Participant's and Unit
Participant's percentage ownership in the San Juan Project as set forth
in Section 6 of the Co-Tenancy Agreement. 3.0 New Section 7.3.2. A new
Section 7.3.2 shall be added to Section 7, after Section 7.3.1, to read
in its entirety as follows:
7.3.2 With respect to matters involving and not solely related
to San Juan Unit 3, Tucson, as a Participant holding voting rights on
the Coordination Committee, shall retain such voting rights for
Alamito, with the obligation to consult with Alamito on all matters
involving the San Juan Project with affect San Juan Unit 3 as set forth
in the San Juan Unit No.
- 2 -
<PAGE>
3 Purchase Agreement.
4.0 Amended Section 7.7. Section 7.7 shall be amended to read in its
entirety as follows:
7.7 In the event the Coordination Committee fails to reach
agreement on a matter that has earlier been determined to relate solely
to a specific San Juan generating unit, which such committee is
authorized to determine, approve, or otherwise act upon after a
reasonable opportunity to do so, then the Operating Agent (as said term
is defined in this Operating Agreement) shall be authorized and
obligated to take such action as in its discretion it deems to be
necessary to the successful and proper construction, operation and
maintenance of such unit, pending the resolution, by arbitration or
otherwise, of any such inability or failure to agree. 5.0 Amended
Section 17.1. Section 17.1 is amended to read in its entirety as
follows:
17.1 The expense for the operation and maintenance of the San
Juan Project which are chargeable to FERC Accounts 426, 500 , 502, 505,
506, 507 and 510 through 514; 556, 557A; and 924 (when appropriate)
shall be apportioned between the Participants and Unit Participants as
follows:
17.1.1 Prior to the Transfer Date in accordance with the
following percentages:
A. Participants
1. New Mexico - 50 percent
- 3 -
<PAGE>
2. Tucson - 50 percent
17.1.2 On and after Tucson's conveyance of its San Juan 3
ownership interest to Alamito, in accordance with the following
schedule:
- 4 -
<PAGE>
17.1.2.1 For San Juan Units 1 and 2 and for all equipment and
facilities directly related to Units 1 and 2 in accordance with the following
percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
B. Unit Participants
1. M-S-R - percent
2. City of Farmington - 0 percent
3. Alamito - 0 percent
17.1.2.2 For San Juan Unit 3 and all equipment and facilities
directly related only to Unit 3 in accordance with the following
percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Alamito - 50 percent
17.1.2.3 For San Juan Unit 4 and for all equipment and
facilities directly related only to Unit 4 in accordance with the
following percentages:
A. Participants
1. New Mexico - 62.725 percent
2. Tucson - 0 percent
- 5 -
<PAGE>
B. Unit Participants
1. M-S-R - 28.8 percent
2. City of Farmington - 8.475 percent
3. Alamito - 0 percent
17.1.2.4 For equipment and facilities common only to Units 1
and 2 in accordance with the following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Alamito - 0 percent
17.1.2.5 For equipment and facilities common only to Units 3
and 4 in accordance with the following percentages:
A. Participants
1. New Mexico - 56.351 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - 14.4 percent
2. City of Farmington - 4.249 percent
3. Alamito - 25 percent
17.1.2.6 For the Switchyard Facilities except as otherwise
provided in Section 15 of the Co-Tenancy Agreement, in accordance with
the following percentages:
- 6 -
<PAGE>
A. Participants
1. New Mexico - 65 percent
2. Tucson - 35 percent
B. Unit Participants
1. M-S-R - percent
2. City of Farmington - 0 percent
3. Alamito - 0 percent
17.1.2.7 For the SO2 chemical plant system, except absorbers,
and for the chemical laboratory, including neutralizers, in accordance
with the following percentages:
A. Participants
1. New Mexico - 53.741 percent
2. Tucson - 19.8 percent
B. Unit Participants
1. M-S-R - 8.7 percent
2. City of Farmington - 2.559 percent
3. Alamito - 15.2 percent
17.1.2.8 Except as provided in Exhibit III(g), for equipment
and facilities common to all of the units and all project expenses not
identifiable by unit and not otherwise listed above, in accordance with
the following percentages:
A. Participants
1. New Mexico - 53.741 percent
2. Tucson - 19.8 percent
- 7 -
<PAGE>
B. Unit Participants
1. M-S-R - 8.7 percent
2. City of Farmington - 2.559 percent
3. Alamito - 15.2 percent
17.1.3 In the event of a shutdown of either of Units 1 and/or
2 of the San Juan Project, the expenses incurred in connection with the
shutdown (including but not limited to removal, salvage, cleanup and
protection service) shall be equally apportioned between the
Participants. In the event of a shutdown of Unit 3, said expenses shall
be allocated as set forth in paragraph 17.1.2.2 above. In the event of
a shutdown of Unit 4, said expenses shall be allocated as set forth in
paragraph 17.1.2.3 above. Expenses which are attributable to equipment
and facilities common to more than one Unit shall be apportioned in
accordance with paragraph 17.1.2. 6.0 Amended Exhibit III. Exhibit III
(a-g) shall be amended to read in its entirety as shown on the
attached.
7.0 Amended Section 31.10. Section 31.10 shall be amended to read in
its entirety as follows:
31.10 Except as modified by the provisions set forth in
Modification No. 4, all of the terms and conditions of this
Operating Agreement, effective as of December 21, 1973, as
modified by Modification No. 1 as of May 16, 1979,
modification No. 2 as of December 31, 1983, and Modification
No. 3 as of July 17, 1984, shall remain in full force and
effect.
- 8 -
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Modification
No. 4 to the Operating Agreement to be executed this 25 day of October , 1984.
PUBLIC SERVICE COMPANY OF NEW MEXICO
Attest: By: /S/ J. L. Wilkins
-------------------------------
/S/ D. E. Peckham Its: Senior Vice President
- -----------------------
Secretary
TUCSON ELECTRIC POWER COMPANY
Attest: By: /S/
-------------------------------
/S/ Jean E. Kettlewell Its: Executive Vice President
- -----------------------
STATE OF NEW MEXICO )
) ss.
COUNTY OF BERNALILLO)
The foregoing instrument was acknowledged before me this 25th day of
October , 1984, by J. L. Wilkins, Senior Vice President of Public Service
Company of New Mexico, a New Mexico corporation, on behalf of said corporation.
/S/ Sherry Leeson
---------------------
Notary Public
My Commission Expires:
July 1, 1988
- 9 -
<PAGE>
STATE OF ARIZONA)
) ss.
COUNTY OF PIMA )
The foregoing instrument was acknowledged before me this 22nd day of
October, 1984, by Einar Greve, of Tucson Electric, Power Company, an Arizona
corporation.
------------------------------------
Notary Public
My Commission Expires:
4/14/87
- 10 -
<PAGE>
Exhibit III(a)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 1
Operation and Maintenance Costs
NewMexico - 50%; Tucson - 50%; M-S-R - 0%;
City of Farmington - 0%; Alamito - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler, including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Start-up, Unit Auxiliary, and SO2 Scrubber Transformers
11. Bottom Ash System (up to but not including Dewatering Tank or
Ash Water Pump Building and Equipment)
12. Fly Ash System
13. Building HVAC Systems
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. SSR Protection System
18. Unit Specific Pumps for all Air Systems, Chemical Feed
Systems, and Hydrogen
- 11 -
<PAGE>
Exhibit III(b)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 2
Operation and Maintenance Costs
NewMexico - 50%; Tucson - 50%; M-S-R - 0%;
City of Farmington - 0%; Alamito - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler, including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Start-up, Unit Auxiliary, and SO2 Scrubber Transformers
11. Bottom Ash System (up to but not including Dewatering Tank or
Ash Water Pump Building and Equipment)
12. Fly Ash System
13. Building HVAC Systems
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
- 12 -
<PAGE>
Exhibit III(c)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 3
Operation and Maintenance Costs
New Mexico - 50%; Tucson - 0%; M-S-R - 0%;
City of Farmington - 0%; Alamito - 50%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler, including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Unit Auxiliary 3A and 3B Transformers
11. Bottom Ash System including: Hopper, Dewatering Tank,
Settling Tank, Surge Tank, and Pump House
12. Fly Ash System
13. Building HVAC Systems
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. Fuel Oil Ignitor Heaters and Unit Specific Piping
- 13 -
<PAGE>
Exhibit III(c)
(Continued)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 3
Operation and Maintenance Costs
New Mexico - 50%; Tucson - 0%; M-S-R - 0%;
City of Farmington - 0%; Alamito - 50%
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
19. SSR Protection System
- 14 -
<PAGE>
Exhibit III(d)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 4
Operation and Maintenance Costs
New Mexico - 62.725%; Tucson - 0%; M-S-R -
28.8%; City of Farmington - 8.475%; Alamito - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers and
Feeders
5. Forced Draft Fans & Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Unit Auxiliary 4A and 4B Transformers
11. Bottom Ash System including Hopper, Dewatering Tank, Settling
Tank, Surge Tank, and Pump House
12. Fly Ash System
13. Building HVAC Systems
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System
15. Emergency Diesel Generator
16. Electrical and Control Systems
- 15 -
<PAGE>
Exhibit III(d)
(Continued)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 4
Operation and Maintenance Costs
New Mexico - 62.725%; Tucson - 0%; M-S-R -
28.8%; City of Farmington - 8.475%; Alamito - 0%
17. Fuel Oil Ignitor Heaters and Unit Specific Piping
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
- 16 -
<PAGE>
Exhibit III(e)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNITS 1 AND 2
Operation and Maintenance Costs
NewMexico - 50%; Tucson - 50%; M-S-R - 0%;
City of Farmington - 0%; Alamito - 0%
1. Bearing Cooling Water System, except Unit Piping
2. Bottom Ash Dewatering Facility, including: Dewatering Tank,
Settling Tank, Surge Tank, Storage Tank, and Pump House
3. Demineralizer System including: Clarifier, Storage Tanks,
and Sump Pumps
4. Fuel Oil System (No. 2 Oil for Ingition and Flame
Stabilization)
5. Instrument Air System, except Unit Piping
6. Chemical Feed System, except Unit Piping
a. Condensate and Feedwater System
b. Boiler
c. Bearing Coding Water System
d. Cooling Tower Systems
e. Chlorination System
7. Plant Air System, except Unit Piping
8. Sootblowing Air System, except Unit Piping
9. Hydrogen Storage System, except Unit Piping
10. Coal Tripper System including Dust Collection System
11. Turbine Lube Oil Storage and Transfer System
12. Control Room, Equipment Rooms, and Associated HVAC System
13. SO2 Back-up Scrubber - Absorber Transformer
14. Turbine Crane South of Column Line 12
15. Fuel Oil, Ash, and Water Pipe Racks
16. Boiler Fill System
17. SAR Multiplexer Control System
- 17 -
<PAGE>
Exhibit III(f)
FACILITIES AND EQUIPMENT
COMMON TO SAN JUAN UNITS 3 AND 4
Operation and Maintenance Costs
NewMexico - 56.351%; Tucson - 0%; M-S-R -
14.4%; City of Farmington - 4.249%; Alamito - 25%
1. Bearing Cooling Water System, except Unit Piping
2. Demineralizer System including: Sump Pumps, Filter Beds and
Storage Tanks
3. Fuel Oil System (No. 6 Oil for Ignition and Flame
Stabilization, except Ignitor Heaters and Unit Specific
Piping)
4. Instrument Air System, except Unit Piping
5. Chemical Feed System, except Unit Piping
a. Condensate & Feedwater System
b. Boiler
c. Bearing Cooling Water System
d. Cooling Tower System
e. Chlorination System
6. Plant Air System, except Unit Piping
7. Sootblowing Air System, except Unit Piping
8. Start-Up Transformers and Iso-Phase Bus to Units 3 and 4
Switchgear
9. Hydrogen Storage System, except Unit Piping
10. Coal Tripper System including Dust Collection Systems
11. Turbine Lube Oil Storage and Transfer System
12. Control Room, Equipment Rooms, and Associated HVAC System
13. Boiler Fill System
14. Auxiliary Cooling Systems including Auxiliary Cooling Tower
No. 1 and Pumps, but excepting No. 4 Tower Pumps and Piping
which is Unit Specific
- 18 -
<PAGE>
Exhibit III(f)
(Continued)
FACILITIES AND EQUIPMENT
COMMON TO ALL SAN JUAN UNITS 3 AND 4
Operation and Maintenance Costs
NewMexico - 56.351%; Tucson - 0%; M-S-R -
14.4% City of Farmington - 4.249%; Alamito - 25%
15. CO2 Storage System, except Unit Piping
16. Start-Up Boiler Feed Pump, except Unit Piping
17. Turbine Bay Crane North of Column Line 12
18. Fuel Oil, Ash, and Water Pipe Racks
19. Fire Water Booster and Jockey Pumps
20. Halon Fire Protection System
21. Cooling Tower Multiplex Control System
- 19 -
<PAGE>
Exhibit III(g)
FACILITIES AND EQUIPMENT
COMMON TO ALL SAN UNITS
Operation and Maintenance Costs
New Mexico - 53.741%; Tucson - 19.8%; M-S-R -
8.7% City of Farmington - 2.559; Alamito - 15.2%
1. River and Raw Water System including:
a. Diversion and intake structures, including all equipment
and pump building
b. Raw water line to reservoir
c. Reservoir, pump building, and all equipment
d. Raw water lines to plant yard
e. All above and underground fire protection system to each
vendor supplied fire protection system
2. Auxiliary boiler
3. SO2 System Chemical Plant, except Absorbers
a. Double effect evaporator train systems
b. Fly ash filter system
c. Absorber product and feed tanks
d. Condensate collection, storage, and transfer systems
e. Soda ash storage, mixing, and distribution systems
f. Sulfur plant
g. Sulfate purge system including: crystallizers,
centrifuges, evaporators, and salt cake system
h. Sulfuric acid plant system including: storage tanks and
load out system
i. Auxiliary No. 2 cooling tower, pumps, and systems
4. Spare Main Transformer 345/24 kV, for all Units
5. Maintenance, Office, and Warehousing Facilities
6. Chemical Laboratory
- 20 -
<PAGE>
Exhibit III(g)
(Continued)
FACILITIES AND EQUIPMENT
COMMON TO ALL SAN UNITS
Operation and Maintenance Costs
New Mexico - 53.741%; Tucson - 19.8%; M-S-R -
8.7% City of Farmington - 2.559; Alamito - 15.2%
7. Coal and Ash Handling Control Facilities
8. Roads and Grounds Such as Fencing, Yard Lighting, Guard
Facilities, Drainage, and Dikes
9. Potable Water System
10. Environmental Monitoring including: Air, Water, and Ground,
excluding Stack Monitoring Systems
11. Transportation such as trucks, cars, and dozers (not otherwise
charged)
12. Water Management System
a. Wastewater Recovery System - Northside
(1) Neutralization system including: premix tanks,
neutralization tank, clarifier/thickener, and
pumps.
(2) Reverse osmosis system including line/soda
softening clarifier system
(3) Brine concentrator Nos. 4 and 5
(4) Centrifuge dewatering system
(5) Effluent Ppond No. 3 and pump system
(6) North evaporation ponds 1, 2, and 3
b. SO2 Waste Treatment System - Southside
(1) Effluent ponds 1A, 1B, 2 and pumping system
(2) Premix tank and clarifier system
(3) Oxidation towers
(4) Brine concentrator Nos. 1, 2, and 3
(5) Centrifuge dewatering system
(6) South evaporation pond Nos. 1, 2, 3, 4, and 5
c. Data Acquisition System
d. Plant Sludge Pit
- 21 -
<PAGE>
Exhibit III(g)
FACILITIES AND EQUIPMENT
COMMON TO ALL SAN UNITS
Operation and Maintenance Costs
New Mexico - 53.741%; Tucson - 19.8%; M-S-R -
8.7% City of Farmington - 2.559; Alamito - 15.2%
13. Coal Handling Equipment - All equipment from all reclaim hoppers ending
at the chutes to the tripper conveyors. This includes: hoppers,
feeders, feeder belts, reclaim conveyors, plant conveyors, belt scales,
fire protection systems, dust suppression systems, magnetic separators,
all electrical and controls, and heating and ventilation systems.
14. Maintenance Bay Facilities including: Bay Bridge Crane, all
Offices, and Support Facilities
15. Sewage Treatment Facilities
- 22 -
<PAGE>
EXHIBIT 10.7.2
<PAGE>
MODIFICATION NO. 5
TO
SAN JUAN PROJECT OPERATING AGREEMENT
BETWEEN
PUBLIC SERVICE COMPANY OF NEW MEXICO
AND
TUCSON ELECTRIC POWER COMPANY
This Modification No. 5 to the San Juan Project Operating Agreement
between PUBLIC SERVICE COMPANY OF NEW MEXICO ("New Mexico") and TUCSON ELECTRIC
POWER COMPANY ("Tucson"), hereinafter referred to collectively as the "Parties"
or "Participants," is hereby entered into and executed as of the 1st day of
July, 1985.
WITNESSETH:
WHEREAS, the Parties entered into an agreement described as the San
Juan Project Operating Agreement effective January 1, 1973, as modified by
Modification No. 1 on May 16, 1979, Modification No. 2 on December 31, 1983,
Modification No. 3 on July 17, 1984, and Modification No. 4 on October 25, 1984
("Operating Agreement"), which establishes certain terms and conditions relating
to their participation and responsibility in the operation of the San Juan
Project; and
- 1 -
<PAGE>
WHEREAS, on December 28, 1984, New Mexico and the Incorporated County
of Los Alamos, New Mexico ("Los Alamos County") entered into the Amended and
Restated San Juan Unit 4 Purchase and Participation Agreement ("County PPA"),
whereby Los Alamos County agreed to purchase from New Mexico a 7.20 percent
undivided ownership interest in Unit 4; and
WHEREAS, the County provides, among other things, that Los Alamos
County, upon closing of the transaction provided for in the County PPA, will
have the voting rights and obligations of a Unit Participant on San Juan Project
Committees as said rights and obligations are set forth in the Project
Agreement; and
WHEREAS, New Mexico and Tucson desire to clarify the rights and
responsibilities of Participants and Unit Participants in the San Juan Project
as a result of Los Alamos County's purchase of a 7.20 percent undivided interest
in Unit 4 pursuant to the County PPA.
NOW THEREFORE, the Parties agree that the Operating Agreement is hereby
amended as follows:
1.0 Effective Date. This Modification No. 5 shall become effective
immediately upon the closing of Los Alamos County's purchase of the 7.20 percent
undivided interest in Unit 4 pursuant to the County PPA, currently anticipated
to be July 1, 1985.
- 2 -
<PAGE>
2.0 New Section 7.3.3. A new Section 7.3.3 shall be added to Section 7
to read in its entirety as follows:
7.3.3 With respect to matters involving and not solely related
to Unit 4, New Mexico will in good faith solicit the views of the City
of Farmington and Los Alamos County on matters involving the San Juan
Project which affect Unit 4.
3.0 Amended Section 17.1. Section 17.1 shall be amended to read in its
entirety as follows:
17.1 The expenses for the operation and maintenance of the San
Juan Project which are chargeable to FERC Accounts 426, 500, 502, 505,
506, 507, and 510 through 514; 556, 557A; and 924 (when appropriate)
shall be apportioned among the Participants and Unit Participants, as
follows:
17.1.1 Prior to the Transfer Date in accordance with the
following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
- 3 -
<PAGE>
17.1.2 On and after Los Alamos County's purchase of the 7.20
percent undivided interest in Unit 4 pursuant to the County PPA, in
accordance with the following percentages:
17.1.2.1 For Units 1 and 2 and for all equipment and
facilities directly related to Units 1 and 2 in accordance with the
following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Alamito - 0 percent
4. Los Alamos County - 0 percent
- 4 -
<PAGE>
17.1.2.2 For Unit 3 and all equipment and facilities directly
related only to Unit 3 in accordance with the following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Alamito - 50 percent
4. Los Alamos County - 0 percent
17.1.2.3 For Unit 4 and for all equipment and facilities
directly related only to Unit 4 in accordance with the following
percentages:
A. Participants
1. New Mexico - 55.525 percent
2. Tucson - 0 percent
- 5 -
<PAGE>
B. Unit Participants
1. M-S-R - 28.8 percent
2. City of Farmington - 8.475 percent
3. Alamito - 0 percent
4. Los Alamos County - 7.20 percent
17.1.2.4 For equipment and facilities common only to Units 1
and 2, in accordance with the following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Alamito - 0 percent
4. Los Alamos County - 0 percent
- 6 -
<PAGE>
17.1.2.5 For equipment and facilities common only to Units 3
and 4, in accordance with the following percentages:
A. Participants
1. New Mexico - 52.739 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - 14.4 percent
2. City of Farmington - 4.249 percent
3. Alamito - 25 percent
4. Los Alamos County - 3.612 percent
17.1.2.6 For the Switchyard Facilities except as otherwise
provided in Section 15 of the Co-Tenancy Agreement, in accordance with
the following percentages:
A. Participants
1. New Mexico - 65 percent
2. Tucson - 35 percent
- 7 -
<PAGE>
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Alamito - 0 percent
4. Los Alamos County - 0 percent
17.1.2.7 For the SO2 chemical plant system, except absorbers,
and for the chemical laboratory, including neutralizers, in accordance
with the following percentages:
A. Participants
1. New Mexico - 51.566 percent
2. Tucson - 19.8 percent
B. Unit Participants
1. M-S-R - 8.7 percent
2. City of Farmington - 2.559 percent
3. Alamito - 15.2 percent
4. Los Alamos County - 2.175 percent
17.1.2.8 Except as provided in Exhibit III(g), for equipment
and facilities common to all of the units, and all Project expenses not
identifiable by unit and not otherwise listed above, in accordance with
the following percentages:
- 8 -
<PAGE>
A. Participants
1. New Mexico - 51.566 percent
2. Tucson - 19.8 percent
B. Unit Participants
1. M-S-R - 8.7 percent
2. City of Farmington - 2.559 percent
3. Alamito - 15.2 percent
4. Los Alamos County - 2.175 percent
17.1.3 In the event of a shutdown of any either of Units 1
and/or 2, the expenses incurred in connection with the shutdown
(including but not limited to removal, salvage, cleanup, and protection
service) shall be equally apportioned between the Participants. In the
event of a shutdown of Unit 3, said expenses shall be allocated as set
forth in Paragraph 17.1.2.2 above. In the event of a shutdown of Unit
4, said expenses shall be allocated as set forth in Paragraph 17.1.2.3.
Expenses which are attributable to equipment and facilities common to
more than one unit shall be apportioned in accordance with paragraph
17.1.2.
4.0 Amended Exhibit III. Exhibit III (a-i) shall be amended to read in
its entirety as shown on the attached.
- 9 -
<PAGE>
5.0 Amended Section 31.10. Section 31.10 shall be amended to read in
its entirety as follows:
31.10 Except as modified by the provisions set forth in
Modification No. 5, all of the terms and conditions of the Operating
Agreement, effective as of January 1, 1973, as modified by Modification
No. 1 on May 16, 1979, Modification No. 2 on December 31, 1983,
Modification No. 3 on July 17, 1984, and Modification No. 4 on October
25, 1984, shall remain in full force and effect.
6.0 Amended Section 32. Section 32 shall be amended to read in its
entirety as follows:
32.0 RECOGNITION OF M-S-R , THE CITY OF FARMINGTON, ALAMITO
AND LOS ALAMOS COUNTY ACKNOWLEDGEMENT.
32.1 The Parties recognize that M-S-R, the City of Farmington,
Alamito, and Los Alamos County, each has acknowledged that it is
familiar with the Project Agreements as amended between New Mexico and
Tucson and such agreements govern the activities of the San Juan
Project. Where a specific provision of the EPPA, the Farmington PAPA,
or the County PPA is in conflict with the provision in one or more of
the Project Agreements, then (a) as between New Mexico and M-S-R, the
provisions of the EPPA shall govern, all as provided in Section 5.2 of
such EPPA, and (b) as between New Mexico and the City of Farmington,
- 10 -
<PAGE>
the provisions of the Farmington PAPAshall govern, all as provided in
Section 8.2 of the Farmington PAPA, and (c) as between New Mexico and
Los Alamos County, the provisions of the County PPA shall govern, all
as provided in Section 5.2 of the County PPA. "EPPA" shall mean the San
Juan Unit 4 Early Purchase and Participation Agreement entered into by
New Mexico and M-S-R on September 26, 1983. "Farmington PAPA" shall
mean the San Juan Unit 4 Purchase Agreement and Participation Agreement
entered into by New Mexico and the City of Farmington on November 17,
1981. "County PPA" shall mean the Amended and Restated San Juan Unit 4
Purchase and Participation Agreement entered into by New Mexico and Los
Alamos County on December 28, 1984.
IN WITNESS WHEREOF, the Parties hereto have caused this Modification
No. 5 to the Operating Agreement to be executed as of the 1st day of July, 1985.
- 11 -
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO
Attest: By: /S/ J. L. Wilkins
-------------------------------
/S/ M. Mason-Plunkett Its: Senior Vice President,
- ------------------------- Power Supply
Secretary
TUCSON ELECTRIC POWER COMPANY
Attest: By: /S/
-------------------------------
/S/ Its: President
- -------------------------
Assistant Secretary
STATE OF NEW MEXICO
ss.
COUNTY OF BERNALILLO
The foregoing instrument was acknowledged before me this 24th day of
June , 1985, by J. L. Wilkins, a Senior Vice President of Public Service Company
of New Mexico, a New Mexico corporation, on behalf of said corporation.
/S/ Sherry Leeson
--------------------
Notary Public
My Commission Expires:
July 1, 1988
STATE OF ARIZONA)
) ss.
COUNTY OF PIMA )
The foregoing instrument was acknowledged before me this 14th day of
June , 1985, by Einar Greve , an Arizona corporation.
/S/
--------------------
Notary Public
My Commission Expires:
January 9, 1987
- 12 -
<PAGE>
Exhibit III(a)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 1
Operation and Maintenance Costs
New Mexico - 50% Tucson - 50%
M-S-R - 0% City of Farmington - 0%
Alamito - 0% Los Alamos County - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Start-up, Unit Auxiliary, and SO2 Scrubber Transformers
11. Bottom Ash System (Up to but not including Dewatering Tank or
Ash Water Pump Building and Equipment.)
12. Fly Ash System
13. Building HVAC Systems
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and Flue Gas
Reheat System including the 650-pound Reheat Steam Line and
Desuperheater from the Plant Main Steam Line but not including the
165-pound Control Valve and Branch Line to the Chemical Plant.
15. Emergency Diesel Generator
- 1 -
<PAGE>
Exhibit III(a)
(continued)
16. Electrical and Control Systems
17. SSR Protection System
18. Unit Specific Piping for All Air Systems, Chemical Feed
Systems, and Hydrogen
- 2 -
<PAGE>
Exhibit III(b)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 2
Operation and Maintenance Costs
New Mexico - 50% Tucson - 50%
M-S-R - 0% City of Farmington - 0%
Alamito - 0% Los Alamos County - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Start-up, Unit Auxiliary, and SO2 Scrubber Transformers
11. Bottom Ash System (Up to but not including Dewatering Tank or
Ash Water Pump building and equipment.)
12. Fly Ash System
13. Building HVAC Systems
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System including the 650-pound Reheat Steam
Line and Desuperheater from the Plant Main Steam Line but not
including the 165-pound Control Valve and Branch Line to the
Chemical Plant
15. Emergency Diesel Generator
- 3 -
<PAGE>
Exhibit III(b)
(continued)
16. Electrical and Control Systems
17. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
- 4 -
<PAGE>
Exhibit III(c)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 3
Operation and Maintenance Costs
New Mexico - 50% Tucson - 0%
M-S-R - 0% City of Farmington - 0%
Alamito - 50% Los Alamos County - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Unit Auxiliary 3A and 3B Transformers
11. Bottom Ash System including: Hopper, Dewatering Tank,
Settling Tank, Surge Tank, and Pump House
12. Fly Ash System
13. Building HVAC Systems
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System including the Reheat Steam Line from
the Auxiliary Steam Header
15. Emergency Diesel Generator
16. Electrical and Control Systems
- 5 -
<PAGE>
Exhibit III(c)
(continued)
17. Fuel Oil Ignitor Heaters and Unit Specific Piping
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
19. SSR Protection System
20. Auxiliary Steam Header Piping System:
a. Including the Unit Specific Branch Line to the Reheat
System
b. Not included is the Branch Line to the Chemical Plant
- 6 -
<PAGE>
Exhibit III(d)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 4
Operation and Maintenance Costs
New Mexico - 55.525% Tucson - 0%
M-S-R - 28.8% City of Farmington - 8.475%
Alamito - 0% Los Alamos County - 7.20%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, and
Feeders
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Unit Auxiliary 4A and 4B Transformers
11. Bottom Ash System including: Hopper, Dewatering Tank,
Settling Tank, Surge Tank, and Pump House
12. Fly Ash System
13. Building HVAC Systems
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System including the Reheat Steam Line from
the Auxiliary Steam Header
15. Emergency Diesel Generator
16. Electrical and Control Systems
- 7 -
<PAGE>
Exhibit III(d)
(continued)
17. Fuel Oil Ignitor Heaters and Unit Specific Piping
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
19. Auxiliary Steam Header Piping System:
a. Including the Unit Specific Branch Line to the Reheat
Steam
b. Not including the Branch Line to the Chemical Plant
- 8 -
<PAGE>
Exhibit III(e)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNITS 1 AND 2
Operation and Maintenance Costs
New Mexico - 50% Tucson - 50%
M-S-R - 0% City of Farmington - 0%
Alamito - 0% Los Alamos County - 0%
1. Bearing Cooling Water System except Unit Piping
2. Bottom Ash Dewatering Facility including: Dewatering Tank,
Settling Tank, Surge Tank, Storage Tank, and Pump House
3. Fuel Oil System (No. 2 Oil for Ignition and Flame
Stabilization)
4. Instrument Air System, except Unit Piping
5. Chemical Feed System, except Unit Piping
a. Condensate and Feedwater System
b. Boiler
c. Bearing Cooling Water System
d. Cooling Tower Systems
e. Chlorination System
6. Plant Air System, except Unit Piping
7. Sootblowing Air System except Unit Piping
8. Hydrogen Storage System except Unit Piping
9. Coal Tripper System including Dust Collection System
10. Turbine Lube Oil Storage and Transfer System
11. Control Room, Equipment Rooms, and Associated HVAC System
12. SO2 Back-up Scrubber - Absorber Transformer
13. Turbine Crane south of column, Line 12
14. Fuel Oil, Ash, and Water Pipe Racks
15. Boiler Fill System
16. SAR Multiplexer Control System
- 9 -
<PAGE>
Exhibit III(f)
FACILITIES AND EQUIPMENT
COMMON TO SAN JUAN UNITS 3 AND 4
Operation and Maintenance Costs
New Mexico - 52.739% Tucson - 0%
M-S-R - 14.4% City of Farmington - 4.249%
Alamito - 25% Los Alamos County - 3.612%
1. Bearing Cooling Water System except Unit Piping
2. Fuel Oil System (No. 6 Oil for Ignition and Flame
Stabilization except Ignitor Heaters and Unit Specific Piping)
3. Instrument Air System except Unit Piping
4. Chemical Feed System except Unit Piping
a. Condensate and Feedwater System
b. Boiler
c. Bearing Cooling Water System
d. Cooling Tower Systems
e. Chlorination System
5. Plant Air System except Unit Piping
6. Sootblowing Air System except Unit Piping
7. Start-Up Transformers and Nonseg Bus to Units 3 and 4
Switchgear
8. Hydrogen Storage System except Unit Piping
9. Coal Tripper System including Dust Collection Systems
10. Turbine Lube Oil Storage and Transfer System
11. Control Room, Equipment Rooms, and Associated HVAC System
12. Boiler Fill System
13. Auxiliary Cooling Systems including Auxiliary Cooling Tower
No. 1 and pumps, but excepting No. 4 Tower Pumps and Piping
which is Unit Specific
- 10 -
<PAGE>
Exhibit III(f)
(continued)
14. CO2 Storage System except Unit Piping
15. Start-Up Boiler Feed Pump except Unit Piping
16. Turbine Bay Crane north of column, Line 12
17. Fuel Oil, Ash, and Water Pipe Racks
18. Fire Water Booster and Jockey Pumps
19. Halon Fire Protection System
20. Cooling Tower Multiplex Control System
- 11 -
<PAGE>
Exhibit III(g)
FACILITIES AND EQUIPMENT
COMMON TO ALL FOUR SAN JUAN UNITS
Operation and Maintenance Costs
New Mexico - 51.566% Tucson - 19.8%
M-S-R - 8.7% City of Farmington - 2.559%
Alamito - 15.2% Los Alamos County - 2.175%
1. River and Raw Water System including:
a. Diversion and intake structures, including all equipment
and pump building.
b. Raw water line to reservoir.
c. Reservoir, pump buildings, and all equipment.
d. Raw water lines to plant yard.
e. All above and underground fire protection system to each
vendor supplied or unit specific fire protection system.
2. Auxiliary boiler
3. SO2 System Chemical Plant except Absorbers
a. Double effect evaporator train systems.
b. Fly ash filter system.
c. Absorber product and feed tanks.
d. Condensate collection, storage, and transfer systems.
e. Soda ash storage, mixing, and distribution systems.
f. Sulfur plant.
g. Sulfate purge system including: crystallizers,
centrifuges, evaporators, and salt cake system.
h. Sulfuric acid plant system including storage tanks and
load out system.
i. Auxiliary No. 2 cooling tower, pumps, and systems.
4. Spare Main Transformer 345/24 kV for all units
5. Maintenance, Office, and Warehousing Facilities
- 12 -
<PAGE>
Exhibit III(g)
(continued)
6. Chemical Laboratory
*7. Coal and Ash Handling Control Facilities
8. Roads and grounds such as fencing, yard lighting, guard
facilities, drainage, and dikes.
9. Potable Water System
10. Environmental Monitoring Systems including Air, Water, and
Ground. Excludes Stack Monitoring Systems which are unit
specific
11. Transportation such as trucks, cars, and dozers (not
otherwise charged).
12. Water Management System
a. Wastewater Recovery System - Northside
(1) Neutralization system including premix tank,
neutralization tank, clarifier/thickener, and pumps.
(2) Reverse osmosis system including line/soda
softening clarifier system.
(3) Brine concentrator Nos. 4 and 5.
(4) Centrifuge dewatering system.
(5) Effluent pond No. 3 and pump system.
(6) North evaporation ponds 1, 2, and 3.
b. SO2 Waste Treatment System - Southside
(1) Effluent ponds 1A, 1B, 2 and pumping system.
(2) Premix tank and clarifier system.
(3) Oxidation towers.
(4) Brine concentrator Nos. 1, 2, and 3.
(5) Centrifuge dewatering system.
(6) South evaporation pond Nos. 1, 2, 3, 4, and 5.
c. Data Acquisition System
d. Solid Waste Disposal Pit
*13. Coal Handling Equipment - all equipment from all reclaim hoppers ending
at the chutes to the tripper conveyors. This includes: hoppers,
feeders, feeder belts, reclaim conveyors, plant conveyors, belt scales,
fire protection systems, dust suppression systems, magnetic separators,
all electrical and controls, and heating and ventilation systems.
*Maintenance Only.
- 13 -
<PAGE>
Exhibit III(g)
(continued)
14. Maintenance Bay Facilities including: Bay Bridge Crane, all
Offices, and Support Facilities
15. Sewage Treatment Facilities
16. All Demineralizer Systems including: Clarifier, Storage
Tanks, Sump Pumps, Filter Beds, and Control Systems
17. The Chemical Plant 165-pound Control Valve and Branch Line
from each of Units 1 and 2 Unit Specific 650-pound Reheat
Steam Line
18. The Chemical Plant Branch Steam Line from (but not
including) the Unit Specific Auxiliary Steam Header System
on each of Units 3 and 4.
- 14 -
<PAGE>
Exhibit III(h)
FACILITIES AND EQUIPMENT
COMMON TO ALL FOUR SAN JUAN UNITS
Operation Costs Only
New Mexico
M-S-R
Tucson Variable split based on generation by unit.
City of Farmington
Alamito
Los Alamos County
1. Coal and Ash Handling Control Facilities
2. Coal Handling Equipment
All equipment from all reclaim hoppers ending at the chutes to the
tripper conveyors. This includes: hoppers, feeders, feeder belts,
reclaim conveyors, plant conveyors, belt scales, fire protection
systems, dust suppression systems, magnetic separators, all electrical
and control, and heating and ventilation systems.
- 15 -
<PAGE>
Exhibit III(i)
SWITCHYARD FACILITIES AND EQUIPMENT
Operation and Maintenance Costs
New Mexico - 65% Tucson - 35%
<PAGE>
EXHIBIT 10.7.5
<PAGE>
MODIFICATION NO. 10
TO
SAN JUAN PROJECT OPERATING AGREEMENT
BETWEEN
PUBLIC SERVICE COMPANY OF NEW MEXICO
AND
TUCSON ELECTRIC POWER COMPANY
This Modification No. 10 to the San Juan Project Operating Agreement
between PUBLIC SERVICE COMPANY OF NEW MEXICO ("New Mexico") and TUCSON ELECTRIC
POWER COMPANY ("Tucson"), hereinafter referred to collectively as the "Parties"
or "Participants", is hereby entered into and executed as of the 30 day of
November, 1995.
WITNESSETH:
WHEREAS, the Parties entered into an agreement described as the San
Juan Project Operating Agreement effective January 1, 1973, as modified by
Modification No. 1 on May 16, 1979, Modification No. 2 on December 31, 1983,
Modification No. 3 on July 17, 1984, Modification No. 4 on October 25, 1984,
Modification No. 5 on July 1, 1985, Modification No. 6 on April 1, 1993,
Modification No. 7 on April 1, 1993, Modification No. 8 on September 15, 1993,
and Modification No. 9 on January 12, 1994 ("Operating Agreement"), which
establishes certain terms and conditions relating to their participation and
responsibility in the operation of the San Juan Project; and
1
<PAGE>
WHEREAS, on June 1, 1994, Century Power Corporation ("Century") and
Tri-State Generation and Transmission Association, Inc., a Colorado nonprofit
cooperative corporation ("Tri-State"), entered into the San Juan Unit 3 Purchase
Agreement ("Tri-State Purchase Agreement"), whereby Tri-State agreed to purchase
from Century an 8.2 percent undivided ownership interest in San Juan Unit 3; and
WHEREAS, the Tri-State Purchase Agreement provides, among other things,
that Tri-State, upon closing of the transaction provided for in the Tri-State
Purchase Agreement, will have the voting rights and obligations of a Unit
Participant on San Juan Project Committees as said rights and obligations are
set forth in the Project Agreements; and
WHEREAS, New Mexico and Tucson desire to clarify the rights and
responsibilities of Participants and Unit Participants in the San Juan Project
as a result of Tri-State's purchase of an undivided interest in Unit 3 pursuant
to the Tri-State Purchase Agreement.
NOW, THEREFORE, the Parties agree that the Operating Agreement is
hereby amended as follows:
1.0 Effective Date. This Modification No. 10 shall become effective
immediately upon the Closing of Tri-State's purchase of the 8.2 percent
undivided interest in Unit 3 pursuant to the Tri-State Purchase Agreement,
currently anticipated to be in January 1996.
2
<PAGE>
2.0 Amended Section 7.3.2. Section 7.3.2 shall be amended to read in
its entirety as follows:
7.3.2 With respect to matters involving and not solely related
to San Juan Unit 3, Tucson, as a Participant holding voting rights on all San
Juan Project Committees, including, without limitation, the Coordination
Committee, the Engineering and Operating Committee, and the Auditing Committee,
shall retain such voting rights for SCPPA and Tri-State in accordance with their
respective interests, with the obligation to consult with SCPPA and Tri-State on
all matters involving the San Juan Project which affect San Juan Unit 3 as set
forth in the San Juan Unit No. 3 Purchase Agreement and the Tri-State Purchase
Agreement (Century having transferred to Tri-State an undivided 8.2 percent
interest in San Juan Unit 3).
3.0 Amended Section 17.1. Section 17.1 shall be amended to read in its
entirety as follows:
17.1 The expenses for the operation and maintenance of the San
Juan Project which are chargeable to FERC Accounts 426, 500, 502, 505, 506, 507,
and 510 through 514; 556, 557A; and 924 (when appropriate) shall be apportioned
among the Participants and Unit Participants, as follows:
17.1.1 Prior to the Transfer Date in accordance with the
following percentages:
A. Participants New Mexico - 50 percent
Tucson - 50 percent
3
<PAGE>
17.1.2 On and after Tri-State's purchase of the 8.2 percent
undivided interest in Unit 3 pursuant to the Tri-State Purchase Agreement, in
accordance with the following percentages:
17.1.2.1 For Units 1 and 2 and for all equipment and
facilities directly related to the Units 1 and 2 in accordance with the
following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Tri-State - 0 percent
4. Los Alamos County - 0 percent
5. SCPPA - 0 percent
6. City of Anaheim - 0 percent
7. UAMPS - 0 percent
17.1.2.2 For Unit 3 and all equipment and facilities directly
related only to Unit 3 in accordance with the following percentages:
A. Participants
1. New Mexico - 50 percent
2. Tucson - 0 percent
4
<PAGE>
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Tri-State - 8.2 percent
4. Los Alamos County - 0 percent
5. SCPPA - 41.8 percent
6. City of Anaheim - 0 percent
7. UAMPS - 0 percent
17.1.2.3 For Unit 4 and for all equipment and facilities
directly related only to Unit 4 in accordance with the following percentages:
A. Participants
1 New Mexico - 38.457 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R - 28.8 percent
2. City of Farmington - 8.475 percent
3. Tri-State - 0 percent
4. Los Alamos County - 7.20 percent
5. SCPPA - 0 percent
6. City of Anaheim - 10.04 percent
7. UAMPS - 7.028 percent
17.1.2.4 For equipment and facilities common only to Units 1
and 2, in accordance with the following percentages:
5
<PAGE>
A. Participants
1. New Mexico - 50 percent
2. Tucson - 50 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Tri-State - 0 percent
4. Los Alamos County - 0 percent
5. SCPPA - 0 percent
6. City of Anaheim - 0 percent
7. UAMPS - 0 percent
17.1.2.5 For equipment and facilities common only to Units 3
and 4, in accordance with the following percentages:
A. Participants
1. New Mexico - 44.119 percent
2. Tucson - 0 percent
B. Unit Participants
1. M-S-R- 14.4 percent
2. City of Farmington - 4.249 percent
3. Tri-State-4.1 percent
4. Los Alamos County - 3.612 percent
5. SCPPA 20.9 percent
6. City of Anaheim - 5.07 percent
7. UAMPS - 3.55 percent
6
<PAGE>
17.1.2.6 For the Switchyard Facilities except as otherwise
provided in Section 15 of the Co-Tenancy Agreement, in accordance with the
following percentages:
A. Participants
1. New Mexico - 65 percent
2. Tucson - 35 percent
B. Unit Participants
1. M-S-R - 0 percent
2. City of Farmington - 0 percent
3. Tri-State - 0 percent
4. Los Alamos County - 0 percent
5. SCPPA - 0 percent
6. City of Anaheim - 0 percent
7. UAMPS - 0 percent
17.1.2.7 For the SO2 chemical plant system, except absorbers,
and for the chemical laboratory, including neutralizers, in accordance with the
following percentages:
A. Participants
1. New Mexico - 46.297 percent
2. Tucson -19.8 percent
B. Unit Participants
1. M-S-R - 8.7 percent
2. City of Farmington - 2.559 percent
3. Tri-State - 2.49 percent
4. Los Alamos County - 2.175 percent
5. SCPPA- 12.71 percent
7
<PAGE>
6. City of Anaheim - 3.10 percent
7. UAMPS - 2.169 percent
17.1.2.8 Except as provided in Exhibit lll(g), for equipment
and facilities common to all of the units, and all Project expenses not
identifiable by unit and not otherwise listed above, in accordance with the
following percentages:
A. Participants
1. New Mexico - 46.297 percent
2. Tucson - 19.8 percent
B. Unit Participants
1. M-S-R - 8.7 percent
2. City of Farmington - 2.559 percent
3. Tri-State - 2.49 percent
4. Los Alamos County - 2.175 percent
5. SCPPA- 12.71 percent
6. City of Anaheim - 3.10 percent
7. UAMPS - 2.169
17.1.3 In the event of a shutdown of any or either of Units 1
and/or 2, the expenses incurred in connection with the shutdown (including but
not limited to removal, salvage, cleanup, and protection service) shall be
equally apportioned between the Participants. In the event of a shutdown of Unit
3, said expenses shall be allocated as set forth in Paragraph 17.1.2.2. In the
8
<PAGE>
event of a shutdown of Unit 4, said expenses shall be allocated as set forth in
paragraph 17.1.2.3. Expenses which are attributable to equipment and facilities
common to more than one unit shall be apportioned in accordance with paragraph
17.1.2.
4.0 Amended Exhibit lll. Exhibit lll (a-i) shall be amended to read in
its entirety as shown on the attached Exhibit lll (a-i).
5.0 Amended Section 31.10. Section 31.10 shall be amended to read in
its entirety as follows:
31.10 Except as modified by the provisions set forth in this
Modification No. 10, all of the terms and conditions of the Operating Agreement,
effective as of January 1, 1973, as modified by Modification No. 1 on May
16,1979, Modification No. 2 on December 31, 1983, Modification No. 3 on July 17,
1984, Modification No. 4 on October 25, 1984, Modification No. 5 on July 1,
1985, Modification No. 6 on April 1, 1993, Modification No. 7 on April 1, 1993,
Modification No. 8 on September 15, 1993, and Modification No. 9 on January 12,
1994, shall remain in full force and effect.
6.0 Amended Section 32. Section 32 shall be amended to read in its
entirety as follows:
32.0 RECOGNITION OF M-S-R, THE CITY OF FARMINGTON, TRI-STATE,
LOS ALAMOS COUNTY, SCPPA, THE CITY OF ANAHEIM AND UAMPS ACKNOWLEDGEMENT.
32.1 The Parties recognize that M-S-R, the City of Farmington,
Tri-State, Alamos County, SCPPA, the City of Anaheim and UAMPS each has
9
<PAGE>
acknowledged that it is familiar with the Project Agreements as amended between
New Mexico and Tucson and such agreements govern the activities of the San Juan
Project. Where a specific provision of the EPPA, the Farmington PAPA, the County
PPA, the Anaheim PPA, or the UAMPS PPA is in conflict with a provision in one or
more of the Project Agreements, then (a) as between New Mexico and M-S-R, the
provisions of the EPPA shall govern, all as provided in Section 5.2 of such
EPPA, and (b) as between New Mexico and the City of Farmington, the provisions
of the Farmington PAPA shall govern, all as provided in Section 8.2 of the
Farmington PAPA, and (c) as between New Mexico and Los Alamos County, the
provisions of the County PPA shall govern, all as provided in Section 5.2 of the
County PPA, (d) as between New Mexico and the City of Anaheim, the provisions of
the Anaheim PPA shall govern, all as provided in Section 7.2 of the Anaheim PPA,
and (e) as between New Mexico and UAMPS, the provisions of the UAMPS PPA shall
govern, all as provided in Section 7.2 of the UAMPS PPA. "EPPA" shall mean the
San Juan Unit 4 Early Purchase and Participation Agreement entered into by New
Mexico and M-S-R on September 26, 1983. "Farmington PAPA" shall mean the San
Juan Unit 4 Purchase Agreement and Participation Agreement entered into by New
Mexico and the City of Farmington on November 17, 1981. "County PPA" shall mean
the Amended and Restated San Juan Unit 4 Purchase and Participation Agreement
entered into by New Mexico and Los Alamos County on December 28,1984. "Anaheim
PPA" shall mean the San Juan Unit 4 Purchase Agreement and Participation
Agreement entered into by New Mexico and the City of Anaheim on April 26,1991.
10
<PAGE>
"UAMPS PPA" shall mean the Restated and Amended San Juan Unit 4 Purchase and
Participation Agreement entered into by New Mexico and UAMPS as of May 27, 1993.
IN WITNESS WHEREOF, the Parties hereto have caused this Modification
No. 10 to the Operating Agreement to be executed as of the 30th day of November,
1995.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By /S/ Jeffry Sterba
-------------------------------
Its Senior Vice President
TUCSON ELECTRIC POWER COMPANY
By /S/ Steven J. Glasser
------------------------------
Its Vice President
11
<PAGE>
STATE OF NEW MEXICO )
) ss.
COUNTY OF BERNALILLO )
This instrument was acknowledged before me on November 28, 1995, by
Jeffry E. Sterba, as Senior Vice President of Public Service Company of New
Mexico, a New Mexico corporation.
/S/ Carmela A. Maes
-----------------------
Notary Public
My commission expires:
10/28/98
STATE OF ARIZONA )
) ss.
COUNTY OF PIMA )
This instrument was acknowledged before me on December 6, 1995, by
Steven J. Glaser, as Vice President of Tucson Electric Power Company, an Arizona
corporation.
/S/
---------------------
Notary Public
My commission expires:
0ctober 2, 1998
12
<PAGE>
EXHIBIT IlI(a)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 1
Operation and Maintenance Costs
New Mexico - 50% Tucson - 50%
M-S-R - 0% City of Farmington - 0%
Tri-State - 0% Los Alamos County - 0%
SCPPA - 0% City of Anaheim - 0%
UAMPS - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, Feeders
and Blowdown Tanks
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Start-Up, Unit Auxiliary, and SO2 Scrubber Transformers
11. Bottom Ash System (Up to but not including Dewatering Tank or
Ash Water Pump building and equipment)
12. Fly Ash System
1
<PAGE>
13. Building HVAC Systems
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and Flue Gas
Reheat System including the 650-pound Reheat Steam Line and
Desuperheater from the Plant Main Steam Line but not including the
165-pound Control Valve and Branch Line to the Chemical Plant.
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. SSR Protection System
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
2
<PAGE>
EXHIBIT IlI(b)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 2
Operation and Maintenance Costs
New Mexico - 50% Tucson - 50%
M-S-R - 0% City of Farmington - 0%
Tri-State - 0% Los Alamos County - 0%
SCPPA - 0% City of Anaheim - 0%
UAMPS - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, Feeders
and Blowdown Tanks
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Start-Up, Unit Auxiliary, and SO2 Scrubber Transformers
11. Bottom Ash System (Up to but not including Dewatering Tank or
Ash Water Pump building and equipment)
12. Fly Ash System
3
<PAGE>
13. Building HVAC Systems
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and Flue Gas
Reheat System including the 650-pound Reheat Steam Line and
Desuperheater from the Plant Main Steam Line but not including the
165-pound Control Valve and Branch Line to the Chemical Plant.
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
4
<PAGE>
EXHIBIT IlI(c)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 3
Operation and Maintenance Costs
New Mexico - 50% Tucson - 0%
M-S-R - 0% City of Farmington - 0%
Tri-State - 8.2% Los Alamos County - 0%
SCPPA - 41.8% City of Anaheim - 0%
UAMPS - 0%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, Feeders
and Blowdown Tanks
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Unit Auxiliary 3A and 3B Transformers
11. Bottom Ash System including: Hopper, Dewatering Tank, Settling
Tank, Surge Tank, and Pump House
12. Fly Ash System
5
<PAGE>
13. Building HVAC Systems
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System including the Reheat Steam Line from
the Auxiliary Steam Header
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. Fuel Oil Ignitor Heaters and Unit Specific Piping
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
19. SSR Protection System
20. Auxiliary Steam Header Piping System:
a. Including the Unit Specific Branch Line to the Reheat
System
b. Not included is the Branch Line to the Chemical Plant
6
<PAGE>
EXHIBIT IlI(d)
FACILITIES AND EQUIPMENT
SPECIFIC TO SAN JUAN UNIT NO. 4
Operation and Maintenance Costs
New Mexico - 38.457% Tucson - 0%
M-S-R - 28.8% City of Farmington - 8.475%
Tri-State - 0% Los Alamos County - 7.2%
SCPPA - 0% City of Anaheim - 10.04%
UAMPS - 7.028%
1. Turbine Generator
2. Condenser
3. Condensate and Feedwater System
a. Condensate Pumps
b. Feedwater Heaters
c. Boiler Feed Pumps
d. Storage Tanks
4. Boiler including: Air Heaters, Pulverizers, Bunkers, Feeders
and Blowdown Tanks
5. Forced Draft Fans and Primary Air Fans
6. Precipitator
7. Stack and Stack Monitoring System
8. Cooling Tower
9. Circulating Water Pumps
10. Main, Unit Auxiliary 4A and 4B Transformers
7
<PAGE>
11. Bottom Ash System including: Hopper, Dewatering Tank, Settling
Tank, Surge Tank, and Pump House
12. Fly Ash System
13. Building HVAC Systems
14. SO2 Absorbers, Scrubbers, Transfer Pumps, Booster Fans, and
Flue Gas Reheat System including the Reheat Steam Line from
the Auxiliary Steam Header
15. Emergency Diesel Generator
16. Electrical and Control Systems
17. Fuel Oil Ignitor Heaters and Unit Specific Piping
18. Unit Specific Piping for all Air Systems, Chemical Feed
Systems, and Hydrogen
19. Auxiliary Steam Header Piping System:
a. Including the Unit Specific Branch Line to the Reheat
System
b. Not included is the Branch Line to the Chemical Plant
8
<PAGE>
EXHIBIT IlI(e)
FACILITIES AND EQUIPMENT
COMMON TO SAN JUAN UNITS 1 AND 2
Operation and Maintenance Costs
New Mexico - 50% Tucson - 50%
M-S-R - 0 City of Farmington - 0%
Tri-State - 0% Los Alamos County - 0%
SCPPA - 0% City of Anaheim - 0%
UAMPS - 0%
1. Bearing Cooling Water System except Unit Piping
2. Bottom Ash Dewatering Facility including: Dewatering Tank,
Settling Tank, Surge Tank, Storage Tank, and Pump House
3. Fuel Oil System (Fuel Oil for Ignition and Flame
Stabilization)
4. Instrument Air System except Unit Piping
5. Chemical Feed System except Unit Piping
a. Condensate and Feedwater System
b. Boiler
c. Bearing Cooling Water System
d. Cooling Tower Systems
e. Chlorination System
6. Plant Air System except Unit Piping
7. Sootblowing Air System except Unit Piping
8. Hydrogen Storage System except Unit Piping
9. Coal Tripper System including Dust Collection System
10. Turbine Lube Oil Storage and Transfer System
11. Control Room. Equipment Rooms, and Associated HVAC System
9
<PAGE>
12. SO2 Back-up Scrubber - Absorber Transformer
13. Turbine Crane south of column, Line 12
14. Fuel Oil, Ash, and Water Pipe Racks
15. Boiler Fill System
16. SAR Multiplexer Control System
10
<PAGE>
EXHIBIT IlI(f)
FACILITIES AND EQUIPMENT
COMMON TO SAN JUAN UNITS 3 AND 4
Operation and Maintenance Costs
New Mexico - 44.119% Tucson - 0%
M-S-R - 14.4% City of Farmington - 4.249%
Tri-State - 4.1% Los Alamos County - 3.612%
SCPPA - 20.9% City of Anaheim - 5.07%
UAMPS - 3.55%
1. Bearing Cooling Water System except Unit Piping
2. Fuel Oil System (Fuel Oil for Ignition and Flame Stabilization
except Ignitor Heaters and Unit Specific Piping)
3. Instrument Air System except Unit Piping
4. Chemical Feed System except Unit Piping
a. Condensate and Feedwater System
b. Boiler
c. Bearing Cooling Water System
d. Cooling Tower Systems
e. Chlorination System
5. Plant Air System except Unit Piping
6. Sootblowing Air System except Unit Piping
7. Start-up Transformers and Nonseg Bus to Units 3 and 4
Switchgear
8. Hydrogen Storage System except Unit Piping
9. Coal Tripper System including Dust Collection Systems
10. Turbine Lube Oil Storage and Transfer System
11. Control Room, Equipment Rooms, and Associated HVAC System
11
<PAGE>
12. Boiler Fill System
13. Auxiliary Cooling Systems including Auxiliary Cooling Tower
No. 1 and Pumps, but excepting No. 4 Tower Pumps and Piping
which is Unit Specific
14. CO2 Storage System except Unit Piping
15. Start-Up Boiler Feed Pump except Unit Piping
16. Turbine Bay Crane north of column, Line 12
17. Fuel Oil, Ash, and Water Pipe Racks
18. Fire Water Booster and Jockey Pumps
19. Halon Fire Protection System
20. Cooling Tower Multiplex Control System
12
<PAGE>
EXHIBIT IlI(g)
FACILITIES AND EQUIPMENT
COMMON TO ALL FOUR SAN JUAN UNITS
Operation and Maintenance Costs
New Mexico - 46.297% Tucson - 19.8%
M-S-R - 8.7% City of Farmington - 2.559%
Tri-State - 2.49% Los Alamos County - 2.175%
SCPPA - 12.71% City of Anaheim - 3.1%
UAMPS - 2.169%
1. River and Raw Water System including:
a. Diversion and intake structures, including all equipment
and pump building.
b. Raw water line to reservoir.
c. Reservoir, pump buildings, and all equipment.
d. Raw water lines to plant yard.
e. All above and underground fire protection system to each
vendor supplied or unit specific fire protection system.
2. Auxiliary Boiler
3. SO2 System Chemical Plant except Absorbers
a. Double effect evaporator train systems.
b. Fly ash filter system.
c. Absorber product and feed tanks.
d. Condensate collection, storage, and transfer systems.
e. Soda ash storage, mixing, and distribution systems.
f. Sulfate purge system including: crystallizers,
centrifuges, evaporators, and salt cake system.
g. Sulfuric acid plant system including storage tanks and
load out system.
h. Auxiliary No. 2 cooling tower, pumps, and systems.
4. Spare-Main Transformer 345/24 kV for all units
13
<PAGE>
5. Maintenance, Office, and Warehousing Facilities
6. Chemical Laboratory
7.* Coal and Ash Handling Control Facilities
8. Roads and grounds such as fencing, yard lighting, guard
facilities, drainage, and dikes
9. Potable Water System
10. Environmental Monitoring systems including Air, Water, and
Ground. Excludes Stack Monitoring Systems which are unit
specific.
11. Transportation such as trucks, cars, and dozers (not otherwise
charged)
12. Water management System
a. Wastewater Recovery System -- Northside
1. Neutralization system including premix tank,
neutralization tank, clarifier/thickener, and
pumps.
2. Reverse osmosis system including lime/soda
softening clarifier system.
3. Brine concentrator Nos. 4 and 5.
4. Process pond No. 3 and pump system
5. North evaporation ponds 1, 2, and 3.
b. SO2 Waste Treatment System -- Southside
1. Process ponds 1A, 1 B, 2 and pumping system.
2. Premix tank and clarifier system.
3. Oxidation towers.
4. Brine concentrator Nos. 2 and 3.
5. South evaporation ponds Nos. 1, 2, 3, 4, and 5.
c. Data Acquisition System
d. Solid Waste Disposal Pit
e. Coal pile runoff pond
13.* Coal Handling Equipment - all equipment from all reclaim
hoppers ending at the chutes to the tripper conveyors. This
includes: hoppers, feeders, feeder belts, reclaim conveyors,
14
<PAGE>
plant conveyors, belt scales, fire protection systems, dust suppressor
systems, magnetic separators, all electrical and controls, and heating
and ventilation systems.
14. Maintenance Bay Facilities including; Bay Bridge Crane, all
Offices, and Support Facilities
15. Sewage Treatment Facilities
16. All Demineralizer Systems including: Clarifier, Storage Tanks,
Sump Pumps, Filter Beds, and Control Systems.
17. The Chemical Plant 165-pound Control Valve and Branch Line
from each of Units 1 and 2 Unit Specific 650-pound Reheat
Steam Line.
18. The Chemical Plant Branch Steam Line from (but not including)
the Unit Specific Auxiliary Steam Header System on each of
Units 3 and 4.
* Maintenance Only
15
<PAGE>
EXHIBIT IlI(h)
FACILITIES AND EQUIPMENT
COMMON TO ALL FOUR SAN JUAN UNITS
Operation Costs Only
New Mexico
M-S-R
Tucson Variable split based on generation by unit.
City of Farmington
Tri-State
Los Alamos County
SCPPA
City of Anaheim
UAMPS
1. Coal and Ash Handling Control Facilities
2. Coal Handling Equipment
All equipment from all reclaim hoppers ending at the chutes to the
tripper conveyors. This includes: hoppers; feeders, feeder belts,
reclaim conveyors, plant conveyors, belt scales, fire protection
systems, dust suppression systems, magnetic separators, all electrical
and control, and heating and ventilation systems.
16
<PAGE>
EXHIBIT IlI(i)
FACILITIES AND EQUIPMENT
OPERATION AND MAINTENANCE COSTS
New Mexico - 65% Tucson - 35%
17
<PAGE>
EXHIBIT 10.8.7
<PAGE>
[Execution Copy]
AMENDMENT NO. 10 TO THE
ARIZONA NUCLEAR POWER PROJECT
PARTICIPATION AGREEMENT
APS CONTRACT No: 4172-419.00
NOVEMBER 21, 1985
<PAGE>
AMENDMENT NO. 10 TO THE
ARIZONA NUCLEAR POWER PROJECT
PARTICIPATION AGREEMENT
1. Parties to this Amendment No. 10 to the Arizona Nuclear Power Project
Participation Agreement, hereinafter referred to as "Amendment No. 10", are:
ARIZONA PUBLIC SERVICE COMPANY, a corporation organized and existing under and
by virtue of the laws of the State of Arizona, hereinafter referred to as
"Arizona", SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT, an
agricultural improvement district organized and existing under and by virtue of
the laws of the State of Arizona, hereinafter referred to as "Salt River
Project"; SOUTHERN CALIFORNIA EDISON COMPANY, a corporation organized and
existing under and by virtue of the laws of the State of California, hereinafter
referred to as "Edison"; PUBLIC SERVICE COMPANY OF NEW MEXICO, a corporation
organized and existing under and by virtue of the laws of the State of New
Mexico, hereinafter referred to as "PNM"; EL PASO ELECTRIC COMPANY, a
corporation organized and existing under and by virtue of the laws of the State
of Texas, hereinafter referred to as "El Paso"; and SOUTHERN CALIFORNIA PUBLIC
POWER AUTHORITY, a joint powers agency organized and existing under and by
virtue of the laws of the State of California, doing business in the State of
Arizona as SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY ASSOCIATION, hereinafter
referred to as "SCPPA".
- 1 -
<PAGE>
2. Recitals:
2.1 Arizona, Salt River Project, Edison, PNM, El Paso and SCPPA are
parties to a certain agreement entitled Arizona Nuclear Power Project
Participation Agreement, dated as of August 23, 1973, as amended by Amendment
No. 1, dated as of January 1, 1974, Amendment No. 2, dated as of August 28,
1975, Amendment No. 3, dated as of July 22, 1976, Amendment No. 4, dated as of
December 15, 1977, Amendment No. 5, dated as of December 5, 1979, Amendment No.
6, dated as of September 28, 1981, Amendment No. 7, dated as of March 4, 1982,
Amendment No. 8, dated as of June 17, 1983, and Amendment No. 9, dated as of
June 12, 1984, hereinafter, as so amended, referred to as the "Participation
Agreement".
2.2 The Participants desire to amend the Participation Agreement to
make provision for sale and leaseback financing transactions involving the
Participants.
3. Agreement:
3.1 In consideration of the terms and conditions contained in this
Amendment No. 10 to the Participation Agreement, the parties agree as follows:
4. Effective Date:
4.1 This Amendment No. 10 shall become effective when executed by all
Participants.
- 2 -
<PAGE>
5. Amendment No. 10 to the Participation Agreement:
5.1 Section 3.43 is hereby deleted in its entirety and a new Section
3.43 is added as follows:
"3.43 Participant: Any party hereto and any successor or assignee of
such party under Section 15.2 or Section 15.3 and any Transferee under
Section 15.10 hereof."
5.2 Section 3.46 is deleted in its entirety and a new Section 3.46 is
added as follows:
"3.46 Project Agreements: This Participation Agreement, any
Construction Agreement, any Nuclear Fuel Agreement, but excluding any
Nuclear Fuel Agreements for the supply of Uranium Concentrates to which
all Participants are not parties, and any agreements between the
Participants or any of them and any third party for land, land rights
or water rights for ANPP, as such agreements are originally executed or
as they may thereafter be supplemented or amended and any other
agreements as the Participants agree to designate as Project
Agreements. Project Agreements shall not include any deed of trust,
mortgage indenture, security agreement or any agreement or instrument
relating to a sale and leaseback transaction, unless the Participants
shall otherwise agree."
5.3 Section 4.1 is deleted in its entirety and a new Section 4.1 is
added as follows:
"4.1 Except as otherwise permitted in Section 15.1.1(b) hereof, each
Participant shall accept, acquire and own an undivided interest as a
tenant in common in ANPP and all Project Agreements in proportion to
its Generation Entitlement Share, but excluding (i) Option and Purchase
of Effluent Agreement, Agreement No. 13904, dated April 23, 1973,
between Arizona and Salt River Project and the Cities of Phoenix,
Glendale, Mesa, Scottsdale and Tempe and the Town of Youngtown, except
to the extent only that said agreement governs the rights and
obligations for the purchase and delivery of wastewater effluent
required for Construction Work, Operating Work and Capital Improvements
and (ii) any Project Agreement which by its terms establishes an
ownership interest or rights of any Participant in the subject matter
thereof which differs from its Generation Entitlement Share under this
Participation Agreement."
- 3 -
<PAGE>
5.4 The caption of Section 15 is hereby amended to read: "15. Mortgage,
Sale and Leaseback and Transfer of Interest:".
5.5 Section 15.1 is hereby deleted in its entirety and a new Section
15.1 is added as follows:
"15.1 The following provisions shall apply to the right of each
Participant to enter into mortgage and sale and leaseback transactions.
"15.1.1 Each Participant shall have the right at any time and from time
to time to
"(a) mortgage, create or provide for a security interest in or
convey in trust all or a part of its ownership share in ANPP,
together with an equal interest in the Project Agreements, to
a trustee or trustees under deed of trust, mortgage or
indenture or to a secured party or parties under a security
agreement, as security for its present or future bonds or
other obligations or securities, and to any successors or
assigns thereof, or
"(b) sell and lease back, under a net lease having a primary
term of not less than 25 years, all or any part of its
interest in a Generating Unit and Capital Improvements made
from time to time with respect thereto, together with all or
any part of its Generation Entitlement Share with respect to
such Generating Unit or part thereof, to a trustee or trustees
under a grantor trust or trusts and to any successors or
assigns thereof,
"without need for the prior written consent of any other Participant
and without such mortgagee, trustee, secured party or lessor under such
sale and leaseback transaction assuming or becoming in any respect
obligated to perform any of the obligations of such Participant;
provided, however, at or prior to any sale and leaseback pursuant to
clause (b) of this Section 15.1.1, the conditions to such transaction
set forth in Section 15.6 hereof shall have been satisfied.
"15.1.2 Each lessor under a sale and leaseback transaction permitted
under clause (b) of Section 15.1.1 shall have the right at any time and
from time to time to
- 4 -
<PAGE>
mortgage, create or provide for a security interest in or convey in
trust all or any part of its ownership share in ANPP to a trustee or
trustees under deed of trust, mortgage or indenture or to a secured
party or parties under a security agreement, as security for its
present or future bonds or other obligations or securities, and to any
successors or assigns thereof, without need for the prior written
consent of any Participant and without such mortgagee, trustee or
secured party assuming or becoming in any respect obligated to perform
any of the obligations of the Participants."
5.6 Section 15.2 is amended (i) to redesignate such Section as
"15.2.1", (ii) by the addition of a new introductory Section 15.2 as follows:
"15.2 The following provisions shall apply to the exercise of rights in
respect of transactions permitted by Section 15.1."
and (iii) by the addition of a new Section 15.2.2 which reads as follows:
"15.2.2 From and after, but in no event prior to, the date of a
rejection or deemed rejection by any receiver, referee or trustee in
bankruptcy or reorganization of any Participant of the lease or other
executory contract constituting part of a sale and leaseback
transaction relating to ANPP to which such Participant is a party, the
lessor in such sale and leaseback transaction (or any mortgagee,
trustee or secured party under present and future deeds of trust,
mortgages, indentures or security agreements of such lessor and any
successor or assignee thereof, and any receiver, referee or trustee in
bankruptcy or reorganization of such lessor and any successor by action
of law or otherwise, and any purchaser, transferee or assignee of any
thereof) may (subject, however, to the rights of the other Participants
under the Project Agreements, including but not limited to, Section 23
hereof), without need for the prior written consent of any other
Participant, (i) succeed to and acquire all the rights, titles and
interests of such Participant in ANPP and the Project Agreements, to
the extent, but only to the extent, of the Generating Unit (or portion
thereof) and the portion of such Participant's Generation Entitlement
- 5 -
<PAGE>
Share acquired by such lessor in such transaction, and (ii) take over
possession of or foreclose upon said property, rights, titles and
interests of such Participant, and in such event such lessor or other
party shall assume and be obligated fully to perform and discharge all
obligations arising thereafter hereunder and under any other Project
Agreement of such Participant to the extent, but only to the extent, of
the Generating Unit (or portion thereof) and the portion of such
Participant's Generation Entitlement Share subject to such
transaction."
5.7 Section 15 is amended by the addition of Sections 15.6, 15.7, 15.8,
15.9 and 15.10 which read as follows:
"15.6 The right of a Participant to enter into a sale and leaseback
transaction as provided in clause (b) of Section 15.1.1 is subject to
the following:
"15.6.1 The other Participants shall have received (1) an instrument of
each lessor party to such transaction confirming the matters set forth
in Section 15.6.3.2 hereof, (2) a certificate of such Participant to
the effect that such transaction will satisfy the conditions set forth
in Section 15.6 hereof, and all other provisions of this Participation
Agreement, and (3) an opinion of counsel to such Participant with
respect to the matters set forth in Sections 15.6.3.1 and 15.6.3.4
hereof and to the effect that the documents and agreements relating to
such transaction are not inconsistent with the requirements of Section
15.6.3 hereof.
"15.6.2 The Administrative Committee, based upon the instrument, the
certificate and the opinion described in Section 15.6.1, shall have
found, by unanimous resolution, such transaction to be consistent with
Section 15 hereof. The representative of any Participant need not join
in such finding if such transaction (1) is inconsistent with Section 15
hereof or (2) may, in some manner, materially impair the rights of such
Participant to retain or obtain tax benefits arising from its property
interest in ANPP.
"15.6.3 Such transaction, and the documents and agreements relating
thereto, shall provide that:
"15.6.3.1 The rights and remedies of the parties thereto shall be
subject and subordinate to the rights and remedies of the Participants
- 6 -
<PAGE>
(other than (i) the Participant party thereto or (ii) any person who
shall become a Participant in respect of the lessor's interest in ANPP
under such transaction) under the Project Agreements;
"15.6.3.2 Except as provided in Sections 15.2.2, 15.6.4 and 15.10
hereof, the Participant party thereto shall be and remain the sole
"Participant" for all purposes of this Participation Agreement and the
sole representative (with power to bind each lessor party to such
transaction and each mortgagee, trustee and secured party of such
lessor described in Section 15.1.2 hereof) in all dealings with the
other Participants in relation to the property, rights, titles and
interests of such Participant transferred pursuant to such transaction;
"15.6.3.3 Any right conferred by Section 15.2.2 hereof shall be
exercised only in concert (through a single nominee, agent, receiver or
subsequent transferee) with similar rights conferred by Section 15.2.2
hereof on parties to other sale and leaseback transactions involving
the same Participant and interests in the same Generating Unit;
"15.6.3.4 All right to partionment with respect to the interest
acquired shall be waived by the lessor party to such transaction;
"15.6.3.5 Upon the expiration of the lease in such transaction and upon
the Participant party thereto failing to purchase all the right, title
and interest in ANPP and contractual rights related thereto necessary
for the operation of such interest (a "Lessor's Interest") acquired by
the lessor in such transaction, such lessor shall entertain cash bids
from each other Participant for such Lessor's Interest; and
"15.6.3.6 The provisions of such transaction responsive to the
foregoing Sections of this Section 15.6.3 shall remain in full force
and effect until such time as the Administrative Committee shall
otherwise consent.
"15.6.4 Such transaction may provide that the authority of the
Participant party thereto described in Section 15.6.3.2 hereof shall
not extend to approval of any amendment to the Participation Agreement
the effect of which would be to reduce the Generation Entitlement Share
in which the lessor or lessors party to such transaction have acquired
an interest.
- 7 -
<PAGE>
"15.7 Except to the extent provided in Section 15.10 hereof, a
Participant shall not be released from any obligation under the Project
Agreements notwithstanding any assumption of or agreement to perform or
discharge in whole or in part, such obligation by any other person in
connection with a sale and leaseback transaction.
"15.8 Anything in a sale and leaseback transaction to the contrary
notwithstanding: (1) the rights and remedies of the parties thereto
shall be subject and subordinate to the rights and remedies of the
Participants under the Project Agreements (including but not limited to
Section 23 hereof), other than (i) the Participant party thereto and
(ii) any person who shall become a Participant in respect of the
lessor's interest in ANPP under such transaction; (2) no other
Participant shall incur any obligations or liabilities in respect of
such transaction; and (3) the lessor party thereto shall be bound by
the provisions of Section 21 hereof (other than Section 21.3) to the
same extent as if such lessor were a Participant.
"15.9 If a Participant enters into a sale and leaseback transaction as
provided in clause (b) of Section 15.1.1 such Participant shall
indemnify all other Participants against any costs and expenses
incurred by them because of such Participant's entering into such
transaction.
"15.10 Upon a lease or sale to a person, partnership, corporation or
governmental corporation or agency engaged in the generation,
transmission or distribution of Energy (other than the Participant
originally party to such transaction) (a "Transferee") of a Lessor's
Interest acquired by a lessor in a sale and leaseback transaction:
"15.10.1 The Transferee shall be and become the sole "Participant" for
all purposes of this Participation Agreement and the sole
representative (with power to bind any lessor) in all dealings with the
other Participants in relation to such interest;
"15.10.2 The Transferee (1) shall assume and agree, and be deemed to
have assumed and agreed, fully to perform and discharge all obligations
under the Project Agreements relating to such interest to the extent
arising subsequent to such lease or sale, except obligations in respect
of decommissioning and removing from service the Generating Unit to
which such interest relates (the "Termination Obligation"), (2) if such
Transferee was not previously a Participant, may assume
- 8 -
<PAGE>
and agree fully to perform and discharge all or any part of the
Termination Obligation and, (3) if such Transferee is and was
previously a Participant, shall assume and agree, and be deemed to have
assumed and agreed, fully to perform and discharge the Termination
Obligation;
"15.10.3 The Participant originally party to such transaction shall
thereupon, with the consent (which consent shall not be withheld by any
Participant unless a release would, in some manner, materially impair
or materially adversely affect the rights of such Participant under
this Participation Agreement or the rights or security of obligation
holders of such Participant) of each other Participant, be released
from all obligations under the Project Agreements so assumed and agreed
to by the Transferee but only to the extent of such assumption and
agreement; and
"15.10.4 The Transferee shall furnish to each other Participant
evidence of such sale or lease and such assumption and agreement."
5.8 Section 20.8 is amended by the addition of the following sentence
at the end thereof:
"Each Participant shall have the right to have any lessor (and any
trustee or trustees under a deed of trust, mortgage or indenture or any
secured party or parties under a security agreement) in a sale and
leaseback transaction named on all or any of the Project Insurance
policies as loss payee or additional insured as its interest may
appear, by notice in writing to the Project Manager of Operating Agent
given in writing not less than thirty (30) days prior to the date
proposed for such naming, which notice shall specify the name or names
of such lessor and such additional information as may be necessary or
required to permit it to be included on the policy(ies) of insurance."
5.9 Section 32.1 is hereby deleted in its entirety and a new Section
32.1 is added as follows:
"32.1 All of the respective covenants and obligations of each of the
Participants set forth and contained in the Project Agreements shall
bind and shall be and become the respective covenants and obligations
of:
- 9 -
<PAGE>
"32.1.1 Each such Participant;
"32.1.2 All mortgagees, trustees and secured parties under all
present and future mortgages, indentures and deeds of trust,
and security agreements which are or may become a lien upon
any of the interests of such Participant in ANPP; provided,
however, that such covenants and obligations shall become
binding upon such parties only at the time of taking
possession;
"32.1.3 All receivers, assignees for the benefit of creditors,
bankruptcy trustees and referees of such Participant;
"32.1.4 All lessors under all future sale and leaseback
transactions (or other person described in Section 15.1.2
hereof) involving interests in ANPP; provided, however, that
such covenants and obligations shall become binding on such
lessors (or other persons) only in accordance with Section
15.2.2 hereof;
"32.1.5 All receivers, assignees for the benefit of creditors,
bankruptcy trustees and referees of such lessors;
"32.1.6 All Transferees pursuant to Section 15.10 hereof;
provided, however, that such covenants and obligations shall
become binding on a Transferee only in accordance with Section
15.10.2 hereof;
"32.1.7 All other persons, firms, partnerships or corporations
claiming through or under any of the foregoing; and
"32.1.8 Any successors or assigns of any of those mentioned in
Sections 32.1.1 through 32.1.7 hereof,
"and shall be covenants and obligations running with such Participant's
respective rights, titles and interests in ANPP and in, to and under
the Project Agreements, and shall be for the benefit of the respective
rights, titles and interests of the Participants and their respective
successors and assigns, in and to ANPP. It is the specific intention of
this provision that all such covenants and obligations shall be binding
upon any party which acquires any of the rights, titles and interests
of any such Participant in ANPP or in, to and under the Project
Agreements and that all of the above-described persons and groups shall
be obligated to use such Participant's rights, titles and interests in
ANPP and/or
- 10 -
<PAGE>
in, to or under the Project Agreements for the purpose of discharging
its covenants and obligations under the Project Agreements: except (i)
that in the case of a partial assignment the assignee shall only be
required to share in the cost of fulfilling the covenants and
obligations of the assigning Participant in, to and under the Project
Agreements to an extent proportionate or attributable to such
assignment, (ii) the rights and obligations of any Fuel Lessor of any
Participant shall be governed by the provisions of Section 15.4 hereof
and (iii) the rights and obligations of any person specified in
Sections 32.1.2, 32.1.4 and 32.1.6 hereof shall be governed as set
forth in such Sections."
5.10 Except as provided herein, the Participation Agreement, as amended
by this Amendment No.10, shall remain in full force and effect.
6. Execution by Counterparts:
6.1 This Amendment No. 10 may be executed in any number of
counterparts, and upon execution by all Participants, each executed counterpart
shall have the same force and effect as an original instrument and as if all
Participants had signed the same instrument. Any signature page of this
Amendment No. 10 may be detached from any counterpart of this Amendment No. 10
without impairing the legal effect of any signatures thereon, and may be
attached to another counterpart of this Amendment No. 10 identical in form
hereto but having attached to it one or more signature pages.
- 11 -
<PAGE>
7. Signature Clause:
7.1 The signatories hereto represent that they have been appropriately
authorized to enter into this Amendment No. 10 on behalf of the party for whom
they sign. This Amendment No. 10 is hereby executed as of the 21st day of
October, 1985.
ARIZONA PUBLIC SERVICE COMPANY
By: /S/
--------------------------
Its: Chief Executive Officer
SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT
ATTEST AND COUNTERSIGN:
______________________ By: _______________________________
Its: _________________ Its: _______________________________
SOUTHERN CALIFORNIA EDISON
COMPANY
By: _______________________________
Its: _______________________________
- 12 -
<PAGE>
7. Signature Clause:
7.1 The signatories hereto represent that they have been appropriately
authorized to enter into this Amendment No. 10 on behalf of the party for whom
they sign. This Amendment No. 10 is hereby executed as of the th day of October,
1985.
ARIZONA PUBLIC SERVICE COMPANY
By:
Its:
SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT
ATTEST AND COUNTERSIGN:
/S/ By: /S/
- ----------------------- -------------------------
Its: Secretary Its: President
SOUTHERN CALIFORNIA EDISON
COMPANY
By: _______________________________
Its: _______________________________
- 12 -
<PAGE>
7. Signature Clause:
7.1 The signatories hereto represent that they have been appropriately
authorized to enter into this Amendment No. 10 on behalf of the party for whom
they sign. This Amendment No. 10 is hereby executed as of the 21st day of
November, 1985.
ARIZONA PUBLIC SERVICE COMPANY
By: /S/
-------------------------
Its: Chief Executive Officer
SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT
ATTEST AND COUNTERSIGN:
By:
Its: _________________ Its:
SOUTHERN CALIFORNIA EDISON
COMPANY
By: _______________________________
Its: _______________________________
- 12 -
<PAGE>
7. Signature Clause:
7.1 The signatories hereto represent that they have been appropriately
authorized to enter into this Amendment No. 10 on behalf of the party for whom
they sign. This Amendment No. 10 is hereby executed as of the th day of
November, 1985.
ARIZONA PUBLIC SERVICE COMPANY
By:
Its:
SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT
ATTEST AND COUNTERSIGN:
By:
Its: Its:
SOUTHERN CALIFORNIA EDISON
COMPANY
By: /S/
Its: /S/
- 12 -
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO
By: J. L. Wilkins
Its: Senior Vice President
Power Supply
EL PASO ELECTRIC COMPANY
By: _______________________________
Its: _______________________________
SOUTHERN CALIFORNIA PUBLIC
POWER AUTHORITY, doing business in
the State of Arizona as SOUTHERN
CALIFORNIA PUBLIC POWER AUTHORITY
ASSOCIATION
ATTEST:
______________________ By: _______________________________
Its: _________________ Its: _______________________________
- 13 -
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO
By:
Its:
EL PASO ELECTRIC COMPANY
By: /S/
Its: Senior Vice President
SOUTHERN CALIFORNIA PUBLIC
POWER AUTHORITY, doing business in
the State of Arizona as SOUTHERN
CALIFORNIA PUBLIC POWER AUTHORITY
ASSOCIATION
ATTEST:
______________________ By: _______________________________
Its: _________________ Its: _______________________________
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<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO
By:
Its:
EL PASO ELECTRIC COMPANY
By: _______________________________
Its:
SOUTHERN CALIFORNIA PUBLIC
POWER AUTHORITY, doing business in
the State of Arizona as SOUTHERN
CALIFORNIA PUBLIC POWER AUTHORITY
ASSOCIATION
ATTEST:
/S/ By: /S/
Its: Asst. Secretary Its: President
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<PAGE>
STATE OF ARIZONA )
) ss.
County of Maricopa )
On this 21st day of November, 1985, before me, the undersigned Notary
Public, personally appeared Keith L. Turley who acknowledged himself to be the
Chairman of the Board of ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation,
and that as such officer, being authorized so to do, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such Chief Executive Officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/S/
Notary Public
My commission expires:
April 9, 1989
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<PAGE>
STATE OF ARIZONA )
) ss.
County of Maricopa )
On this 8th day of November, 1985, before me, the undersigned Notary
Public, personally appeared John R. Lassen and Paul D. Rice who acknowledged
themselves to be the President and Secretary of SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT, an Arizona agricultural improvement district,
and that they as such officers, being authorized so to do, executed the
foregoing instrument for the purposes therein contained by signing the name of
the district by themselves as such President and Secretary.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/S/ Don E. Smith
Notary Public
My commission expires:
May 3, 1987
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<PAGE>
STATE OF CALIFORNIA )
)ss.
County of Los Angeles )
On this 21st day of November, 1985, before me, the undersigned Notary
Public, personally appeared /S/ who acknowledged himself to be the Exec. Vice
President of SOUTHERN CALIFORNIA EDISON COMPANY, a California corporation, and
that as such officer, being authorized so to do, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such Exec. Vice President.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/S/ Vera M Manley
Notary Public
My commission expires:
July 11, 1987
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<PAGE>
STATE OF NEW MEXICO )
) ss.
County of Bernalillo)
On this 31st day of October, 1985, before me, the undersigned Notary
Public, personally appeared J. L. Wilkins who acknowledged himself to be the
Senior Vice President of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico
corporation, and that as such officer, being authorized so to do, executed the
foregoing instrument for the purposes therein contained by signing the name of
the corporation by himself as such Senior Vice President.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/S/ Sherry Leeson
Notary Public
My commission expires:
July 1, 1988
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<PAGE>
STATE OF TEXAS )
) ss.
County of El Paso )
On this 1st day of November, 1985, before me, the undersigned Notary
Public, personally appeared /S/ R. E. York who acknowledged himself to be the
Sr. Vice Pres of EL PASO ELECTRIC COMPANY, a Texas corporation, and that as such
officer, being authorized so to do, executed the foregoing instrument for the
purposes therein contained by signing the name of the corporation by himself as
such Sr. Vice Pres.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/S/
Notary Public
My commission expires:
July 3, 89
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<PAGE>
STATE OF CALIFORNIA )
)ss.
County of Los Angeles )
On this 6th day of November, 1985, before me, the undersigned Notary
Public, personally appeared Fred Kran and Charles W. Montoya who acknowledged
themselves to be the Pres. and Assis. Sec of SOUTHERN CALIFORNIA PUBLIC POWER
AUTHORITY (doing business in the State of Arizona as SOUTHERN CALIFORNIA PUBLIC
POWER AUTHORITY ASSOCIATION), a California joint powers agency, and that they as
such officers, being authorized so to do, executed the foregoing instrument for
the purposes therein contained by signing the name of the agency by themselves
as such Pres and Assis. Sec .
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/S/ Raul A. Mora
Notary Public
My commission expires:
July 27, 1988
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<PAGE>
EXHIBIT 10.8.8
<PAGE>
AMENDMENT NO. 11 TO THE
ARIZONA NUCLEAR POWER PROJECT
PARTICIPATION AGREEMENT
APS Contract No.: 4172-419.00
Pursuant to Section 4 herein, this Amendment No. 11 has been filed with the
Nuclear Regulatory Commission and became effective on the 10th day of January,
1987.
June 13, 1986
(0592A)
<PAGE>
AMENDMENT NO. 11 TO THE
ARIZONA NUCLEAR POWER PROJECT
PARTICIPATION AGREEMENT
1. PARTIES:
The parties to this Amendment No. 11 to the Arizona Nuclear Power
Project Participation Agreement, hereinafter referred to as "Amendment
No. 11", are: ARIZONA PUBLIC SERVICE COMPANY, a corporation organized
and existing under and by virtue of the laws of the State of Arizona,
hereinafter referred to as "Arizona"; SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT, an agricultural improvement district
organized and existing under and by virtue of the laws of the State of
Arizona, hereinafter referred to as " Salt River Project"; SOUTHERN
CALIFORNIA EDISON COMPANY, a corporation organized and existing under
and by virtue of the laws of the State of California, hereinafter
referred to as "Edison"; PUBLIC SERVICE COMPANY OF NEW MEXICO, a
corporation organized and existing under and by virtue of the laws of
the State of New Mexico, hereinafter referred to as "PNM"; EL PASO
ELECTRIC COMPANY, a corporation organized and existing under and by
virtue of the laws of the State of Texas, hereinafter referred to as
"El Paso"; SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY, a joint powers
agency organized and existing under and by virtue of the laws of the
State of California, doing business in the State of Arizona as SOUTHERN
CALIFORNIA PUBLIC POWER AUTHORITY ASSOCIATION, hereinafter referred to
as "SCPPA"; and
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<PAGE>
DEPARTMENT OF WATER AND POWER OF THE CITY OF LOS ANGELES, a municipal
corporation organized and existing under and by virtue of the laws of
the State of California, hereinafter referred to as "LADWP".
2. RECITALS:
2.1 Arizona, Salt River Project, Edison, PNM, El Paso and SCPPA
are parties to a certain agreement entitled Arizona Nuclear
Power Project Participation Agreement, dated as of August 23,
1973, as amended by Amendment No. 1., dated as of January 1,
1974, Amendment No. 2, dated as of August 28, 1975, Amendment
No. 3, dated as of July 22, 1976, Amendment No. 4, dated as of
December 15, 1977, Amendment No. 5, dated as of December 5,
1979, Amendment No. 6, dated as of September 28, 1981,
Amendment No. 7, dated as of March 4, 1982, Amendment No. 8,
dated as of June 17, 1983, Amendment No. 9, dated as of June
12, 1984, and Amendment No. 10, dated as of November 21, 1985,
hereinafter referred to as the "Participation Agreement", as
so amended.
2.2 By this Amendment No. 11, the Participants desire to amend the
Participation Agreement in order to provide for the
determination of administrative and general expenses regarding
Start-Up and Pre-Operation Costs as agreed to in the letter
entitled "Letter of Understanding Concerning Administrative
and General Expense Charged to Arizona Nuclear Power Project
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<PAGE>
Start-Up and Pre-Operation Expenses", hereinafter referred to
as "Letter of Understanding", which became effective February
21, 1985.
2.3 Pursuant to Items D.1, D.2 and D.3 of the Letter of
Understanding, the Participants, based upon the recommendation
of the Auditing Committee, have determined that it is
desirable to implement by this Amendment No. 11 certain
changes to the formulas for determining the Operation and
Maintenance A & G Ratio, the O & M Ratio and Construction
Ratio, and the Capital A & G Ratio.
2.4 Pursuant to the Salt River Project - Los Angeles Palo Verde
Station Assignment Agreement, dated January 29, 1986, by and
between Salt River Project and LADWP, on January 29, 1986,
Salt River Project, pursuant to Section 15.3 of the
Participation Agreement, assigned and transferred to LADWP,
among other things, an undivided 5.7% interest in the Palo
Verde Nuclear Generating Station and in the Project Agreements
related thereto, and a 5.7% Generation Entitlement Share under
the Participation Agreement (all collectively referred to as
"LADWP's Palo Verde Interest") and LADWP pursuant to Section
15.5 of the Participation Agreement has accepted said
assignment and transfer and has become, and assumed the status
and obligations of, a Participant in the Palo Verde Nuclear
Generating Station to the extent of LADWP's Palo Verde
Interest.
- 3 -
<PAGE>
3. AGREEMENT:
In consideration of the terms and conditions contained in this
Amendment No. 11, the parties agree as follows:
4. EFFECTIVE DATE:
This Amendment No. 11 shall become effective 10 days following the
filing of this Amendment No. 11 with the Nuclear Regulatory Commission,
and the effective date shall be as indicated on the cover page to this
Amendment No. 11. This Amendment No. 11 shall supersede in its entirety
the Letter of Understanding.
5. AMENDMENT NO. 11 TO THE PARTICIPATION AGREEMENT:
5.1 A new Section 3.8A is hereby added to read as follows:
"3.8A Beginning of Generating Unit Fuel Load: The date on
which the first Fuel Assembly is placed in the
reactor vessel of each Generating Unit."
5.2 A new Section 3.8B is hereby added to read as follows:
"3.8B Beginning of Generating Unit Precore Hot Functional
Test: The date on which information is first recorded
in the Hot Functional Director's Log of Information
for each Generating Unit in accordance with Section
8.1 of the PVNGS Manual, Procedure No. 90HF-1ZZ01."
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<PAGE>
5.3 Section 3.23 is hereby deleted in its entirety and a new
Section 3.23 is hereby added to read as follows:
"3.23 FPC Accounts: The Federal Energy Regulatory
------------ Commission's (FERC) "Uniform System of
Accounts Prescribed for Public Utilities and
Licensees (Class A and Class B)", in effect as of the
date of this Participation Agreement, and as such
system of accounts may be in effect from time to
time. References in this Participation Agreement to
any specific FPC Account number shall mean the FERC
Account number in effect as of the effective date of
this Participation Agreement or any successor FERC
Account."
5.4 Section 3.28 is hereby deleted in its entirety and a new
Section 3.28 is hereby added to read as follows:
"3.28 Generation Entitlement Share: The percentage
entitlement of each Participant to the Net Energy
Generation and to the Available Generating
Capability. Each Participant's percentage entitlement
is as follows:
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<PAGE>
2.28.1 Arizona = 29.1 percent
3.28.2 Salt River Project = 17.49 percent
3.28.3 Edison = 15.9 percent
3.28.4 PNM = 10.2 percent
3.28.5 El Paso = 15.8 percent
3.28.6 SCPPA = 5.91 percent
3.28.7 LADWP = 5.7 percent"
5.5 A new Section 3.45A is hereby added to read as follows:
"3.45A Power Ascension Level 50%: That point at which each
Generating Unit is certified at the fifty percent
(50%) "Reliable (Power Level) Power Operation During
Power Ascension Testing" level by the Engineering and
Operating Committee pursuant to the Engineering and
Operating Committee's Procedure No. 7."
5.6 A new Section 3.53A is hereby added to read as follows:
"3.53A Start-Up and Pre-Operation Costs: The costs of
start-up and pre-operation of ANPP as described in
Section 10A."
5.7 A new Section 10A is hereby added to read as follows:
"10A. START-UP AND PRE-OPERATION COSTS:
10A.1 For purposes of computing the allowance for
start-up and pre-operation administrative
and general expenses beginning on October 1,
1984, and through the Date of Firm Operation
- 6 -
<PAGE>
of each respective Generating Unit, Start-Up
and Pre- Operation Costs of ANPP for each
Generating Unit, including its one- third
share of common facilities, shall consist of
all payments made and obligations incurred
by the Project Manager and the Operating
Agent as follows:
10A.1.1 Costs of pre-operational Operating
Work, as such costs are described within
Appendix G, Section G.7.1;
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<PAGE>
10A.1.2 Costs of training personnel for
Operating Work, as such training expenses
are described within Appendix G, Sections
G.7.3 and G.7.4;
10A.1.3 Costs of all operation and
maintenance performed by any contractor.
10A.2 Start-Up and Pre-Operation Costs shall
not receive an allowance for administrative
and general expenses except as provided
pursuant to Appendix L, attached hereto and
made a part hereof."
5.8 A new Section 38.1.7 is hereby added to read as follows:
"38.1.7 Department of Water and Power
of the City of Los Angeles
c/o Chief Electric Engineer and
Assistant Manager
P. O. Box 111
111 North Hope Street
Los Angeles, California 90015"
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<PAGE>
5.9 Section E.6 of Appendix E is hereby deleted in its entirety
and a new Section E.6 is hereby added to read as follows:
"E.6 Operation and Maintenance A & G Ratio:
E.6.1 The Operation and Maintenance A & G Ratio
shall be the percentage computed by dividing
(i) the sum of (a) the total amounts charged
to FPC Accounts 920 and 921 multiplied by
the O & M Ratio computed in accordance with
Section E.8 hereof, (b) the total amounts
directly chargeable to ANPP) and 935
(formerly 932), (c) the product of the
portion of labor charges included within (a)
and (b) above multiplied by the Payroll Tax
Ratio computed in accordance with Section
E.4 hereof, (d) the product of the labor
charges included within (a) the product of
the labor charges included within (a) and
(b) above multiplied by the Compensation
Insurance Ratio computed in accordance with
Section E.7 hereof, less (7) the one percent
(1%) portion of the administrative and
general expenses charged to FPC Accounts 920
and 921 allocable to contract operation and
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<PAGE>
maintenance by (ii) the direct labor (i.e.
total labor less labor charged to clearing
accounts) chargeable to operation and
maintenance accounts (exclusive of A & G),
to include O & M labor billed to
Participants and the labor portion of
Start-Up and Pre-Operation Costs subject to
the Operation and Maintenance A & G Ratio
pursuant to Section L.1.3, and to exclude
the labor portion of Start-Up and
Pre-Operation Costs subject to the
construction administrative and general
expense percentage of one percent (1%)
pursuant to Section L.1.3.
E.6.2 The following example sets forth the method
to be employed by the Operating Agent to
determine the Operation and Maintenance A &
G Ratio:
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<PAGE>
EXAMPLE COMPUTATION
OF OPERATION AND MAINTENANCE A & G RATIO
(Based on the Operating Agent's 1984 Experience)
Labor Total
Administrative and General Salaries
charged to FPC Account 920 $ 17,408,542 $ 17,406,779
Office Supplies and Expenses
charged to FPC Account 921 7,208,084
------------ ------------
Total $ 17,408,542 $ 24,614,863
============ ============
Total FPC Accounts 920 and 921,
multiplied by O & M Ratio @ 68.481% $ 11,921,544 $ 16,856,504
FPC Account 923 919,166
FPC Account 932 (presently 935) 1,555,913 3,127,002
------------ ------------
Subtotal $ 13,477,457 $ 20,902,672
============ ============
Payroll Taxes @ 7.126% 960,404
Pensions and Benefits @ 13.512% 1,821,074
Compensation Insurance @ 0.451% 60,783
Less that 1% portion of A & G allocable to
Contract Operation and Maintenance 1,483,314
Total administrative and general expenses ------------
allocable to operations and maintenance $ 22,261,619
============
Labor Base
Direct labor charged to system operations
and maintenance, as further defined in
Section E.6.1 148,557,953
Less direct labor charged to administrative
and general expenses (FPC 920-931 and 935) 13,160,635
------------
Labor Base $135,397,318
============
Operation and Maintenance
A & G Ratio for 1984 $22,261,619 / $135,397,318 = 16.442%
Note: All labor figures include loading for allowed time."
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<PAGE>
5.10 Section E.8 of Appendix E is hereby deleted in its entirety
and a new Section E.8 is hereby added to read as follows:
"E.8 O & M Ratio and Construction Ratio:
E.8.1 O & M Ratio set forth below shall be applied
to the amounts chargeable to FPC Accounts
920 and 921 for the purpose of determining
one component in the computation of the
Operation and Maintenance A & G Ratio as
provided in Section E.6 hereof.
O & M Ratio = O
L
Where: O = The Operating Agent's direct
labor chargeable to operation
and maintenance accounts
(exclusive of A & G), to include
O & M labor billed to
Participants and the labor
portion of Start-Up and Pre-
Operation Costs subject to the
Operation and Maintenance A & G
Ratio pursuant to Section
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<PAGE>
L.1.3, and to exclude the labor
portion of Start-Up and
Pre-Operation Costs subject to
the construction administrative
and general expense percentage
of one percent (1%) pursuant to
Section L.1.3.
L = The Operating Agent's direct
labor distributed, including
accruals, less direct labor
chargeable to FPC Accounts 920
through 931 and 935.
E.8.2 The Construction Ratio set forth below shall
be applied to the amounts chargeable to FPC
Accounts 920 and 921 for the purpose of
determining one component in the computation
of the Capital A & G Ratio as provided in
Section E.9 hereof.
Construction Ratio = C
-
L
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<PAGE>
Where: C = The Operating Agent's
direct labor in construction
accounts (exclusive of A & G),
to include construction labor
billed to Participants,
including the labor portion of
Start-Up and Pre- Operation
Costs subject to the
construction administrative and
general expense percentage of
one percent (1%) pursuant to
Section L.1.3, and excluding the
labor portion of Start-Up and
Pre-Operation Costs subject to
the Operation and Maintenance A
& G Ratio pursuant to Section
L.1.3.
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<PAGE>
L = The Operating Agent's direct
labor distributed, including
accruals, less direct labor
chargeable to FPC Accounts 920
through 931 and 935.
E.8.3 Estimated and actual O & M Ratios
and Construction Ratios shall be
determined, adjusted and used in the
manner set forth in Section E.10
hereof.
E.8.4 The following example sets forth the
method to be employed by the
Operating Agent to determine the O &
M Ratio and the Construction Ratio:
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<PAGE>
EXAMPLE COMPUTATION
O & M RATIO AND CONSTRUCTION RATIO
(Based on the Operating Agent's 1984 Experience)
Total direct labor in operation and maintenance
Accounts $ 148,557,953
Less: direct labor charged to administrative
and general expense FPC Accounts 920
through 931, inclusive and FPC Account 935 13,160,635
-------------
Net labor in O & M Accounts $ 135,397,318
Total direct labor charged to General Ledger
Accounts 6,255,648
Total direct labor in construction Accounts
(exclusive of A & G) 56,061,726
-------------
Total Labor Base $ 197,714,692
Ratio of net O & M labor to direct labor $ 135,397,318 = 68.481%
-------------
$ 197,714,692
Ratio of construction labor to direct labor $ 56,061,726 = 28.355%
-------------
$ 197,714,692
Note: All labor figures include loading for allowed time."
5.11 Section E.9 of Appendix E is hereby deleted in its entirety
and a new Section E.9 is hereby added to read as follows:
"E.9 Capital A & G Ratio:
E.9.1 The Capital A & G Ratio shall be the
percentage computed by dividing (i) the
amounts equal to (A) the sum of (a) the
total amounts charged to FPC Accounts 920
and 921 multiplied by the Construction Ratio
computed in accordance with Section
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<PAGE>
E.8 hereof, and (b) the product of the
portion of labor charges included in (a)
above multiplied by the sum of the Payroll
Tax Ratio, the Benefits Ratio and the
Compensation Insurance Ratio less (B) the
one percent (1%) portion of administrative
and general expenses charged to FPC Accounts
920 and 921 allocable to contract
construction (including the administrative
and general expenses (i) recovered on
Start-Up and Pre-Operation Costs subject to
the construction administrative and general
expense percentage of one percent (1%)
pursuant to Section L.1.3, (ii) recovered on
ANPP construction expenses, and (iii)
allocable to other contract construction) by
(ii) the direct labor in construction
accounts (exclusive of A & G), to include
construction labor billed to Participants,
excluding the labor portion of Start-Up ad
Pre-Operation Costs subject to the Operation
and Maintenance A & G pursuant to Section
L.1.3, less the labor portion of
construction expenses to which the one
percent (1%) portion of
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<PAGE>
administrative and general expenses is
applicable, and less the labor portion of
Start-Up and Pre-Operation Costs subject to
the construction administrative and general
expense percentage of one percent (1%)
pursuant to Section L.1.3.
E.9.2 The following example sets forth the method
to be employed by the Operating Agent to
determine the Capital A & G Ratio:
EXAMPLE COMPUTATION OF CAPITAL A & G RATIO
(Based on the Operating Agent's 1984 Experience)
Labor Total
Administrative and General Salaries
charged to FPC Account 920 $ 17,408,542 $ 17,406,779
Office Supplies and Expenses
charged to FPC Account 921 7,208,084
------------ -------------
Total $ 17,408,542 $ 24,614,863
============ =============
Total FPC Accounts 920 and 921, multiplied
by Construction Ratio @ 28.355% $ 4,936,192 $ 6,979,544
============
Payroll Taxes @ 7.126% 351,753
Pensions and Benefits @ 13.512% 666,978
Compensation Insurance @ 0.451% 22,262
Less that 1% portion of A & G allocable
to Contract Construction, as further
defined in
Section E.9.1 3,634,919
-------------
Total A & G Expense allocable to Construction $ 4, 385,618
=============
Construction Direct Labor 56,061,726
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<PAGE>
Compensation Insurance @ 0.451% 22,262
Less the labor portion of Construction Work,
Start-Up and Pre-Operation Costs subject
to the construction administrative and 13,496,824
general expense percentage of one percent
(1%)
Total Construction Direct Labor Base $ 42,564,902
============
Capital A & G Ratio for 1984 $4,385,618 / $42,564,902 = 10.303%
=======
Note: All labor figures include loading for allowed time."
5.12 A new Appendix L is hereby added to read as attached.
5.13 Except as provided herein, the Participation Agreement,
as amended by this Amendment No. 11, shall remain in full
force and effect.
6. EXECUTION BY COUNTERPARTS:
This Amendment No. 11 may be executed in any number of counterparts,
and upon execution by all Participants, each executed counterpart shall
have the same force and effect as an original instrument and as if all
Participants had signed the same instrument. Any signature page of this
Amendment No. 11 may be detached from any counterpart of this Amendment
No. 11 without impairing the legal effect of any signatures thereon,
and may be attached to another counterpart of this Amendment No. 11
identical in form hereto but having attached to it one or more
signature pages.
/
/
/
/
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<PAGE>
7. SIGNATURE CLAUSE:
The signatories hereto represent that they have been appropriately
authorized to enter into this Amendment No. 11 on behalf of the party
for whom they sign. This Amendment No. 11 is hereby executed as of the
8th day of September, 1986.
ARIZONA PUBLIC SERVICE COMPANY
By: /S/
Its: Executive Vice President
SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT
ATTEST AND COUNTERSIGN:
By:
Its: Its:
SOUTHERN CALIFORNIA EDISON COMPANY
By:
Its:
/
/
/
/
/
/
/
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<PAGE>
7. SIGNATURE CLAUSE:
The signatories hereto represent that they have been
appropriately authorized to enter into this Amendment No. 11 on behalf
of the party for whom they sign. This Amendment No. 11 is hereby
executed as of the day of , 1986.
ARIZONA PUBLIC SERVICE COMPANY
By:
Its:
SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT
ATTEST AND COUNTERSIGN:
By: /S/
Its: Secretary Its: President
SOUTHERN CALIFORNIA EDISON COMPANY
By:
Its:
/
/
/
/
/
/
/
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<PAGE>
7. SIGNATURE CLAUSE:
The signatories hereto represent that they have been appropirately
authorized to enter into this Amendment No. 11 on behalf of the party
for whom they sign. This Amendment No. 11 is hereby executed as of the
day of , 1986.
ARIZONA PUBLIC SERVICE COMPANY
By:
Its:
SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT
ATTEST AND COUNTERSIGN:
By:
Its: Its:
SOUTHERN CALIFORNIA EDISON COMPANY
By: /S/
Its: Vice President
/
/
/
/
/
/
/
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<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO
By: /S/ J. L. Wilkins
Its: Senior Vice President
Power Supply
EL PASO ELECTRIC COMPANY
By:
Its:
SOUTHERN CALIFORNIA PUBLIC POWER
AUTHORITY, doing business in the
State of Arizona as SOUTHERN
CALIFORNIA PUBLIC POWER AUTHORITY
ASSOCIATION
ATTEST:
By:
Its: Its:
DEPARTMENT OF WATER AND POWER
OF THE CITY OF LOS ANGELES
BY
BOARD OF WATER AND POWER
COMMISSIONERS OF THE CITY OF
LOS ANGELES
By: _______________________________
Its: _______________________________
and _______________________________
Its: _______________________________
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<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO
By:
Its:
EL PASO ELECTRIC COMPANY
By: /S/
Its: Vice President
SOUTHERN CALIFORNIA PUBLIC POWER
AUTHORITY, doing business in the
State of Arizona as SOUTHERN
CALIFORNIA PUBLIC POWER AUTHORITY
ASSOCIATION
ATTEST:
By:
Its: Its:
DEPARTMENT OF WATER AND POWER
OF THE CITY OF LOS ANGELES
BY
BOARD OF WATER AND POWER
COMMISSIONERS OF THE CITY OF
LOS ANGELES
By: _______________________________
Its: _______________________________
and _______________________________
Its: _______________________________
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<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO
By:
Its:
EL PASO ELECTRIC COMPANY
By:
Its:
SOUTHERN CALIFORNIA PUBLIC POWER
AUTHORITY, doing business in the
State of Arizona as SOUTHERN
CALIFORNIA PUBLIC POWER AUTHORITY
ASSOCIATION
ATTEST:
/S/ By: /S/
Its: Asst. Secretary Its: President
DEPARTMENT OF WATER AND POWER
OF THE CITY OF LOS ANGELES
By
BOARD OF WATER AND POWER COMMISSIONERS
OF THE CITY OF LOS ANGELES
By: _____________________________
and Secretary
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<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO
By:
Its:
EL PASO ELECTRIC COMPANY
By:
Its:
SOUTHERN CALIFORNIA PUBLIC POWER
AUTHORITY, doing business in the
State of Arizona as SOUTHERN
CALIFORNIA PUBLIC POWER AUTHORITY
ASSOCIATION
ATTEST:
By:
I Its:
DEPARTMENT OF WATER AND POWER
OF THE CITY OF LOS ANGELES
By: /S/
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<PAGE>
STATE OF ARIZONA )
) ss.
County of Maricopa )
On this 8th day of September, 1986, before me, the undersigned
Notary Public, personally appeared /S/ who acknowledged himself to be the
Executive Vice President of ARIZONA PUBLIC SERVICE COMPANY, an Arizona
corporation, and that he as such officer, being authorized so to do, executed
the foregoing instrument for the purposes therein contained by signing the name
of the company by himself as such Executive Vice President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/S/
Notary Public
My commission expires:
April 6, 1987
STATE OF ARIZONA )
) ss.
County of Maricopa )
On this day of , 1986, before me, the undersigned Notary
Public, personally appeared and who acknowledged themselves to the and
________________________ of SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND
POWER DISTRICT, an Arizona agricultural improvement district, and that they as
such officers, being authorized so to do, executed the foregoing instrument for
the purposes therein contained by signing the name of the company by themselves
as such __________________ and __________________.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My commission expires:
/
/
- 22 -
<PAGE>
STATE OF ARIZONA )
) ss.
County of Maricopa )
On this day of , 1986, before me, the undersigned Notary
Public, personally appeared and who acknowledged himself to be the of ARIZONA
PUBLIC SERVICE COMPANY, an Arizona corporation, and that he as such officer,
being authorized so to do, executed the foregoing instrument for the purposes
therein contained by signing the name of the company by himself as such
_____________.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My commission expires:
STATE OF ARIZONA )
) ss.
County of Maricopa )
On this 29th day of July, 1986, before me, the undersigned
Notary Public, personally appeared /S/ John R. Lassen and Paul D. Rice who
acknowledged themselves to the President and Secretary of SALT RIVER PROJECT
AGRICULTURAL IMPROVEMENT AND POWER DISTRICT, an Arizona agricultural improvement
district, and that they as such officers, being authorized so to do, executed
the foregoing instrument for the purposes therein contained by signing the name
of the company by themselves as such and
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/S/
Notary Public
My commission expires:
April 29, 1987 /
/
- 22 -
<PAGE>
STATE OF CALIFORNIA )
) ss.
County of Los Angeles )
On this 26th day of August, 1986, before me, the undersigned
Notary Public, personally appeared /S/ G. J. Bjorklund who acknowledged himself
to the Vice President of SOUTHERN CALIFORNIA EDISON COMPANY, a California
corporation, and that he as such officer, being authorized so to do, executed
the foregoing instrument for the purposes therein contained by signing the name
of the company by himself as such Vice President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/S/ Vera Montemayor
Notary Public
My commission expires:
Aug. 19, 1987
STATE OF NEW MEXICO )
) ss.
County of Bernalillo )
On this day of , 1986, before me, the undersigned Notary
Public, personally appeared who acknowledged himself to be the of PUBLIC SERVICE
COMPANY OF NEW MEXICO, a New Mexico corporation, and that he as such officer,
being authorized so to do, executed the foregoing instrument for the purposes
therein contained by signing the name of the company by himself as such
_____________.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My commission expires:
/
/
/
- 23 -
<PAGE>
STATE OF CALIFORNIA )
) ss.
County of Los Angeles )
On this day of , 1986, before me, the undersigned Notary
Public, personally appeared who acknowledged himself to be the of SOUTHERN
CALIFORNIA EDISON COMPANY, a California corporation, and that he as such
officer, being authorized so to do, executed the foregoing instrument for the
purposes therein contained by signing the name of the company by himself as such
_____________.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My commission expires:
STATE OF NEW MEXICO )
) ss.
County of Bernalillo )
On this 25th day of September, 1986, before me, the
undersigned Notary Public, personally appeared /S/ J. L. Wilkins who
acknowledged himself to be the Senior Vice President of PUBLIC SERVICE COMPANY
OF NEW MEXICO, a New Mexico corporation, and that he as such officer, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained by signing the name of the company by himself as such Senior Vice
President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/S/ Sherry Leeson
Notary Public
My commission expires:
July 1, 1988
/
/
/
- 23 -
<PAGE>
STATE OF TEXAS )
) ss.
County of El Paso )
On this 18th day of July, 1986, before me, the undersigned
Notary Public, personally appeared /S/ J. E. Wasiak who acknowledged himself to
be the Vice President of EL PASO ELECTRIC COMPANY, a Texas corporation, and that
he as such officer, being authorized so to do, executed the foregoing instrument
for the purposes therein contained by signing the name of the company by himself
as such Vice President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/S/ Cecilia R. Jhea
Notary Public
My commission expires:
7-3-89
STATE OF CALIFORNIA )
) ss.
County of Los Angeles )
On this day of , 1986, before me, the undersigned Notary
Public, personally appeared __________________ and __________________ who
acknowledged themselves to be the __________________ and __________________ of
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY, (doing business in the State of
Arizona as SOUTHERN CALIFORNIA POWER AUTHORITY ASSOCIATION), a California joint
powers agency, and that they as such officers, being authorized so to do,
executed the foregoing instrument for the purposes therein contained by signing
the name of the company by themselves as such __________________ and
__________________.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My commission expires:
/
/
- 24 -
<PAGE>
STATE OF TEXAS )
) ss.
County of El Paso )
On this day of , 1986, before me, the undersigned Notary
Public, personally appeared who acknowledged himself to be the of EL PASO
ELECTRIC COMPANY, a Texas corporation, and that he as such officer, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained by signing the name of the company by himself as such .
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------------------
Notary Public
My commission expires:
STATE OF CALIFORNIA )
) ss.
County of Los Angeles )
On this 30th day of July, 1986, before me, the undersigned
Notary Public, personally appeared /S/ Gale A. Drew, and Frank Salas who
acknowledged themselves to be the President and Asst Secretary of SOUTHERN
CALIFORNIA PUBLIC POWER AUTHORITY (doing business in the State of Arizona as
SOUTHERN CALIFORNIA POWER AUTHORITY ASSOCIATION), a California joint powers
agency, and that they as such officers, being authorized so to do, executed the
foregoing instrument for the purposes therein contained by signing the name of
the company by themselves as such President and Asst Secretary.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My commission expires:
/
/
- 24 -
<PAGE>
STATE OF CALIFORNIA )
) ss.
County of Los Angeles )
On this 29th day of October, 1986, before me, the undersigned
Notary Public, personally appeared /S/ Eldon A. Cotton, who acknowledged himself
to be the Assistant Chief Engineer - Power of DEPARTMENT OF WATER AND POWER OF
THE CITY OF LOS ANGELES, a California municipal corporation, and that he as such
officer, being authorized so to do, executed the foregoing instrument for the
purposes therein contained by signing the name of the company by himself as such
Assistant Chief Engineer - Power.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/S/ Sally Morrison Fick
Notary Public
My commission expires:
November 10. 1988
/
/
/
/
/
/
/
/
/
/
/
/
/
/
/
- 25 -
<PAGE>
APPENDIX L
START-UP AND PRE-OPERATION ADMINISTRATIVE AND GENERAL EXPENSE
L.1 Calculation of Start-Up and Pre-Operation A & G Expense
L.1.1 For the period from October 1, 1984 through completion of
start-up and pre-operation activities for ANPP, the
administrative and general expense associated with such
activities for each Generating unit shall be determined by the
following formula: (An example calculation is shown in Exhibit
L-A.) AGE = [(SUPO) x (OMF) x (OMAG)] + [(SUPO) x (1-OMF) x
(CFAG)] where:
AGE = Monthly start-up and pre-operation administrative
and general expenses for each Generating Unit.
SUPO = Monthly Start-Up and Pre-Operation Costs for each
Generating Unit.
OMF = Percent (expressed as a decimal) of the total
monthly Start-Up and Pre-Operation Costs for each
Generating Unit to be allocated to the operation and
maintenance administrative and general expense
formula, as determined in Section L.1.3.
OMAG = Operation and maintenance administrative and
general expense percentages as determined and applied
in Sections E.1.7 and E.1.9 of the Participation
Agreement.
L-1
<PAGE>
CFAG = Construction administrative and general expense
percentage of one percent (1%) as applied pursuant to
Section D.1.14 of the Agreement.
L.1.2 Start-Up and Pre-Operation Costs for ANPP common
facilities shall be allocated by apportioning
one-third (1/3) of these expenses to each ANPP
Generating Unit prior to determining the
administrative and general expense associated with
each Generating Unit.
L.1.3 To determine start-up and pre-operation
administrative and general expense (AGE) in Section
L.1.1 the monthly total Start-Up and Pre-Operation
Costs for each ANPP Generating Unit, including its
common facilities share, shall be allocated between
construction and operation & maintenance in
accordance with the benchmark time period begins in
the middle of a month, the change in percentage
allocation to construction and operation &
maintenance expenses shall take place on the first
day of the calendar month following such benchmark.
L-2
<PAGE>
Benchmark Time Period Percent Allocation Between
Operation & Maintenance
and Construction
for Each Generating Unit OMF/1-OMF)
a. 10/1/84 to eight (8) months 25% O&M/75% Construction
prior to Beginning of
Generating Unit Precore Hot
Functional Test.
b. Eight (8) months prior to 50% O&M/50% Construction
Beginning of Generating Unit
Pecore Hot Functional Test to
Beginning of Generating Unit
Pecore Hot Functional Test.
c. Beginning of Generating Unit 70% O&M/30% Construction
Pecore Hot Functional Test to
Beginning of Generating Unit
Fuel Load.
d. Beginning of Generating Unit 90% O&M/10% Construction
Fuel Load to satisfy
completion of Power Ascension
Level 50%
e. Satisfactory completion of 100% O&M
Power Ascension Level 50% to
completion of start-up and
pre-operation.
L.2 Adjustments
L.2.1 The benchmark time periods in Items L.1.3a and L.1.3b require
an estimate of the Beginning of Generating Unit Precore Hot
Functional Test for a Generating Unit. Should the actual date
for the Beginning of Generating Unit Precore Hot Functional
Test for a Generating Unit be different than estimated,
adjustments shall be made to the amount of administrative and
general expense actually charged based on the appropriate
allocation of Start-Up and Pre-Operation Costs to construction
and operation & maintenance expenses.
L-3
<PAGE>
L.2.2 Amounts of administrative and general expense determined
pursuant to the Letter of Understanding for the period October
1, 1984 through March, 1985 that were different than the
amount actually paid for the same period have, pursuant to the
Letter of Understanding appeared as a credit on the request
for advancement of Operating Funds for ANPP dated June 14,
1985, Request No. PVO-093. Such expense differences accrued
interest at the rate from time to time publicly announced by
Citibank, N. A., New York, New York, as its prime interest
rate less two percent (2%), from the date of payment of such
difference to the date of mailing of the request for
advancement of Operating Funds. Any such amounts were
allocated to each Participant in accordance with its
Generation Entitlement Share, and were clearly delineated on
the Operating Agent's requests for advancement of Operating
Funds.
L.3 Credit to Future Requests for Advancement of Operating Funds
for ANPP
L.3.1 The Operating Agent shall credit to future requests for
advancement of Operating Funds, thirteen million dollars
(13,000,000) plus interest, determined pursuant to Section
L.3.2 of this Appendix L, for administrative and general
expense charged to Start-Up and Pre-Operation Costs through
L-4
<PAGE>
September 30, 1984. Such credit will be allocated to each
Participant in accordance with its Generation Entitlement
Share, and is separate and in addition to any adjustment to
administrative and general expense necessitated by the routine
annual adjustment to the Operation and Maintenance A & G Ratio
pursuant to Section E.10.2 of the Participation Agreement. No
other adjustments shall be made to change administrative and
general expense charged to Start-Up and Pre-Operation Costs
through September 30, 1984, except for those related to any
future adjustments made to Start-Up and Pre-Operation Costs
incurred through such date.
L.3.2 Interest will be charged on the unpaid balance of the thirteen
million dollars ($13,000,000) credit beginning on October 1,
1984. The interest rate to be applied will be the rate from
time to time publicly announced by Citibank, N.A., New York,
New York, as its prime interest rate, less two percent (2%).
The initial credit shall include all interest accrued from
September 30, 1984, and subsequent monthly credits will be
applied first against accrued interest. In addition to such
monthly payments of all accrued interest, the principal
balance shall be amortized by crediting monthly an amount
equal to not less than one twenty-fourth (1/24) of such amount
L-5
<PAGE>
until the full thirteen million dollars ($13,000,000)
principal amount has been credited. Pursuant to the Letter of
Understanding, the intimal credit hereunder occurred with the
first request for the advancement of Operating Funds dated
March 1, 1985.
L-6
<PAGE>
EXHIBIT L-A
SAMPLE CALCULATION of
MONTHLY ADMINISTRATIVE AND GENERAL EXPENSE FOR
START-UP AND PRE-OPERATION COSTS FOR
ANPP GENERATING UNIT NO. 1
AGE = [(SUPO) x (OMF) x ([OMAG)] + [(SUPO) x (1-OMF) x (CFAG)]
ASSUMPTIONS
SUPO = $9,500,000 (1)
OMF = 90%
OMAG = 16.442% of Project Manager's/Operating Agent's ANPP
labor, plus 1% of contractor's costs, plus 0% of
other costs.
CFAG = 1%
Project Manager's/Operating Agent's ANPP Labor Costs =
$4,750,000
CONTRACTOR COSTS = $3,800,000
OTHER COSTS = $950,000
CALCULATION:
AGE = [($9,500,000) x (.9) x (OMAG)] + ($9,500,000)(1-.9) x (CFAG)]
(4,750,000)(.9)(.16442)
[($9,500,000) x (.9) x (OMAG)] =+(3,800,000)(.9)(.01) = $737,096
+(950,000)(.9)(.01)
[($9,500,000) x (1-.9) x (CFAG)] = ($9,500,000)(.1)(0.0) = $9,500
AGE = $737,096 + $9,500
AGE = $746,596
(1) Includes 1/3 of Start-Up and Pre-Operation Costs for common
facilities.
(2) The OMAG rate will be applied to only the Project Manager's/Operating
Agent's ANPP labor incurred for Start-Up and Pre-Operation Costs times
the OMF factor in effect.
L-7
<PAGE>
AMENDMENT NUMBER EIGHT TO COAL SALES AGREEMENT
----------------------------------------------
This Amendment Number Eight to Coal Sales Agreement ("this Amendment") is made
effective as of the 1st day of September, 1995 between SAN JUAN COAL COMPANY, a
Delaware corporation ("SJCC"), PUBLIC SERVICE COMPANY OF NEW MEXICO, a New
Mexico corporation and TUCSON ELECTRIC POWER COMPANY, an Arizona corporation
(collectively, "Utilities").
RECITALS:
1. SJCC and Utilities are parties to that certain Coal Sales Agreement
dated August 18, 1980, as amended and supplemented (the "CSA") which
provides for the delivery of coal to the San Juan Generating Station
("SJGS").
2. The CSA describes specific coal sources for SJGS, including the
Fruitland Leases and the La Plata Leases. Under the terms of the
various subleases and assignment agreements that give SJCC the right to
mine coal from the Fruitland and La Plata Leases, SJCC and BHP Minerals
International Inc. ("BHP") are obligated to make the following
payments, among others, to third parties:
a) A Retained Economic Interest ("REI") is payable by BHP on each
ton of coal mined and delivered from the Fruitland Leases or
on an Annual Tonnage (the "REI Minimum"), as set forth in
Article VI of the Sublease between Western Coal Co. ("WCC")
and BHP (formerly Utah International Inc.) dated August 18,
1980, as amended (the "BHP Sublease"), whichever is greater.
An amount equal to the REI is payable by SJCC to BHP on each
ton of coal mined and delivered from the Fruitland Leases
under the provisions of the Sublease between SJCC and BHP
dated August 18, 1980, as amended (the "SJCC Sublease").
b) An Overriding Royalty and/or Net Profits Interest
(collectively, "NPI") is payable by SJCC on each ton of coal
mined and delivered from the La Plata Leases or on a minimum
annual tonnage (the "NPI Minimum"), whichever is greater, all
as set forth in the Assignment Agreement between WCC and
Cimarron Coal Company dated October 30, 1979, as amended (the
"Assignment Agreement"). The rights and obligations of WCC
under the Assignment Agreement were assigned to and assumed by
SJCC by Assignment of Leases dated November 24, 1981.
c) Under the terms of the CSA, Utilities reimburse SJCC for
amounts equal to payments of REI made by SJCC pursuant to the
SJCC Sublease and for payments of NPI made by SJCC pursuant to
the Assignment Agreement.
3. The parties wish to provide flexibility among coal sources, with the
objective of lowering the total delivered cost of coal to SJCS, by
providing for payment by Utilities to SJCC of amounts equal to REI or
NPI payments made by BHP or SJCC, respectively, with respect to the REI
Minimum or the NPI Minimum to the extent that lower cost coal replaces
coal which would otherwise have been mined and delivered from the
Fruitland Leases and/or the La Plata Leases.
<PAGE>
CSA Amendment Eight
Now therefore, in consideration of the promises contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, SJCC and Utilities hereby amend the CSA as follows:
DEFINITIONS:
(A) La Plata Minimum is the "La Plata Surface Mine La Plata Leases Annual
Tons" as set forth in Column 4 of Exhibit H of the CSA.
(B) Fruitland Tons is the actual number of tons mined and delivered from
the Fruitland Leases during the year.
(C) Fruitland Substitute Tons are any Replacement Tons delivered to SJGS by
SJCC, provided, however, that the number of Fruitland Substitute Tons
is any year will not exceed the greater of (i) the REI Minimum plus the
ending REI Shortfall Balance for the previous year (as defined in
paragraph (E) below) less the Fruitland Tons, or (ii) zero (0).
(D) REI Shortfall Tons means for any year the REI Minimum for that year
less the sum of Fruitland Tons and Fruitland Substitute Tons for the
year. (REI Shortfall Tons may be negative.)
(E) REI Shortfall Balance for 1994 year end is 377,828. The ending REI
Shortfall Balance for each year thereafter will be greater of (i) the
sum of the ending REI Shortfall Balance for the previous year and the
REI Shortfall Tons for the year, or (ii) zero (0).
(F) La Plata Tons is the actual number of tons mined and delivered from the
La Plata Leases during the year.
(G) Replacement Tons means tons delivered from the South Lease Extension,
from the La Plata Leases in excess of the La Plata Minimum, and from
other sources approved pursuant to paragraph 7 of this Amendment.
(H) South Lease Extension means the San Juan Mine Permit Area (as shown in
Exhibit 1.1 of State Mining Permit 94-01 issued to SJCC on 26 September
1994) outside of the Fruitland Leases and the N1/2 of Sec. 3, T.29N.,
R.15W., New Mexico
Prime Meridian.
(I) CSA Invoice is the monthly invoice prepared in accordance with the CSA.
(J) Other Terms. Capitalized terms not otherwise defined herein shall have
the meanings assigned thereto in the CSA.
<PAGE>
CSA Amendment Eight
AGREEMENT:
1. SJCC agrees to deliver and Utilities agree to purchase Replacement Tons
in accordance with the provisions of the CSA, as amended by this
Amendment.
2. An amount equal to the REI multiplied by "X" (which may be negative)
will be added to each CSA Invoice. (Such additions to monthly CSA
Invoices will be based on the projected number of Fruitland Substitute
Tons and Fruitland Tons for the year and may be changed through the
year as appropriate.)
Where
X=A-G
And
A=The number of Fruitland Substitute Tons;
B=The aggregate cumulative number of Make-up Tons (as defined
in the BHP Sublease) as of the previous year end;
C=The RIE Shortfall Balance as of the previous year
end;
D=The number of Fruitland Tons;
E=The REI Minimum;
F=(D-E-C), or zero (0), whichever is greater and
G=(B-C), or F, whichever is less.
3. No year during which SJCC delivers coal to SJGS from any source(s) in
aggregate quantities and at times which are consistent with paragraph
4.2 of the CSA shall be a "NonPerformance Year" as defined in paragraph
9.2(b)(3) and paragraph 9.3(c) of the CSA, so long as said deliveries
are otherwise in accordance with the CSA, as amended by this Amendment.
4. If the total tons mined and delivered from all sources in accordance
with the CSA, as amended by this Amendment, are less than the sum of
the Minimum Annual Tons as described in paragraph 9.2(b)(3) and
paragraph 9.3(c) of the CSA, (the Minimum Total Tons") in any year in
which SJCC was directed, consistent with paragraph 4.2 of the CSA, to
mine and deliver coal in such amounts that the total tons requested for
said year would be greater than or equal to the Minimum Total Tons,
said year shall be defined as a Non-Performance Year as described in
paragraph 9.2(b)(3) and 9.3(c) of the CSA.
<PAGE>
CSA Amendment Eight
5. SJCC will deliver Replacement Tons pursuant to mining plans approved by
the Joint Committee showing that the projected total cost to Utilities
of Replacement Tons is less than the projected total cost to Utilities
for an equal number of tons to be delivered under then current
operating plans. Notwithstanding any other provision of this Amendment
or the CSA, decisions of the Joint Committee about mining plans for
Replacement Tons shall not be subject to arbitration. All costs of
mining and delivering Replacement Tons will be included in the annual
operating cost budget submitted pursuant to paragraph 12.3(a) of the
CSA and will be subject to the provisions thereof. If SJCC desires to
deliver Replacement Tons for which plans and budgets have not been
approved pursuant to paragraph 12.3(a) of the CSA, SJCC shall give
Utilities as much advance notice thereof as possible (not to be less
than fifteen (15) days) and shall include plans and budgets thereof
said notice. Utilities shall approve or disapprove said plans and
budgets within fifteen (15) days of receipt of notification. If
Utilities fail to approve or to disapprove said plans and budgets
within fifteen (15) days, or if they approve them, said plans and
budgets shall be deemed to be part of the annual operating cost budget,
and shall be subject to all of the provisions of paragraph 12.3(a) of
the CSA.
6. Replacement Tons will be priced as follows:
a) Replacement Tons mined from the South Lease Extension will be
priced in accordance with paragraph 9.2(a) of the CSA and
paragraph 8 of this Amendment.
b) Replacement Tons minded from the La Plata Leases will be
priced in accordance with paragraph 9.3(a) of the CSA and
paragraph 8 of this Amendment.
7. Notwithstanding any other provisions of this Amendment, SJCC may not
deliver Replacement Tons from sources other than the South Lease
Extension and the La Plata Leases without prior approval by the Joint
Committee of each additional source of Replacement Tons.
Notwithstanding any other provision of this Amendment or the CSA,
decisions of the Joint Committee about sources of Replacement Tons
shall not be subject to arbitration.
8. The total payable to SJCC under the terms of paragraph 9.2(b) and
paragraph 9.3(b) and (c) of the CSA in any year during which
Replacement tons are delivered will be the sum of
a) the lesser of (i) the La Plata Minimum or (ii) of the sum of
the Fruitland Tons, the La Plata Tons, and the Replacement
Tons mined and delivered during the year from sources other
than the La Plata Leases (the "Total SJCC Tons"), multiplied
by the La Plata Capital Investment Element as described in
paragraph 9.3(b) of the CSA, plus
<PAGE>
CSA Amendment Eight
b) the greater of (i) Total SJCC Tons less the Replacement Tons
mined and delivered from the La Plata Leases (the "La Plata
Replacement Tons") less the La Plata Minimum, or (ii) zero
(0), multiplied by the Fruitland Capital Investment Element as
described in paragraph 9.2(b) of the CSA (the "Fruitland
CIE"), plus
c) the La Plata Replacement Tons multiplied by the Fruitland CIE
less the Capital Investment Element payable for each ton of
coal transported from the La Plata Leases to SJGS in excess of
the La Plata Minimum in any calendar year under the terms of
paragraph 7.2(b) of the certain Transportation Agreement,
dated April 30, 1984, between San Juan Transportation Company
and Utilities, as amended, plus
d) the minimum aggregate capital investment element payable under
paragraph 9.2(b)(3) and paragraph 9.3(c) of the CSA.
All references in this paragraph 8 to paragraphs 9.2(b), 9,2(b)(3),
9.3(b), and 9.3(c) of the CSA are to such paragraphs as adjusted by the
First Supplement, dated as of July 27,1992, to the CSA, by the Interim
Invoicing Agreement dated June 1, 1995 between SJCC and Utilities (the
"Interim Invoicing Agreement"), and by this Amendment.
9. The phrase "total tons mined and delivered" as used in paragraph
9.2(b)(3) of the CSA shall mean (i) the difference between the Total
SJCC Tons and the La Plata Minimum, or (ii) zero (0), whichever is
greater.
10. The phrase "total tons mined and delivered" as used in paragraph 9.3(c)
of the CSA shall mean the La Plata Minimum or Total SJCC Tons,
whichever is less.
11. The phrase "from the Fruitland Leases and the La Plata Leases in at
least the quantities set forth for each of said sources" in the first
sentence of paragraph 2.1(b) of the CSA is hereby deleted, and the
phrase "in at least the sum of the quantities set forth for the
Fruitland Leases and the La Plata Leases" is inserted in place thereof.
12. Replacement Tons delivered to SJGS under the terms of this Amendment
from sources other than the La Plata Leases shall be added to the tons
mined and delivered from the Fruitland Leases and the La Plata Leases
to determine whether SJCC has satisfied the obligation to mine,
process, sell and deliver coal as set forth in paragraph 2.1(b) of the
CSA as amended by paragraph 11 of this Amendment.
13. Except as expressly amended hereby, the CSA and all prior amendments
are in all respects hereby confirmed and ratified.
<PAGE>
CSA Amendment Eight
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first written above.
SAN JUAN COAL COMPANY
By
--------------------------------
Vice President
PUBLIC SERVICE COMPANY OF NEW MEXICO
By
-------------------------------
Senior Vice President
TUCSON ELECTRIC POWER COMPANY
By
-------------------------------
Vice President
<PAGE>
CSA Amendment Eight
BHP Minerals International Inc. (formerly BHP-Utah International Inc.), a
Delaware corporation and the guarantor of the obligations of SJCC under the Coal
Sales Agreement pursuant to Guaranty dated August 18, 1980 (the "Guaranty"),
herby consents to the foregoing Amendment Eight to Coal Sales Agreement and
agrees that all references in the Guaranty to the Coal Sales Agreement shall be
deemed to be references to the Coal Sales Agreement as amended by Amendments
Numbers One to Eight, inclusive.
BHP MINERALS INTERNATIONAL INC.
By
--------------------------
Vice President
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K, into the Company's previously filed
Registration Statement File No. 33-65418.
Arthur Andersen LLP
Albuquerque, New Mexico
February 22, 1996
<PAGE>
[Conformed]1
[Confirms]1
October 25, 1994
October 25, 1994
================================================================================
COLLATERAL TRUST INDENTURE
dated as of December 16, 1985
Among
FIRST PV FUNDING CORPORATION,
PUBLIC SERVICE COMPANY OF NEW MEXICO
and
CHEMICAL BANK,
as Trustee
Providing for the Issuance from Time to Time of
Securities To Be Issued in
One or More Series
================================================================================
PALO VERDE NUCLEAR GENERATING STATION
- ----------
1 Exhibits B through F are not part of the Collateral Trust Indenture as
originally executed.
#30122041.1
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FIRST PV FUNDING CORPORATION
PUBLIC SERVICE COMPANY OF NEW MEXICO
Reconciliation and tie between Indenture
dated as of December 16, 1985
and
Trust Indenture Act of 1939
Section of
Section of Act Indenture
- -------------- ---------
310 (a) (1) 9.09
(2) 9.09
(3) Inapplicable
(4) Inapplicable
(b) 9.08, 9.10(a),
9.10(d),
9.10(e), 9.11
(c) Inapplicable
311(a)(b) 9.13
(c) Inapplicable
312 (a) 10.01
10.02(a)
(b) 10.02(b)
(c) 10.02(c)
313 (a) 10.03(a)
313 (b) (1) 10.03(b)(1)
(2) 10.03(b)
(c) 10.03(a) & (b)
(d) 10.03(c)
314 (a) 10.04
(b) 5.06
(c) (1) 1.02
(2) 1.02
(3) Inapplicable
(d) (1) Inapplicable
(2) Inapplicable
(3) Inapplicable
(e) 1.02
315 (a) (1) 9.01(a)(1)
(2) 9.01(a)(2)
#30122041.1
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Section of
Section of Act Indenture
- -------------- ---------
315 (a) (last clause) 9.01(a)(2)
(b) 9.02
(c) 9.01(b)
(d) (1) 9.01(c)(1)
(2) 9.01(c)(2)
(3) 9.01(c)(3)
(e) 8.10
316 (a) (1) (A) 8.07
(B) 8.08
(2) Inapplicable
(a) (last sentence) 1.01
("Outstanding")
(b) 8.11
317 (a) (1) 8.05(a)
(2) 8.05(d)
(b) 5.03
9.14(c)(2)
318 (a) 1.07
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to
constitute a part of the Indenture.
#30122041.1
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COLLATERAL TRUST INDENTURE, dated as of December 16, 1985,
among FIRST PV FUNDING CORPORATION, a Delaware corporation (hereinafter called
the Company), having its principal office and mailing address at Corporation
Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, PUBLIC SERVICE
COMPANY OF NEW MEXICO, a New Mexico corporation, having its principal office and
mailing address at Alvarado Square, Albuquerque, New Mexico 87158 (hereinafter
called PNM), and CHEMICAL BANK, a New York banking corporation, as Trustee
(hereinafter called the Trustee), having its corporate trust office at 55 Water
Street, New York, New York 10041, Attention: Corporate Trustee Administration.
RECITALS
WHEREAS, the Company has duly authorized the creation of an
issue of its debentures, notes or other evidences of indebtedness to be issued
in one or more series (the Securities) up to such principal amount or amounts as
may from time to time be authorized in accordance with the terms of this
Indenture; and to secure the Securities and to provide for the authentication
and delivery thereof by the Trustee, the Company has duly authorized the
execution and delivery of this Indenture; and
WHEREAS, all acts necessary to make this Indenture a valid
instrument for the security of the Securities, in accordance with its and their
terms, have been done;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, to secure the
payment of theprincipal of, premium (if any) and interest on all the Securities
authenticated and delivered hereunder and issued by the Company and outstanding,
and the performance of the covenants therein and herein contained, and in
consideration of the premises and of the covenants herein contained and of the
purchase of the Securities by the holders thereof, and of the sum of one dollar
($1.00) paid to the Company by the Trustee at or before the delivery hereof, the
receipt whereof is hereby acknowledged, the Company by these presents does
grant, bargain, sell, release, convey, assign, pledge, transfer, mortgage,
hypothecate, and confirm unto the Trustee all and singular the following (which
collectively are hereinafter called the Pledged Property), excluding, in any
event, any moneys which are specifically stated herein not to constitute part of
the Pledged Property, to wit:
CLAUSE FIRST
All Pledged Lessor Notes (as hereinafter defined) as shall be
actually pledged and assigned by the Company to the Trustee, together with the
interest of the Company (if any) in the Lease Indentures (as hereinafter
defined) securing said Lessor Notes, pursuant to the Series Supplemental
Indentures or other supplemental indentures to be executed and delivered as
provided in this Indenture.
CLAUSE SECOND
All right, title and interest of the Company in, to and under
any agreements with respect to commitment fees or other amounts payable by PNM
entered into between PNM and the Company in connection with the issuance and
sale of any series of Securities, if actually assigned by the Company to the
Trustee pursuant to a Series Supplemental Indenture or other supplemental
indentures to be executed and delivered as provided in this Indenture.
CLAUSE THIRD
All the proceeds received by the Company from the sale of the
Securities, all the tolls, rents, issues, profits, products, revenues and other
income of the property subjected or required to be subjected to the lien of this
Indenture, and all the estate, right, title and interest of every nature
whatsoever of the Company in and to the same and every part thereof.
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<PAGE>
CLAUSE FOURTH
Any property, including cash, that may, from time to time
hereafter be subjected to the lien and/or pledge hereof by the Company or which
pursuant to any provision of this Indenture or any Series Supplemental Indenture
or other supplemental indentures to be executed and delivered as provided in
this Indenture may become subjected to the lien and/or pledge hereof; and the
Trustee is hereby authorized to receive the same at any time as additional
security hereunder. Such subjection to the lien hereof of any such property as
additional security may be made subject to any reservations, limitations or
conditions which shall be set forth in a written instrument executed by the
Company and/or by the Trustee respecting the scope or priority of such lien
and/or pledge or the use and disposition of such property or the proceeds
thereof.
TO HAVE AND TO HOLD the Pledged Property unto the Trustee and
its successors and assigns forever subject to the terms of this Indenture,
including, without limitation, Section 12.01.
BUT IN TRUST, NEVERTHELESS, for the equal and proportionate
benefit and security of the holders from time to time of all the Securities
authenticated and delivered hereunder and issued by the Company and outstanding,
without any priority of any one Security over any other.
AND UPON THE TRUSTS and subject to the covenants and
conditions hereinafter set forth.
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.
SECTION 1.011. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act (as hereinafter defined), either directly or by
reference therein, have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles;
(4) all reference in this Indenture to designated "Articles",
"Sections" and other subdivisions are to the designated Articles,
Sections and other subdivisions of this Indenture; and
(5) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
Certain terms, used principally in Article Nine, are defined
in that Article.
"Act" when used with respect to any Holder has the meaning
specified in Section 1.04.
#30122041.1
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<PAGE>
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authorized Agent"means any Paying Agent or Security Registrar.
"Board of Directors" means the board of directors of the
Company, when used with respect to the Company, and either the board of
directors, or any committee of that board duly authorized to act for it
hereunder, when used with respect to PNM.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company or PNM, as the case may
be, to have been duly adopted by the Board of Directors of such entity and to be
in full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in The City of New
York, New York, the City of Boston, Massachusetts or the City of Albuquerque,
New Mexico are authorized by law to remain closed.
"Change" with respect to any instrument means any consent,
amendment, waiver, approval, notice or direction or the execution, grant or
giving of any thereof.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or if at any time after the execution of this instrument such Commission
is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties on such date.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request" and "Company Order" mean, respectively, a
written request or order signed in the name of the Company by its President or
one of its Vice Presidents, and by its Treasurer, Secretary, or one of its
Assistant Treasurers or Assistant Secretaries, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the
Trustee at which at any particular time corporate trust business of the Trustee
shall be administered, which at the date of this Indenture is 55 Water Street,
New York, N.Y. 10041, Attention: Corporate Trustee Administration.
"Equity Investor" means any Equity Investor identified in a
Schedule to a Series Supplemental Indenture, until a successor or assignees
thereof shall have become such pursuant to the applicable provisions of the
Participation Agreement to which such Equity Investor is a party, and thereafter
"Equity Investor" means such successor or assignees; "Equity Investors" means
each and every Equity Investor.
"Event of Default" has the meaning specified in Section 8.01.
"Extension Letter" means the Extension Letter, to be dated the
date of issue of a Pledged Lessor Note and addressed to the Trustee by the
parties to the Participation Agreement, extending to the Trustee the
representations, warranties and covenants of such parties set forth in the
Participation Agreement.
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3
<PAGE>
"Holder" or "Securityholder" means a Person in whose name a
Security is registered in the Security Register.
"Indenture" means this instrument as originally executed and
as it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Initial Interest Date" with respect to any series of
Securities means the date of the Stated Maturity for the initial installment of
interest on Securities of such series.
"Lease Indenture" means any Lease Indenture and any Lease
Indenture Supplement identified in a Schedule to a Series Supplemental
Indenture, as such Lease Indenture and Lease Indenture Supplement may be amended
or supplemented from time to time pursuant to the applicable provisions thereof
and of this Indenture; "Lease Indentures" means each and every Lease Indenture.
"Leases" means any Lease and any Lease Supplement identified
in a Schedule to a Series Supplemental Indenture, as such Lease and Lease
Supplement may be amended from time to time pursuant to the applicable
provisions thereof and of this Indenture; "Leases" means each and every Lease.
"Lease Indenture Trustee" means the Lease Indenture Trustee
identified in Schedule 1 to a Series Supplemental Indenture, until a successor
Lease Indenture Trustee shall have become such pursuant to the applicable
provisions of the Lease Indenture to which such Lease Indenture Trustee is a
party, and thereafter "Lease Indenture Trustee" means the successor Lease
Indenture Trustee; "Lease Indenture Trustees" means each and every Lease
Indenture Trustee.
"Lease Payments" with respect to any Lease shall mean amounts
payable by PNM under such lease in respect of (i) interim rent (if any), (ii)
basic rent, (iii) casualty value, (iv) special casualty value, (v) termination
value or (vi) any other amounts payable in connection with termination of the
Lease, in each case as more fully described in and assigned pursuant to the
related Lease Indenture; "Lease Payments" with respect to all Leases means the
aggregate of Lease Payments under any and all Leases.
"Lessee Request" and "Lessee Order" mean, respectively, a
written request and a written order signed in the name of PNM by its President
or one of its Vice Presidents or Assistant Vice Presidents and by its Treasurer
or Secretary or one of its Assistant Treasurers or Assistant Secretaries, or by
any authorized agent of PNM, and delivered to the Trustee.
"Lessor" or "Owner Trustee" means any Lessor or Owner Trustee
identified in a Schedule to a Series Supplemental Indenture, until a successor
shall have become such pursuant to the applicable provisions of the related
Trust Agreement identified in said Schedule, and thereafter "Lessor" or "Owner
Trustee" means such successor; "Lessors" or "Owner Trustees" means each and
every Lessor or Owner Trustee.
"Lien of this Indenture" or "lien hereof" means the lien
created by these presents, or created by any concurrent or subsequent conveyance
to the Trustee (whether made by the Company or any other Person and whether
pursuant to a Series Supplemental Indenture or otherwise), or otherwise created,
constituting any property a part of the Pledged Property held by the Trustee for
the benefit of the Securities Outstanding hereunder.
"Obligor", when used with reference to the Securities or this
Indenture, means PNM and any successor to the obligations of PNM under a Lease,
and does not include the Trustee, the Lease Indenture Trustee, an Owner Trustee
or an Equity Investor so long as they have not assumed such obligations;
provided, however, that no reference to PNM as an Obligor herein shall be
construed as implying any guaranty by PNM of the Securities.
#30122041.1
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<PAGE>
"Officers' Certificate" means a certificate signed by the
President or a Vice President, and by the Treasurer, the Secretary, or one of
the Assistant Treasurers or Assistant Secretaries, of PNM, any Lessor or the
Company, as the case may be, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel for
any Person either expressly referred to herein or otherwise satisfactory to the
Trustee which may include, without limitation, counsel to the Company, any
Lessor, the Lease Indenture Trustee, any Equity Investor or PNM, whether or not
such counsel is an employee of any of them.
"Outstanding" when used with respect to Securities means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee
or delivered to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money
in the necessary amount has been theretofore deposited with
the Trustee in trust for the Holders of such Securities as
provided in Section 12.01, provided that, if such Securities
are to be redeemed (otherwise than through the operation of
the Sinking Fund), notice of such redemption has been duly
given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) Securities paid in full or in exchange for or
in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture unless held by a Holder
in whose hands such Securities constitute valid obligations of
the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Securities Outstanding have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or owned by PNM, any Lessor or any Equity Investor, or any
Affiliate of PNM, of any Lessor or of any Equity Investor, shall be disregarded
and deemed not to be Outstanding, unless such Persons own 100% of the Securities
owned by all Persons, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Securities which the Trustee knows to be so
owned shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or PNM, any Lessor or any
Equity Investor or any Affiliate of the Company, of PNM, of any Lessor or of any
Equity Investor.
"Participation Agreement" means any Participation Agreement or
other similar Lessor Note purchase document to which the Company is a party
identified in a Schedule to a Series Supplemental Indenture, as such
Participation Agreement or other purchase document may be amended from time to
time pursuant to the applicable provisions thereof and of this Indenture;
"Participation Agreements" means each and every Participation Agreement.
"Paying Agent" means any Person acting as Paying Agent
hereunder pursuant to Section 9.14.
"Permitted Investment" means (i) direct obligations of the
United States of America, or (ii) obligations fully guaranteed by the United
States of America, or (iii) certificates of deposit issued by, or bankers'
acceptances of, or time deposits with, any bank, trust company or national
banking association incorporated or doing business under the laws of the United
States of America or one of the States thereof (but not exceeding $15,000,000 in
principal amount of all certificates of deposit and time deposits at any given
time for any one bank, trust company or national banking association) having a
combined capital and surplus of at least $300,000,000 (including the Trustee,
any Lease Indenture Trustee, any Lessor and any Paying Agent if such conditions
are met), or (iv) commercial paper of companies incorporated or doing business
under the laws of the United States of America or one of the States thereof (but
#30122041.1
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<PAGE>
not exceeding $15,000,000 in principal amount at any given time for any one
company) and in each case having a rating assigned to such commercial paper by
Standard & Poor's Corporation or Moody's Investors Service, Inc. (or, if neither
such organization shall rate such commercial paper at any time, by any
nationally recognized rating organization in the United States of America) equal
to the highest rating assigned by such organization, or (v) repurchase
agreements fully collateralized by an obligation of the type described in clause
(i) or (iv) above, pursuant to which a bank, trust company or national banking
association referred to in clause (iii) above or another financial institution
having a net worth of at least $200,000,000 is obligated to repurchase any such
obligation not later than 90 days after the purchase of any such obligation.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities
of any series, means the corporate trust office of the Trustee and such other
place or places, if any, where the principal of (and premium, if any) and
interest on the Securities of that series are payable as specified in the Series
Supplemental Indenture setting forth the terms of the Securities of such series.
"Pledged Lessor Note" means any Lessor Note identified in a
Schedule to a Series Supplemental Indenture, as such Lessor Note may be amended
or supplemented from time to time pursuant to the applicable provisions thereof,
of the related Lease Indenture and of this Indenture; "Pledged Lessor Notes"
means each and every Pledged Lessor Note.
"Pledged Property" has the meaning set forth in the Granting
Clauses.
"PNM" means Public Service Company of New Mexico, a New Mexico
corporation, and, subject to the provisions hereof, its successors and assigns.
"Predecessor Securities" of any particular Security means
every previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this definition,
any Security authenticated and delivered under Section 2.09 in lieu of a lost,
destroyed or stolen Security shall be deemed to evidence the same debt as the
lost, destroyed or stolen Security.
"Principal Instruments" means the Pledged Lessor Notes, the
Lease Indentures, the Participation Agreements and the Leases.
"Redemption Date" when used with respect to any Security to be
redeemed means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price" when used with respect to any Security to
be redeemed means the price (inclusive of accrued interest) at which it is to be
redeemed pursuant to this Indenture and the terms of such Security.
"Regular Record Date" for the Stated Maturity of any
installment of interest means the 15th day (whether or not a Business Day) next
preceding such Stated Maturity.
"Responsible Officer" when used with respect to the Trustee
means any officer of the Trustee customarily performing corporate trust
functions.
"Security Register" has the meaning specified in Section 2.08.
"Security Registrar" means any Person acting as Security
Registrar hereunder pursuant to Section 9.14.
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"Series Supplemental Indenture" means an indenture
supplemental to this Indenture, for the purpose of specifying, in accordance
with Article Two hereof, the form of the Securities of any series, and/or for
the purpose of subjecting to the Lien of this Indenture the Pledged Lessor Notes
related to such series; "Series Supplemental Indentures" means each and every
Series Supplemental Indenture.
"Sinking Fund" has the meaning specified in Section 7.01.
"Special Record Date" for the payment of any defaulted
interest means a date fixed by the Trustee pursuant to Section 2.10.
"Stated Maturity" when used with respect to any Security or
any installment of interest thereon means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939 as in force at the date as of which this instrument was executed, except
as provided in Section 11.06.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
SECTION 1.012. Compliance Certificates and Opinions.
Upon any application or request by the Company, any Lessor or
PNM to the Trustee to take any action under any provision of this Indenture, the
Company, such Lessor or PNM, as the case may be, shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished; provided that any action which may be taken under any provision of
this Indenture by a Lessor may be taken by PNM on behalf of such Lessor pursuant
to the agency granted to PNM pursuant to the Participation Agreement unless and
until the Trustee has been notified of the revocation of such agency.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
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SECTION 1.013. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company, of
any Lessor or of PNM may be based, in so far as it relates to legal matters,
upon a certificate or opinion of, or representations by, counsel, unless such
officer knows that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
such certificate or Opinion of Counsel may be based, in so far as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company, of any Lessor or of PNM, as the case may be,
stating that the information with respect to such factual matters is in the
possession of the Company, such Lessor or PNM, respectively, unless such counsel
knows that the certificate or opinion or representations with respect to such
matters are erroneous.
Any Opinion of Counsel stated to be based on the opinion of
other counsel shall be accompanied by a copy of such other opinion.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 1.014. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company and to
PNM. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 9.01) conclusive in favor of
the Trustee, the Company and PNM, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the certificate of any notary public
or other officer of any jurisdiction authorized to take acknowledgments of deeds
or administer oaths that the Person executing such instrument acknowledged to
him the execution thereof, or by an affidavit of a witness to such execution
sworn to before any such notary or other such officer and where such execution
is by an officer of a corporation or association or a member of a partnership,
on behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner which the
Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the
Security Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Security shall bind the
Holder of every Security issued upon the transfer thereof or in exchange
therefor or in lieu thereof, whether or not notation of such action is made upon
such Security.
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SECTION 1.015. Notices, etc., to Trustee, PNM and Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder, by the Company, by PNM or by an
Authorized Agent shall be sufficient for every purpose hereunder if
made, given, furnished or filed in writing to or with the Trustee at
its Corporate Trust Office, or
(2) the Company by the Trustee, by any Holder, by PNM or by an
Authorized Agent shall be sufficient for every purpose hereunder if in
writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee and PNM by the Company for such
purpose, or
(3) PNM by the Trustee, by any Holder, by the Company or by an
Authorized Agent shall be sufficient for every purpose hereunder if in
writing and mailed, first-class postage prepaid, to PNM addressed to it
at the address of its principal office specified in the first paragraph
of this instrument or at any other address previously furnished in
writing to the Trustee and the Company by PNM for such purpose.
SECTION 1.016. Notices to Holders; Waiver.
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. Where this Indenture provides for notice in any manner,
such notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders, and any notice which
is mailed in the manner herein provided shall be conclusively presumed to have
been duly given.
SECTION 1.017. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with
another provision hereof which is required to be included in this Indenture by
any of the provisions of the TIA, such required provision shall control.
Notwithstanding the foregoing, the provisions of the TIA contained in Sections
9.08, 9.13 and 10.03 shall not become operative under this Indenture until this
Indenture shall have been qualified under the TIA.
SECTION 1.018. Effect of Heading and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
SECTION 1.019. Successors and Assigns.
All covenants, agreements, representations and warranties in
this Indenture by the Trustee, PNM and the Company shall bind and, to the extent
permitted hereby, shall inure to the benefit of and be enforceable by their
respective successors and assigns, whether so expressed or not.
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SECTION 1.10. Separability Clause.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, expressed or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the Holders of Securities, and the Lessors and the Equity
Investors as expressly provided herein, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 1.12. Governing Law.
This Indenture and each Security are being executed and
delivered in the State of New York, shall be deemed to be contracts made in such
State and for all purposes shall be construed in accordance with and governed by
the laws of the State of New York.
SECTION 1.13. Legal Holidays.
In any case where the Redemption Date or the Stated Maturity
of any Security or of any installment of interest, or any date on which any
defaulted interest is proposed to be paid, shall not be a Business Day, then
(notwithstanding any other provision of this Indenture) payment of interest
and/or principal (and premium, if any) need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on the Redemption Date or at the Stated Maturity, or on the date on which
the defaulted interest is proposed to be paid, and no interest shall accrue for
the period from and after such Redemption Date or Stated Maturity, or date for
the payment of defaulted interest, as the case may be.
ARTICLE II.
THE SECURITIES
SECTION 1.001. Forms Generally.
The Securities of each series shall be in the form (not
inconsistent with this Indenture) as shall be established in one or more Series
Supplemental Indentures, in each case with such appropriate insertions,
omissions, substitutions and other variations in and to such form as are
required or permitted by this Indenture and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
or regulations pursuant thereto, or with any rules of any securities exchange or
to conform to general usage, all as may be determined by the officers executing
such Securities, as evidenced by their execution thereof.
SECTION 1.002. Form of Trustee's Authentication.
The Trustee's certificate of authentication on all Securities
shall be in substantially the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
CHEMICAL BANK
as Trustee
By
------------------
Authorized Officer
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SECTION 1.003. Amount Unlimited; Issuable in Series;
Limitations on Issuance.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited. Securities may be
issued hereunder up to the aggregate principal amount which may be authorized
from time to time by the Board of Directors of the Company.
The terms of any series of Securities relative to payment of
principal thereof, and premium (if any) and interest thereon, need not
correspond exactly to the schedule for such payments under the related Pledged
Lessor Notes.
The Securities may be issued in one or more series. There
shall be established in one or more Series Supplemental Indentures, prior to the
issuance of Securities of any series,
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities) and
the form or forms of Securities of such series;
(2) any limit upon the aggregate principal amount of the
Securities of such series that may be authenticated and delivered under
this Indenture (except for Securities authenticated and delivered upon
registration of, transfer of, or in exchange for, or in lieu of, other
Securities of such series pursuant to Section 2.07, 2.08, 2.09, 6.06 or
11.07);
(3) the date or dates on which the principal of the Securities
of such series is payable;
(4) the rate or rates at which the Securities of such series
shall bear interest, or the method by which such rate shall be
determined, the date or dates from which such interest shall accrue,
the interest payment dates on which such interest shall be payable and
the record dates for the determination of Holders to whom interest is
payable;
(5) the place or places where the principal and interest
on Securities of such series shall be payable (if other than as
provided in Section 5.02);
(6) the price or prices at which, the period or periods within
which and the terms and conditions upon which Securities of such series
may be redeemed, in whole or in part, at the option of the Company,
pursuant to any sinking fund or otherwise;
(7) the obligation, if any, of the Company to redeem, purchase
or repay Securities of such series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the price
or prices at which and the period or periods within which and the terms
and conditions upon which Securities of the series shall be redeemed,
purchased or repaid, in whole or in part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any multiple
thereof, the denominations in which Securities of such series shall be
issuable;
(9) any other terms of such series (which terms shall not be
inconsistent with the provisions of this Indenture); and
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(10) any trustees, authenticating or paying agents, warrant
agents, transfer agents or registrars with respect to the Securities of
such series;
provided, however, that, after giving effect to the issuance of a new series of
the Securities and the subjection to the Lien of this Indenture of the related
Pledged Lessor Notes, the average of the daily balance of Excess Funds for each
fiscal year of the Company shall not exceed 10% of the average of the aggregate
principal amount of Securities Outstanding on each day in such fiscal year. For
purposes of the foregoing proviso, "Excess Funds" shall mean, for any day,
amounts actually paid to the Trustee under the Pledged Lessor Notes in excess of
amounts then due and payable in respect of Securities.
SECTION 1.004. Authentication and Delivery of Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
executed by the Company to the Trustee for authentication, together with a
Company Order for the authentication and delivery of such Securities, and the
Trustee shall thereupon authenticate and deliver such Securities in accordance
with such Company Order, without any further action by the Company. In
authenticating such Securities and accepting the additional responsibilities
under this Indenture in relation to such Securities the Trustee shall be
entitled to receive, and (subject to Section 9.01) shall be fully protected in
relying upon:
(1) an executed Series Supplemental Indenture;
(2) an Officers' Certificate of the Company (a) certifying as
to resolutions of the Board of Directors of the Company by or pursuant
to which the terms of the Securities of such series were established,
(b) certifying that all conditions precedent under this Indenture to
the Trustee's authentication and delivery of such Securities have been
complied with and (c) certifying that (x) the terms of the documents
referred to in clauses (3) and (4) below are not inconsistent with the
terms of this Indenture as then and theretofore supplemented and (y)
such documents comply with Exhibit A hereto (if applicable);
(3) fully executed counterparts (but not the original thereof)
of (a) the Lease Indentures under which were issued the Pledged Lessor
Notes relating to such series of Securities and (b) the Leases relating
to such Pledged Lessor Notes;
(4) the original of the Pledged Lessor Notes relating to such
series of Securities;
(5) signed copies, either addressed to the Trustee or
accompanied by statements that the Trustee may rely on such documents,
of all certificates and opinions of counsel delivered to the Company in
connection with its purchase pursuant to the applicable participation
Agreements of the Pledged Lessor Notes relating to such series of
Securities and, to the extent not covered by such opinions, Opinions of
Counsel (x) to the effect that: (a) the form or forms and the terms of
such Securities have been established by a Series Supplemental
Indenture as permitted by Sections 2.01 and 2.03 in conformity with the
provisions of this Indenture; (b) such Securities, when authenticated
and delivered by the Trustee and issued by the Company in the manner
and subject to any conditions specified in such Opinion of Counsel,
will constitute valid and binding obligations of the Company; and (c)
all laws and requirements in respect of the execution and delivery by
the Company of the Securities have been complied with; and (y) covering
such other matters as the Trustee may reasonably request; and
(6) duly executed Extension Letters relating to the Pledged
Lessor Notes;
provided, however, that if a series of Securities is to be authenticated by the
Trustee in advance of the actual delivery to the Trustee of the Pledged Lessor
Notes relating thereto, (X) the documents described in the foregoing clauses
(2)(c), (3), (4), (5) (other than the opinion described in subclauses (x) and
(y)) and (6) need not be delivered in connection with
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such authentication, but shall be delivered in connection with the release of
the proceeds of the sale of such series of Securities in accordance with
Sections 2.15 and 13.01 hereof and (Y) the form of the Series Supplemental
Indenture shall be appropriately modified to reflect the later delivery and
pledge of the related Pledged Lessor Notes.
Receipt by the Trustee of the Officer's Certificate referred
to in clause (2) above shall be conclusively presumed for all purposes of this
Indenture to establish that the Lease Indentures, the Leases and the Pledged
Lessor Notes referred to in such certification comply with the requirements of
Exhibit A hereto.
The Trustee shall have the right to decline to authenticate
and deliver any Securities under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken by the Company or
if the Trustee in good faith by its board of directors or board of trustees,
executive committee, or a trust committee of directors or trustees and/or
responsible officers shall determine that such action would expose the Trustee
to personal liability.
SECTION 1.005. Form and Denominations.
The Securities of each series shall be in registered form and
may have such letters, numbers or other marks of identification and such legends
or endorsements printed, lithographed or engraved thereon, as may be required to
comply with the rules of any securities exchange or to conform to any usage in
respect thereof, or as may, consistently herewith, be prescribed by the Board of
Directors of the Company or by the officers executing such Securities, such
determination by said officers to be evidenced by their signing the Securities.
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
All Securities of any one series shall be substantially
identical except as to denomination and Stated Maturity and except as may
otherwise be provided herein or in the Series Supplemental Indenture setting
forth the terms of the Securities of such series.
SECTION 1.006. Execution of Securities.
The Securities shall be executed on behalf of the Company by
its President or one of its Vice Presidents under its corporate seal reproduced
thereon and attested by its Secretary or one of its Assistant Secretaries. The
signature of any such officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at the time such signatures were affixed the proper
officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities or did not hold such offices at
the date of such Securities.
SECTION 1.007. Temporary Securities.
Pending the preparation of definitive Securities of any
series, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Securities of such series which are printed,
lithographed, typewritten, photocopied or otherwise produced, in any
denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of such series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of such
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series at the office or agency of the Company, for such purpose, in the Place of
Payment, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Securities of any series the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like aggregate
principal amount of definitive Securities of such series of authorized
denominations. Until so exchanged such temporary Securities of any series shall
in all respects be entitled to the same benefits under this Indenture as
definitive Securities of such series.
SECTION 1.008. Registration, Transfer and Exchange.
The Trustee shall cause to be kept at the Corporate Trust
Office a register in which, subject to such reasonable regulations as the
Company may prescribe, the Company shall provide for the registration of
Securities and of registration of transfers and exchanges of Securities. This
register and, if there shall be more than one Security Registrar, the combined
registers maintained by all such Security Registrars, are herein sometimes
referred to as the "Security Register".
Upon surrender for registration of transfer of any Security of
any series at the Corporate Trust Office, or at any office or agency maintained
for such purpose pursuant to Section 9.14(a), the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Securities of the same series and of the same
Stated Maturity for principal and interest and of a like aggregate principal
amount.
At the option of the Holders, Securities of any series may be
exchanged for an equal aggregate principal amount of Securities of the same
series and of the same Stated Maturity for principal and interest and of any
authorized denominations, upon surrender of the Securities to be exchanged at
the Corporate Trust Office, or at any office or agency maintained for such
purpose pursuant to Section 9.14(a). Whenever any Securities are so surrendered
for exchange, the Company shall execute, and the Trustee or any other
Authenticating Agent shall authenticate and deliver, the Securities which the
Securityholder making the exchange is entitled to receive.
All Securities issued upon any transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same security and benefits under this Indenture, as
the Securities surrendered upon such transfer or exchange.
Every Security presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be required of any Securityholders
participating in any transfer or exchange of Securities in respect of such
transfer or exchange, but the Security Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Securities, other than exchanges
pursuant to Sections 2.07, 6.06 or 11.07 not involving any transfer.
The Security Registrar shall not be required (i) to issue,
transfer or exchange any Security of any series during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of Securities of such series selected for redemption under Section
6.02 or 7.02 and ending at the close of business on the day of such mailing, or
(ii) to transfer or exchange any Security so selected for redemption in whole or
in part except the unredeemed portion of any Security selected for redemption in
part.
SECTION 1.009. Mutilated, Destroyed, Lost and Stolen
Securities.
If (i) any mutilated Security is surrendered to the Trustee,
or the Company, the Security Registrar and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Security, and (ii) there
is delivered to the Company, to the Security Registrar and to the Trustee
evidence to their satisfaction of the ownership and authenticity thereof, and
such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company, to the Security
Registrar or to the Trustee that such Security has been acquired by a bona fide
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purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company may, upon
satisfaction of the conditions set forth in clauses (i) and (ii) of the
preceding paragraph, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Security Registrar may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto and any
other expenses connected therewith.
Every new Security issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the security and benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 1.10. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually
paid or duly provided for, at any Stated Maturity of an installment of interest
shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest. At the option of the Company, payment of interest
on any Security may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register.
Any interest on any Security of any series which is payable,
but is not punctually paid or duly provided for, at any Stated Maturity of an
installment of interest shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder; and such
defaulted interest may be paid by the Company, at its election in each case, as
provided in paragraph (1) or paragraph (2) below:
(1) The Company may elect, which election shall be at the
direction of any Lessor whose Pledged Lessor Note is in default in
respect of the payment of interest and who is proposing to make payment
of all or part of such defaulted interest, to make payment of any
defaulted interest to the Persons in whose names the Securities of such
series in respect of which interest is in default (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such defaulted interest, which
shall be fixed in the following manner. Such Lessor shall notify the
Trustee and the Paying Agent in writing of the amount of defaulted
interest proposed to be paid on each such Security and the date of the
proposed payment, and at the same time there shall be deposited with
the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such defaulted interest or there shall be made
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such defaulted
interest as in this paragraph provided. Thereupon the Trustee shall fix
a Special Record Date for the payment of such defaulted interest which
shall be not more than 15 nor less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company and the Security Registrar of such Special
Record Date and, in the name and at the expense of the Company, shall
cause notice of the proposed payment of such defaulted interest and the
Special Record Date therefor to be mailed, first class postage prepaid,
to each holder of a Security of such series at his address as it
appears in the Security Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such defaulted
interest and the
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Special Record Date therefor having been mailed as aforesaid, such
defaulted interest shall be paid to the Persons in whose names the
Securities of such series (or their respective Predecessor Securities)
are registered on such Special Record Date and shall no longer be
payable pursuant to the following paragraph (2).
(2) The Company may make, or cause to be made, payment of any
defaulted interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities in
respect of which interest is in default may be listed, and upon such
notice as may be required by such exchange, if, after notice given by
the Company to the Trustee of the proposed payment pursuant to this
paragraph, such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon transfer of or in exchange for or
in lieu of any other Security shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Security, and each such
Security shall bear interest from whatever date shall be necessary so that
neither gain nor loss in interest shall result from such transfer, exchange or
replacement.
SECTION 1.11. Persons Deemed Owners.
Prior to due presentment for registration of transfer, the
Person in whose name any Security is registered shall be deemed to be the owner
of such Security for the purpose of receiving payment of principal of (and
premium, if any), and (subject to Section 2.10) interest on, such Security and
for all other purposes whatsoever, whether or not such Security be overdue,
regardless of any notice to anyone to the contrary.
SECTION 1.12. Cancellation.
All Securities surrendered for payment, redemption, credit
against any Sinking Fund payment or redemption payment, transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee for cancellation. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and all Securities
so delivered shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be destroyed and certification of their
destruction delivered to the Company unless, by Company Request, the Company
otherwise directs.
SECTION 1.13. Dating of Securities; Authentication.
Each Security of any series shall be dated the date of the
original issuance of the Securities of such series by the Company, which date
shall be specified by the Company in the Company Order delivered to the Trustee
pursuant to Section 2.04 in connection with the original authentication and
delivery of the Securities of such series. No Security shall be secured by or
entitled to any benefit under this Indenture or be valid or obligatory for any
purpose unless there appears on such Security a certificate of authentication,
in the form provided for herein, executed by the Trustee by the manual signature
of one of its Responsible Officers, and such certificate upon any Security shall
be conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder.
SECTION 1.14. Source of Payments; Rights and Liabilities of
Lessors and Equity Investors.
All payments of principal and premium (if any) and interest to
be made under the Securities and this Indenture (other than payments made in
connection with an optional redemption by a Lessor) shall be made only from
assets subject to the lien of this Indenture or the income and proceeds received
by the Trustee therefrom. Each Holder, by its acceptance of a Security, agrees
that (x) it will look solely to the assets subject to the lien of this Indenture
or the income and proceeds received by the Trustee therefrom to the extent
available for distribution to such Holder as herein provided and (y) none of any
Equity Investor, any Lessor, any Lease Indenture Trustee or the Trustee is
liable to any Holder or, in the case of any Equity Investor, Lessor and Lease
Indenture Trustee, to the Trustee for any amounts payable under any Security or,
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except as provided herein with respect to the Trustee, for any liability under
this Indenture. An Equity Investor, Lessor or Lease Indenture Trustee shall not
have any duty or responsibility under this Indenture or the Securities to any
Holder or to the Trustee.
SECTION 1.15. Sale of Securities; and Application of Proceeds
from the Sale of Securities.
(a) Promptly upon receipt by the Company of the proceeds from
any sale of a series of the Securities, the Company shall deposit such proceeds
with the Trustee. The funds so deposited shall be held by the Trustee in a
separate account as part of the Pledged Property and shall be invested, applied
and distributed by the Trustee as provided herein.
(b) Subject to the provisions of Section 13.01, upon the
issuance of the Pledged Lessor Notes related to any series of Securities and the
delivery thereof to the Trustee to be subjected to the Lien of this Indenture
pursuant to a Series Supplemental Indenture, the Trustee shall pay to the Lessor
obligated in respect of any such Pledged Lessor Note, out of funds held by the
Trustee in such separate account as Pledged Property, an amount equal to the
principal amount of such Pledged Lessor Note in respect of which such Lessor is
obligated. All payments to be made by the Trustee to any Lessor shall be made in
immediately available funds at the respective offices designated by such Lessor.
ARTICLE II.
PROVISIONS AS TO PLEDGED PROPERTY
SECTION 1.001. Holding of Pledged Securities.
The Trustee is authorized in its discretion to cause to be
registered in its name, as Trustee, or in the name of its nominee, any and all
coupon bonds which it may receive as part of the Pledged Property, or it may
cause the same to be exchanged for registered bonds without coupons of any
denomination. The Trustee may cause to be transferred into its name, as Trustee,
or into the name of its nominee, any and all registered bonds which it may
receive as part of the Pledged Property, or may cause such registered bonds to
be exchanged for coupon bonds. All Pledged Lessor Notes assigned to and pledged
with the Trustee pursuant to any provision of this Indenture or any Series
Supplemental Indenture shall be endorsed in blank for transfer or be accompanied
by proper instruments of assignment satisfactory to the Trustee, duly executed
by the Company. The Company will deliver promptly to the Trustee such documents,
certificates and opinions as the Trustee may reasonably request in connection
with subjection of any securities to the Lien of this Indenture to the extent
contemplated hereby.
SECTION 1.002. Disposition of Payments on Pledged Property.
Unless and until all Outstanding Securities have been paid in
full or provision for the payment of such Securities has been made in accordance
with this Indenture, the Trustee shall be entitled to receive all principal,
premium (if any) and interest paid in respect of any Pledged Lessor Notes and
interest paid on bonds or other obligations or indebtedness which may be subject
to the lien of this Indenture and shall apply the same to the payment of the
principal of, and premium (if any) and interest on, the Securities when and as
they become due and payable pursuant to, and in accordance with, this Indenture.
The Trustee shall duly note on the Schedules attached to the Pledged Lessor
Notes or by other appropriate means all payments of principal, premium, if any,
and interest made on the Pledged Lessor Notes.
SECTION 1.003. Exercise of Rights and Powers Under Pledged
Lessor Notes and Lease Indentures.
The Trustee shall not take any action as the holder of the
Pledged Lessor Notes to direct any Lease Indenture Trustee in any respect or to
vote any Pledged Lessor Note or any portion thereof except as specified in this
Section. The Trustee shall give notice to the Securityholders of the occurrence
of any Indenture Event of Default or Indenture Default under any Lease Indenture
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(as defined therein), and of every Event of Loss, Deemed Loss Event, or Special
Loss Event occurring under a Lease, but only to the extent the same shall
actually be known by an officer in the corporate trustee administration
department of the Trustee. The Trustee may, at any time, and shall, upon the
request of any Lease Indenture Trustee made to the Trustee to give any direction
or to vote its interest in the Pledged Lessor Notes, request from
Securityholders directions as to (i) whether or not to direct such Lease
Indenture Trustee to take or refrain from taking any action which holders of a
Pledged Lessor Note have the option to direct and (ii) how to vote any Pledged
Lessor Note if a vote has been called for with respect thereto. In addition, any
Securityholder may at any time request the Trustee to direct, or to participate
in the direction of, any action under any Lease Indenture to the extent that the
Trustee may do so under such Lease Indenture. In directing any action or casting
any vote as the holder of a Pledged Lessor Note, the Trustee shall specify to
the Lease Indenture Trustee the principal amount of the Pledged Lessor Note
which is in favor of the action or vote, the principal amount of the Pledged
Lessor Note which is opposed to the action or vote, and the principal amount of
the Pledged Lessor Note which is not taking any position for the action or vote.
Such principal amounts shall be determined by allocating the total principal
amount of the Pledged Lessor Note with respect to which direction was requested
in accordance with the principal amount of Securities taking corresponding
positions or not taking any position. In addition, the Trustee shall certify to
the Lease Indenture Trustee that the principal amounts of Securities taking such
corresponding positions or not taking any position was determined in accordance
with the provisions of this Indenture.
SECTION 1.004.Certain Actions in Case of Judicial Proceedings.
In case all or any part of the property of any Lessor or any
other Person which may be deemed an obligor in respect of the Pledged Lessor
Notes shall be sold at any judicial or other involuntary sale, the Trustee shall
receive any portion of the proceeds of such sale accruing on the Pledged
Property held hereunder, and such proceeds shall be held as provided in Section
3.05.
SECTION 1.005. Cash Held by Trustee Treated as a Deposit.
Any and all cash held by the Trustee under any provision of
this Indenture may be treated by the Trustee, until required to be paid out
hereunder, as a deposit, in trust, without any liability for interest.
ARTICLE I.
WITHDRAWAL OF COLLATERAL.
SECTION 1.011. Withdrawal of Collateral.
Except as provided in Section 4.02 and Article Thirteen, none
of the Pledged Property shall be subject to withdrawal unless and until all
Outstanding Securities have been paid in full or provision for such payment has
been made in accordance with the terms of this Indenture and the Trustee shall
have received the documents and opinions required by Article Twelve.
SECTION 1.012. Reassignment of Pledged Lessor Notes upon
Payment.
Upon receipt of payment in full of the principal of, and
premium (if any) and interest on, any Pledged Lessor Note held by the Trustee,
the Trustee shall deliver to the Company said Pledged Lessor Note and any
instrument of transfer or assignment necessary to reassign to the Company said
Pledged Lessor Note and the interest of the Company (if any) in the Lease
Indenture relating thereto; provided that nothing herein contained shall prevent
the Trustee from presenting any Pledged Lessor Note to a Lease Indenture Trustee
for final payment in accordance with the applicable provisions of the related
Lease Indenture.
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ARTICLE II.
COVENANTS
SECTION 1.021. Payment of Principal, Premium (if any) and
Interest.
The Company will duly and punctually pay, or cause to be paid,
the principal of, and premium, if any, and interest on, the Securities in
accordance with the terms of the Securities and this Indenture.
SECTION 1.022. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The
City of New York, an office or agency where Securities may be presented or
surrendered for payment, where Securities may be surrendered for transfer or
exchange and where notices and demands to or upon the Company in respect of
Securities and this Indenture may be served. PNM will give prompt written notice
to the Trustee of the location, and of any change in the location, of each such
office or agency. If at any time the Company shall fail to maintain any such
office or agency or the Company or PNM shall fail to furnish the Trustee with
the address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee its agent to receive all such presentations,
surrenders, notices and demands.
SECTION 1.023. Money for Security Payments to be Held in
Trust.
All moneys deposited with the Trustee or with any Paying Agent
for the purpose of paying the principal of or premium, if any, or interest on
Securities shall be deposited and held in trust for the benefit of the Holders
of the Securities entitled to such principal, premium, if any, or interest,
subject to the provisions of this Section. Moneys so deposited and held in trust
shall not be a part of the Pledged Property but shall constitute a separate
trust fund for the benefit of the Holders of the relevant Securities.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
direct any Paying Agent to pay, to the Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Trustee upon the same trusts as those
upon which such sums were held by such Paying Agent; and, upon such payment by
any Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent in
trust for the payment of the principal of or premium, if any, or interest on any
Security and remaining unclaimed for three years (or such lesser period as may
be required by law to give effect to this provision) after such principal,
premium or interest has become due and payable shall be paid to the Company on
Company Request (to the extent such monies shall have been deposited by the
Company) or to any other Person on its request (to the extent such monies shall
have been deposited by such other Person); and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company or such
other Person, to the extent such monies shall have been paid to the Company or
such other Person, as the case may be, for payment thereof, and all liability of
the Trustee or such Paying Agent with respect to such trust money shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company or, to the extent such monies are to be paid to another Person, such
other Person cause to be mailed to each such Holder notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such mailing, any unclaimed balance of such
money then remaining will be repaid to the Company or such other Person.
SECTION 1.024. Maintenance of Corporate Existence.
The Company, at its own cost and expense, will do or cause to
be done all things necessary to preserve and keep in full force and effect its
corporate existence, rights and franchises, except as otherwise specifically
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permitted in this Indenture; provided, however, that the Company shall not be
required to preserve any right or franchise if the Board of Directors of the
Company shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the Securityholders.
SECTION 1.025. Protection of Pledged Property.
The Company and PNM will from time to time execute and deliver
all such supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance, and other instruments
necessary to
(i) grant more effectively all or any portion of the
Pledged Property,
(ii) maintain or preserve the lien of this Indenture
or carry out more effectively the purposes hereof,
(iii) perfect, publish notice of, or protect the
validity of, any grant made or to be made by this Indenture,
(iv) enforce any of the Securities, or
(v) preserve and defend title to any Securities or
other instrument included in the Pledged Property and the
rights of the Trustee, and of the Securityholders, in such
Securities or other instrument against the claims of all
persons and parties.
The Company hereby designates the Trustee its agent and attorney-in-fact to
execute any financing statement, continuation statement or other instrument
required pursuant to this Section.
SECTION 1.026. Opinions as to Pledged Property.
Promptly after the execution and delivery of this Indenture
and of each Series Supplemental Indenture or other supplemental indenture or
other instrument of further assurance, the Company shall furnish to the Trustee
an Opinion of Counsel stating that, in the opinion of such Counsel, this
Indenture and all such Series Supplemental Indentures, other supplemental
indentures and other instruments of further assurance have been properly
recorded, registered and filed to the extent necessary to make effective the
lien intended to be created by this Indenture, and reciting the details of such
action or referring to prior Opinions of Counsel in which such details are
given, and stating that all financing statements and continuation statements
have been executed and filed that are necessary fully to preserve and protect
the rights of the Securityholders and the Trustee, or stating that, in the
opinion of such Counsel, no such action is necessary to make such lien
effective.
On or before May 1, in each calendar year, beginning with the
first calendar year commencing more than three months after the date of
authentication and delivery of any Securities, the Company shall furnish to the
Trustee an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording, filing,
re-recording and re-filing of this Indenture, any Series Supplemental Indenture
and any other requisite documents and with respect to the execution and filing
of any financing statements and continuation statements as is necessary to
maintain the lien and security interest created by this Indenture with respect
to the Pledged Property and reciting the details of such action or stating that
in the opinion of such counsel no such action is necessary to maintain such lien
and security interest. Such Opinion of Counsel shall also describe the
recording, filing, re-recording and re-filing of this Indenture, any Series
Supplemental Indenture and any other requisite documents and the execution and
filing of any financing statements and continuation statements that will, in the
opinion of such counsel, be required to maintain the lien and security interest
of this Indenture with respect to the Pledged Property until May 1 in the
following calendar year.
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SECTION 1.027. Performance of Obligations
(a) Neither the Company nor PNM will take any action or permit
any action to be taken by others which would release any Person from any of such
Person's covenants or obligations under any instrument included in the Pledged
Property, or which would result in the amendment, hypothecation, subordination,
termination or discharge of, or impair the validity or effectiveness of, any
such instrument, except as expressly provided in this Indenture.
(b) PNM will fully perform all of its obligations under the
Leases.
SECTION 1.028. Negative Covenants
During such time as any Security issued hereunder is
Outstanding, the Company will not:
(i) sell, transfer, exchange or otherwise dispose of
any portion of the Pledged Property except as expressly
permitted by this Indenture;
(ii) engage in any business or activity other than in
connection with, or relating to, the issuance of Securities
pursuant to this Indenture or amend Article Third, Fourth or
Sixth of its Certificate of Incorporation as in effect on the
date of execution and delivery of this Indenture, without, in
each case, the consent of the Holders of not less than 66 2/3%
of the aggregate principal amount of the Securities then
Outstanding; notwithstanding the foregoing, however, the
Company may, with respect to one or more series of Securities
(or one or more Stated Maturities within any series), enter
into credit or liquidity support facilities (including, but
without limitation, bank letters of credit, bank lines of
credit and bonds of insurance) and may engage in interest rate
swaps;
(iii) issue bonds, notes or other evidences of
indebtedness other than (i) Securities issued hereunder or
(ii) bonds, notes or other evidences of indebtedness secured
by a pledge of Securities issued hereunder or evidencing
indebtedness permitted by clause (ii) above;
(iv) incur, assume or guaranty any indebtedness of
any Person;
(v) dissolve or liquidate in whole or in part;
(vi) take any action which would (1) permit the
validity or effectiveness of this Indenture or any grant of
any of the Pledged Property to be impaired, or permit the Lien
of this Indenture to be amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be released
from any covenant or obligation under this Indenture, (2)
permit any Lien, charge, security, mortgage or other
encumbrance (other than the lien of this Indenture) to be
created on or extend to or otherwise arise upon or burden the
Pledged Property or any part thereof or any interest therein
or the proceeds thereof, or (3) permit the Lien of this
Indenture not to constitute a valid first priority security
interest in the Pledged Property; or
(vii) institute any proceedings to be adjudicated a
bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a
petition or answer or consent seeking reorganization or relief
under the Federal Bankruptcy Act or any other applicable
Federal or state law or law of the District of Columbia, or
consent to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company or any
substantial part of its property, or make an assignment for
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the benefit of its creditors, or admit in writing its
inability to pay its debts generally as they become due, or
take any corporate action in furtherance of the foregoing.
SECTION 1.029. Administration of Principal Instruments.
(a) Without the consent of the Holders of a majority in
principal amount of Outstanding Securities (or, in the case of Changes to a
Support Facility, the series (or the Stated Maturity Dates within a series) of
outstanding Securities benefiting from such Support Facility), the Trustee shall
not consent to any Change in any Principal Instrument; provided, however, that
the Trustee may consent to any Change in any Principal Instrument if such Change
is permitted by subsection (b) of this Section 5.09.
(b) Subject to the provisions of subsection (c) of this
Section 5.09, the Trustee may consent to any Change in any Principal Instrument
if such Change is:
(1) to cure any ambiguity, to correct or supplement any
provision in such Principal Instrument which may be defective or
inconsistent with any other provision in such Principal Instrument or
any related Principal Instrument, or to make any other provisions with
respect to matters arising under any such Principal Instrument,
provided, in each instance, that such action shall not materially
adversely affect the interests of Holders of Securities; or
(2) to add to the covenants and agreements of the parties to
such Principal Instrument other covenants and agreements hereafter to
be observed by any such party, or to surrender any right or power
therein reserved to or conferred upon the Company; or
(3) to amend or supplement such Principal Instrument, or to
give any consent or grant any waiver thereunder, so long as thereafter
such Principal Instrument will comply with the requirements (if any) of
Exhibit A hereto; provided that such action does not materially
adversely affect the interests of Holders of Securities; or
(4) in any other manner not inconsistent with Exhibit A
hereto; provided that such action does not materially adversely affect
the interests of Holders of Securities; or
(5) Change in the Lease permitted by applicable provisions of
the related Lease Indenture; or
(6) to describe more fully and to amplify or correct the
description of any property or rights assigned or pledged by such
Principal Instrument or intended so to be, or to assign, pledge,
mortgage or grant a security interest in any additional property,
rights and interests, subject to such liens, restrictions or other
encumbrances, if any, as shall be therein specifically described; or
(7) in the case of a Lease Indenture, to enable the Lease
Indenture Trustee thereunder to confer upon holders of Pledged Lessor
Notes any additional rights, remedies, powers or authorities that may
lawfully be granted or conferred upon such holders; or
(8) to evidence the appointment of a separate or co-Lease
Indenture Trustee or the succession of a new Lease Indenture Trustee;
or
(9) to evidence the succession of or assumption by a successor
or assignee Lessee under the Leases and the Participation Agreements or
to evidence the succession of a new Lessor or Owner Trustee under any
Principal Document to which it is a party; or
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(10) permitted by the terms of such Principal Instrument to be
made without the consent of or notice to the holders of the related
Pledged Lessor Notes; or
(11) to provide for the issuance of Lessor Notes in addition
to the Pledged Lessor Notes relating to such Principal Instruments in
accordance with the applicable provisions of the related Principal
Instruments.
(c) No Change with respect to a Principal Instrument, whether
effected pursuant to subsection (a) or pursuant to subsection (b) of this
Section 5.09, and anything in such subsections or elsewhere in this Indenture to
the contrary notwithstanding, shall, without the consent of the Holder of each
Outstanding Security affected thereby:
(1) except as provided in any Lease, change such Lease in such
a way as to change the timing or reduce the amount of any Lease
Payment, or otherwise to release, except as provided in such Lease, PNM
from its obligation under such Lease in respect of payment of Lease
Payments; or
(2) modify, amend or supplement the Participation Agreements
in such a way as to, or give any consent, waiver, authorization or
approval which would, release any Equity Investor from its payment
obligations contained in said Participation Agreements.
(d) Except during the continuance of an Event of Default
hereunder, upon request of the Company or PNM, the Trustee shall consent to any
Change described in this Section 5.09, and shall execute any instrument
requested by the Company or PNM, as the case may be, for the purpose of
confirming such consent, but only upon receipt by the Trustee of an Officers'
Certificate and an Opinion of Counsel of the Company or PNM, as the case may be,
each stating that such Change is authorized by this Indenture and that execution
of such instrument is appropriate to confirm such consent, unless such Change
adversely affects the Trustee's rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may, in its discretion, but
shall not be obligated to, give such consent and the Trustee shall be fully
protected in relying on such Officers' Certificate and Opinion of Counsel.
SECTION 1.10. Annual Statement as to Compliance.
(a) PNM and the Company each will deliver to the Trustee, on
or before 120 days after the end of each of its fiscal years, a written
statement (which need not comply with Section 1.02) signed by its President or
one of its Vice Presidents and by its Treasurer or one of its Assistance
Treasurers or its Comptroller or one of its Assistant Comptrollers, stating, as
to each signer thereof, that
(1) a review of the activities of PNM or the Company, as the
case may be, required during such year of PNM or the Company, as the
case may be, under this Indenture has been made under his supervision;
and
(2) to the best of his knowledge, based on such review, PNM or
the Company, as the case may be, has fulfilled all its obligations
under this Indenture throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof.
(b) PNM and the Company each will deliver to the Trustee,
promptly after having obtained knowledge thereof, but in no event later than
five days thereafter, written notice of any event which with the giving of
notice or lapse of time, or both, would become an Event of Default under Section
8.01.
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ARTICLE II.
REDEMPTION OF SECURITIES
The provisions of this Article Six shall be applicable to the
Securities of any series which are redeemable before their Stated Maturity of
principal except as otherwise provided in such Securities or the Series
Supplemental Indenture with respect thereto as contemplated by Section 2.03.
SECTION 1.001. Notice to Trustee of Redemption.
In case of any redemption of any Securities of any series
otherwise than through the operation of an applicable Sinking Fund, the Company
shall, at least 45 days prior to the scheduled Redemption Date (unless a shorter
notice shall be satisfactory to the Trustee), notify the Trustee in writing of
such Redemption Date and of the principal amount of Securities of such series to
be redeemed.
SECTION 1.002. Selection by Trustee of Securities to be
Redeemed.
If fewer than all the Securities of any series are to be
redeemed, other than through the operation of an applicable Sinking Fund, the
particular Securities of such series to be redeemed shall be selected following
receipt by the Trustee of the notice required by Section 6.01, but not more than
60 days prior to the Redemption Date, by the Trustee, from the Outstanding
Securities of such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions of the principal of Securities of any
denomination larger than $1,000; provided, however, that for purposes of
selecting Securities of any series for redemption pursuant to this Section,
Securities of such series shall be redeemed from each Stated Maturity of
principal of Securities of such series as nearly as practicable in the
proportion that the aggregate principal amount of Securities of such series of
such Stated Maturity of principal Outstanding immediately prior to the
Redemption Date shall bear to the aggregate principal amount of Securities of
such series of all Stated Maturities of principal then Outstanding, in each case
taking into account in the determination of Securities Outstanding the
Securities of such series subject to such redemption; provided further, however,
that when Securities are being redeemed pursuant to any applicable optional
(rather than mandatory) redemption provisions, the Securities to be redeemed
shall be selected solely from the Securities of the series and of the Stated
Maturity of principal in respect of which a Company Order has been received. If
Securities are to be selected for any redemption pursuant to this Section, the
Trustee may make such adjustments as it shall deem necessary so that the
principal amount of Securities redeemed shall be $1,000 or an integral multiple
thereof, such adjustments to be made by the Trustee in such manner as the
Trustee in its sole discretion deems appropriate.
The Trustee shall promptly notify the Company, PNM, the
Security Registrar and the Paying Agent in writing of the Securities selected
for redemption and, in the case of any Security selected for partial redemption,
the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Security redeemed or to be redeemed only in
part, to the portion of the principal of such Security which has been or is to
be redeemed.
SECTION 1.003. Notice of Redemption.
Notice of redemption (including redemption through the
operation of any applicable Sinking Fund) shall be given by first-class mail,
postage prepaid, mailed not less than 20 nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at his address
appearing in the Security Register. All notices of redemption shall state:
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(1) the Redemption Date,
(2) the Redemption Price,
(3) if fewer than all Outstanding Securities of any series are
to be redeemed, the identification (and, in the case of partial
redemption, the respective principal amounts) of the particular
Securities, including the series and the Stated Maturity of principal
of such Securities, to be redeemed,
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security, and that interest
thereon shall cease to accrue from and after said date,
(5) the place where such Securities are to be surrendered for
payment of the Redemption Price, and
(6) that the redemption is through the operation of a Sinking
Fund, if such is the case.
Notice of redemption of Securities to be redeemed shall be
given by the Trustee in the name of the Company.
SECTION 1.004. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit, or
cause to be deposited, with the Paying Agent an amount of money sufficient to
pay the Redemption Price of all the Securities which are to be redeemed on that
date.
SECTION 1.005. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the corporate trust office of the Paying Agent (or, if such office is
not in the Borough of Manhattan, the City of New York, at either such office or
an office to be maintained in such Borough) at the Redemption Price therein
specified and from and after such date (unless there shall be a default in the
payment of the Redemption Price) such Securities shall cease to bear interest.
Upon surrender of such Securities for redemption in accordance with said notice,
such Securities shall be paid at the Redemption Price, exclusive, however, of
installments of interest maturing on or prior to the Redemption Date, payment of
which shall have been made or duly provided for to the Holders of such
Securities registered as such on the relevant Record Dates, or otherwise,
according to their terms and the provisions of Section 2.10.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, continue to bear interest from the Redemption Date at the
rate borne by the Security in respect of overdue payments.
SECTION 1.006. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be
surrendered at the corporate trust office of the Paying Agent (or, if such
office is not in the Borough of Manhattan, the City of New York, at either such
office or an office to be maintained in such Borough) (with due endorsement by,
or a written instrument of transfer in form satisfactory to the Security
Registrar duly executed by, the Holder thereof or his attorney duly authorized
in writing) and the Company shall execute and the Trustee shall authenticate and
deliver to the Paying Agent for delivery to the Holder of such Security a new
Security or Securities of the same series and the same Stated Maturity of
principal, of any authorized denomination as requested by such Holder in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Security so surrendered.
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ARTICLE I.
SINKING FUNDS
SECTION 1.011. Sinking Funds for Securities.
[(a)] The amount of any sinking fund payment provided for by
the terms of Securities of any series (and any Stated Maturity of principal
within a series) is herein referred to as a "Sinking Fund", and the date on
which a Sinking Fund payment is to be made is herein referred to as a "Sinking
Fund Date." Each such Sinking Fund payment shall be applied to the redemption of
Securities of the appropriate series and the appropriate Stated Maturity of
principal on the appropriate Sinking Fund Date.
[(b)] In the event that there shall have been any partial
redemption of a series of Securities (other than pursuant to an applicable
Sinking Fund), the amount of each applicable Sinking Fund payment of a
particular Stated Maturity of principal within such series subsequent to such
redemption shall be reduced by an amount equal to the amount obtained by (i)
multiplying the amount of such Sinking Fund payment with respect to such Stated
Maturity of principal as in effect prior to such redemption by a fraction of
which the numerator shall be the aggregate principal amount of Securities of
such Stated Maturity of such series redeemed pursuant to such partial
redemption, and the denominator shall be the aggregate principal amount of
Securities of such Stated Maturity of such series Outstanding immediately prior
to such redemption, and (ii) rounding the amount indicated in (i) to the nearest
$1,000, subject to necessary adjustment so that the total amount of such
reduction is equal to the total principal amount of Securities redeemed pursuant
to such partial redemption, such adjustment to be made by the Trustee in such
manner as the Trustee in its sole discretion deems appropriate.
[(c)] Pursuant to the Series 1986A Series Supplemental
Indenture dated as of July 15, 1986 (the Series 1986A Supplement), the Company
issued a series of Securities designated "Lease Obligation Bonds Series 1986A"
(the Series A Bonds), of which, on June 1, 1994 two Stated Maturities of
principal remain outstanding: July 15, 1996 and January 15, 2014. Paragraph (b)
of Section 7.01 of the Original Indenture to the contrary notwithstanding, in
the event that there shall have been any partial redemption of Series A Bonds of
a particular Stated Maturity of principal (other than pursuant to the Sinking
Fund), the Sinking Fund payments thereafter to be made with respect to such
Series A Bonds shall be adjusted as follows. The Company shall first identify
all related Pledged Lessor Notes (as defined in Article II of Series 1986A
Supplement and identified in Schedule 2 thereto) having the same maturity as the
Series A Bonds of such particular Stated Maturity of principal redeemed, if any,
which are outstanding following such redemption; provided, however, that for
purposes of this Section 7.01(c), any such Pledged Lessor Notes with a maturity
subsequent to January 15, 2010 shall be deemed to have a maturity of January 15,
2014. Having identified all such outstanding Pledged Lessor Notes (the
Outstanding Notes), the Company shall determine the dates on which the principal
of such Outstanding Notes is to be amortized (the Scheduled Amortization Dates).
The amount of the Sinking Fund payment scheduled to be made on each Sinking Fund
Date subsequent to the date of such partial redemption shall then be adjusted to
equal the aggregate principal amount of all Outstanding Notes scheduled to be
amortized on the Scheduled Amortization Date corresponding to such Sinking Fund
Date. All such adjustments in respect of Sinking Fund payments on a Sinking Fund
Date shall be rounded to the nearest $1,000, and shall be subject to necessary
further adjustment so that the total amount of such reduction is at least equal
to the total principal amount of Series A Bonds redeemed pursuant to such
partial redemption. Having made the calculations required by the preceding two
sentences, the Company shall deliver to the Trustee a Company Request not later
than 30 days following any partial redemption of Series A Bonds (other than
pursuant to the Sinking Fund), setting forth (x) the schedules of principal
amortization of all related Outstanding Notes having the same maturity as the
Stated Maturity of principal of the Series A Bonds redeemed and (y) a revised
schedule of Sinking Fund payments applicable to Series A Bonds having the same
Stated Maturity of principal as the Series A Bonds redeemed. The Trustee may
rely on such Company Request and shall have no duty with respect to the
adjustments set forth therein other than to make them available for inspection
by a Holder of Series A Bonds at the Corporate Trust Office uponreasonable
notice.]2
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SECTION 1.012. Selection by Trustee of Securities to be
Redeemed Through Operation of Sinking Fund.
In the case of Securities to be redeemed through operation of
the Sinking Fund, the particular Securities to be redeemed shall be selected no
more than 60 days nor less than 30 days prior to the Redemption Date by the
Trustee from the outstanding Securities of the same series and of the same
Stated Maturity of principal not previously called for redemption by prorating,
as nearly as may be, the principal amount of Securities to be redeemed among the
Holders of Securities of the same series and of the same Stated Maturity of
principal registered in their respective names. In any proration pursuant to
this Section, the Trustee shall make such adjustments, reallocations and
eliminations as it shall deem proper so that the principal amount of Securities
so prorated shall be $1,000 or an integral multiple thereof, by increasing or
decreasing or eliminating the amount which would be allocable to any Holder on
the basis of exact proportion by an amount not exceeding $1,000. The Trustee in
its discretion may determine the particular Securities of a Stated Maturity of
principal registered in the name of any Holder which are to be redeemed, in
whole or in part.
Notwithstanding the provisions of the preceding paragraph, if,
at the time of any such selection, there shall be any Holders of less than
$1,000,000 aggregate principal amount of Outstanding Securities of the series
and of the Stated Maturity of principal to be so redeemed, the selection of the
particular Securities to be so redeemed shall be made in the following manner:
(a) the Trustee shall first prorate the principal amount of
Securities of such series and of such Stated Maturity to be so redeemed between
(i) Holders of Securities in aggregate principal amounts of $1,000,000 or more
and (ii) Holders of Securities in aggregate principal amounts of less than
$1,000,000; such proration to be effected in accordance with the respective
aggregate principal amounts of such Securities held by the Holders referred to
in the foregoing items (i) and (ii), respectively;
(b) the Trustee shall then select for redemption in the manner
hereinabove in the first paragraph of this Section 7.02 provided, from the
Securities of such series and Stated Maturity held by the Holders referred to in
item (i) of clause (a) above, particular Securities (or portions thereof) in the
principal amount prorated to such Holders pursuant to said clause (a); and
(c) the Trustee shall then select for redemption in the manner
provided in Section 6.02 hereof, from the Securities of such series and Stated
Maturity held by the Holders referred to in item (ii) of said clause (a),
particular Securities (or portions thereof) in the principal amount prorated to
such Holders pursuant to said clause (a);
provided, however, in any such prorating pursuant to this paragraph the Trustee
may, according to such method as it shall deem proper in its discretion, make
such adjustments by increasing or decreasing by not more than $1,000 the amount
which would be allocable on the basis of an exact proportion, as may be
necessary to the end that the principal amount so prorated shall be in each
instance an integral multiple of $1,000.
- --------
2 Bracketed language added by 1994 Supplemental Indenture. See Exhibit F.
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ARTICLE II.
EVENTS OF DEFAULT; REMEDIES
SECTION 1.021. Events of Default.
"Events of Default", wherever used herein, means any one of
the following events (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to a judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security
when it becomes due and payable, and continuance of such default for a
period of ten (10) days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Security at its Stated Maturity, or upon call for
redemption or otherwise, and continuance of such default for a period
of ten (10) days; or
(3) default in the making of any Sinking Fund payment, and
continuance of such default for a period of ten (10) days; or
(4) default in the performance, or breach, of any covenant of
PNM or the Company contained herein and continuance of such default or
breach for a period of 30 days after there has been given, by
registered or certified mail, to PNM and the Company by the Trustee, or
to PNM, the Company and the Trustee by the Holders of at least 25% in
principal amount of Outstanding Securities, a written notice specifying
such failure and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
(5) the occurrence of an "Indenture Event of Default" under
any Lease Indenture and the declaration as a result thereof that any
Pledged Lessor Note is due and payable; or
(6) the entry of a decree or order by a court having
jurisdiction in the premises adjudging the Company a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect
of the Company under the Federal Bankruptcy Act or any other applicable
federal or state law or law of the District of Columbia, or appointing
a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for
a period of 60 consecutive days; or
(7) the institution by the Company of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization
or relief under the Federal Bankruptcy Act or any other applicable
Federal or state law or law of the District of Columbia, or the consent
by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property, or
the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally
as they become due, or the taking of corporate action by the Company in
furtherance of any such action.
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SECTION 1.022. Acceleration of Maturity; Rescission and
Annulment.
Upon the occurrence of an Event of Default, (i) if such Event
of Default is one referred to in clause (1), (2), (3), (4), (6) or (7) of
Section 8.01, the Trustee may, and upon the direction of the Holders of not less
than 25% in principal amount of the Securities Outstanding shall, and (ii) if
such Event of Default is the one referred to in clause (5) of Section 8.01
(including without limitation an event of default under any Lease which has
resulted in an Event of Default referred to in clause (1), (2), or (3) of
Section 8.01), the Trustee shall, declare the principal of all the Securities to
be due and payable immediately, by a notice in writing to PNM and the Company,
and upon any such declaration such principal shall become immediately due and
payable; provided that no such declaration shall be made (and no action under
Section 8.03 or 8.05 shall be taken) in cases in which the Event of Default is
one referred to in clause (1), (2), or (3) of Section 8.01 which resulted
directly from a failure of PNM to make any payment of rent under any Lease until
such time as the Lessor under such Lease has been given the opportunity to
exercise its rights, if any, under provisions of the related Lease Indenture
analogous to Section 6.8 of the Lease Indentures dated as of December 16, 1985.
At any time after such a declaration of acceleration has been
made and before any sale of the Pledged Property, or any part thereof, shall
have been made pursuant to any power of sale as hereinafter in this Article;
provided, the Holders of a majority in principal amount of the Securities
Outstanding, by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if
(1) there shall have been paid to or deposited with the
Trustee a sum sufficient to pay
(A) all overdue installments of interest on all
Securities,
(B) the principal of (and premium, if any, on) any
Securities which have become due otherwise than by such
declaration of acceleration and interest thereon at the
respective rates provided in the Securities for late payments
of principal or premium,
(C) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest at the
respective rates provided in the Securities for late payments
of interest, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel; and
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such
acceleration, have been cured or waived as provided in Section 8.08.
No such rescission shall affect any subsequent default or impair any right
consequent thereon. [and no such annulment shall take place unless all
declarations of acceleration of all Pledged Lessor Notes theretofore given have
also been annulled in accordance with the terms of the applicable Lease
Indentures.]3
[Notwithstanding anything in this Section to the contrary, the
Trustee shall rescind any acceleration of maturity of the principal of and
interest on the Securities as a consequence of an Event of Default which
resulted from an event of default under any Lease and which resulted in a
declaration of acceleration of the Pledged Lessor Notes issued under the related
Lease Indenture, if the declaration of acceleration of such Pledged Lessor Notes
has been rescinded in accordance with the terms of such Lease Indenture and the
conditions set forth in paragraphs (1) and (2) of this Section have been met.]4
- --------
3 This language was deleted by paragraph (b)(ii) of Article III of the
1986A Bond Supplemental Indenture. See Exhibit B.
4 This paragraph was deleted in its entirety by paragraph (b)(i) of
Artcile III to the 1986A Bond Supplemental Indenture. See Exhibit B.
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<PAGE>
SECTION 1.023. Trustee's Power of Sale of Pledged Property;
Notice Required; Power to Bring Suit.
If an Event of Default shall have occurred and be continuing,
subject to the provisions of Sections 8.06 and 8.07 and the proviso to the first
paragraph of Section 8.02, the Trustee, by such officer or agent as it may
appoint, may:
(1) sell, to the extent permitted by law, without recourse,
for cash, or credit or for other property, for immediate or future
delivery, and for such price or prices and on such terms as the Trustee
in its discretion may determine, the Pledged Property as an entirety,
or in any such portions as the Holders of a majority in aggregate
principal amount of the Securities then Outstanding shall request by an
Act of Securityholders, or, in the absence of such request, as the
Trustee in its discretion shall deem expedient in the interest of the
Securityholders, at public or private sale; and/or
(2) proceed by one or more suits, actions or proceedings at
law or in equity or otherwise or by any other appropriate remedy, to
enforce payment of the Securities or Pledged Lessor Notes, or to
foreclose this Indenture or to sell the Pledged Property under a
judgment or decree of a court or courts of competent jurisdiction, or
by the enforcement of any such other appropriate legal or equitable
remedy, as the Trustee, being advised by counsel, shall deem most
effectual to protect and enforce any of its rights or powers or any of
the rights or powers of the Securityholders.
In the event that the Trustee shall deem it advisable to sell
any of or all the Pledged Property in accordance with the provisions of this
Section, PNM and the Company agree that if registration of any such Pledged
Property shall be required, in the opinion of counsel for the Trustee, under the
Securities Act of 1933 or other applicable law, and regulations promulgated
thereunder, and if PNM shall not effect, or cause to be effected, such
registration promptly, the Trustee may sell any such Pledged Property at a
private sale, and no Person shall attempt to maintain that the prices at which
such Pledged Property is sold are inadequate by reason of the failure to sell at
public sale, or hold the Trustee liable therefor.
SECTION 1.024. Incidents of Sale of Pledged Property.
Upon any sale of all or any part of the Pledged Property made
either under the power of sale given under this Indenture or under judgment or
decree in any judicial proceedings for foreclosure or otherwise for the
enforcement of this Indenture, the following shall be applicable:
(1) Securities Due and Payable. The principal of, and premium,
if any, and accrued interest on, the Securities, if not previously due,
shall immediately become and be due and payable.
(2) Trustee Appointed Attorney of Company to Make Conveyances.
The Trustee is hereby irrevocably appointed the true and lawful
attorney of the Company, in its name and stead, to make all necessary
deeds, bills of sale and instruments of assignment, transfer or
conveyance of the property thus sold; and for that purpose the Trustee
may execute all such documents and instruments and may substitute one
or more persons with like power; and the Company hereby ratifies and
confirms all that its said attorneys, or such substitute or
substitutes, shall lawfully do by virtue hereof.
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(3) Company to Confirm Sales and Conveyances. If so requested
by the Trustee or by any purchaser, the Company shall ratify and
confirm any such sale or transfer by executing and delivering to the
Trustee or to such purchaser or purchasers all proper deeds, bills of
sale, instruments of assignment, conveyance or transfer and releases as
may be designated in any such request.
(4) Securityholders and Trustee May Purchase Pledged Property.
Any Securityholder or the Trustee may bid for and purchase any of the
Pledged Property, and upon compliance with the terms of sale, may hold,
retain, possess and dispose of such Pledged Property in his or its own
absolute right without further accountability.
(5) Purchaser at Sale May Apply Securities to Purchase Price.
Any purchaser at any such sale may, in paying the purchase price,
deliver any of the Securities then Outstanding in lieu of cash and
apply to the purchase price the amount which shall, upon distribution
of the net proceeds of such sale, after application to the costs of the
action and any other sums which the Trustee is authorized to deduct
under this Indenture, be payable on such Securities so delivered in
respect of principal, premium, if any, and interest. In case the amount
so payable on such Securities shall be less than the amount due
thereon, duly executed and authenticated Securities shall be delivered
in exchange therefor to the Holder thereof for the balance of the
amount due on such Securities so delivered by such Holder.
(6) Receipt of Trustee Shall Discharge Purchaser. The receipt
of the Trustee or of the officer making such sale under judicial
proceedings shall be a sufficient discharge to any purchaser for his
purchase money, and, after paying such Purchase money and receiving
such receipt, such purchaser or his personal representative or assigns
shall not be obliged to see to the application of such purchase money,
or be in any way answerable or any loss, misapplication or
non-application thereof.
(7) Sale To Divest Rights of Company in Property Sold. Any
such sale shall operate to divest the Company of all right, title,
interest, claim and demand whatsoever, either at law or in equity
otherwise, in and to the Pledged Property so sold, and shall be a
perpetual bar both at law and in equity or otherwise against the
Company, and its successors and assigns, and any and all persons
claiming or who may claim the Pledged Property sold or any part hereof
from, through or under the Company, or its successors and assigns.
(8) Application of Moneys Received upon Sale. Any moneys
collected by the Trustee upon any sale made either under the power of
sale given by this Indenture or under judgment or decree in any
judicial proceedings for foreclosure or otherwise for the enforcement
of this Indenture, shall be applied as provided in Section 8.12.
SECTION 1.025. Judicial Proceedings Instituted by Trustee
[ (a) Trustee May Bring Suit. If there shall be a failure to
make payment of the principal of any Security at its Stated Maturity or upon
declaration of acceleration, call for redemption or otherwise, or of any Sinking
Fund payment when due and payable by the terms hereof or of such Security, or if
there shall be a failure to pay the premium, if any, or interest on any Security
when the same becomes due and payable, then the Trustee, if any such failure
shall continue for 15 days, in its own name, and as trustee of an express trust,
shall be entitled, and empowered subject to the proviso to the first paragraph
of Section 8.02 to institute any suits, actions or proceedings at law, in equity
or otherwise, for the collection of the sums so due and unpaid on the
Securities, and may prosecute any such claim or proceeding to judgment or final
decree, and may enforce any such judgment or final decree and collect the moneys
adjudged or decreed to be payable in any manner provided by law, whether before
or after or during the pendency of any proceedings for the enforcement of the
Lien of this Indenture, or of any of the Trustee's rights or the rights of the
Securityholders under this Indenture, and such power of the Trustee shall not be
affected by any sale hereunder or by the exercise of any other right, power or
remedy for the enforcement of the provisions of this Indenture or for the
foreclosure of the lien hereof.
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(b) Trustee May Recover Unpaid Indebtedness after Sale of
Pledged Property. In the case of a sale of the Pledged Property and of the
application of the proceeds of such sale to the payment of the indebtedness
secured by this Indenture, the Trustee in its own name, and as trustee of an
express trust, shall be entitled and empowered, by any appropriate means, legal,
equitable or otherwise, to enforce payment of, and to receive all amounts then
remaining due and unpaid upon, all or any of the Securities, for the benefit of
the Holders thereof, and upon any other portion of the indebtedness remaining
unpaid, with interest at the rates specified in the respective Securities on the
overdue principal of and premium, if any, and (to the extent that payment of
such interest is legally enforceable) on the overdue installments of interest.
(c) Recovery of Judgment Does Not Affect Lien of this
Indenture or Other Rights. No recovery of any such judgment or final decree by
the Trustee and no levy of any execution under any such judgment upon any of the
Pledged Property, or upon any other property, shall in any manner or to any
extent affect the Lien of this Indenture upon any of the Pledged Property, or
any rights, powers or remedies of the Trustee, or any liens, rights, powers or
remedies of the Securityholders, but all such liens, rights, powers and remedies
shall continue unimpaired as before.
(d) Trustee May File Proofs of Claim; Appointment of Trustee
as Attorney-in-Fact in Judicial Proceedings. The Trustee in its own name, or as
trustee of an express trust, or as attorney-in-fact for the Securityholders, or
in any one or more of such capacities (irrespective of whether the principal of
the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand for the payment of overdue principal, premium (if any) or interest),
shall be entitled and empowered to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee and of the Securityholders (whether such claims be based upon the
provisions of the Securities or of this Indenture) allowed in any equity,
receivership, insolvency, bankruptcy, liquidation, readjustment, reorganization
or any other judicial proceedings relative to the Company or any obligor on the
Securities (within the meaning of the TIA), the creditors of the Company or any
such obligor, the Pledged Property or any other property of the Company or any
such obligor and any receiver, assignee, trustee, liquidator, sequestrator (or
other similar official) in any such judicial proceeding is hereby authorized by
each Securityholder to make such payments to the Trustee and in the event that
the Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel. The Trustee is hereby irrevocably appointed (and the successive
respective Holders of the Securities, by taking and holding the same, shall be
conclusively deemed to have so appointed the Trustee) the true and lawful
attorney-in-fact of the respective Securityholders, with authority to (i) make
and file in the respective names of the Securityholders (subject to deduction
from any such claims of the amounts of any claims filed by any of the
Securityholders themselves), any claim, proof of claim or amendment thereof,
debt, proof of debt or amendment thereof, petition or other document in any such
proceedings and to receive payment of any amounts distributable on account
thereof, (ii) execute any such other papers and documents and to do and perform
any and all such acts and things for and on behalf of such Securityholders, as
may be necessary or advisable in order to have the respective claims of the
Trustee and of the Securityholders against the Company or any such obligor, the
Pledged Property or any other property of the Company or any such obligor
allowed in any such proceeding and (iii) receive payment of or on account of
such claims and debt; provided, however, that nothing contained in this
Indenture shall be deemed to give to the Trustee any right to accept or consent
to any plan of reorganization or otherwise by action of any character in any
such proceeding to waive or change in any way any right of any Securityholder.
Any moneys collected by the Trustee under this Section shall be applied as
provided in Section 8.12.
(e) Trustee Need Not Have Possession of Securities. All rights
of action and of asserting claims under this Indenture or under any of the
Securities enforceable by the Trustee may be enforced by the Trustee without
possession of any of such Securities or the production thereof at the trial or
other proceedings relative thereto.
(f) Suit To Be Brought for Ratable Benefit of Securityholders.
Any suit, action or other proceeding at law, in equity or otherwise which shall
be instituted by the Trustee under any of the provisions of this Indenture shall
be for the equal, ratable and common benefit of all the Securityholders, subject
to the provisions of this Indenture.
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<PAGE>
(g) Trustee May Be Restored to Former Position and Rights in
Certain Circumstances. In case the Trustee shall have proceeded to enforce any
right under this Indenture by suit, foreclosure or otherwise and such
proceedings shall have been discontinued or abandoned for any reason, or shall
have been determined adversely to the Trustee, then in every such case, PNM, the
Company and the Trustee shall be restored without further act to their
respective former positions and rights hereunder, and all rights, remedies and
powers of the Trustee shall continue as though no such proceedings had been
taken.
SECTION 1.026. Securityholders May Demand Enforcement of
Rights by Trustee.
If an Event of Default shall have occurred and shall be
continuing, the Trustee shall, upon the written request of the Holders of a
majority in aggregate principal amount of the Securities then Outstanding and
upon the offering of indemnity as provided in Section 9.03(e), but subject in
all cases to the provisions of Section 3.03 and the proviso to the first
paragraph of Section 8.02, proceed to institute one or more suits, actions or
proceedings at law, in equity or otherwise, or take any other appropriate
remedy, to enforce payment of the principal of, or premium, if any, or interest
on, the Securities or Pledged Lessor Notes or to foreclose this Indenture or to
sell the Pledged Property under a judgment or decree of a court or courts of
competent jurisdiction or under the power of sale herein granted, or take such
other appropriate legal, equitable or other remedy, as the Trustee, being
advised by counsel, shall deem most effectual to protect and enforce any of the
rights or powers of the Trustee or the Securityholders, or, in case such
Securityholders shall have requested a specific method of enforcement permitted
hereunder, in the manner requested, provided that such action shall not be
otherwise than in accordance with law and the provisions of this Indenture, and
the Trustee, subject to such indemnity provisions, shall have the right to
decline to follow any such request if the Trustee in good faith shall determine
that the suit, proceeding or exercise of the remedy so requested would involve
the Trustee in personal liability or expense.
SECTION 1.027. Control by Securityholders.
The Holders of a majority in principal amount of the
Outstanding Securities shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 1.028. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of
the Outstanding Securities may on behalf of the Holders of all the Securities
waive any past default hereunder and its consequences, except that only the
Holders of all Securities affected thereby may waive a default
(1) in the payment of the principal of (or premium, if any) or
interest on such Securities,
or
(2) in respect of a covenant or provision hereof which under
Article Eleven cannot be modified or amended without the consent of the
Holder of each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and
any 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 default or impair any right consequent thereon.
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<PAGE>
SECTION 1.029. Securityholder May Not Bring Suit Except under
Certain Conditions.
A Securityholder shall not have the right to institute any
suit, action or proceeding at law or in equity or otherwise for the foreclosure
of this Indenture, for the appointment of a receiver or for the enforcement of
any other remedy under or upon this Indenture, unless:
(1) such Securityholder previously shall have given written
notice to the Trustee of a continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal amount
of the Securities then Outstanding shall have requested the Trustee in
writing to institute such action, suit or proceeding and shall have
offered to the Trustee indemnity as provided in Section 9.03(e);
(3) the Trustee shall have refused or neglected to institute
any such action, suit or proceeding for 60 days after receipt of such
notice, request and offer of indemnity; and
(4) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of outstanding Securities.
It is understood and intended that no one or more of the
Securityholders shall have any right in any manner whatever hereunder or under
the Securities to (i) surrender, impair, waive, affect, disturb or prejudice the
Lien of this Indenture on any property subject thereto or the rights of the
Holders of any other Securities, (ii) obtain or seek to obtain priority or
preference over any other such Holder or (iii) enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all the Securityholders subject to the provisions of this
Indenture.
SECTION 1.10. Undertaking To Pay Court Costs.
All parties to this Indenture, and each Securityholder by his
acceptance of a Security, shall be deemed to have agreed that any court may in
its discretion require, in any suit, action or proceeding for the enforcement of
any right or remedy under this Indenture, or in any suit, action or proceeding
against the Trustee for any action taken or omitted by it as Trustee hereunder,
the filing by any party litigant in such suit, action or proceeding of an
undertaking to pay the costs of such suit, action or proceeding, and that such
court may, in its discretion, assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, action or proceeding,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; provided, however, that the provisions of this Section
shall not apply to (a) any suit, action or proceeding instituted by the Trustee,
(b) any suit, action or proceeding instituted by any Securityholder or group of
Securityholders holding in the aggregate more than 10% in aggregate principal
amount of the Securities then Outstanding or (c) any suit, action or proceeding
instituted by any Securityholder for the enforcement of the payment of the
principal of, or premium, if any, or interest on, any of the Securities, on or
after the respective due dates expressed therein.
SECTION 1.11. Right of Securityholders To Receive Payment Not
To Be Impaired.
Anything in this Indenture to the contrary notwithstanding,
the right of any Holder of any Security to receive payment of the principal of,
and premium, if any, and interest on, such Security, on or after the respective
due dates expressed in such Security (or, in case of redemption, on the
Redemption Date fixed for such Security), or to institute suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 1.12. Application of Moneys Collected by Trustee.
Any moneys collected or to be applied by the Trustee pursuant
to this Article, together with any other moneys which may then be held by the
Trustee under any of the provisions of this Indenture as security for the
Securities
#30122041.1
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<PAGE>
(other than moneys at the time required to be held for the payment of specific
Securities at their Stated Maturities or at a time fixed for the redemption
thereof) shall be applied in the following order from time to time, on the date
or dates fixed by the Trustee and, in the case of a distribution of such moneys
on account of principal, premium, if any, or interest, upon presentation of the
several Outstanding Securities, and stamping thereon of payment, if only
partially paid, and upon surrender thereof, if fully paid:
FIRST: to the payment of all taxes, assessments or liens prior
to the Lien of this Indenture, except those subject to which any sale
shall have been made, all reasonable costs and expenses of collection,
including the reasonable costs and expenses of handling the Pledged
Property and of any sale thereof pursuant to the provisions of this
Article and of the enforcement of any remedies hereunder or under any
Lease Indenture, and to the payment of all amounts due the Trustee or
any predecessor Trustee under Section 9.07, or through the Trustee by
any Securityholder or Securityholders;
SECOND: in case the principal of the Securities or any of them
shall not have become due, to the payment of any interest in default,
in the order of the maturity of the installments of such interest, with
interest at the rates specified in the respective Securities in respect
of overdue payments (to the extent that payment of such interest shall
be legally enforceable) on the overdue installments thereof;
THIRD: in case the principal of any of but not all the
Securities shall have become due at their Stated Maturities, upon
redemption or otherwise, first to the payment of accrued interest in
the order of the maturity of the installments thereof with interest at
the respective rates specified in the Securities in respect of payments
on overdue principal, premium, if any, and (to the extent that payment
of such interest shall be legally enforceable) on overdue installments
of interest, and next to the payment of the principal of all Securities
then due;
FOURTH: in case the principal of all the Securities shall have
become due at their Stated Maturities, by declaration, upon redemption
or otherwise, to the payment of the whole amount then due and unpaid
upon the Securities then Outstanding for principal, premium, if any,
and interest, together with interest at the respective rates specified
in the Securities in respect of overdue payments on principal, premium,
if any, and (to the extent that payment of such interest shall be
legally enforceable) on overdue installments of interest, and, in case
such proceeds shall be insufficient to pay in full the whole amount so
due and unpaid, then to the payment of such principal, premium, if any,
and interest ratably, without discrimination or preference; and
FIFTH: in case the principal of all the Securities shall have
become due at their Stated Maturities, by declaration, upon redemption
or otherwise, and all of such Securities shall have been fully paid,
together with all interest (including any interest on overdue payments)
and premium, if any, thereon, any surplus then remaining shall be paid
to the Company, its successors or assigns, or to whomsoever may be
lawfully entitled to receive the same, or as a court of competent
jurisdiction may direct;
provided, however, that all payments to be made pursuant to this Section shall
be made ratably to the persons entitled thereto, without discrimination or
preference.
SECTION 1.13. Securities Held by Certain Persons Not To Share
in Distribution.
Any Securities known to the Trustee to be owned or held by, or
for the account or benefit of, PNM, the Company or any Affiliate of any thereof
shall not be entitled to share in any payment or distribution provided for in
this Article until all Securities held by other Persons have been paid in full.
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SECTION 1.14. Waiver of Appraisement, Valuation, Stay, Right
to Marshalling.
To the extent it may lawfully do so, each of PNM and the
Company, for itself and for any Person who may claim through or under it,
hereby:
(1) agrees that neither it nor any such Person will set up,
plead, claim or in any manner whatsoever take advantage of, any
appraisement, valuation, stay, extension or redemption laws, now or
hereafter in force in any jurisdiction, which may delay, prevent or
otherwise hinder (i) the performance or enforcement or foreclosure of
this Indenture, (ii) the sale of any of the Pledged Property, or (iii)
the putting of the purchaser or purchasers thereof into possession of
such property immediately after the sale thereof;
(2) waives all benefit or advantage of any such laws;
(3) waives and releases all rights to have the Pledged
Property marshalled upon any foreclosure, sale or other enforcement of
this Indenture; and
(4) consents and agrees that all the Pledged Property may at
any such sale be sold by the Trustee as an entirety.
SECTION 1.15.Remedies Cumulative; Delay or Omission Not a Waiver.
Every remedy given hereunder to the Trustee or to any of the
Securityholders shall not be exclusive of any other remedy or remedies, and
every such remedy shall be cumulative and in addition to every other remedy
given hereunder or now or hereafter given by statute, law, equity or otherwise.
The Trustee may exercise all or any of the powers, rights or remedies given to
it hereunder or which may now or hereafter be given by statute, law or equity or
otherwise, in its absolute discretion. No course of dealing between PNM or the
Company and the Trustee or the Securityholders or any delay or omission of the
Trustee or of any Securityholder to exercise any right, remedy or power accruing
upon any Event of Default shall impair any such right, remedy or power or shall
be construed to be a waiver of any such Event of Default or of any right of the
Trustee or of the Securityholders or acquiescence therein, and, subject to the
provisions of Section 8.07, every right, remedy and power given by this Article
to the Trustee or to the Securityholders may be exercised from time to time and
as often as may be deemed expedient by the Trustee or by the Securityholders.
ARTICLE II.
THE TRUSTEE
SECTION 1.001. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions
which by any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture.
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(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the
Outstanding Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture; and
(4) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(d) Whether or not herein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 1.002. Notice of Defaults.
In addition to its obligation to give notice to
Securityholders as provided in Section 3.03, as promptly as practicable after,
and in any event within 90 days after, the occurrence of any default hereunder,
the Trustee shall transmit by mail to all Securityholders, as their names and
addresses appear in the Security Register, notice of such default hereunder
known to the Trustee, unless such default shall have been cured or waived;
provided, however, that, except in the case of a default in the payment of the
principal of (or premium, if any) or interest on any Security or in the payment
of any Sinking Fund installment, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee or
a trust committee of directors and/or Responsible Officers of the Trustee in
good faith determine that the withholding of such notice is in the interests of
the Securityholders; and provided, further, that in the case of any default of
the character specified in Section 8.01(4) no such notice to Securityholders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default.
SECTION 1.003. Certain Rights of Trustee.
Except as otherwise provided in Section 9.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting in reliance upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(b) any request or direction of PNM or the Company mentioned
herein shall be sufficiently evidenced by a PNM or Company Request or Order,
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in the case of a request or direction of PNM, the Company, as the case may be
and any resolution of the Board of Directors of PNM or the Company may be
sufficiently evidenced by a Board Resolution of PNM or the Company, as the case
may be;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate of PNM or the Company;
(d) the Trustee may consult with counsel and the advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Securityholders pursuant to this Indenture, unless such
Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of PNM or the Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 1.004. Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities, except
the certificates of authentication, shall not be taken as the statements of the
Trustee, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to the validity or sufficiency of this
Indenture, the Pledged Property or the Securities, except that the Trustee
hereby represents and warrants that this Indenture has been executed and
delivered by one of its officers who is duly authorized to execute and deliver
such document on its behalf. The Trustee shall not be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 1.005. May Hold Securities.
The Trustee, any Paying Agent, Security Registrar or any other
agent of PNM or the Company, in its individual or any other capacity, may become
the owner or pledgee of Securities and, subject to Sections 9.08 and 9.13, may
otherwise deal with PNM and the Company with the same rights it would have if it
were not Trustee, Paying Agent, Security Registrar or such other agent.
SECTION 1.006. Funds May Be Held by Trustee or Paying Agent;
Investments.
(a) Subject to Subsection (b) of this Section 9.06, any monies
held by the Trustee or the Paying Agent hereunder as part of the Pledged
Property may, until paid out by the Trustee or the Paying Agent as herein
provided, be carried by the Trustee or the Paying Agent on deposit with itself,
and neither the Trustee nor the Paying Agent shall have any liability for
interest upon any such monies.
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[(b) At any time and from time to time prior to payment in
full of any amounts to be paid by the Trustee pursuant to Section 2.15(b) in
respect of any series of Securities (or prior to payment in full of any amount
required to be paid by the Trustee in respect of such series of Securities
pursuant to Section 6.07), if at the time no Event of Default has occurred and
is continuing, the Trustee shall, on Company Request, invest and reinvest in
Permitted Investments as specified in such Company Request any monies from the
sale of the Securities of such series at the time on deposit with the Trustee as
part of the Pledged Property, together with any income and gains from the
investment and reinvestment thereof, and sell any Permitted Investments, in
either case, at such prices, including accrued interest, as are set forth in
such Company Request, and such Permitted Investments shall be held by the
Trustee until so sold in trust as part of the Pledged Property. The Trustee
shall, on Company Request, sell such Permitted Investments as may be specified
therein, and the Trustee shall, without Company Request, in the event monies are
required for payment of any amounts to be paid by the Trustee pursuant to
Section 2.15(b) in respect of any series of Securities and for any Stated
Maturity of any installment of interest on any series of Securities becoming due
and payable prior to the thirtieth day following the Termination Date applicable
to such series, sell such Permitted Investments as are required to restore to
cash as part of the Pledged Property such amounts as are needed for any such
payment. The Trustee shall not be responsible for any losses on any investments
or sales of Permitted Investments made pursuant to the procedure specified in
this subsection (b).]5
SECTION 1.007. Compensation and Reimbursement.
The Company agrees
(1) to pay, or cause to be paid, to each of the Trustee and
any Authorized Agent from time to time reasonable compensation for all
services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(2) to reimburse, or cause to be reimbursed, each of the
Trustee and any Authorized Agent upon its request for all expenses,
disbursements and advances incurred or made by it in accordance with
any provision of this Indenture (including the compensation and the
expenses and disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its own
negligence, willful misconduct or bad faith; and
(3) to indemnify, or cause to be indemnified, each of the
Trustee, any predecessor Trustee and any Authorized Agent for, and to
hold it harmless against, any loss, liability or expense incurred
without negligence, willful misconduct or bad faith on its part,
arising out of or in connection with the acceptance or administration
of this trust or the performance of its duties hereunder, including the
costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or
duties hereunder.
As security for the performance of the obligations of the
Company under this Section the Trustee shall have a lien prior to the Securities
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the payment of principal of (and premium, if any) or
interest on particular Securities
SECTION 1.008. Disqualification; Conflicting Interests.
(a) If the Trustee has or shall acquire any conflicting
interest, as defined in this Section, it shall, within 90 days after
ascertaining that it has such conflicting interest, either eliminate such
conflicting interest or resign in the manner and with the effect hereinafter
specified in this Article.
- --------
5 This paragraph was replaced in its entirety pursuant to Section 3.01 of
the 1986B Bond Supplemental Indenture. See p. 9 of Exhibit C for the replacement
text.
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(b) In the event that the Trustee shall fail to comply with
the provisions of Subsection (a) of this Section the Trustee shall, within 10
days after the expiration of such 90-day period, transmit by mail to all
Securityholders, as their names and addresses appear in the Security Register,
notice of such failure.
(c) For the purposes of this Section, the Trustee shall be
deemed to have a conflicting interest if
(1) the Trustee is trustee under another Indenture under which
any other securities, or certificates of interest or participation in
any other securities, of any obligor on the Securities are outstanding,
unless (A) the Securities are collateral trust bonds under which the
only Collateral consists of securities issued under such other
indenture, or (B) such other indenture is a collateral trust indenture
under which the only collateral consists of Securities issued under
this Indenture, provided that there shall be excluded from the
operation of this paragraph any indenture or indentures under which
other securities, or certificates of interest or participation in other
securities, of such obligor are outstanding, if such obligor shall have
sustained the burden of proving, on application to the Commission and
after opportunity for hearing thereon, that trusteeship under this
Indenture and such other indenture or indentures is not so likely to
involve a material conflict of interest as to make it necessary in the
public interest or for the protection of investors to disqualify the
Trustee from acting as such under one of such indentures;
(2) the Trustee or any of its directors or executive officers
is an obligor upon the Securities or an underwriter for such obligor;
(3) the Trustee directly or indirectly controls or is directly
or indirectly controlled by or is under direct or indirect common
control with any obligor on the Securities or an underwriter for such
obligor;
(4) the Trustee or any of its directors or executive officers
is a director, officer, partner, employee, appointee or representative
of any obligor on the Securities, or of an underwriter (other than the
Trustee itself) for such obligor who is currently engaged in the
business of underwriting, except that (i) one individual may be a
director or an executive officer, or both, of the Trustee and a
director or an executive officer, or both, of an obligor on the
Securities but may not be at the same time an executive officer of both
the Trustee and such obligor; (ii) if and so long as the number of
directors of the Trustee in office is more than nine, one additional
individual may be director or an executive officer, or both, of the
Trustee and a director of an obligor on the Securities; and (iii) the
Trustee may be designated by an obligor on the Securities or by any
underwriter for such obligor to act in the capacity of transfer agent,
registrar, custodian, paying agent, fiscal agent, escrow agent, or
depositary, or in any other similar capacity, or, subject to the
provisions of paragraph (1) of this Subsection, to act as trustee,
whether under an indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by any director, partner, or executive
officer thereof, or 20% or more of such voting securities is
beneficially owned, collectively, by any two or more of such persons;
or 10% or more of the voting securities of the Trustee is beneficially
owned either by an underwriter for any obligor on the Securities or by
any director, partner or executive officer thereof, or is beneficially
owned collectively by any two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined), (i) 5% or more of the voting
securities, or 10% or more of any other class of security, of any
obligor on the Securities not including the Securities issued under
this Indenture and securities issued under any other indenture under
which the Trustee is also trustee, or (ii) 10% or more of any class of
security of an underwriter for any obligor on the Securities;
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(7) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined), 5% or more of the voting
securities of any person who, to the knowledge of the Trustee, owns 10%
or more of the voting securities of, or controls directly or indirectly
or is under direct or indirect common control with, any obligor on the
Securities;
(8) the Trustee is the beneficial owner of, or holds
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined), 10% or more of any class of
security of any person who, to the knowledge of the Trustee, owns 50%
or more of the voting securities of any obligor on the Securities; or
(9) the Trustee owns, on May 15 in any calendar year, in the
capacity of executor, administrator, testamentary or inter vivos
trustee, guardian, committee or conservator, or in any other similar
capacity, an aggregate of 25% or more of the voting securities, or of
any class of security, of any person, the beneficial ownership of a
specified percentage of which would have constituted a conflicting
interest under paragraphs (6), (7) or (8) of this Subsection. As to any
such securities of which the Trustee acquired ownership through
becoming executor, administrator, or testamentary trustee of an estate
which included them, the provisions of the preceding sentence shall not
apply, for a period of two years from the date of such acquisition to
the extent that such securities included in such estate do not exceed
25% of such voting securities or 25% of any such class of security.
Promptly after May 15 in each calendar year, the Trustee shall make a
check of its holdings of such securities in any of the above mentioned
capacities as of such May 15. If any obligor upon the Securities fails
to make payment in full of the principal of, or the premium, if any, or
interest on, any of the Securities when and as the same becomes due and
payable, and such failure continues for 30 days thereafter, the Trustee
shall make a prompt check of its holdings of such securities in any of
the above mentioned capacities as of the date of the expiration of such
30 day period, and after such date, notwithstanding the foregoing
provisions of this paragraph, all such securities so held by the
Trustee, with sole or joint control over such securities vested in it,
shall, but only so long as such failure shall continue, be considered
as though beneficially owned by the Trustee for the purposes of
paragraphs (6), (7) and (8) of this Subsection.
The specification of percentages in paragraphs (5) to (9)
inclusive, of this Subsection, shall not be construed as indicating that the
ownership of such percentages of the securities of a person is or is not
necessary or sufficient to constitute direct or indirect control for the
purposes of paragraph (3) or (7) of this Subsection.
For the purposes of paragraphs (6), (7), (8) and (9) of this
Subsection only, (i) the terms "security" and "securities" shall include only
such securities as are generally known as corporate securities, but shall not
include any note or other evidence of indebtedness issued to evidence an
obligation to repay moneys loaned to a person by one or more banks, trust
companies or banking firms, or any certificate of interest or participation in
any such note or evidence or indebtedness; (ii) an obligation shall be deemed to
be "in default" when a default in payment of principal shall have continued for
30 days or more and shall not have been cured; and (iii) the Trustee shall not
be deemed to be the owner or holder of (A) any security which it holds as
collateral security, as trustee or otherwise, for an obligation which is not in
default as defined in clause (ii) above, or (B) any security which it holds as
collateral security under this Indenture, irrespective of any default hereunder,
or (C) any security which it holds as agent for collection, or as custodian,
escrow agent, or depositary, or in any similar representative capacity.
Except as provided in the next preceding paragraph, the word
"security" or "securities" as used in this Indenture shall mean any note, stock,
treasury stock, bond, debenture, evidence of indebtedness, certificate of
interest or participation in any profit sharing agreement, collateral trust
certificate, preorganization certificate or subscription, transferable share,
investment contract, voting trust certificate, certificate of deposit for a
security, fractional undivided interest in oil, gas, or other mineral rights,
or, in general, any interest or instrument commonly known as a "security", or
any certificate of interest or participation in, temporary or interim
certificate for, receipt for, guarantee of, or warrantor right to subscribe to
purchase, any of the foregoing.
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(d) For the purposes of this Section:
(1) The term "underwriter" when used with reference to any
obligor on the Securities means every person who, within three years
prior to the time as of which the determination is made, has purchased
from such obligor with a view to, or has offered or sold for such
obligor in connection with, the distribution of any security of such
obligor outstanding at such time, or has participated or has had a
direct or indirect participation in any such undertaking, or has
participated or has had a participation in the direct or indirect
underwriting of any such undertaking, but such term shall not include a
person whose interest was limited to a commission from an underwriter
or dealer not in excess of the usual and customary distributors' or
sellers' commission.
(2) The term "director" means any director of a corporation,
or any individual performing similar functions with respect to any
organization whether incorporated or incorporated.
(3) The term "person" means an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, an
unincorporated organization, or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only
a trust where the interest or interests of the beneficiary or
beneficiaries are evidenced by a security.
(4) The term "voting security" means any security presently
entitling the owner or holder thereof to vote in the direction or
management of the affairs of a person, or any security issued under or
pursuant to any trust, agreement or arrangement whereby a trustee or
trustees or agent or agents for the owner or holder of such security
are presently entitled to vote in the direction or management of the
affairs of a person.
(5) The term "obligor" means any obligor upon the Securities
within the meaning of TIA.
(6) The term "executive officer" means the president, every
vice president, every trust officer, the cashier, the secretary, and
the treasurer of a corporation, and any individual customarily
performing similar functions with respect to any organization whether
incorporated or unincorporated, but shall not include the chairman of
the board of directors.
(e) The percentages of the voting securities and other
securities specified in this Section shall be calculated in accordance
with the following provisions:
(1) A specified percentage of the voting securities of the
Trustee, any obligor or any other person referred to in this Section
(each of whom is referred to as a "person" in this paragraph) means
such amount of the outstanding voting securities of such person as
entitles the holder or holders thereof to cast such specified
percentage of the aggregate votes which the holders of all the
outstanding voting securities of such person are entitled to cast in
the direction or management of the affairs of such person.
(2) A specified percentage of a class of securities of a
person means such percentage of the aggregate amount of securities of
the class outstanding.
(3) The term "amount", when used in regard to securities,
means the principal amount if relating to evidences of indebtedness,
the number of shares if relating to capital shares and the number of
units if relating to any other kind of Security.
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(4) The term "outstanding" means issued and not held by or for
the account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund
relating to securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund
relating to another class of securities of the issuer, if the
obligation evidenced by such other class of securities is not
in default as to principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as
security for an obligation of the issuer not in default as to
principal or interest or otherwise; and
(iv) securities held in escrow if placed in escrow by
the issuer thereof;
provided, however, that any voting securities of an issuer shall be deemed
outstanding if any person other than the issuer is entitled to exercise the
voting rights thereof.
(5) A security shall be deemed to be of the same class as
another security if both securities confer upon the holder or holders
substantially the same rights and privileges; provided, however, that
in the case of secured evidences of indebtedness, all of which are
issued under a single indenture, differences in the interest rates or
maturity dates of various series thereof shall not be deemed sufficient
to constitute such series different classes; and provided, further,
that, in the case of unsecured evidences of indebtedness, differences
in the interest rates or maturity dates thereof shall not be deemed
sufficient to constitute them securities of different classes, whether
or not they are issued under a single indenture.
SECTION 1.009. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
a corporation organized and doing business under the laws of the United States
of America or of any State, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000, and
subject to supervision or examination by Federal or State authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article.
SECTION 1.10. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee under
Section 9.11.
(b) The Trustee may resign at any time by giving written
notice thereof to PNM and the Company. If an instrument of acceptance by a
successor Trustee shall not have been delivered to PNM, the Company and the
Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in principal amount of the Outstanding Securities,
delivered to the Trustee, PNM and to the Company.
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(d) If at any time:
(i) the Trustee shall fail to comply with Section
9.08(a) after written request therefor by any Lessor or by any
Securityholder who has been a bona fide Holder of a Security
for at least 6 months, or
(ii) the Trustee shall cease to be eligible under
Section 9.09 and shall fail to resign after written request
therefor by any Lessor or by any such Securityholder, or
(iii) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the
Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) PNM, acting after consultation with the Company, may
remove the Trustee by Board Resolution or (ii) subject to Section 8.10, any
Securityholder who has been a bona fide Holder of a Security for at least 6
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, PNM, acting after consultation with the Company, shall promptly
appoint by Board Resolution a successor Trustee. If, within 1 year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities delivered to PNM, the Company and
the retiring Trustee, the successor Trustee so appointed shall, forthwith upon
its acceptance of such appointment, become the successor Trustee and supersede
the successor Trustee appointed by PNM. If no successor Trustee shall have been
so appointed by PNM, acting after consultation with the Company, or by the
Securityholders, and accepted appointment in the manner hereinafter provided,
any Securityholder who has been a bona fide Holder of a Security for at least 6
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Securities as their names and addresses appear in the Security
Register. Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office.
SECTION 1.11. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to PNM, the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on request of
any Lessor, the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring
Trustee, and shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder, subject
nevertheless to its lien, if any, provided for in Section 9.07. Upon request of
any such successor Trustee, PNM and the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
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SECTION 1.12. Merger, Conversion, Consolidation or Succession
to Business.
Any corporation into which the 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 Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be otherwise qualified and eligible
under this Article, without the execution or filing of any paper or any further
act on the part of any of the parties hereto. In case any Securities shall have
been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Securities so authenticated with
the same effect as if such successor Trustee had itself authenticated such
Securities.
SECTION 1.13. Preferential Collection of Claims against any
Obligor.
[(a) Subject to Subsection (b) of this Section, if the
Trustee shall be or shall become a creditor, directly or indirectly, secured or
unsecured, of any obligor on the Securities (as defined in Subsection (c) of
this Section) within 4 months prior to a default, as defined in Subsection (c)
of this Section, or subsequent to such a default, then, unless and until such
default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually, the Holders of the
Securities and the holders of other indenture securities (as defined in
Subsection (c) of this Section):
(i) an amount equal to any and all reductions in the
amount due and owing upon any claim as such creditor in
respect of principal or interest, effected after the beginning
of such 4 month period and valid as against any obligor on the
Securities and its other creditors, except any such reduction
resulting from the receipt or disposition of any property
described in paragraph (ii) of this Subsection, or from the
exercise of any right of set-off which the Trustee could have
exercised if a petition in bankruptcy had been filed by or
against any such obligor upon the date of such default; and
(ii) all property received by the Trustee in respect
of any claim as such creditor, either as security therefor, or
in satisfaction or composition thereof, or otherwise, after
the beginning of such 4 month period, or an amount equal to
the proceeds of any such property, if disposed of, subject,
however, to the rights, if any, of any obligor on the
Securities and its other creditors in such property or such
proceeds.
Nothing herein contained, however, shall affect the right of the Trustee
(A) to retain for its own account (i) payments made
on account of any such claim by any Person (other than an
obligor on the Securities) who is liable thereon, and (ii) the
proceeds of the bona fide sale of any such claim by the
Trustee to a third person, and (iii) distributions made in
cash, securities or other property in respect of claims filed
against such obligor in bankruptcy or receivership or in
proceedings for reorganization pursuant to the Federal
Bankruptcy Act or applicable State law;
(B) to realize, for its own account, upon any
property held by it as security for any such claim, if such
property was so held prior to the beginning of such 4 month
period;
(C) to realize, for its own account, but only to the
extent of the claim hereinafter mentioned, upon any property
held by it as security for any such claim, if such claim was
created after the beginning of such 4 month period and such
property was received as security therefor simultaneously with
the creation thereof,
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and if the Trustee shall sustain the burden of proving that at
the time such property was so received the Trustee had no
reasonable cause to believe that a default as defined in
Subsection (c) of this Section would occur within 4 months; or
(D) to receive payment on any claim referred to in
paragraph (B) or (C), against the release of any property held
as security for such claim as provided in paragraph (B) or
(C), as the case may be, to the extent of the fair value of
such property.
For the purposes of paragraphs (B), (C) and (D), property substituted after the
beginning of such 4 month period for property held as security at the time of
such substitution shall, to the extent of the fair value of the property
released, have the same status as the property released, and, to the extent that
any claim referred to in any of such paragraphs is created in renewal of or in
substitution for or for the purpose of repaying or refunding any pre-existing
claim of the Trustee as such creditor, such claim shall have the same status as
such pre-existing claim.
If the Trustee shall be required to account, the funds and
property held in such special account and the proceeds thereof shall be
apportioned between the Trustee, the Securityholders and the holders of other
indenture securities in such manner that the Trustee, the Securityholders and
the holders of other indenture securities realize, as a result of payments from
such special account and payments of dividends on claims filed against the
obligor on the Securities in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Act or applicable State law,
the same percentage of their respective claims, figured before crediting to the
claim of the Trustee anything on account of the receipt by it from such obligor
of the funds and property in such special account and before crediting to the
respective claims of the Trustee and the Securityholders and the holders of
other indenture securities dividends on claims filed against such obligor in
bankruptcy or receivership or in proceedings for reorganization pursuant to the
Federal Bankruptcy Act or applicable State law, but after crediting thereon
receipts on account of the indebtedness represented by their respective claims
from all sources other than from such dividends and from the funds and property
so held in such special account. As used in this paragraph, with respect to any
claim, the term "dividends" shall include any distribution with respect to such
claim, in bankruptcy or receivership or proceedings for reorganization pursuant
to the Federal Bankruptcy Act or applicable State law, whether such distribution
is made in cash, securities, or other property, but shall not include any such
distribution with respect to the secured portion, if any, of such claim. The
court in which such bankruptcy, receivership or proceedings for reorganization
is pending shall have jurisdiction (i) to apportion between the Trustee and the
Securityholders and the holders of other indenture securities, in accordance
with the provisions of this paragraph, the funds and property held in such
special account and proceeds thereof, or (ii) in lieu of such apportionment, in
whole or in part, to give to the provisions of this paragraph due consideration
in determining the fairness of the distributions to be made to the Trustee and
the Securityholders and the holders of other indenture securities with respect
to their respective claims, in which event it shall not be necessary to
liquidate or to appraise the value of any securities or other property held in
such special account or as security for any such claim, or to make a specific
allocation of such distributions as between the secured and unsecured portions
of such claims, or otherwise to apply the provisions of this paragraph as a
mathematical formula.
Any Trustee which has resigned or been removed after the
beginning of such 4 month period shall be subject to the provisions of this
Subsection as though such resignation or removal had not occurred. If any
Trustee has resigned or been removed prior to the beginning of such 4 month
period, it shall be subject to the provisions of this Subsection if and only if
the following conditions exist:
(i) the receipt of property or reduction of claim, which would
have given rise to the obligation to account if such Trustee had
continued as Trustee, occurred after the beginning of such 4 month
period; and
(ii) such receipt of property or reduction of claim occurred
within 4 months after such resignation or removal.
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(b) There shall be excluded from the operation of Subsection
(a) of this Section a creditor relationship arising from
(1) the ownership or acquisition of securities issued under
any indenture, or any security or securities having a maturity of one
year or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court
of competent jurisdiction, or by this Indenture, for the purpose of
preserving any property which shall at any time be subject to the lien
of this Indenture or of discharging tax liens or other prior liens or
encumbrances thereon, if notice of such advances and of the
circumstances surrounding the making thereof is given to the
Securityholders at the time and in the manner provided in this
Indenture;
(3) disbursements made in the ordinary course of business in
the capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
(4) an indebtedness created as a result of services rendered
or premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction as defined in Subsection (c) of
this Section;
(5) the ownership of stock or of other securities of a
corporation organized under the provisions of Section 25(a) of the
Federal Reserve Act, as amended, which is directly or indirectly a
creditor of PNM; or
(6) the acquisition, ownership, acceptance or negotiation of
any drafts, bills of exchange, acceptances or obligations which fall
within the classification of self-liquidating paper as defined in
Subsection (c) of this Section.
(c) For the purposes of this Section only:
(1) The term "default" means any failure to make payment in
full of the principal of or interest on any of the Securities or upon
the other indenture securities when and as such principal or interest
becomes due and payable.
(2) The term "other indenture securities" means securities
upon which the Person obligated thereunder is an obligor (as defined in
the Trust Indenture Act) outstanding under any other indenture (i)
under which the Trustee is also trustee, (ii) which contains provisions
substantially similar to the provisions of this Section, and (iii)
under which a default exists at the time of the apportionment of the
funds and property held in a special account as provided in Subsection
(a) of this Section.
(3) The term "cash transaction" means any transaction in which
full payment for goods or securities sold is made within 7 days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand.
(4) The term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by any obligor on the Securities for the purpose of financing
the purchase, processing, manufacturing, shipment, storage or sale of
goods, wares or merchandise and which is secured by documents
evidencing title to, possession of or a lien upon, the goods, wares or
merchandise or the receivables or proceeds arising from the sale of the
goods, wares or merchandise previously constituting the security,
provided the security is received by the Trustee simultaneously with
the creation of the creditor relationship with such obligor arising
from the making, drawing, negotiating or incurring of the draft, bill
of exchange, acceptance or obligation.
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(5) The term "obligor" means any obligor upon the Securities
within the meaning of the TIA.
SECTION 1.14. Maintenance of Agencies.
(a) There shall at all times be maintained in the Borough of
Manhattan, the City of New York, an office or agency where Securities may be
presented or surrendered for transfer or exchange or for the registration
thereof, and for payment of principal, premium (if any) and interest and where
notices and demands to or upon the Trustee in respect of the Securities or of
this Indenture may be served. Such office or agency shall be initially at the
Corporate Trust Office of Chemical Bank. Written notice of the location of each
such other office or agency and of any change of location thereof shall be given
to the Company and to the Trustee. In the event that no such office or agency
shall be maintained or no such notice of location or of change of location shall
be given, presentations and demands may be made and notices may be served at the
Corporate Trust Office.
(b) There shall at all times be a Security Registrar and a
Paying Agent hereunder. Each such Authorized Agent shall be a bank or trust
company, shall be a corporation organized and doing business under the laws of
the United States or any State thereof, with a combined capital and surplus of
at least $50,000,000, and shall be authorized under such laws to exercise
corporate trust powers, subject to supervision by Federal or State authorities.
Chemical Bank is hereby appointed as Paying Agent and Security Registrar
hereunder. Each Security Registrar (other than the Trustee) shall furnish to the
Trustee, at stated intervals of not more than 6 months, and at such other times
as the Trustee may request in writing, a copy of the Security Register.
(c) Any Paying Agent (other than the Trustee) from time to
time appointed hereunder shall execute and deliver to the Trustee an instrument
in which said Paying Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent will
(1) hold all sums held by it for the payment of principal of,
and premium (if any) and interest on Securities in trust for the
benefit of the Persons entitled thereto until such sums shall be paid
to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee within five days thereafter notice of any
default by any obligor upon the Securities in the making of any such
payment of principal, premium (if any) or interest; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
Notwithstanding any other provision of this Indenture, any payment required to
be made to or received or held by the Trustee may, to the extent authorized by
written instructions of the Trustee, be made to or received or held by a Paying
Agent in the Borough of Manhattan, the City of New York, for the account of the
Trustee.
(d) Any corporation into which any Authorized Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any Authorized
Agent shall be a party, or any corporation succeeding to the corporate trust
business of any Authorized Agent, shall be the successor of such Authorized
Agent hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or such Authorized Agent or such successor
corporation.
(e) Any Authorized Agent may at any time resign by giving
written notice of resignation to the Trustee, PNM and the Company. The Company
may, and at the request of the Trustee or any Lessor shall, at any time,
terminate the agency of any Authorized Agent by giving written notice of
termination to such Authorized Agent and to the Trustee. Upon the resignation or
termination of an Authorized Agent or in case at any time any such Authorized
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Agent shall cease to be eligible under this Section (when, in either case, no
other Authorized Agent performing the functions of such Authorized Agent shall
have been appointed), the Company shall promptly appoint one or more qualified
successor Authorized Agents approved by the Trustee and each Lessor to perform
the functions of the Authorized Agent which has resigned or whose agency has
been terminated or who shall have ceased to be eligible under this Section. The
Company shall give written notice of any such appointment to all Holders as
their names and addresses appear on the Security Register.
ARTICLE II.
SECURITYHOLDERS' LISTS AND REPORTS BY TRUSTEE AND PNM
SECTION 1.001. PNM to Furnish Trustee Names and Addresses of
Securityholders.
PNM will furnish or cause to be furnished to the Trustee
semiannually, between January 15 and January 30, inclusive, and between July 15
and July 30, inclusive, in each year, and at such other times as the Trustee may
request in writing, within 30 days after receipt by PNM of any such request, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders of Securities, in each case as of a date not more than
15 days prior to the time such list is furnished; provided, however, that so
long as the Trustee is the sole Security Registrar, no such list need be
furnished for so long as a copy of the Security Register is being furnished to
the Trustee pursuant to Section 9.14(b).
SECTION 1.002. Preservation of Information; Communications to
Securityholders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders of Securities
contained in the most recent list furnished to the Trustee as provided in
Section 9.14(b) or Section 10.01, as the case may be, and the names and
addresses of Holders of Securities received by the Trustee in its capacity as
Security Registrar, if so acting. The Trustee may destroy any list furnished to
it as provided in Section 9.14(b) or Section 10.01, as the case may be, upon
receipt of a new list so furnished.
(b) If three or more Holders of Securities (hereinafter
referred to as "applicants") apply in writing to the Trustee, and furnish to the
Trustee reasonable proof that each such applicant has owned a Security for a
period of at least six months preceding the date of such application, and such
application states that the applicants desire to communicate with other Holders
of Securities with respect to their rights under this Indenture or under the
Securities and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee shall,
within 5 Business Days after the receipt of such application, at its election,
either:
(i) afford such applicants access to the information
preserved at the time by the Trustee in accordance with
Section 10.02(a), or
(ii) inform such applicants as to the approximate
number of Holders of Securities whose names and addresses
appear in the information preserved at the time by the Trustee
in accordance with Section 10.02(a), and as to the approximate
cost of mailing to such Securityholders the form of proxy or
other communication, if any, specified in such application.
If the Trustee shall elect to afford such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder whose name and address appear in the
information preserved at the time by the Trustee in accordance with Section
10.02(a), a copy of the form of proxy or other communication which is specified
in such request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment, of the
reasonable expenses of mailing, unless within five days after such tender, the
Trustee shall mail to such applicants and file with the Commission, together
with a copy of the material to be mailed, a written statement to the effect
that, in the opinion of the Trustee, such mailing would be contrary to the best
interests of the Holders of Securities or would be in violation of applicable
law. Such written statement shall specify the basis of such opinions.
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If the Commission, after opportunity for a hearing upon the objections specified
in the written statement so filed, shall enter an order refusing to sustain any
of such objections or if, after the entry of an order sustaining one or more of
such objections, the Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such material to all such
Securityholders with reasonable promptness after the entry of such order and the
renewal of such tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with PNM and the Trustee that neither PNM nor the Trustee shall be
held accountable by reason of the disclosure of any such information as to the
names and addresses of the Holders of Securities in accordance with Section
10.02(b), regardless of the source from which such information was derived, and
that the Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under Section 10.02(b).
SECTION 1.003. Reports by Trustee.
(a) Within 60 days after May 15 in each year, commencing with
1986, the Trustee shall transmit by mail to all Securityholders, as their names
and addresses appear in the Security Register, a brief report dated as of such
May 15 with respect to:
(1) it eligibility under Section 9.09 and its qualifications
under Section 9.08, or in lieu thereof, if to the best of its knowledge
it has continued to be eligible and qualified under said Sections, a
written statement to such effect;
(2) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the making
thereof) made by the Trustee (as such) which remain unpaid on the date
of such report, and for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Securities, on any
property or funds held or collected by it as Trustee, except that the
Trustee shall not be required (but may elect) to report such advances
if such advances so remaining unpaid aggregate not more than 1/2 of 1%
of the principal amount of the Securities Outstanding on the date of
such report;
(3) the amount, interest rate and maturity date of all other
indebtedness owing by an obligor on the Securities within the meaning
of the TIA to the Trustee in its individual capacity, on the date of
such report, with a brief description of any property held as
collateral security therefor, except an indebtedness based upon a
creditor relationship arising in any manner described in Section
9.13(b)(2), (3), (4) or (6);
(4) the property and funds, if any, physically in the
possession of the Trustee as such on the date of such report;
(5) any release, or release and substitution, of property
subject to the lien of this Indenture (and the consideration therefor,
if any) which the Trustee has not previously reported;
(6) any additional issue of Securities which the Trustee has
not previously reported; and
(7) any action taken by the Trustee in the performance of its
duties hereunder which it has not previously reported and which in its
opinion materially affects the Securities, except action in respect of
a default, notice of which has been or is to be withheld by the Trustee
in accordance with Section 9.02.
(b) The Trustee shall transmit by mail to all Securityholders,
as their names and addresses appear in the Security Register, a brief report
with respect to:
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(1) the release, or release and substitution, of property
subject to the Lien of this Indenture (and the consideration therefor,
if any), such report to be transmitted within 90 days of such time; and
(2) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the making
thereof) made by the Trustee (as such) since the date of the last
report transmitted pursuant to Subsection (a) of this Section (or if no
such report has yet been so transmitted, since the date of execution of
this instrument) for the reimbursement of which it claims or may claim
a lien or charge, prior to that of the Securities, on property or funds
held or collected by it as Trustee, and which it has not previously
reported pursuant to this Subsection, except that the Trustee shall not
be required (but may elect) to report such advances if such advances
remaining unpaid at any time aggregate 10% or less of the principal
amount of the Securities Outstanding at such time, such report to be
transmitted within 90 days after such time.
(c) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee with each stock
exchange upon which the Securities are listed, and also with the Commission. PNM
will notify the Trustee when the Securities are listed on any stock exchange.
SECTION 1.004. Reports by PNM.
PNM will
(1) file with the Trustee, within 15 days after PNM is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which PNM may be
required to file with the Commission pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934: or, if PNM is not
required to file information, documents or reports pursuant to either
of said Sections, then it will file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 in respect of a
security listed and registered on a national securities exchange as may
be prescribed from time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with
respect to compliance by PNM with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(3) transmit by mail to all Securityholders, as their names
and addresses appear in the Security Register, within 30 days after the
filing thereof with the Trustee, such summaries of any information,
documents and reports required to be filed by PNM pursuant to
paragraphs (1) and (2) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission.
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ARTICLE I.
SUPPLEMENTAL INDENTURES
SECTION 1.011. Supplemental Indentures Without Consent of
Securityholders.
Without the consent of the Holders of any Securities, PNM,
when authorized by a Board Resolution, the Company and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental hereto
(a "Series Supplemental Indenture" in the case of item 1 below), in form
satisfactory to the Trustee, for any of the following purposes:
(1) to establish the form and terms of Securities of any
series of Securities permitted by Sections 2.01 and 2.03; or
(2) to evidence the succession of another corporation to PNM,
and the assumption by any such successor of the covenants of PNM herein
contained, or to evidence the succession of another corporation to the
Company, and the assumption by any such successor of the covenants of
the Company herein and in the Securities contained; or
(3) to add to the covenants of PNM or the Company, for the
benefit of the Holders of the Securities, or to surrender any right or
power herein conferred upon PNM or the Company; or
(4) to convey, transfer and assign to the Trustee, and to
subject to the Lien of this Indenture, with the same force and effect
as though included in the Granting Clauses hereof, additional Pledged
Lessor Notes or additional properties or assets, and to correct or
amplify the description of any property at any time subject to the Lien
of this Indenture or to assure, convey and confirm unto the Trustee any
property subject or required to be subject to the Lien of this
Indenture; or
(5) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to continue the
qualification of this Indenture (including any supplemental indenture)
under the TIA, or under any similar federal statute hereafter enacted,
and to add to this Indenture such other provisions as may be expressly
permitted by the TIA, excluding, however, the provisions referred to in
Section 316(a)(2) of the TIA as in effect at the date as of which this
instrument was executed or any corresponding provision in any similar
federal statute hereafter enacted; or
(6) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture, provided such action
shall not adversely affect the interest of the Holders of the
Securities.
SECTION 1.012. Supplemental Indenture With Consent of
Securityholders.
With the consent of (i) the Holders of not less than a
majority in principal amount of the Outstanding Securities, by Act of said
Holders delivered to the Company and the Trustee, and (ii) PNM, when authorized
by a Board Resolution, and the Company may and the Trustee, subject to Section
11.03 shall, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner the rights and
obligations of the Holders of the Securities and of PNM and the Company under
this Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, or the dates or circumstances of payment of
premium (if any) on, any Security, or reduce the principal amount
thereof or the interest thereon or any premium payable upon the
redemption thereof, or change
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the place of payment where, or the coin or currency in which, any
Security or the premium (if any) or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such
payment of principal or interest on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption
Date) or such payment of premium (if any) on or after the date such
premium becomes due and payable or change the dates or the amounts of
payments to be made through the operation of the Sinking Fund in
respect of such Securities; or
(2) except with respect to additional series of Securities
issued in accordance with the terms of this Indenture, permit the
creation of any lien prior to or pari passu with the Lien of this
Indenture with respect to any of the Pledged Property, or terminate the
Lien of this Indenture on any Pledged Property (except in each case as
permitted by, and pursuant to, Article Four) or deprive any
Securityholder of the security afforded by the Lien of this Indenture;
or
(3) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture; or
(4) modify any of the provisions of this Section or Section
8.08[9]6, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Security affected thereby.
Upon receipt by the Trustee of Board Resolutions of PNM and
the Company and such other documentation as the Trustee may reasonably require
and upon the filing with the Trustee of evidence of the Act of said Holders, the
Trustee shall join in the execution of such supplemental indenture or other
instrument, as the case may be, subject to the provisions of Sections 11.03 and
11.04.
It shall not be necessary for any Act of Securityholders under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
SECTION 1.013. Documents Affecting Immunity or Indemnity.
If in the opinion of the Company or the Trustee any document
required to be executed by it pursuant to the terms of Section 11.02 affects any
interest, right, duty, immunity or indemnity in favor of the Company or the
Trustee under this Indenture or any of the Participation Agreements, the Company
or the Trustee, as the case may be, may in its discretion decline to execute
such document.
SECTION 1.014. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 9.01) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture.
SECTION 1.015. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
- --------
6 Paragraph (b) of Article III to the Series 1986A Bond Supplemental
Indenture corrected the defective reference to Section 8.09. See Exhibit B.
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SECTION 1.016. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the TIA as then in effect.
SECTION 1.017. Reference in Securities to Supplemental
Indentures.
Securities authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by any Lessor or the Company, bear a notation in form approved by such Lessor,
the Company and the Trustee as to any matter provided for in such supplemental
indenture; and, in such case, suitable notation may be made upon Outstanding
Securities after proper presentation and demand. If any Lessor or the Company
shall so determine, new Securities so modified as to conform, in the opinion of
such Lessor, the Company and the Trustee, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities.
ARTICLE II.
DEFEASANCE
SECTION 1.021. Payment of Indebtedness; Satisfaction and
Discharge of this Indenture.
This Indenture shall cease to be of further effect (except as
to any rights of registration of transfer or exchange of Securities herein
expressly provided for and the rights of the Trustee, any predecessor Trustee
and any Authorized Agent under Section 9.07), and the Trustee, on demand and at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been destroyed, lost or
stolen and which have been replaced or redeemed as provided in Section
2.09 and (ii) Securities for the payment of which money held in trust
hereunder has been paid to the Company and discharged from such trust,
as provided in Section 5.03) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable; or
(ii) will become due and payable at their Stated
Maturity of principal within one year; or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name and at the
expense of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee in trust
(subject to Section 9.06 hereof) for the purpose of paying and
discharging the entire indebtedness on such Securities not
theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation, an amount sufficient to discharge
such indebtedness, including principal, premium (if any) and
interest to the date of such deposit (in the case of
Securities which have become due and payable), or to the
Stated Maturity of principal or Redemption Date, as the case
may be;
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(2) All other sums then due and payable hereunder have been
paid; and
(3) PNM or the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
SECTION 1.022. Application of Deposited Money.
All money deposited with the Trustee pursuant to Section 12.01
shall be held in trust and applied by it, in accordance with the provisions of
the Securities and this Indenture, to the payment to the Persons entitled
thereto of the principal, premium (if any), and interest for the payment of
which such money has been deposited with the Trustee.
ARTICLE III.
RELEASE OF FUNDS BY THE TRUSTEE
FOR PAYMENT OF THE PLEDGED LESSOR
NOTES AND RELEASE AND SUBSTITUTION OF PLEDGED PROPERTY
SECTION 1.031. Conditions Precedent to Release of Funds by the
Trustee for Payment of the Pledged Lessor Notes.
The obligation of the Trustee to make payments to the Lessors
pursuant to Section 2.15(b) hereof is subject to the receipt by the Trustee of
the following:
(a) an executed counterpart of a supplemental indenture
appropriate to subject to the Lien of this Indenture the related Pledged Lessor
Notes;
(b) the documents, opinions and certificates specified in the
provision to Section 2.04;
(c) a written notice of the Company, dated as of the closing
date under the applicable Participation Agreements (the Closing Date), of the
Closing Date;
(d) a certificate of each Lessor dated as of the Closing Date
under the related Participation Agreement (i) specifying the principal amount of
the Pledged Lessor Note to be issued thereby and (ii) stating that (A) such
Lessor has received the amount of the Equity Investor's investment pursuant to
applicable provisions of such Participation Agreement and that such amount is
available for use by such Lessor pursuant to applicable provisions of such
Participation Agreement upon receipt of the amount to be paid by the Trustee
with respect to such Pledged Lessor Note pursuant to Section 2.15(b) hereof; (B)
to the best knowledge of such Lessor no event has occurred and is continuing
which constitutes an Indenture Event of Default, or would constitute an
Indenture Event of Default after notice or lapse of time or both under the
related Lease Indenture and (C) the Pledged Lessor Note of such Lessor has been
duly authorized, executed and delivered by such Lessor and is a valid and
binding obligation of such Lessor; and
(e) such other documents and evidence with respect to the
Lessors and the Company as the Trustee may reasonably request.
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ARTICLE IV.
SUNDRY PROVISIONS
SECTION 1.041. Execution in Counterparts.
This instrument may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
FIRST PV FUNDING CORPORATION
By
------------------------
President
Attest:
- ---------------------------------
Assistant Secretary
PUBLIC SERVICE COMPANY OF NEW MEXICO
By
--------------------------------
Senior Vice President
and Chief Financial Officer
Attest:
- --------------------------------
Assistant Secretary
CHEMICAL BANK
By
-------------------------------
Vice President
Attest:
- --------------------------------
Assistant Secretary
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EXHIBIT A
TO
COLLATERAL TRUST
INDENTURE
REQUIREMENTS FOR PLEDGED LESSOR
NOTES AND LEASE INDENTURES
The Pledged Lessor Notes and the Lease Indentures relating
to any series of Securities shall contain the provisions summarized below or
other provisions substantially as protective or more protective of the interests
of Holders of Outstanding Securities. Notwithstanding the foregoing, (i) the
Principal Instruments in connection with the initial series of Securities issued
under this Indenture shall be deemed to satisfy all criteria set forth in this
Exhibit A and (ii) the Principal Instruments in connection with any subsequent
series of Securities, if substantially similar in form and substance to the
Principal Instruments in connection with such initial series of Securities,
shall also be deemed to satisfy all criteria set forth in this Exhibit A.
I. Each Pledged Lessor Note will:
(i) be duly issued pursuant to, and be secured by,
the related Lease Indenture;
(ii) provide for the payment to the registered holder
thereof, not later than when due, of amounts at least equal to
that portion of all principal of and premium, if any, and
interest on the series of Securities issued in connection with
and relating to the pledge thereof under the Indenture, such
payment to be without defenses or set-offs and otherwise
unconditional;
(iii) if such Pledged Lessor Note is the initial
series issued under the related Lease Indenture, the principal
amount thereof shall not exceed an amount equal to 90% of sum
of the aggregate purchase price of the property being
purchased with the proceeds of the issuance and sale of such
Lessor Note; and (B) if such Pledged Lessor Note is of an
additional series issued under the related Lease Indenture,
the sum of the principal amount thereof and the principal
amount of Pledged Lessor Notes theretofore issued under such
Lease Indenture shall not exceed an amount equal to 90% of the
sum of (1) the aggregate purchase price of property being
purchased with the proceeds of the issuance and sale of such
Lessor Note and (2) the aggregate purchase price of the
property purchased with the proceeds of the issuance and sale
of each Pledged Lessor Note theretofore issued; and
(iv) provide that no Change to the Pledged Lessor
Note may be made without the consent of the holder thereof.
II. Each Lease Indenture will:
(i) assign to the Lease Indenture Trustee obligations
under the related Lease to which the Owner Trustee then or
thereafter is entitled at least sufficient to pay the
principal of, premium, if any, and interest on the related
Pledged Lessor
#30122041.1
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Note; and
(ii) contain provisions no less protective of the
interests of Holders of Securities than the following
provisions of the Lease Indentures in connection with the
initial series of Securities: Article II, Sections 3.4, 3.5,
3.6, 3.8, 3.11, Article V, Article VI and Article VII.
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<PAGE>
TABLE OF CONTENTS
Page
RECITALS..................................................................... 1
GRANTING CLAUSES............................................................ 1
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION........ 2
SECTION 1.01. Definitions.................................................... 2
SECTION 1.02. Compliance Certificates and Opinions......................... 7
SECTION 1.03. Form of Documents Delivered to Trustee....................... 8
SECTION 1.04. Acts of Holders.............................................. 8
SECTION 1.05. Notices, etc., to Trustee, PNM and Company................... 9
SECTION 1.06. Notices to Holders; Waiver................................... 9
SECTION 1.07. Conflict with Trust Indenture Act............................ 10
SECTION 1.08. Effect of Heading and Table of Contents...................... 10
SECTION 1.09. Successors and Assigns....................................... 10
SECTION 1.10. Separability Clause.......................................... 10
SECTION 1.11. Benefits of Indenture........................................ 10
SECTION 1.12. Governing Law................................................ 10
SECTION 1.13. Legal Holidays............................................... 10
ARTICLE II.
THE SECURITIES............................................... 11
SECTION 2.01. Forms Generally.............................................. 11
SECTION 2.02. Form of Trustee's Authentication............................. 11
SECTION 2.03. Amount Unlimited; Issuable in Series; Limitations
on Issuance................................................ 11
SECTION 2.04. Authentication and Delivery of Securities.................... 12
SECTION 2.05. Form and Denominations....................................... 13
SECTION 2.06. Execution of Securities...................................... 14
SECTION 2.07. Temporary Securities......................................... 14
SECTION 2.08. Registration, Transfer and Exchange.......................... 14
SECTION 2.09. Mutilated, Destroyed, Lost and Stolen Securities............. 15
SECTION 2.10. Payment of Interest; Interest Rights Preserved............... 16
SECTION 2.11. Persons Deemed Owners........................................ 17
SECTION 2.12. Cancellation................................................. 17
SECTION 2.13. Dating of Securities; Authentication......................... 17
SECTION 2.14. Source of Payments; Rights and Liabilities of Lessors
and Equity Investors....................................... 17
SECTION 2.15. Sale of Securities; and Application of Proceeds from
the Sale of Securities..................................... 17
ARTICLE III.
PROVISIONS AS TO PLEDGED PROPERTY............................ 18
SECTION 3.01. Holding of Pledged Securities................................ 18
SECTION 3.02. Disposition of Payments on Pledged Property.................. 18
SECTION 3.03. Exercise of Rights and Powers Under Pledged Lessor
Notes and Lease Indentures................................. 18
SECTION 3.04. Certain Actions in Case of Judicial Proceedings.............. 19
SECTION 3.05. Cash Held by Trustee Treated as a Deposit.................... 19
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TABLE OF CONTENTS, Continued
Page
ARTICLE IV.
WITHDRAWAL OF COLLATERAL..................................... 19
SECTION 4.01. Withdrawal of Collateral..................................... 19
SECTION 4.02. Reassignment of Pledged Lessor Notes upon Payment............ 19
ARTICLE V.
COVENANTS ................................................... 20
SECTION 5.01. Payment of Principal, Premium (if any) and Interest.......... 20
SECTION 5.02. Maintenance of Office or Agency.............................. 20
SECTION 5.03. Money for Security Payments to be Held in Trust.............. 20
SECTION 5.04. Maintenance of Corporate Existence........................... 21
SECTION 5.05. Protection of Pledged Property............................... 21
SECTION 5.06. Opinions as to Pledged Property.............................. 21
SECTION 5.07. Performance of Obligations................................... 22
SECTION 5.08. Negative Covenants........................................... 22
SECTION 5.09. Administration of Principal Instruments...................... 23
SECTION 5.10. Annual Statement as to Compliance............................ 24
ARTICLE VI.
REDEMPTION OF SECURITIES..................................... 25
SECTION 6.01. Notice to Trustee of Redemption.............................. 25
SECTION 6.02. Selection by Trustee of Securities to be Redeemed............ 25
SECTION 6.03. Notice of Redemption......................................... 26
SECTION 6.04. Deposit of Redemption Price.................................. 26
SECTION 6.05. Securities Payable on Redemption Date........................ 26
SECTION 6.06. Securities Redeemed in Part.................................. 27
ARTICLE VII.
SINKING FUNDS ............................................... 27
SECTION 7.01. Sinking Funds for Securities................................. 27
SECTION 7.02. Selection by Trustee of Securities to be Redeemed
Through Operation of Sinking Fund.......................... 28
ARTICLE VIII.
EVENTS OF DEFAULT; REMEDIES.................................. 29
SECTION 8.01. Events of Default. .......................................... 29
SECTION 8.02. Acceleration of Maturity; Rescission and Annulment........... 30
SECTION 8.03. Trustee's Power of Sale of Pledged Property; Notice
Required; Power to Bring Suit.............................. 31
SECTION 8.04. Incidents of Sale of Pledged Property........................ 32
SECTION 8.05. Judicial Proceedings Instituted by Trustee................... 33
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TABLE OF CONTENTS, Continued
Page
SECTION 8.06. Securityholders May Demand Enforcement of Rights
by Trustee................................................. 34
SECTION 8.07. Control by Securityholders................................... 35
SECTION 8.08. Waiver of Past Defaults...................................... 35
SECTION 8.09. Securityholder May Not Bring Suit Except under
Certain Conditions......................................... 35
SECTION 8.10. Undertaking To Pay Court Costs............................... 36
SECTION 8.11. Right of Securityholders To Receive Payment Not
To Be Impaired............................................. 36
SECTION 8.12. Application of Moneys Collected by Trustee................... 36
SECTION 8.13. Securities Held by Certain Persons Not To Share
in Distribution............................................ 37
SECTION 8.14. Waiver of Appraisement, Valuation, Stay, Right
to Marshalling............................................. 37
SECTION 8.15. Remedies Cumulative; Delay or Omission Not a Waiver.......... 38
ARTICLE IX.
THE TRUSTEE ................................................. 38
SECTION 9.01. Certain Duties and Responsibilities. ........................ 38
SECTION 9.02. Notice of Defaults........................................... 39
SECTION 9.03. Certain Rights of Trustee.................................... 39
SECTION 9.04. Not Responsible for Recitals or Issuance of Securities....... 40
SECTION 9.05. May Hold Securities.......................................... 40
SECTION 9.06. Funds May Be Held by Trustee or Paying Agent; Investments.... 40
SECTION 9.07. Compensation and Reimbursement............................... 41
SECTION 9.08. Disqualification; Conflicting Interests...................... 41
SECTION 9.09. Corporate Trustee Required; Eligibility...................... 45
SECTION 9.10. Resignation and Removal; Appointment of Successor............ 46
SECTION 9.11. Acceptance of Appointment by Successor....................... 47
SECTION 9.12. Merger, Conversion, Consolidation or Succession to
Business................................................... 47
SECTION 9.13. Preferential Collection of Claims against any Obligor........ 47
SECTION 9.14. Maintenance of Agencies...................................... 50
ARTICLE X.
SECURITYHOLDERS' LISTS AND REPORTS BY TRUSTEE AND PNM....... 51
SECTION 10.01. PNM to Furnish Trustee Names and Addresses of
Securityholders........................................... 51
SECTION 10.02. Preservation of Information; Communications to
Securityholders........................................... 52
SECTION 10.03. Reports by Trustee.......................................... 53
SECTION 10.04. Reports by PNM.............................................. 54
ARTICLE XI.
SUPPLEMENTAL INDENTURES..................................... 54
SECTION 11.01. Supplemental Indentures Without Consent of
Securityholders........................................... 54
SECTION 11.02. Supplemental Indenture With Consent of
Securityholders........................................... 55
SECTION 11.03. Documents Affecting Immunity or Indemnity................... 56
SECTION 11.04. Execution of Supplemental Indentures........................ 56
SECTION 11.05. Effect of Supplemental Indentures........................... 56
SECTION 11.06. Conformity with Trust Indenture Act......................... 57
SECTION 11.07. Reference in Securities to Supplemental Indentures.......... 57
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Page
----
ARTICLE XII.
DEFEASANCE ................................................. 57
SECTION 12.01. Payment of Indebtedness; Satisfaction and Discharge
of this Indenture......................................... 57
SECTION 12.02. Application of Deposited Money.............................. 58
ARTICLE XIII.
RELEASE OF FUNDS BY THE TRUSTEE
FOR PAYMENT OF THE PLEDGED LESSOR
NOTES AND RELEASE AND SUBSTITUTION OF PLEDGED PROPERTY ..... 58
SECTION 13.01. Conditions Precedent to Release of Funds by the Trustee
for Payment of the Pledged Lessor Notes................... 58
ARTICLE XIV.
SUNDRY PROVISIONS........................................... 59
SECTION 14.01. Execution in Counterparts................................... 59
PARTIES
EXHIBIT A Requirements for Pledged Lessor Notes, Lease Indentures, Leases
and Participation Agreements
EXHIBIT B 1986A Bond Supplemental Indenture
EXHIBIT C 1986B Bond Supplemental Indenture
EXHIBIT D Unit 1 Supplemental Indenture of Pledge
EXHIBIT E Unit 2 Supplemental Indenture of Pledge
EXHIBIT F 1994 Supplemental Indenture (adding to Section 7.01)
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<PAGE>
EXHIBIT B to
Conformed Collateral
Trust Indenture
=============================================
FIRST PV FUNDING CORPORATION,
PUBLIC SERVICE COMPANY OF NEW MEXICO
and
CHEMICAL BANK,
as Trustee
SERIES 1986A BOND SUPPLEMENTAL INDENTURE
Dated as of July 15, 1986
to
COLLATERAL TRUST INDENTURE
dated as of December 16, 1985
Providing for the Issuance of
$253,677,000 Aggregate Amount
of Lease Obligation Bonds Series 1986A
with the Interest Rates and Stated Maturities
Set Forth Herein
=============================================
PALO VERDE NUCLEAR GENERATING STATION
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<PAGE>
SERIES 1986A BOND SUPPLEMENTAL INDENTURE, dated as of July 15,
1986 among FIRST PV FUNDING CORPORATION (the Company), Public Service Company of
New Mexico (PNM) and Chemical Bank, as trustee (the Trustee).
WHEREAS, the Company and PNM have heretofore executed and
delivered to the Trustee an indenture dated as of December 16, 1985 (the
Original Indenture) to provide for the issue from time to time of the Company's
debentures, notes or other evidences of indebtedness to be issued in one or more
series (the Securities);
WHEREAS, Section 2.03 of the Original Indenture provides,
among other things, that PNM, the Company and the Trustee may enter into
indentures supplemental to the Original Indenture for, among other things, the
purpose of establishing the form and terms of Securities of any series as
permitted by Section 2.03 of the Original Indenture;
WHEREAS, PNM and the Company heretofore executed and delivered
a Term Note Supplemental Indenture, dated as of December 31, 1985 (the Series
1985 Term Note Supplemental Indenture), to the Trustee, and the Company issued
thereunder a series of Securities designated "Term Lease Obligation Notes,
Series 1985" in the aggregate principal amount of $250,250,000;
WHEREAS, Section 1.03 of the Series 1985 Term Note
Supplemental Indenture provides, among other things, that the Term Lease
Obligation Notes, Series 1985, shall be redeemed in connection with the issuance
of a series of Securities to effect a refunding of the same;
WHEREAS, PNM and the Company (i) desire the issuance by the
Company of a new series of Securities, to be designated as hereinafter provided,
to effect a refunding of the Term Lease Obligation Notes, Series 1985, and for
other purposes and (ii) have requested the Trustee to enter into this Series
1986A Bond Supplemental Indenture for the purpose, among others, of establishing
the form and terms of the Securities of such series;
WHEREAS, all action on the part of the Company necessary to
authorize the issuance of $253,677,000 principal amount of its Lease Obligation
Bonds Series 1986A (the Bonds) under the Original Indenture and this Series
1986A Bond Supplemental Indenture (said Original Indenture, as supplemented and
amended by the Series 1985 Term Note Supplemental Indenture, and this Series
1986A Bond Supplemental Indenture, being hereinafter called the Indenture) has
been duly taken;
WHEREAS, the Bonds to be issued hereunder are to be
substantially in the form annexed as Schedule 1 hereto;
WHEREAS, Section 11.02 of the Original Indenture provides
that, with the consent of Holders of not less than a majority in principal
amount of the Outstanding Securities and PNM, the Company and the Trustee may
enter into an indenture supplemental to the Original Indenture for the purpose
of changing the rights and obligations of the Holders of Securities and of PNM
and the Company under the Original Indenture;
WHEREAS, the Company desires to make the amendment to Section
8.02 of the Original Indenture set forth in clause (a) of Article Three of this
Series 1986A Bond Supplemental Indenture and the Holders of not less than a
majority in principal amount of the Outstanding Securities, by Act of said
holders, and PNM have given their consent to such amendment;
WHEREAS, Section 11.01 of the Original Indenture provides that
the Company and the Trustee may, without consent of the Holders of any
Securities, enter into an indenture supplemental to the Original Indenture to
cure a defective provision in the Original Indenture provided such action does
not adversely affect the interest of the Holders of the Securities;
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WHEREAS, the Company desires to make the amendment to Section
11.02(4) of the Original Indenture set forth in clause (b) of Article Three of
this Series 1986A Bond Supplemental Indenture; and
WHEREAS, all acts and things necessary to make the Securities
to be issued hereunder, when executed by the Company and authenticated and
delivered by the Trustee as provided in the Original Indenture, the valid,
binding and legal obligations of the Company, and to constitute these presents a
valid and binding supplemental indenture and agreement according to its terms,
have been done and performed, and the execution of this Series 1986A Bond
Supplemental Indenture and the creation and issuance under the Indenture of
$253,677,000 aggregate principal amount of the Bonds have in all respects been
duly authorized, and the Company, in the exercise of legal right and power in it
vested, executes this Series 1986A Bond Supplemental Indenture and proposes to
create, execute, issue and deliver the Bonds:
NOW, THEREFORE, THIS SERIES 1986A BOND SUPPLEMENTAL INDENTURE
WITNESSETH:
That in order to establish the form and terms of and to
authorize the authentication and delivery of the Securities to be issued
hereunder, and in consideration of the acceptance of such Securities by the
holders thereof and of the sum of one dollar duly paid to the Company by the
Trustee at the execution of these presents, the receipt whereof is hereby
acknowledged, the Company and PNM each covenant and agree with the Trustee, for
the equal and proportionate benefit of the respective holders from time to time
of the Securities, as follows:
ARTICLE III.
THE BONDS
SECTION 1.031. Terms of the Bonds.
There is hereby created a series of Securities designated
"Lease Obligation Bonds Series 1986A". Subject to the exceptions referred to in
the Original Indenture, the aggregate principal amount of the Bonds that may be
authenticated and delivered under the Indenture is limited to $253,677,000.
Bonds in the aggregate principal amount of $253,677,000 may forthwith be
executed by the Company and delivered to the Trustee for authentication and
delivery by the Trustee in accordance with the provisions of Section 2.04 of the
Original Indenture in the following amounts for the Stated Maturities of
principal and at the interest rates indicated:
Stated Maturity Interest Principal
of Principal Rate Amount
------------ ---- ------
July 15, 1991 8.300% $25,332,000
July 15, 1996 9.125% $40,532,000
January 15, 2014 10.300% $187,813,000
------------
$253,677,000
The Bonds shall be payable, bear interest and have and be
subject to such other terms as provided in the form of Bond attached as Schedule
1 hereto.
SECTION 1.032. Mandatory Redemption of the Bonds.
(a) Termination of Lease. In the event that there shall occur
under Section 14 of any Lease identified in Schedule 2 hereto a termination of
such Lease, Bonds with a Stated Maturity of principal of January 15, 2014 shall
be redeemed, in part, in proportion to the principal amount of the Pledged
Lessor Notes related to such Lease (the Prepaid Lessor Notes), prepaid in
accordance with their terms and Section 5.2 of the Lease Indenture under which
#30122043.1
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<PAGE>
such Pledged Lessor Notes are issued. Any such redemption shall be on the same
date on which, and shall be made to the extent that, the Prepaid Lessor Notes
are so prepaid.
(b) Selection. In the event of a redemption of Bonds with a
Stated Maturity of principal of January 15, 2014 pursuant to Section 1.02(a) of
this Series 1986A Bond Supplemental Indenture, the Bonds so to be redeemed shall
be selected in accordance with Section 6.02 of the Indenture, but without giving
effect to the first proviso contained in such Section.
(c) Redemption Price. The Redemption Price for any Bond to be
redeemed pursuant to this Section 1.02 shall be 100% of the principal amount
thereof, together with accrued interest to the Redemption Date.
SECTION 1.033. Optional Redemption of Bonds.
The Bonds shall be redeemable prior to maturity at the option
of the Company at the times and redemption prices set forth in the form of Bond
attached as Schedule 1 hereto.
SECTION 1.034. Sinking Fund.
(a) Amounts and Dates. The Bonds shall be redeemed through
operation of a sinking fund. The amount of each Sinking Fund payment (subject to
adjustment as provided in Section 7.01 of the Indenture and paragraph (c) below)
and each Sinking Fund Date applicable to a Stated Maturity of principal of the
Bonds are as set forth below:
Stated Maturity
---------------
Sinking Fund July 15, July 15, January 15,
Date 1991 1996 2014
---------------- -------- -------- ---------
January 15, 1987 $1,515,000
July 15, 1987 1,809,000
January 15, 1988 2,375,000
July 15, 1988 2,475,000
January 15, 1989 2,577,000
July 15, 1989 2,684,000
January 15, 1990 2,795,000
July 15, 1990 2,912,000
January 15, 1991 3,032,000
July 15, 1991 3,158,000
January 15, 1992 $3,289,000
July 15, 1992 3,439,000
January 15, 1993 3,596,000
July 15, 1993 3,759,000
January 15, 1994 3,931,000
July 15, 1994 4,111,000
January 15, 1995 4,298,000
July 15, 1995 4,495,000
January 15, 1996 4,700,000
July 15, 1996 4,914,000
January 15, 1997 $5,138,000
July 15, 1997 5,403,000
January 15, 1998 5,680,000
#30122043.1
iii
<PAGE>
July 15, 1998 4,078,000
January 15, 1999 4,193,000
July 15, 1999 2,584,000
January 15, 2000 4,417,000
Stated Maturity
---------------
Sinking Fund July 15, July 15, January 15,
Date 1991 1996 2014
---------------- -------- -------- ---------
July 15, 2000 $2,726,000
January 15, 2000 4,664,000
July 15, 2001 2,877,000
January 15, 2002 4,924,000
July 15, 2002 3,035,000
January 15, 2003 5,199,000
July 15, 2003 3,203,000
January 15, 2004 5,866,000
July 15, 2004 3,886,000
January 15, 2005 5,287,000
July 15, 2005 4,666,000
January 15, 2006 5,251,000
July 15, 2006 4,666,000
January 15, 2007 5,542,000
July 15, 2007 4,924,000
January 15, 2008 5,849,000
July 15, 2008 5,196,000
January 15, 2009 6,468,000
July 15, 2009 8,450,000
January 15, 2010 9,127,000
July 15, 2010 9,233,000
January 15, 2011 11,495,000
July 15, 2011 12,060,000
January 15, 2012 8,653,000
July 15, 2012 5,827,000
January 15, 2013 3,646,000
July 15, 2013 2,507,000
January 15, 2014 1,093,000
(b) Selection of Bonds. The provisions of Section 7.02 of the
Original Indenture to the contrary notwithstanding, the Trustee shall first
select for redemption on any Sinking Fund Date on which Bonds of a particular
Stated Maturity of principal (other than Bonds with a Stated Maturity of
principal of July 15, 1991) are to be redeemed in accordance with the Sinking
Fund relating thereto, such Bonds, if any, of such Stated Maturity of principal
as the Company shall specify (by Bond number) are held by PNM or an Affiliate of
PNM in a Company Request delivered to the Trustee at least 40 (but not more than
90) days prior to such Sinking Fund Date and upon which the Trustee may rely.
(c) Certain Adjustments to Sinking Funds. The principal amount
of Bonds of a particular Stated Maturity of principal to be redeemed through
operation of the Sinking Fund for the Bonds of such Stated Maturity of principal
may be adjusted (upward or downward) at the discretion of the Company at one
time (contemporaneously with similar adjustments for all Stated Maturities of
principal) prior to July 15, 1988; provided, however, that no such adjustment
#30122043.1
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<PAGE>
shall be made by the Company which will increase or reduce the average life of
the Bonds of such Stated Maturity of principal (calculated in accordance with
generally accepted financial practice from the date of initial issuance) by more
than 6 months; provided further, however, such adjustment may only be made in
connection with an adjustment to basic rent pursuant to Section 3(d) of one or
more of the Leases identified in Schedule 2 hereto. If the Company shall elect
to make the foregoing adjustment, the Company shall deliver to the Trustee and
PNM at least 60 days prior to the first Sinking Fund Date proposed to be
affected by such adjustment, a Company Request (w) stating that the Company has
elected to make such adjustment in connection with adjustments to basic rent
under one or more of such Leases, (x) setting forth a revised schedule of
principal amounts of the Sinking Fund applicable to Bonds of the affected Stated
Maturity of principal, (y) attaching a copy of the revised schedules of
principal amortization for the related Pledged Lessor Notes identified in
Schedule 2 hereto and (z) attaching calculations showing that (i) the average
life of the Bonds of the affected Stated Maturity of principal will not be
reduced or increased except as permitted by this paragraph (c), (ii) the
aggregate principal amount of the Pledged Lessor Notes identified on Schedule 2
hereto equals the aggregate principal amount of the Bonds and (iii) the
aggregate amortization of the principal amount of such Pledged Lessor Notes is
sufficient to repay in full, as and when due, the principal amount of the Bonds
as and when due, whether upon redemption through operation of the applicable
Sinking Funds or at maturity. The Trustee may rely on such Company Request and
shall have no duty with respect to the calculations referred to in the foregoing
clause (z), other than to make them available for inspection by any Holder of
Bonds at the Corporate Trust Office upon reasonable notice. The Trustee shall,
at the expense of PNM, send to each Holder of Bonds of the affected Stated
Maturity of principal at least 20 days before the first Sinking Fund Date to be
affected thereby, by first class mail, a copy of such revised schedule of
principal amounts of Sinking Fund payments applicable to such Bonds.
(d) Redemption Price. The Redemption Price for any Bond to be
redeemed pursuant to paragraph (a) of this Section 1.04 shall be 100% of the
principal amount thereof, together with accrued interest to the Redemption Date.
ARTICLE IV.
PLEDGE OF LESSOR NOTES
To secure the payment of the principal of and premium (if any)
and interest on all the Securities from time to time Outstanding under the
Indenture, and the performance of the covenants therein and herein contained,
the Company by these presents does grant, bargain, sell, release, convey,
assign, transfer, mortgage, hypothecate, pledge, confirm and create a security
interest in, unto the Trustee, the Lessor Notes identified on Schedule 2 hereto
(herein referred to as the Pledged Lessor Notes).
TO HAVE AND TO HOLD the aforesaid Pledged Lessor Notes unto
the Trustee and its successors and assigns forever, in trust and for the uses
and purposes and subject to the covenants and conditions set forth in the
Indenture.
ARTICLE V.
AMENDMENTS TO ORIGINAL INDENTURE
(a) Amendment to Section 8.02. Section 8.02 of the Original
Indenture is hereby amended to delete (i) in its entirety the third paragraph
thereof and (ii) the words following the phrase "or impair any right consequent
thereon" in the concluding sentence of the second paragraph thereof and insert
in lieu thereof a ".".
(b) Amendment to Section 11.02. Clause (4) of Section 11.02 of
the Original Indenture is hereby amended to change the reference to "Section
8.09" therein to "Section 8.08".
#30122043.1
v
<PAGE>
ARTICLE VI.
MISCELLANEOUS
SECTION 1.061. Execution as Supplemental Indenture.
This Series 1986A Bond Supplemental Indenture is executed and
shall be construed as an indenture supplemental to the Original Indenture and,
as provided in the Original Indenture, this Series 1986A Bond Supplemental
Indenture forms a part thereof. Except as herein expressly otherwise defined,
the use of the terms herein is in accordance with the definitions contained in
the Original Indenture.
SECTION 1.062. Responsibility for Recitals, Etc.
The recitals contained herein and in the Bonds, except the
Trustee's certificate of authentication, shall be taken as the statements of the
Company and PNM, and the Trustee assumes no responsibility for the correctness
of the same. The Trustee makes no representation as to the validity or
sufficiency of this Series 1986A Bond Supplemental Indenture or the Bonds.
SECTION 1.063. Provisions Binding on Successors.
All the covenants, stipulations, promises and agreements in
this Series 1986A Bond Supplemental Indenture contained by or on behalf of the
Company shall bind its successors and assigns, whether so expressed or not.
SECTION 1.064. New York Contract.
This Series 1986A Bond Supplemental Indenture and each Bond
shall be deemed to be a contract under the laws of the State of New York, and
for all purposes shall be governed by and construed in accordance with the laws
of said state.
SECTION 1.065. Counterparts.
This Series 1986A Bond Supplemental Indenture may be executed
in any number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the Company, PNM and the Trustee have
caused this Series 1986A Bond Supplemental Indenture to be duly executed by
their respective officers thereunto duly authorized, as of the date and year
first above written.
FIRST PV FUNDING CORPORATION
[CORPORATE SEAL]
By /s/ J.A. Barbara
----------------------------
President
Attest:
/s/ R.B. Goldstein
- -----------------------
Assistant Secretary
#30122043.1
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<PAGE>
PUBLIC SERVICE COMPANY
OF NEW MEXICO
[CORPORATE SEAL]
By /s/ B.D. Lackey
-------------------------
Senior Vice President and
Chief Financial Officer
Attest:
/s/ K.A. Knight
- ----------------------
Assistant Secretary
CHEMICAL BANK,
as Trustee
[CORPORATE SEAL]
By /s/ T.J. Foley
------------------------
Vice President
Attest:
/s/ G. Mc Farlane
- -------------------------
Trust Officer
#30122043.1
vii
<PAGE>
Schedule 1
to
SERIES 1986A BOND
SUPPLEMENTAL INDENTURE
[FORM OF FACE OF BOND]
No. R- $
-----
FIRST PV FUNDING CORPORATION
LEASE OBLIGATION BOND SERIES 1986A
INTEREST RATE STATED MATURITY
REGISTERED HOLDER:
PRINCIPAL AMOUNT: DOLLARS
FIRST PV FUNDING CORPORATION, a Delaware corporation
(hereinafter called the "Company", which term includes any successor corporation
under the Indenture referred to on the reverse hereof), for value received,
hereby promises to pay to the Registered Holder (named above) hereof, or
registered assigns, the Principal Amount (stated above) on the Stated Maturity
(stated above) and to pay interest thereon from the date hereof, or from the
most recent interest payment date to which interest has been paid or duly
provided for, semiannually on July 15 and January 15, in each year, commencing
January 15, 1987, at the Interest Rate (stated above) per annum, until the
principal hereof is paid in full or made available for payment. The interest so
payable, and punctually paid or duly provided for, on any interest payment date
will, as provided in such Indenture, be paid to the person in whose name this
Bond (or one or more Predecessor Securities, as defined in such Indenture) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the June 30 or December 31, as the case may be (whether
or not a Business Day, as defined in such Indenture), next preceding such
interest payment date. Any such interest not so punctually paid or duly provided
for shall forthwith cease to be payable to the Registered Holder on such Regular
Record Date, and may be paid to the person in whose name this Bond (or one or
more Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such defaulted interest to be fixed by the
Trustee, notice of which shall be given to the Bondholders not less than 10 days
prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Bonds may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in such Indenture. Payment of the
principal of (and premium, if any) and interest on this Bond will be made at the
corporate trust office of the Paying Agent, Chemical Bank (or if such office is
not in the Borough of Manhattan, The City of New York, at either such office or
an office to be maintained in such Borough), in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of interest or may be made at the option of the Company by check mailed to the
address of the Holder entitled thereto as such address shall appear on the
Security Register.
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 of interest per annum (computed on
the basis of a 360-day year of twelve 30-day months) equal to 1% above the
Interest Rate (stated above) on this Bond for the period during which any such
principal, premium or interest shall be overdue.
#30122043.1
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<PAGE>
Reference is hereby made to the further provisions of this
Bond set forth on the reverse hereof which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Bond shall not be entitled to
any benefit under such Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: July 17, 1986
FIRST PV FUNDING CORPORATION
By
-------------------------
President
Attest:
- ---------------------
Secretary
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
CHEMICAL BANK
as Trustee
By
-------------------------
Authorized Officer
#30122043.1
2
<PAGE>
[FORM OF REVERSE OF BOND]
FIRST PV FUNDING CORPORATION
LEASE OBLIGATION BOND SERIES 1986A
This Bond is one of an authorized issue of Securities of the
Company known as its "Lease Obligation Bonds Series 1986A" (the "Bonds") issued
under, and all equally and ratably secured by, a Collateral Trust Indenture
dated as of December 16, 1985 among the Company, Public Service Company of New
Mexico, a New Mexico corporation (herein called "PNM"), and Chemical Bank, as
Trustee (herein called the "Trustee", which term includes any successor Trustee
under the Indenture), as heretofore supplemented and as further supplemented and
amended by the Series 1986A Bond Supplemental Indenture dated as of July 15,
1986 among such parties (collectively, the "Indenture") to which Indenture
reference is hereby made for a description of the nature and extent of the
securities and other property assigned, pledged and transferred thereunder, the
respective rights of the holders of the Bonds and of the Trustee and the Company
in respect of such security, and the terms upon which the Bonds are and are to
be authenticated and delivered.
The principal of, and premium, if any, and interest on, this
Bond are payable from, and secured by, the assets subject to the lien of the
Indenture or the income and proceeds received by the Trustee therefrom, and all
payments of principal, premium (if any) and interest shall be made in accordance
with the terms of the Indenture.
The Indenture and each of the Participation Agreements among
an Equity Investor (as hereinafter defined), a Lessor (as hereinafter defined),
the Company, the Lease Indenture Trustee (as hereinafter defined) and certain
other parties (each a "Participation Agreement") provide that, as and when
issued, certain Nonrecourse Promissory Notes (the "Pledged Lessor Notes"), in
aggregate principal amount of $253,677,000, to be issued by The First National
Bank of Boston, as owner trustee under one or more separate Trust Agreements,
with the respective institutional investors named in such Trust Agreements (The
First National Bank of Boston in each of such capacities as owner trustee being
herein called a "Lessor" and each such institutional investor being herein
called an "Equity Investor"), will be included within the assets subject to the
lien of the Indenture pursuant to indenture supplements. Such Pledged Lessor
Notes are to be issued under separate documents entitled Trust Indenture,
Mortgage, Security Agreement and Assignment of Rents, each between a Lessor and
Chemical Bank, as trustee (the "Lease Indenture Trustee") (each of such Trust
Indentures, as it is executed and delivered and as thereafter amended in
accordance with its terms, being herein called a "Lease Indenture"). Reference
is made to each Lease Indenture for a description of the nature and extent of
property to be assigned, pledged, transferred and mortgaged thereunder and the
rights of the holders of notes issued thereunder, including the Pledged Lessor
Notes. Except as expressly provided in a Lease Indenture, all payments of
principal, premium, if any, and interest to be made on a Pledged Lessor Note and
under such Lease Indenture will be made only from the assets subject to the lien
of such Lease Indenture or the income and proceeds received by the Lease
Indenture Trustee therefrom, including, in the case of each Lease Indenture, the
rights of the Lessor which is a party thereto to receive basic rentals and
certain other payments under a Lease with PNM relating to an undivided interest
in certain assets constituting part of the Palo Verde Nuclear Generating Station
(also known as the Arizona Nuclear Power Project) (each of such Leases, as it is
executed and delivered and as to be hereafter amended in accordance with its
terms being herein called a "Lease"), which basic rentals and other payments
will be at least sufficient to provide for the payment of the principal of and
premium, if any, and interest on each Pledged Lessor Note issued under such
Lease Indenture. Each Holder hereof, by its acceptance of this Bond, agrees (x)
that except as expressly provided above, it will look solely to the assets
subject to the lien of the Indenture or the income and proceeds received by the
Trustee therefrom, to the extent available for distribution to the Holder hereof
as provided in the Indenture and (y) that none of an Equity Investor, a Lessor,
a Lease Indenture Trustee or the Trustee is liable to the Holder hereof or, in
the case of an Equity Investor, a Lessor and a Lease Indenture Trustee, to the
Trustee for any amounts payable under this Bond or, except as provided in the
Indenture with respect to the Trustee, for any liability under the Indenture. An
Equity Investor shall not have any duty or responsibility under the Indenture or
the Bonds to any Holder or to the Trustee.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of PNM and the Company and the rights of the Holders of the
Securities under the Indenture at any time by PNM and the Company with the
consent of the Holders of not less than a majority in aggregate principal amount
#30122043.1
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<PAGE>
of the Securities at the time Outstanding, as defined in the Indenture. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive compliance
by PNM and the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Bond shall be conclusive and binding upon such Holder and
upon all future Holders of this Bond and of any Security issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent or waiver is made upon this Bond.
As provided in the Indenture, the aggregate principal amount
of Securities which may be issued thereunder is unlimited. The Bonds are limited
in aggregate principal amount to $253,677,000, consisting of:
Stated Maturity Interest Principal
of Principal Rate Amount
------------ ---- ------
July 15, 1991 8.3% $25,332,000
July 15, 1996 9.125% $40,532,000
January 15, 2014 10.3% $187,813,000
------------
$253,677,000
In the event that one or more Leases are terminated under
Section 14 thereof, the Bonds with Stated Maturity of principal of January 15,
2014 are subject to mandatory redemption in part from time to time on not less
than 20 nor more than 60 days' prior notice given as provided in the Indenture
at a redemption price equal to the principal amount of the Bonds to be redeemed
plus accrued interest to the date fixed for redemption, on the same date on
which, and to the same extent that, the Pledged Lessor Notes relating to the
Bonds are prepaid as provided in Section 5.2 of the Lease Indenture under which
they were issued.
The Bonds of each Stated Maturity of principal are also
subject to mandatory redemption pursuant to sinking fund installments, as more
fully provided in the Indenture, at the principal amount thereof, together with
interest accrued to the date fixed for redemption, on the dates and in the
respective principal amounts set forth in the Indenture.
The sinking fund installments for the Bonds of a particular
Stated Maturity of principal set forth in the Indenture may be adjusted once at
the discretion of the Company prior to July 15, 1988, in connection with certain
adjustments in basic rent pursuant to any of the Leases; provided, however, that
no such adjustments shall be made by the Company which will increase or reduce
the average life of such Bonds (calculated in accordance with generally accepted
financial practice from the date of initial issuance thereof) by more than 6
months.
As provided in the Indenture, in connection with any mandatory
sinking fund redemption of Bonds of a particular Stated Maturity or principal
(other than Bonds of a Stated Maturity of principal of July 15, 1991), the
Company may cause the Trustee first to select for such redemption Bonds of such
Stated Maturity of principal held by PNM or any Affiliate of PNM.
In the event of any partial redemption of Bonds of a
particular Stated Maturity of principal (other than pursuant to the
aforementioned sinking fund), the principal amount of Bonds of such Stated
Maturity of principal to be redeemed thereafter pursuant to the sinking fund
schedule indicated in the Indenture shall be adjusted proportionately as nearly
as practicable in accordance with Section 7.01 of the Indenture.
In addition, the Bonds (other than Bonds with a Stated
Maturity of principal of July 15, 1991) are subject to redemption, in whole or
in part, at any time, at the option of the Company, with monies deposited with
the Trustee, on not less than 20 nor more than 60 days' notice given as provided
in the Indenture, at the following redemption prices (expressed as a percentage
of principal amount), together with interest accrued to the date fixed for
redemption as follows:
#30122043.1
4
<PAGE>
Bonds with a Stated Maturity of principal of July 15, 1996 may
be redeemed at a price of 109.125% of the principal amount thereof,
such percentage to decline by 1.304 on July 15, 1987 and each second
anniversary thereof and by 1.303 on July 15, 1988 and each second
anniversary thereof, until such date as such percentage shall be 100%,
and thereafter 100%; and
Bonds with a Stated Maturity of principal of January 15, 2014
may be redeemed at a price of 110.3% of the principal amount thereof,
such percentage to decline by .412 on July 15, 1987 and each
anniversary thereof, until such date as such percentage shall be 100%,
and thereafter 100%;
provided, however, that no such redemption 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 Company, any Lessor,
PNM or any Affiliate of any thereof if such indebtedness has an effective
interest cost to the Company, such Lessor, PNM or such Affiliate, as the case
may be (computed in accordance with generally accepted financial practice), of
less than 9.125% per annum in the case of Bonds with a Stated Maturity of
principal of July 15, 1996, and 10.3% per annum in the case of Bonds with a
Stated Maturity of principal of January 15, 2014.
In the case of any redemption of Bonds, unpaid interest
installments whose Stated Maturity, as defined in the Indenture, is on or prior
to the date fixed for redemption will be payable to the Holders of such Bonds or
one or more Predecessor Securities of record at the close of business on the
relevant Regular or Special Record Date referred to on the face hereof.
The Indenture provides that Bonds of a denomination larger
than $1,000 may be redeemed in part ($1,000 or an integral multiple thereof) and
that upon any partial redemption of any such Bond the same shall be surrendered
at the corporate trust office of the Paying Agent in exchange for one or more
new Bonds for the unredeemed portion thereof.
Bonds (or portions thereof as aforesaid) for whose redemption
and payment provision is made in accordance with the Indenture shall thereupon
cease to be entitled to the lien of the Indenture and shall cease to bear
interest from and after the date fixed for redemption.
If an Event of Default, as defined in the Indenture, shall
occur, the principal of this Bond may become or be declared due and payable, in
the manner and with the effect provided in the Indenture.
This Bond is transferable by the registered owner hereof in
person or by attorney authorized in writing, at the corporate trust office of
the Bond Registrar, Chemical Bank (or if such office is not in the Borough of
Manhattan, The City of New York, at either such office or an office to be
maintained in such Borough), upon surrender of this Bond, and upon any such
transfer a new Bond of the same Stated Maturity of principal, for the same
aggregate principal amount, will be issued to the transferee in exchange
herefor.
The Bonds are issuable only as registered Bonds without
coupons in denominations of $1,000 and/or any integral multiple thereof. As
provided in, and subject to the provisions of, the Indenture, Bonds of a
particular Stated Maturity of principal are exchangeable for other Bonds of such
Stated Maturity, but of a different authorized denomination or denominations, as
requested by the Holder surrendering the same.
No service charge will be made to any Holder of Bonds for any
such transfer or exchange, but the Bond Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Prior to due presentment for registration of transfer, the
person in whose name this Bond is registered shall be deemed to be the owner
hereof for the purpose of receiving payment as herein provided and for all other
purposes whether or not this Bond be overdue, regardless of any notice to anyone
to the contrary.
#30122043.1
5
<PAGE>
As provided in the Indenture, the Indenture and the Bonds
shall be construed in accordance with and governed by the laws of the State of
New York.
Schedule 2
to
SERIES 1986A BOND
SUPPLEMENTAL INDENTURE
A. As used in this Series 1986A Bond Supplemental Indenture, the following terms
have the following meanings:
(1) Lease Indenture means each of:
(i) the Trust Indenture, Mortgage, Security Agreement
and Assignment of Rents, dated as of December 16, 1985,
between the Indenture Trustee and Owner Trustee No. 1, as
amended by Supplemental Indenture No. 1 thereto, dated as of
July 15, 1986;
(ii) the Trust Indenture, Mortgage, Security
Agreement and Assignment of Rents, dated as of December 16,
1985, between the Indenture Trustee and Owner Trustee No. 2,
as amended by Supplemental Indenture No. 1 thereto, dated as
of July 15, 1986; and
(iii) the Trust Indenture, Mortgage, Security
Agreement and Assignment of Rents, dated as of December 16,
1985, between the Indenture Trustee and Owner Trustee No. 3,
as amended by Supplemental Indenture No. 1 thereto, dated as
of July 15, 1986.
(2) Lessor Note means each of:
(i) the Non-Recourse Promissory Note, Fixed Rate
Series (Due July 15, 1991) in the amount of $13,622,000 dated
July 17, 1986, payable by Owner Trustee No. 1 to the Company.
(ii) the Non-Recourse Promissory Note, Fixed Rate
Series (Due July 15, 1996) in the amount of $20,851,000 dated
July 17, 1986, payable by Owner Trustee No. 1 to the Company;
(iii) the Non-Recourse Promissory Note, Fixed Rate
Series (Due January 15, 2012) in the amount of $95,177,000
dated July 17, 1986, payable by Owner Trustee No. 1;
(iv) the Non-Recourse Promissory Note, Fixed Rate
Series (Due July 15, 1991) in the amount of $7,017,000 dated
July 17, 1986, payable by Owner Trustee No. 2 to the Company;
(v) the Non-Recourse Promissory Note, Fixed Rate
Series (Due July 15, 1996) in the amount of $12,496,000 dated
July 17, 1986, payable by Owner Trustee No. 2 to the Company;
(vi) the Non-Recourse Promissory Note, Fixed Rate
Series (Due January 15, 2013) in the amount of $58,031,000
dated July 17, 1986, payable by Owner Trustee No. 2 to the
Company;
#30122043.1
1
<PAGE>
(vii) the Non-Recourse Promissory Note, Fixed Rate
Series (Due July 15, 1991) in the amount of $4,693,000 dated
July 17, 1986, payable by Owner Trustee No. 3; and
(viii) the Non-Recourse Promissory Note, Fixed Rate
Series (Due July 15, 1996) in the amount of $7,185,000 dated
July 17, 1986, payable by Owner Trustee No. 3 to the Company;
and
(ix) the Non-Recourse Promissory Note, Fixed Rate
Series (Due January 15, 2014) in the amount of $34,605,000
dated July 17, 1986, payable by Owner Trustee No. 3 to the
Company.
(3) Lessor or Owner Trustee means The First National Bank of
Boston, a national banking association (FNB), in its capacity as owner trustee
under three separate Trust Agreements, each dated as of December 16, 1985, with
the equity investor named therein, in such capacity Owner Trustee No. 1, Owner
Trustee No. 2 and Owner Trustee No. 3, respectively.
(4) Indenture Trustee means Chemical Bank, a New York banking
corporation, as Trustee.
(5) Lease means each of:
(i) the Facility Lease, dated as of December 16,
1985, between PNM, as lessee, and Owner Trustee No. 1, as
lessor, as amended by Amendment No. 1 thereto, dated as of
July 15, 1986;
(ii) the Facility Lease, dated as of December 16,
1985, between PNM, as lessee, and Owner Trustee No. 2, as
lessor, as amended by Amendment No. 1 thereto, dated as of
July 15, 1986; and
(iii) the Facility Lease, dated as of December 16,
1985, between PNM, as lessee, and Owner Trustee No. 3, as
lessor, as amended by Amendment No. 1 thereto, dated as of
July 15, 1986.
(6) Participation Agreement means each of:
(i) the Participation Agreement, dated as of December
16, 1985, among the Owner Participant designated therein, the
Company, FNB, in its individual capacity and as Owner Trustee
No. 1, Chemical Bank, in its individual capacity and as
Indenture Trustee, and PNM, as amended by Amendment No. 1
thereto, dated as of July 15, 1986;
(ii) the Participation Agreement, dated as of
December 16, 1985, among the Owner Participant designated
therein, the Company, FNB, in its individual capacity and as
Owner Trustee No. 2, Chemical Bank, in its individual capacity
and as Indenture Trustee, and PNM, as amended by Amendment No.
1 thereto, dated as of July 15, 1986; and
(iii) the Participation Agreement, dated as of
December 16, 1985, among the Owner Participant designated
therein, the Company, FNB, in its individual capacity and as
Owner Trustee No. 3, Chemical Bank, in its individual capacity
and as Indenture Trustee, and PNM, as amended by Amendment No.
1 thereto, dated as of July 15, 1986.
#30122043.1
2
<PAGE>
EXHIBIT C to
Conformed Collateral
Trust Indenture
================================================================================
FIRST PV FUNDING CORPORATION,
PUBLIC SERVICE COMPANY OF NEW MEXICO
and
CHEMICAL BANK,
as Trustee
----------
SERIES 1986B BOND SUPPLEMENTAL INDENTURE
dated as of November 18, 1986
to
COLLATERAL TRUST INDENTURE
dated as of December 16, 1985
----------
Providing for the Issuance of
$460,000,000 Aggregate Amount
of Lease Obligation Bonds, Series 1986B
with the Interest Rates and Stated Maturities
Set Forth Herein
================================================================================
PALO VERDE NUCLEAR GENERATING STATION
SERIES 1986B BOND SUPPLEMENTAL INDENTURE, dated as of November
18, 1986 among FIRST PV FUNDING CORPORATION, a Delaware corporation (the
Company), PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation (PNM),
and CHEMICAL BANK, a New York banking corporation, as trustee (the Trustee).
#30122046.1
3
<PAGE>
WHEREAS, the Company and PNM have heretofore executed and
delivered to the Trustee an indenture dated as of December 16, 1985 (the
Original Indenture) to provide for the issue from time to time of the Company's
debentures, notes or other evidences of indebtedness to be issued in one or more
series (the Securities);
WHEREAS, Section 2.03 of the Original Indenture provides,
among other things, that PNM, the Company and the Trustee may enter into
indentures supplemental to the Original Indenture for, among other things, the
purpose of establishing the form and terms of Securities of any series as
permitted by Section 2.03 of the Original Indenture;
WHEREAS, PNM and the Company heretofore executed and delivered
the Series 1986A Term Note Supplemental Indenture, dated as of July 31, 1986
(the Series 1986A Term Note Supplemental Indenture), to the Trustee, and the
Company issued thereunder a series of Securities designated "Term Lease
Obligation Notes Series 1986A" in the aggregate principal amount of $40,000,000;
WHEREAS, Section 1.03 of the Series 1986A Term Note
Supplemental Indenture provides, among other things, that the Term Lease
Obligation Notes Series 1986A shall be redeemed in connection with the issuance
of a series of Securities to effect a refunding of the same;
WHEREAS, PNM and the Company heretofore executed and delivered
the Series 1986B Term Note Supplemental Indenture, dated as of August 12, 1986
(the Series 1986B Term Note Supplemental Indenture), to the Trustee, and the
Company issued thereunder a series of Securities designated "Term Lease
Obligation Notes Series 1986B" in the aggregate principal amount of
$325,960,123.15;
WHEREAS, Section 1.03 of the Series 1986B Term Note
Supplemental Indenture provides, among other things, that the Term Lease
Obligation Notes Series 1986B shall be redeemed in connection with the issuance
of a series of Securities to effect a refunding of the same;
WHEREAS, PNM and the Company (i) desire the issuance by the
Company of a new series of Securities to be designated as hereinafter provided
to effect a refunding of the Term Lease Obligation Notes Series 1986A and the
Term Lease Obligation Notes Series 1986B, and for certain other purposes, and
(ii) have requested the Trustee to enter into this Series 1986B Bond
Supplemental Indenture (the Series 1986B Bond Supplemental Indenture) for the
purpose of establishing the form and terms of the Securities of such series;
WHEREAS, all action on the part of the Company necessary to
authorize the issuance of $460,000,000 principal amount of its Lease Obligation
Bonds, Series 1986B (the Bonds) under the Original Indenture and this Series
1986B Bond Supplemental Indenture (said Original Indenture, as heretofore
supplemented and amended and as supplemented by this Series 1986B Bond
Supplemental Indenture, being hereinafter called the Indenture) has been duly
taken;
WHEREAS, the Bonds to be issued hereunder are to be
substantially in the form annexed as Schedule 1 hereto;
WHEREAS, to the extent not released on the date of initial
issuance of the Bonds, the Company intends, in accordance with Sections 2.15(b)
and 13.01 of the Original Indenture, to obtain the release of all or a portion
of the remaining proceeds of sale of the Bonds by subjecting to the Lien of the
Original Indenture, pursuant to one or more Supplemental Indentures of Pledge
(each a Supplemental Indenture of Pledge, a form of which is attached as Exhibit
A to this Series 1986B Bond Supplemental Indenture), all or some of the Lessor
Notes described in Schedule 3 hereto;
WHEREAS, Section 11.01 of the Original Indenture provides that
the Company and the Trustee may, without consent of the Holders of any
Securities, enter into an indenture supplemental to the Original Indenture to
cure a defective provision in the Original Indenture provided such action does
not adversely affect the interest of the Holders of the Securities;
#30122046.1
4
<PAGE>
WHEREAS, the Company desires to make the amendment to Section
9.06(b) of the Original Indenture set forth in Article Three of this Series
1986B Bond Supplemental Indenture; and
WHEREAS, all acts and things necessary to make the Bonds, when
executed by the Company and authenticated and delivered by the Trustee as
provided in the Original Indenture, the valid, binding and legal obligations of
the Company, and to constitute these presents a valid and binding supplemental
indenture and agreement according to its terms, have been done and performed,
and the execution of this Series 1986B Bond Supplemental Indenture and the
creation and issuance under the Indenture of $460,000,000 aggregate principal
amount of the Bonds have in all respects been duly authorized, and the Company,
in the exercise of legal right and power in it vested, executes this Series
1986B Bond Supplemental Indenture and proposes to create, execute, issue and
deliver the Bonds:
NOW, THEREFORE, THIS SERIES 1986B BOND SUPPLEMENTAL INDENTURE
WITNESSETH:
That in order to establish the form and terms of and to
authorize the authentication and delivery of the Bonds, and in consideration of
the acceptance of the Bonds by the holders thereof and of the sum of one dollar
duly paid to the Company by the Trustee at the execution of these presents, the
receipt whereof is hereby acknowledged, the Company and PNM each covenant and
agree with the Trustee, for the equal and proportionate benefit of the
respective holders from time to time of the Bonds, as follows:
ARTICLE I.
THE BONDS
SECTION 1.011. Terms of the Bonds.
There is hereby created a series of Securities designated
"Lease Obligation Bonds, Series 1986B". Subject to the exceptions referred to in
the Original Indenture, the aggregate principal amount of the Bonds that may be
authenticated and delivered under this Series 1986B Bond Supplemental Indenture
is limited to $460,000,000. Bonds in the aggregate principal amount of
$460,000,000 may forthwith be executed by the Company and delivered to the
Trustee for authentication and delivery by the Trustee in accordance with the
provisions of Section 2.04 of the Original Indenture in the following amounts
for the Stated Maturities of principal and at the interest rates indicated:
Stated Maturity Interest Principal
of Principal Rate Amount
------------ ---- ------
January 15, 1992 8.05% $ 13,988,000
January 15, 1997 8.95 60,347,000
January 15, 2016 10.15 385,665,000
-------------
$460,000,000
The Bonds shall be payable, bear interest and have and be subject to such other
terms as provided in the form of Bond attached as Schedule 1 hereto.
SECTION 1.012. Mandatory Redemption of the Bonds.
(a) Failure to Pledge Lessor Notes. If the Company shall (i)
fail, on or before January 25, 1987, duly to subject to the Lien of the
Indenture Lessor Notes (in addition to the Lessor Notes identified in Schedule 2
hereto) in the principal amount of $88,000,000 and with the amortizations of
principal and bearing the interest rates set forth in Schedule 3 hereto or (ii)
deliver to the Trustee, on or before January 25, 1987, irrevocable written
notice that it shall not so subject such Lessor Notes, then, in either such
event, on the Redemption Date established in accordance with Section 1.02(d) of
#30122046.1
5
<PAGE>
this Series 1986B Bond Supplemental Indenture, Bonds of the Stated Maturities of
principal and in the aggregate principal amounts set forth in Section 1.02(c)(i)
of this Series 1986B Bond Supplemental Indenture shall be redeemed from funds
held by the Trustee pursuant to Section 2.15(a) of the Indenture and, to the
extent the aforesaid funds shall not be sufficient to redeem such Bonds, funds
provided by the Company.
(b) Termination of Lease. In the event that there shall occur
under Section 14 of any Lease identified in Schedule 2 hereto or related to the
Lessor Notes described in Schedule 3 hereto a termination of such Lease, Bonds
with a Stated Maturity of principal of January 15, 2016 shall be redeemed, in
part, in proportion to the principal amount of the Pledged Lessor Notes (as
defined in Article II of this Series 1986B Bond Supplemental Indenture and
identified in Schedules 2 and 3 hereto) related to such Lease (the Prepaid
Lessor Notes) prepaid in accordance with their terms and Section 5.2 of the
Lease Indenture under which such Pledged Lessor Notes are issued. Any such
redemption shall be on the same date on which, and shall be made to the extent
that, the Prepaid Lessor Notes are so prepaid.
(c) Selection of Bonds to be Redeemed. (i) Attached as
Schedule 3 hereto is a description of six Lessor Notes, three of which relate to
a Lease with respect to an undivided interest in Palo Verde Nuclear Generating
Station (PVNGS) Unit 1 and certain related common facilities (the Unit 1 Lessor
Notes) and three of which relate to an undivided interest in PVNGS Unit 2 and
certain related common facilities (the Unit 2 Lessor Notes). In the event of a
redemption pursuant to Section 1.02(a) of this Series 1986B Bond Supplemental
Indenture arising from a failure to pledge the Unit 1 Lessor Notes, the Bonds so
to be redeemed shall (notwithstanding the first proviso to the first sentence of
Section 6.02 of the Original Indenture) be selected from among the Stated
Maturities of principal of the Bonds as follows: Bonds of a Stated Maturity of
principal of January 15, 1992, $3,300,000; Bonds of a Stated Maturity of
principal of January 15, 1997, $8,060,000; and Bonds of a Stated Maturity of
principal of January 15, 2016, $48,640,000. In the event of a redemption
pursuant to Section 1.02(a) of this Series 1986B Bond Supplemental Indenture
arising from a failure to pledge the Unit 2 Lessor Notes, the Bonds so to be
redeemed shall (notwithstanding the first proviso to the first sentence of
Section 6.02 of the Original Indenture) be selected from among the Stated
Maturities of principal of the Bonds as follows: Bonds of a Stated Maturity of
principal of January 15, 1992, $1,270,000; Bonds of a Stated Maturity of
principal of January 15, 1997, $3,501,000; and Bonds of a Stated Maturity of
principal of January 15, 2016, $23,229,000.
(ii) In the event of a redemption of Bonds with a Stated
Maturity of principal of January 15, 2016 pursuant to Section 1.02(b) of this
Series 1986B Bond Supplemental Indenture, the Bonds so to be redeemed shall be
selected in accordance with Section 6.02 of the Indenture, but without giving
effect to the first proviso to the first sentence of such Section.
(d) Redemption Dates. (i) The Redemption Date for any Bond to
be redeemed pursuant to Section 1.02(a) of this Series 1986B Bond Supplemental
Indenture shall be a Business Day selected by the Company occurring at least 30
days after notice of such selection has been given by the Company to the
Trustee; provided, however, that such Redemption Date shall in no event be later
than April 25, 1987; provided further, however, that such Redemption Date shall
be April 25, 1987 if the Company has not at least 35 days prior thereto given
written notice of such selection of a Redemption Date to the Trustee.
(ii) The Redemption Date for any Bond to be redeemed pursuant
to Section 1.02(b) of this Series 1986B Bond Supplemental Indenture shall be
determined in accordance with such Section 1.02(b).
(e) Redemption Price. (i) The Redemption Price for any Bond to
be redeemed pursuant to Section 1.02(a) of this Series 1986B Bond Supplemental
Indenture shall be 101% of the principal amount thereof, together with accrued
interest to the Redemption Date.
(ii) The Redemption Price for any Bond to be redeemed pursuant
to Section 1.02(b) of this Series 1986B Bond Supplemental Indenture shall be
100% of the principal amount thereof, together with accrued interest to the
Redemption Date.
#30122046.1
6
<PAGE>
SECTION 1.013. Optional Redemption of Bonds.
The Bonds may not be redeemed at the option of the Company
prior to January 15, 1992. On and after January 15, 1992, Bonds with a Stated
Maturity of principal of January 15, 1997 and Bonds with a Stated Maturity of
principal of January 15, 2016 may be redeemed at the option of the Company, in
whole or in part with monies deposited with the Trustee by the Company, as
follows:
(a) Bonds with a Stated Maturity of principal of January 15,
1997 may be redeemed at the following redemption prices (expressed as a
percentage of principal amount), together with interest accrued to the
redemption date:
Twelve Month Redemption
Period Beginning Price
---------------- -----
January 15, 1992 102.557%
January 15, 1993 101.279
and thereafter at the principal amount thereof, together with interest accrued
to the Redemption Date.
(b) Bonds with a Stated Maturity of principal of January 15,
2016 may be redeemed at the following redemption prices (expressed as a
percentage of principal amount), together with interest accrued to the
Redemption Date:
Twelve Month Redemption
Period Beginning Price
---------------- -----
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 Redemption Date.
#30122046.1
7
<PAGE>
SECTION 1.014. Sinking Fund.
(a) Amounts and Dates. The Bonds shall be redeemed through
operation of a sinking fund. The amount of each Sinking Fund payment (subject to
adjustment as provided in paragraphs (c) and (d) below) and each Sinking Fund
Date applicable to a Stated Maturity of principal of the Bonds are as set forth
below:
Stated Maturity of Principal
----------------------------
Sinking Fund January 15, January 15, January 15,
Date 1992 1997 2016
---------------- -------- -------- --------
July 15, 1989 $ 379,000
January 15, 1990 773,000
July 15, 1990 1,344,000
January 15, 1991 2,221,000
July 15, 1991 4,545,000
January 15, 1992 4,726,000
July 15, 1992 $ 4,916,000
January 15, 1993 5,137,000
July 15, 1993 5,366,000
January 15, 1994 5,607,000
July 15, 1994 5,857,000
January 15, 1995 6,118,000
July 15, 1995 6,395,000
January 15, 1996 6,680,000
July 15, 1996 6,980,000
January 15, 1997 7,291,000
July 15, 1997 $ 7,618,000
January 15, 1998 8,005,000
July 15, 1998 8,211,000
January 15, 1999 7,383,000
July 15, 1999 6,891,000
January 15, 2000 6,921,000
July 15, 2000 7,004,000
January 15, 2001 6,739,000
July 15, 2001 7,065,000
January 15, 2002 7,116,000
July 15, 2002 7,414,000
January 15, 2003 7,439,000
July 15, 2003 7,783,000
January 15, 2004 7,839,000
July 15, 2004 8,289,000
January 15, 2005 8,352,000
July 15, 2005 8,830,000
January 15, 2006 9,063,000
July 15, 2006 9,635,000
January 15, 2007 9,250,000
July 15, 2007 10,262,000
January 15, 2008 9,892,000
July 15, 2008 12,043,000
January 15, 2009 11,501,000
#30122046.1
8
<PAGE>
July 15, 2009 12,938,000
January 15, 2010 12,367,000
July 15, 2010 13,904,000
January 15, 2011 13,301,000
July 15, 2011 14,947,000
January 15, 2012 14,309,000
July 15, 2012 13,495,000
January 15, 2013 10,850,000
July 15, 2013 12,502,000
January 15, 2014 11,555,000
July 15, 2014 13,314,000
January 15, 2015 19,217,000
July 15, 2015 10,473,000
January 15, 2016 11,948,000
(b) Selection of Bonds. The provisions of Section 7.02 of the
Original Indenture to the contrary notwithstanding, the Trustee shall first
select for redemption on any Sinking Fund Date on which Bonds with a Stated
Maturity of principal of January 15, 2016 are to be redeemed in accordance with
the Sinking Fund relating thereto, such Bonds, if any, of such Stated Maturity
of principal, as the Company shall specify (by Bond number) are held by PNM or
an Affiliate of PNM in a Company Request delivered to the Trustee at least 40
(but not more than 90) days prior to such Sinking Fund Date and upon which the
Trustee may rely. Subject to the foregoing, particular Bonds to be redeemed on
any Sinking Fund Date shall be selected in accordance with Section 7.02 of the
Original Indenture.
(c) Optional Adjustment to Sinking Bond Fund for Bonds with a
Stated Maturity of principal of January 15, 2016. The principal amount of Bonds
with a Stated Maturity of principal of January 15, 2016 to be redeemed through
operation of the Sinking Fund for such Bonds may be adjusted (upward or
downward) at the discretion of the Company at one time prior to July 15, 1997;
provided, however, that no such adjustment shall be made by the Company which
will increase or reduce the average life of such Bonds (calculated in accordance
with generally accepted financial practice from the date of initial issuance) by
more than two years; provided further, however, such adjustment may only be made
in connection with an adjustment to basic rent pursuant to Section 3(d) of one
or more of the Leases identified in Schedule 2 hereto or related to the Lessor
Notes described in Schedule 3 hereto. If the Company shall elect to make the
foregoing adjustment, the Company shall deliver to the Trustee and PNM at least
60 days prior to the first Sinking Fund Date proposed to be affected by such
adjustment, a Company Request (w) stating that the Company has elected to make
such adjustment in connection with adjustments to basic rent under one or more
of such Leases, (x) setting forth a revised schedule of principal amounts of the
Sinking Fund applicable to such Bonds, (y) attaching a copy of the revised
schedules of principal amortization for the related Pledged Lessor Notes (as
defined in Article II of this Series 1986B Bond Supplemental Indenture and
identified in Schedules 2 and 3 hereto) and (z) attaching calculations showing
that (i) the average life of such Bonds will not be reduced or increased except
as permitted by this paragraph (c), (ii) the aggregate principal amount of the
Pledged Lessor Notes equals the aggregate principal amount of the Bonds and
(iii) the aggregate amortization of the principal amount of such Pledged Lessor
Notes is sufficient to repay in full, as and when due, the principal amount of
such Bonds as and when due, whether upon redemption through operation of the
applicable Sinking Fund or at maturity. The Trustee may rely on such Company
Request and shall have no duty with respect to the calculations referred to in
the foregoing clause (z) other than to make them available for inspection by any
Holder of such Bonds at the Corporate Trust Office upon reasonable notice. The
Trustee shall, at the expense of PNM, send to each Holder of such Bonds at least
20 days before the first Sinking Fund Date to be affected thereby, by first
class mail, a copy of such revised schedule of principal amounts of Sinking Fund
payments applicable to such Bonds.
(d) Mandatory Adjustment to Sinking Funds. The second
paragraph of Section 7.01 of the Original Indenture to the contrary
notwithstanding, in the event that there shall have been any partial redemption
of Bonds of a particular Stated Maturity of principal (other than pursuant to
the Sinking Fund), the Sinking Fund payments thereafter to be made with respect
to such Bonds shall be adjusted as follows. The Company shall first identify all
related Pledged Lessor Notes (as defined in Article II of this Series 1986B Bond
Supplemental Indenture and identified in Schedules 2 and 3 hereto) having the
same maturity as the Bonds of such particular Stated Maturity of principal
redeemed,
#30122046.1
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<PAGE>
if any, which are outstanding following such redemption provided, however, that
for purposes of this Section 1.04(d), any such Pledged Lessor Notes with a
maturity subsequent to January 15, 2010 shall be deemed to have a maturity of
January 15, 2016. Having identified all such outstanding Pledged Lessor Notes
(the Outstanding Notes), the Company shall determine the dates on which the
principal of such Outstanding Notes is to be amortized (the Scheduled
Amortization Dates). The amount of the Sinking Fund payment scheduled to be made
on each Sinking Fund Date subsequent to the date of such partial redemption
shall then be adjusted to equal the aggregate principal amount of all
Outstanding Notes scheduled to be amortized on the Scheduled Amortization Date
corresponding to such Sinking Fund Date. All such adjustments in respect of
Sinking Fund payments on a Sinking Fund Date shall be rounded to the nearest
$1,000, and shall be subject to necessary further adjustment so that the total
amount of such reduction is at least equal to the total principal amount of
Bonds redeemed pursuant to such partial redemption. Having made the calculations
required by the preceding two sentences, the Company shall deliver to the
Trustee a Company Request not later than 30 days following any partial
redemption of Bonds (other than pursuant to the Sinking Fund), setting forth (x)
the schedules of principal amortization of all related Outstanding Notes having
the same maturity as the Stated Maturity of principal of the Bonds redeemed and
(y) a revised schedule of Sinking Fund payments applicable to Bonds having the
same Stated Maturity of principal as the Bonds redeemed. The Trustee may rely on
such Company Request and shall have no duty with respect to the adjustments set
forth therein other than to make them available for inspection by a Holder of
Bonds at the Corporate Trust Office upon reasonable notice.
(e) Redemption Price. The Redemption Price for any Bond to be
redeemed pursuant to Section 1.04(a) of this Series 1986B Bond Supplemental
Indenture shall be 100% of the principal amount thereof, together with accrued
interest to the Redemption Date.
ARTICLE II.
PLEDGE OF LESSOR NOTES
SECTION 1.021. Pledge of Lessor Notes.
To secure the payment of the principal of and premium (if any)
and interest on all the Securities from time to time Outstanding under the
Indenture, and the performance of the covenants therein and herein contained,
the Company by these presents does grant, bargain, sell, release, convey,
assign, transfer, mortgage, hypothecate, pledge, confirm and create a security
interest in, unto the Trustee, the Lessor Notes identified on Schedule 2 hereto
(herein, together with each Unit 1 Lessor Note and each Unit 2 Lessor Note which
shall hereafter be subjected to the Lien of the Original Indenture by one or
more Supplemental Indentures of Pledge, in the form attached hereto as Exhibit
A, referred to as the Pledged Lessor Notes).
TO HAVE AND TO HOLD the aforesaid Pledged Lessor Notes
identified on Schedule 2 hereto unto the Trustee and its successors and assigns
forever, in trust and for the uses and purposes and subject to the covenants and
conditions set forth in the Indenture.
ARTICLE III.
AMENDMENT TO ORIGINAL INDENTURE
SECTION 1.031. Amendment to Original Indenture.
Section 9.06(b) of the Original Indenture is hereby amended,
to read in its entirety as follows:
"At any time and from time to time prior to payment in full of
any amounts to be paid by the Trustee pursuant to Section 2.15(b) in respect of
any series of Securities (or prior to payment in full of any amount required to
be paid by the Trustee in respect of such series of Securities pursuant to
Section 1.02(a) of the Series 1986B Bond Supplemental Indenture, dated
#30122046.1
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<PAGE>
as of November 18, 1986, or analogous provisions of any other Series
Supplemental Indenture), if at the time no Event of Default has occurred and is
continuing, the Trustee shall, on Company Request, invest and reinvest in
Permitted Investments as specified in such Company Request any monies from the
sale of the Securities of such series at the time on deposit with the Trustee as
part of the Pledged Property, together with any income and gains from the
investment and reinvestment thereof, and sell any Permitted Investments, in
either case, at such prices, including accrued interest, as are set forth in
such Company Request, and such Permitted Investments shall be held by the
Trustee until so sold in trust as part of the Pledged Property. The Trustee
shall, on Company Request, sell such Permitted Investments as may be specified
therein, and the Trustee shall, without Company Request, in the event monies are
required for payment of any amounts to be paid by the Trustee pursuant to
Section 2.15(b) in respect of any series of Securities and for any payment of
principal, premium, if any, or interest on any series of Securities, sell such
Permitted Investments as are required to restore to cash as part of the Pledged
Property such amounts as are needed for any such payments. The Trustee shall not
be responsible for any losses on any investments or sales of Permitted
Investments made pursuant to the procedure specified in this subsection (b)."
ARTICLE IV.
MISCELLANEOUS
SECTION 1.041. Execution as Supplemental Indenture.
This Series 1986B Bond Supplemental Indenture is executed and
shall be construed as an indenture supplemental to the Original Indenture and,
as provided in the Original Indenture, this Series 1986B Bond Supplemental
Indenture forms a part thereof. Except as herein expressly otherwise defined,
the use of the terms herein is in accordance with the definitions contained in
the Original Indenture.
SECTION 1.042. Responsibility for Recitals, Etc.
The recitals contained herein and in the Bonds, except the
Trustee's certificate of authentication, shall be taken as the statements of the
Company and PNM, and the Trustee assumes no responsibility for the correctness
of the same. The Trustee makes no representation as to the validity or
sufficiency of this Series 1986B Bond Supplemental Indenture or the Bonds.
SECTION 1.043. Provisions Binding on Successors.
All the covenants, stipulations, promises and agreements in
this Series 1986B Bond Supplemental Indenture contained by or on behalf of the
Company shall bind its successors and assigns, whether so expressed or not.
SECTION 1.044. New York Contract.
This Series 1986B Bond Supplemental Indenture and each
Bond shall be deemed to be a contract under the laws of the State of New York,
and for all purposes shall be governed by and construed in accordance with the
laws of said state.
SECTION 1.045. Counterparts.
This Series 1986B Bond Supplemental Indenture may be executed
in any number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
#30122046.1
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<PAGE>
IN WITNESS WHEREOF, the Company, PNM and the Trustee have
caused this Series 1986B Bond Supplemental Indenture to be duly executed by
their respective officers thereunto duly authorized, as of the date and year
first above written.
FIRST PV FUNDING CORPORATION
[CORPORATE SEAL]
By /s/ J.A. Barbera
-------------------------
President
Attest:
/s/ R. Franzen
- -----------------------
Assistant Secretary
PUBLIC SERVICE COMPANY
OF NEW MEXICO
[CORPORATE SEAL]
By /s/ B.D. Lackey
------------------------
Vice President and
Corporate Controller
Attest:
/s/ K.A. Knight
- -----------------------
Assistant Secretary
CHEMICAL BANK,
as Trustee
[CORPORATE SEAL]
By /s/ T.J. Foley
------------------------
Vice President
Attest:
/s/ G.McFarlane
- ----------------------
Trust Officer
#30122046.1
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<PAGE>
SCHEDULE 1
to
SERIES 1986B BOND
SUPPLEMENTAL INDENTURE
[FORM OF FACE OF BOND]
No. R- $
-----
FIRST PV FUNDING CORPORATION
LEASE OBLIGATION BOND, SERIES 1986B
INTEREST RATE STATED MATURITY
REGISTERED HOLDER:
PRINCIPAL AMOUNT: DOLLARS
FIRST PV FUNDING CORPORATION, a Delaware corporation
(hereinafter called the "Company", which term includes any successor corporation
under the Indenture referred to on the reverse hereof), for value received,
hereby promises to pay to the Registered Holder (named above) hereof, or
registered assigns, the Principal Amount (stated above) on the Stated Maturity
(stated above) and to pay interest thereon from the date hereof, or from the
most recent interest payment date to which interest has been paid or duly
provided for, semiannually on July 15 and January 15, in each year, commencing
January 15, 1987, at the Interest Rate (stated above) per annum, until the
principal hereof is paid in full or made available for payment. The interest so
payable, and punctually paid or duly provided for, on any interest payment date
will, as provided in such Indenture, be paid to the person in whose name this
Bond (or one or more Predecessor Securities, as defined in such Indenture) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the June 30 or December 31, as the case may be (whether
or not a Business Day, as defined in such Indenture), next preceding such
interest payment date. Any such interest not so punctually paid or duly provided
for shall forthwith cease to be payable to the Registered Holder on such Regular
Record Date, and may be paid to the person in whose name this Bond (or one or
more Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such defaulted interest to be fixed by the
Trustee, notice of which shall be given to the Bondholders not less than 10 days
prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Bonds may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in such Indenture. Payment of the
principal of (and premium, if any) and interest on this Bond will be made at the
corporate trust office of the Paying Agent, Chemical Bank (or if such office is
not in the Borough of Manhattan, The City of New York, at either such office or
an office to be maintained in such Borough), in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public or private debts, provided that payment of interest may be made at the
option of the Company by check mailed to the address of the Holder entitled
thereto as such address shall appear on the Security Register.
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 of interest per annum (computed on
the basis of a 360-day year of twelve 30-day months) equal to 1% above the
Interest Rate (stated above) on this Bond for the period during which any such
principal, premium or interest shall be overdue.
#30122046.1
1
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Reference is hereby made to the further provisions of this
Bond set forth on the reverse hereof which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Bond shall not be entitled to
any benefit under such Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: November 25, 1986
FIRST PV FUNDING CORPORATION
By
-------------------------
President
Attest:
- ----------------------
Secretary
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
CHEMICAL BANK
as Trustee
By
------------------------
Authorized Officer
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<PAGE>
[FORM OF REVERSE OF BOND]
FIRST PV FUNDING CORPORATION
LEASE OBLIGATION BOND, SERIES 1986B
This Bond is one of an authorized issue of Securities of the
Company known as its "Lease Obligation Bonds, Series 1986B" (the "Bonds") issued
under, and all equally and ratably secured by, a Collateral Trust Indenture
dated as of December 16, 1985 among the Company, Public Service Company of New
Mexico, a New Mexico corporation (herein called "PNM"), and Chemical Bank, as
Trustee (herein called the "Trustee", which term includes any successor Trustee
under the Indenture), as heretofore supplemented and amended and as further
supplemented and amended by the Series 1986B Bond Supplemental Indenture dated
as of November 18, 1986 among such parties (collectively, the "Indenture") to
which Indenture reference is hereby made for a description of the nature and
extent of the securities and other property assigned, pledged and transferred
thereunder, the respective rights of the holders of the Bonds and of the Trustee
and the Company in respect of such security, and the terms upon which the Bonds
are and are to be authenticated and delivered.
The principal of, and premium, if any, and interest on, this
Bond are payable from, and secured by, the assets subject to the lien of the
Indenture or the income and proceeds received by the Trustee therefrom, and all
payments of principal, premium (if any) and interest shall be made in accordance
with the terms of the Indenture.
The Indenture and each of the Participation Agreements among
an Equity Investor (as hereinafter defined), a Lessor (as hereinafter defined),
the Company, the Lease Indenture Trustee (as hereinafter defined) and certain
other parties (each a "Participation Agreement") provide (or, in the case of
each of two of such Participation Agreements to be hereafter entered into as
contemplated by the Indenture, will upon execution and delivery thereof provide)
that, as and when issued, certain Nonrecourse Promissory Notes (the "Pledged
Lessor Notes"), in the aggregate principal amount of $460,000,000, to be issued
by The First National Bank of Boston, as owner trustee under one or more
separate Trust Agreements, with the respective institutional investors named in
such Trust Agreements (The First National Bank of Boston in each of such
capacities as owner trustee being herein called a "Lessor" and each such
institutional investor being herein called an "Equity Investor"), will be
included within the assets subject to the lien of the Indenture pursuant to
indenture supplements. Such Pledged Lessor Notes are to be issued under separate
documents entitled Trust Indenture, Mortgage, Security Agreement and Assignment
of Rents, each between a Lessor and Chemical Bank, as trustee (the "Lease
Indenture Trustee") (each of such Trust Indentures, as and when it is executed
and delivered and as thereafter amended in accordance with its terms, being
herein called a "Lease Indenture"). Reference is made to each Lease Indenture
for a description of the nature and extent of property to be assigned, pledged,
transferred and mortgaged thereunder and the rights of the holders of notes
issued thereunder, including the Pledged Lessor Notes. Except as expressly
provided in a Lease Indenture, all payments of principal, premium, if any, and
interest to be made on a Pledged Lessor Note and under such Lease Indenture will
be made only from the assets subject to the lien of such Lease Indenture or the
income and proceeds received by the Lease Indenture Trustee therefrom,
including, in the case of each Lease Indenture, the rights of the Lessor which
is a party thereto to receive basic rentals and certain other payments under a
Lease with PNM relating to an undivided interest in certain assets constituting
part of the Palo Verde Nuclear Generating Station (also known as the Arizona
Nuclear Power Project) (each of such Leases, as and when it is executed and
delivered and as thereafter amended in accordance with its terms, being herein
called a "Lease"), which basic rentals and other payments will be at least
sufficient to provide for the payment of the principal of and premium, if any,
and interest on each Pledged Lessor Note issued under such Lease Indenture. Each
Holder hereof, by its acceptance of this Bond, agrees (x) that except as
expressly provided above, it will look solely to the assets subject to the lien
of the Indenture or the income and proceeds received by the Trustee therefrom,
to the extent available for distribution to the Holder hereof as provided in the
Indenture and (y) that none of an Equity Investor, a Lessor, a Lease Indenture
Trustee or the Trustee is liable to the Holder hereof or, in the case of an
Equity Investor, a Lessor and a Lease Indenture Trustee, to the Trustee for any
amounts payable under this Bond or, except as provided in the Indenture with
respect to the Trustee, for any liability under the Indenture. An Equity
Investor shall not have any duty or responsibility under the Indenture or the
Bonds to any Holder or to the Trustee.
#30122046.1
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The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of PNM and the Company and the rights of the Holders of the
Securities under the Indenture at any time by PNM and the Company with the
consent of the Holders of not less than a majority in aggregate principal amount
of the Securities at the time Outstanding, as defined in the Indenture. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive compliance
by PNM and the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Bond shall be conclusive and binding upon such Holder and
upon all future Holders of this Bond and of any Security issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent or waiver is made upon this Bond.
As provided in the Indenture, the aggregate principal amount
of Securities which may be issued thereunder is unlimited. The Bonds are limited
in aggregate principal amount to $460,000,000, consisting of:
Stated Maturity Interest Principal
of Principal Rate Amount
------------ ---- ------
January 15, 1992 8.05% $13,988,000
January 15, 1997 8.95 $60,347,000
January 15, 2016 10.15 $385,665,000
------------
$460,000,000
In the event that one or more Leases are terminated under
Section 14 thereof, Bonds with a Stated Maturity of principal of January 15,
2016 are subject to mandatory redemption in part from time to time on not less
than 20 nor more than 60 days' prior notice given as provided in the Indenture
at a redemption price equal to the principal amount of the Bonds to be redeemed
plus accrued interest to the date fixed for redemption, on the same date on
which, and to the same extent that, the Pledged Lessor Notes relating to the
Bonds are prepaid as provided in Section 5.2 of the Lease Indenture under which
they were issued.
The Bonds of each Stated Maturity of principal are also
subject to mandatory redemption pursuant to sinking fund installments, as more
fully provided in the Indenture, at the principal amount thereof, together with
interest accrued to the date fixed for redemption, on the dates and in the
respective principal amounts set forth in the Indenture.
The sinking fund installments for Bonds with a Stated Maturity
of principal of January 15, 2016 may be adjusted once at the discretion of the
Company prior to July 15, 1997, in connection with certain adjustments in basic
rent pursuant to any of the Leases; provided, however, that no such adjustments
shall be made by the Company which will increase or reduce the average life of
such Bonds (calculated in accordance with generally accepted financial practice
from the date of initial issuance thereof) by more than two years.
As provided in the Indenture, in connection with any mandatory
sinking fund redemption of Bonds with a Stated Maturity of principal of January
15, 2016, the Company may cause the Trustee first to select for such redemption
Bonds of such Stated Maturity of principal held by PNM or any Affiliate of PNM.
In the event of any partial redemption of Bonds of a
particular Stated Maturity of principal (other than pursuant to the
aforementioned sinking fund), the principal amounts of Bonds of such Stated
Maturity of principal to be redeemed thereafter pursuant to the sinking fund
schedule indicated in the Indenture shall be adjusted in accordance with the
Indenture.
As provided in the Indenture, in the event that the Company
shall fail to pledge certain Nonrecourse Promissory Notes included within the
term "Pledged Lessor Notes" (the "Lessor Notes") in the aggregate principal
amount of $88,000,000 (and otherwise as required by the Indenture), on or prior
to January 25, 1987, Bonds will be redeemed as provided in the Indenture
#30122046.1
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<PAGE>
(allocated among the Stated Maturities of principal of the Bonds as provided in
the Indenture) in the aggregate amount equal to the difference between
$88,000,000 and the principal amount of such Lessor Notes so pledged (if any),
at a redemption price equal to 101% of the principal amount thereof, plus
accrued interest thereon to the date fixed for redemption.
In addition, the Bonds (other than Bonds with a Stated
Maturity of principal of January 15, 1992) are subject to redemption, in whole
or in part, at any time on and after January 15, 1992, at the option of the
Company, with monies deposited with the Trustee, on not less than 20 nor more
than 60 days' notice given as provided in the Indenture, as follows:
(a) Bonds with a Stated Maturity of principal of January 15,
1997 may be redeemed at the following redemption prices (expressed as a
percentage of principal amount), together with interest accrued to the
redemption date:
Twelve Month Redemption
Period Beginning Price
---------------- -----
January 15, 1992 102.557%
January 15, 1993 101.279
and thereafter at the principal amount thereof, together with interest accrued
to the redemption date.
(b) Bonds with a Stated Maturity of principal of January 15,
2016 may be redeemed at the following redemption prices (expressed as a
percentage of principal amount), together with interest accrued to the
redemption date:
Twelve Month Redemption
Period Beginning Price
---------------- -----
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 redemption date.
#30122046.1
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In the case of any redemption of Bonds, unpaid interest
installments whose Stated Maturity, as defined in the Indenture, is on or prior
to the date fixed for redemption will be payable to the Holders of such Bonds or
one or more Predecessor Securities of record at the close of business on the
relevant Regular or Special Record Date referred to on the face hereof.
The Indenture provides that Bonds of a denomination larger
than $1,000 may be redeemed in part ($1,000 or an integral multiple thereof) and
that upon any partial redemption of any such Bond the same shall be surrendered
at the corporate trust office of the Paying Agent in exchange for one or more
new Bonds for the unredeemed portion thereof.
Bonds (or portions thereof as aforesaid) for whose redemption
and payment provision is made in accordance with the Indenture shall thereupon
cease to be entitled to the lien of the Indenture and shall cease to bear
interest from and after the date fixed for redemption.
If an Event of Default, as defined in the Indenture, shall
occur, the principal of this Bond may become or be declared due and payable, in
the manner and with the effect provided in the Indenture.
This Bond is transferable by the registered owner hereof in
person or by attorney authorized in writing, at the corporate trust office of
the Bond Registrar, Chemical Bank (or if such office is not in the Borough of
Manhattan, The City of New York, at either such office or an office to be
maintained in such Borough), upon surrender of this Bond, and upon any such
transfer a new Bond of the same Stated Maturity of principal, for the same
aggregate principal amount, will be issued to the transferee in exchange
herefor.
The Bonds are issuable only as registered Bonds without
coupons in denominations of $1,000 and/or any integral multiple thereof. As
provided in, and subject to the provisions of, the Indenture, Bonds of a
particular Stated Maturity of principal are exchangeable for other Bonds of such
Stated Maturity, but of a different authorized denomination or denominations, as
requested by the Holder surrendering the same.
No service charge will be made to any Holder of Bonds for any
such transfer or exchange, but the Bond Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Prior to due presentment for registration of transfer, the
person in whose name this Bond is registered shall be deemed to be the owner
hereof for the purpose of receiving payment as herein provided and for all other
purposes whether or not this Bond be overdue, regardless of any notice to anyone
to the contrary.
As provided in the Indenture, the Indenture and the Bonds
shall be construed in accordance with and governed by the laws of the State of
New York.
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SCHEDULE 2
to
SERIES 1986B BOND
SUPPLEMENTAL INDENTURE
A. As used in this Series 1986B Bond Supplemental Indenture, the following
terms have the following meanings:
(1) Lease Indenture means each of:
(i) the Trust Indenture, Mortgage, Security Agreement
and Assignment of Rents, dated as of December 16, 1985,
between the Indenture Trustee and Owner Trustee No. 1, as
amended by Supplemental Indenture No. 1 thereto, dated as of
July 15, 1986, and Supplemental Indenture No. 2 thereto, dated
as of November 18, 1986
(ii) the Trust Indenture, Mortgage, Security
Agreement and Assignment of Rents, dated as of December 16,
1985, between the Indenture Trustee and Owner Trustee No. 2,
as amended by Supplemental Indenture No. 1 thereto, dated as
of July 15, 1986, and Supplemental Indenture No. 2 thereto,
dated as of November 18, 1986
(iii) the Trust Indenture, Mortgage, Security
Agreement and Assignment of Rents, dated as of December 16,
1985, between the Indenture Trustee and Owner Trustee No. 3,
as amended by Supplemental Indenture No. 1 thereto, dated as
of July 15, 1986, and Supplemental Indenture No. 2 thereto,
dated as of November 18, 1986
(iv) the Trust Indenture, Mortgage, Security
Agreement and Assignment of Rents, dated as of July 31, 1986,
between the Indenture Trustee and Owner Trustee No. 4, as
amended by Supplemental Indenture No. 1 thereto, dated as of
November 18, 1986;
(v) the Trust Indenture, Mortgage, Security Agreement
and Assignment of Rents, dated as of August 12, 1986, between
the Indenture Trustee and Owner Trustee No. 5, as amended by
Supplemental Indenture No. 1 thereto, dated as of November 18,
1986;
(vi) the Trust Indenture, Mortgage, Security
Agreement and Assignment of Rents, dated as of August 12,
1986, between the Indenture Trustee and Owner Trustee No. 6,
as amended by Supplemental Indenture No. 1 thereto, dated as
of November 18, 1986;
(vii) the Trust Indenture, Mortgage, Security
Agreement and Assignment of Rents, dated as of August 12,
1986, between the Indenture Trustee and Owner Trustee No. 7,
as amended by Supplemental Indenture No. 1 thereto, dated as
of November 18, 1986;
(viii) the Trust Indenture, Mortgage, Security
Agreement and Assignment of Rents, dated as of August 12,
1986, between the Indenture Trustee and Owner Trustee No. 8,
as amended by Supplemental Indenture No. 1 thereto, dated as
of November 18, 1986; and
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(ix) the Trust Indenture, Mortgage, Security
Agreement and Assignment of Rents, dated as of August 12,
1986, between the Indenture Trustee and Owner Trustee No. 9,
as amended by Supplemental Indenture No. 1 thereto, dated as
of November 18, 1986.
(2) Lessor Note means each of:
(i) the Non-Recourse Promissory Note, Releveraging
Series (Due January 15, 2015) in the amount of $2,350,000,
dated November 25, 1986, payable by Owner Trustee No. 1 to the
Company;
(ii) the Nonrecourse Promissory Note, Releveraging
Series (Due January 15, 2015) in the amount of $2,456,000,
dated November 25, 1986, payable by Owner Trustee No. 2 to the
Company;
(iii) the Nonrecourse Promissory Note, Releveraging
Series (Due January 15, 2015) in the amount of $1,235,000,
dated November 25, 1986, payable by Owner Trustee No. 3 to the
Company;
(iv) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 1992) in the amount of $1,501,000
dated November 25, 1986, payable by Owner Trustee No. 4 to the
Company;
(v) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 1997) in the amount of $5,626,000
dated November 25, 1986, payable by Owner Trustee No. 4 to the
Company;
(vi) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 2015) in the amount of $32,873,000
dated November 25, 1986, payable by Owner Trustee No. 4 to the
Company;
(vii) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 1992) in the amount of $1,737,000
dated November 25, 1986, payable by Owner Trustee No. 5 to the
Company;
(viii) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 1997) in the amount of $10,653,000
dated November 25, 1986, payable by Owner Trustee No. 5 to the
Company;
(ix) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 2016) in the amount of $71,610,000
dated November 25, 1986, payable by Owner Trustee No. 5 to the
Company;
(x) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 1992) in the amount of $2,716,000
dated November 25, 1986, payable by Owner Trustee No. 6 to the
Company; and
(xi) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 1997) in the amount of $10,645,000
dated November 25, 1986, payable by Owner Trustee No. 6 to the
Company;
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(xii) the Nonrecourse Promissory Note, Fixed Rate
Series (Due July 15, 2012) in the amount of $60,598,000 dated
November 25, 1986, payable by Owner Trustee No. 6 to the
Company.
(xiii) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 1992) in the amount of $993,000 dated
November 25, 1986, payable by Owner Trustee No. 7 to the
Company.
(xiv) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 1997) in the amount of $6,087,000
dated November 25, 1986, payable by Owner Trustee No. 7 to the
Company;
(xv) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 2016) in the amount of $40,920,000
dated November 25, 1986, payable by Owner Trustee No. 7 to the
Company;
(xvi) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 1992) in the amount of $827,000 dated
November 25, 1986, payable by Owner Trustee No. 8 to the
Company;
(xvii) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 1997) in the amount of $5,072,000
dated November 25, 1986, payable by Owner Trustee No. 8 to the
Company;
(xviii) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 2016) in the amount of $34,101,000
dated November 25, 1986, payable by Owner Trustee No. 8 to the
Company;
(xix) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 1992) in the amount of $1,644,000
dated November 25, 1986, payable by Owner Trustee No. 9 to the
Company;
(xx) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 1997) in the amount of $10,703,000
dated November 25, 1986, payable by Owner Trustee No. 9 to the
Company; and
(xxi) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 2016) in the amount of $67,653,000
dated November 25, 1986, payable by Owner Trustee No. 9 to the
Company.
(3) Lessor or Owner Trustee means The First National Bank of
Boston, a national banking association (FNB), in its capacity as owner trustee
under nine separate Trust Agreements, respectively dated as of December 16,
1985, July 31, 1986 or August 12, 1986, with the equity investor named therein;
in such capacity referred to as Owner Trustee No. 1, Owner Trustee No. 2, Owner
Trustee No. 3, Owner Trustee No. 4, Owner Trustee No. 5, Owner Trustee No. 6,
Owner Trustee No. 7, Owner Trustee No. 8 and Owner Trustee No. 9, respectively.
(4) Indenture Trustee means Chemical Bank, a New York banking
corporation, as Trustee.
(5) Lease means each of:
(i) the Facility Lease, dated as of December 16,
1985, between PNM, as lessee, and Owner Trustee No. 1, as
lessor, as amended by Amendment No. 1
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thereto, dated as of July 15, 1986, and by Amendment No. 2
thereto, dated as of November 18, 1986
(ii) the Facility Lease, dated as of December 16,
1985, between PNM, as lessee, and Owner Trustee No. 2, as
lessor, as amended by Amendment No. 1 thereto, dated as of
July 15, 1986, and by Amendment No. 2 thereto, dated as of
November 18, 1986
(iii) the Facility Lease, dated as of December 16,
1985, between PNM, as lessee, and Owner Trustee No. 3, as
lessor, as amended by Amendment No. 1 thereto, dated as of
July 15, 1986, and by Amendment No. 2 thereto, dated as of
November 18, 1986
(iv) the Facility Lease, dated as of July 31, 1986,
between PNM, as lessee, and Owner Trustee No. 4, as lessor, as
amended by Amendment No. 1 thereto, dated as of November 18,
1986;
(v) the Facility Lease, dated as of August 12, 1986,
between PNM, as lessee, and Owner Trustee No. 5, as lessor, as
amended by Amendment No. 1 thereto, dated as of November 18,
1986;
(vi) the Facility Lease, dated as of August 12, 1986,
between PNM, as lessee, and Owner Trustee No. 6, as lessor, as
amended by Amendment No. 1 thereto, dated as of November 18,
1986;
(vii) the Facility Lease, dated as of August 12,
1986, between PNM, as lessee, and Owner Trustee No. 7, as
lessor, as amended by Amendment No. 1 thereto, dated as of
November 18, 1986;
(viii) the Facility Lease, dated as of August 12,
1986, between PNM, as lessee, and Owner Trustee No. 8, as
lessor, as amended by Amendment No. 1 thereto, dated as of
November 18, 1986; and
(ix) the Facility Lease, dated as of August 12, 1986,
between PNM, as lessee, and Owner Trustee No. 9, as lessor, as
amended by Amendment No. 1 thereto, dated as of November 18,
1986.
(6) Participation Agreement means each of:
(i) the Participation Agreement, dated as of December
16, 1985, among the Owner Participant designated therein, the
Company, FNB, in its individual capacity and as Owner Trustee
No. 1, Chemical Bank, in its individual capacity and as
Indenture Trustee, and PNM, as amended by Amendment No. 1
thereto, dated as of July 15, 1986 and Amendment No. 2
thereto, dated as of November 18, 1986;
(ii) the Participation Agreement, dated as of
December 16, 1985, among the Owner Participant designated
therein, the Company, FNB, in its individual capacity and as
Owner Trustee No. 2, Chemical Bank, in its individual capacity
and as Indenture Trustee, and PNM, as amended by Amendment No.
1 thereto, dated as of July 15, 1986 and Amendment No. 2
thereto, dated as of November 18, 1986;
#30122046.1
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(iii) the Participation Agreement, dated as of
December 16, 1985, among the Owner Participant designated
therein, the Company, FNB, in its individual capacity and as
Owner Trustee No. 3, Chemical Bank, in its individual capacity
and as Indenture Trustee, and PNM, as amended by Amendment No.
1 thereto, dated as of July 15, 1986 and Amendment No. 2
thereto, dated as of November 18, 1986;
(iv) the Participation Agreement, dated as of July
31, 1986, among the Owner Participant designated therein, the
Company, FNB, in its individual capacity and as Owner Trustee
No. 4, Chemical Bank, in its individual capacity and as
Indenture Trustee, and PNM, as amended by Amendment No. 1
thereto, dated as of November 18, 1986;
(v) the Participation Agreement, dated as of August
12, 1986, among the Owner Participant designated therein, the
Company, FNB, in its individual capacity and as Owner Trustee
No. 5, Chemical Bank, in its individual capacity and as
Indenture Trustee, and PNM, as amended by Amendment No. 1
thereto, dated as of November 18, 1986;
(vi) the Participation Agreement, dated as of August
12, 1986, among the Owner Participant designated therein, the
Company, FNB, in its individual capacity and as Owner Trustee
No. 6, Chemical Bank, in its individual capacity and as
Indenture Trustee, and PNM, as amended by Amendment No. 1
thereto, dated as of November 18, 1986;
(vii) the Participation Agreement, dated as of August
12, 1986, among the Owner Participant designated therein, the
Company, FNB, in its individual capacity and as Owner Trustee
No. 7, Chemical Bank, in its individual capacity and as
Indenture Trustee, and PNM, as amended by Amendment No. 1
thereto, dated as of November 18, 1986;
(viii) the Participation Agreement, dated as of
August 12, 1986, among the Owner Participant designated
therein, the Company, FNB, in its individual capacity and as
Owner Trustee No. 8, Chemical Bank, in its individual capacity
and as Indenture Trustee, and PNM, as amended by Amendment No.
1 thereto, dated as of November 18, 1986; and
(ix) the Participation Agreement, dated as of August
12, 1986, among the Owner Participant designated therein, the
Company, FNB, in its individual capacity and as Owner Trustee
No. 9, Chemical Bank, in its individual capacity and as
Indenture Trustee, and PNM, as amended by Amendment No. 1
thereto, dated as of November 18, 1986.
#30122046.1
5
<PAGE>
SCHEDULE 3
to
SERIES 1986B BOND
SUPPLEMENTAL INDENTURE
DESCRIPTION OF CERTAIN LESSOR NOTES
(A) The following Lessor Notes relate to a Lease with respect
to an undivided interest in PVNGS Unit 1 and certain related common facilities:
(i) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 1992), in the amount of $3,300,000,
bearing interest at 8.05%, the principal amount of which
amortizes as follows:
Payment Principal
Date Amount Payable
---- --------------
July 15, 1989 $ 379,000
January 15, 1990 539,000
July 15, 1990 561,000
January 15, 1991 583,000
July 15, 1991 607,000
January 15, 1992 631,000
-----------
Principal Amount $3,300,000
===========
(ii) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 1997), in the amount of $8,060,000,
bearing interest at 8.95%, the principal amount of which
amortizes as follows:
Payment Principal
Date Amount Payable
---- --------------
July 15, 1992 $ 657,000
January 15, 1993 686,000
July 15, 1993 717,000
January 15, 1994 749,000
July 15, 1994 782,000
January 15, 1995 817,000
July 15, 1995 854,000
January 15, 1996 892,000
July 15, 1996 932,000
January 15, 1997 974,000
----------
Principal Amount $8,060,000
==========
(iii) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 2015), in the amount of $48,640,000,
bearing interest at 10.15%, the principal amount of which
amortizes as follows:
#30122046.1
1
<PAGE>
July 15, 1997 $1,017,000
January 15, 1998 1,069,000
July 15, 1998 1,123,000
January 15, 1999 1,180,000
July 15, 1999 1,240,000
January 15, 2000 1,303,000
July 15, 2000 1,217,000
January 15, 2001 939,000
July 15, 2001 1,053,000
January 15, 2002 967,000
July 15, 2002 1,065,000
January 15, 2003 960,000
July 15, 2003 1,077,000
January 15, 2004 979,000
July 15, 2004 1,143,000
January 15, 2005 1,039,000
July 15, 2005 1,214,000
January 15, 2006 1,103,000
July 15, 2006 1,288,000
January 15, 2007 1,171,000
July 15, 2007 1,368,000
January 15, 2008 1,243,000
July 15, 2008 1,452,000
January 15, 2009 1,319,000
July 15, 2009 1,541,000
January 15, 2010 1,400,000
July 15, 2010 1,636,000
January 15, 2011 1,486,000
July 15, 2011 1,737,000
January 15, 2012 1,577,000
July 15, 2012 1,844,000
January 15, 2013 1,674,000
July 15, 2013 1,957,000
January 15, 2014 1,777,000
July 15, 2014 2,077,000
January 15, 2015 2,405,000
-----------
Principal Amount $48,640,000
===========
(B) The following Lessor Notes relate to a Lease with respect
to an undivided interest in PVNGS Unit 2 and certain related common facilities:
(i) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 1992), in the amount of $1,270,000,
bearing interest at 8.05%, the principal amount of which
amortizes as follows:
#30122046.1
2
<PAGE>
Payment Principal
Date Amount Payable
---- --------------
January 15, 1990 $ 234,000
July 15, 1990 244,000
January 15, 1991 254,000
July 15, 1991 264,000
January 15, 1992 274,000
----------
Principal Amount $1,270,000
==========
(ii) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 1997), in the amount of $3,501,000,
bearing interest at 8.95%, the principal amount of which
amortizes as follows:
Payment Principal
Date Amount Payable
---- --------------
July 15, 1992 $285,000
January 15, 1993 298,000
July 15, 1993 311,000
January 15, 1994 325,000
July 15, 1994 340,000
January 15, 1995 355,000
July 15, 1995 371,000
January 15, 1996 388,000
July 15, 1996 405,000
January 15, 1997 423,000
----------
Principal Amount $3,501,000
==========
(iii) the Nonrecourse Promissory Note, Fixed Rate
Series (Due January 15, 2016), in the amount of $23,229,000,
bearing interest at 10.15%, the principal amount of which
amortizes as follows:
Payment Principal
Date Amount Payable
July 15, 1997 $442,000
January 15, 1998 465,000
July 15, 1998 488,000
January 15, 1999 513,000
July 15, 1999 539,000
January 15, 2000 566,000
July 15, 2000 585,000
January 15, 2001 416,000
July 15, 2001 464,000
January 15, 2002 427,000
July 15, 2002 468,000
January 15, 2003 422,000
#30122046.1
3
<PAGE>
Payment Principal
Date Amount Payable
---- --------------
July 15, 2003 372,000
January 15, 2004 430,000
July 15, 2004 501,000
January 15, 2005 456,000
July 15, 2005 532,000
January 15, 2006 484,000
July 15, 2006 565,000
January 15, 2007 514,000
July 15, 2007 600,000
January 15, 2008 545,000
July 15, 2008 637,000
January 15, 2009 579,000
July 15, 2009 676,000
January 15, 2010 614,000
July 15, 2010 717,000
January 15, 2011 652,000
July 15, 2011 762,000
January 15, 2012 692,000
July 15, 2012 808,000
January 15, 2013 734,000
July 15, 2013 858,000
January 15, 2014 780,000
July 15, 2014 911,000
January 15, 2015 827,000
July 15, 2015 968,000
January 15, 2016 1,120,000
-----------
Principal Amount $23,229,000
===========
#30122046.1
4
<PAGE>
EXHIBIT A
to
Series 1986B Bond
Supplemental Indenture
================================================================================
FIRST PV FUNDING CORPORATION,
PUBLIC SERVICE COMPANY OF NEW MEXICO
and
CHEMICAL BANK,
as Trustee
----------
UNIT SUPPLEMENTAL INDENTURE OF PLEDGE
--
(LEASE OBLIGATION BONDS SERIES 1986B)
dated December , 1986
to
COLLATERAL TRUST INDENTURE
dated as of December 16, 1985
----------
Providing for the Pledge of
the Lessor Notes Specified
on Schedule 1 hereto
================================================================================
PALO VERDE NUCLEAR GENERATING STATION
#30122046.1
1
<PAGE>
UNIT SUPPLEMENTAL INDENTURE OF PLEDGE (LEASE OBLIGATION BONDS,
SERIES 1986B), dated December , 1986, among FIRST PV FUNDING CORPORATION, a
Delaware corporation (the Company), PUBLIC SERVICE COMPANY OF NEW MEXICO, a New
Mexico corporation (PNM), and CHEMICAL BANK, as trustee (the Trustee).
WHEREAS, the Company and PNM have heretofore executed and
delivered to the Trustee an indenture dated as of December 16, 1985 (as
heretofore amended and supplemented, the Original Indenture);
WHEREAS, Section 11.01(4) of the Original Indenture provides,
among other things, that the Company and the Trustee may, without the consent of
the Holders of any Securities, enter into an indenture supplemental to the
Original Indenture to convey, transfer and assign to the Trustee, and to subject
to the Lien of the Original Indenture additional Pledged Lessor Notes;
WHEREAS, PNM and the Company have heretofore executed and
delivered the Series 1986B Bond Supplemental Indenture, dated as of November 18,
1986 (the Series 1986B Bond Supplemental Indenture), to the Trustee, and the
Company issued thereunder a series of Securities designated "Lease Obligation
Bonds, Series 1986B" (the Series 1986B Securities) in the aggregate principal
amount of $460,000,000;
WHEREAS, the Company, in accordance with Section 2.15(a) of
the Original Indenture, deposited with the Trustee the proceeds of sale of the
Series 1986B Securities;
WHEREAS, the Company has heretofore obtained the release of
$ from such proceeds of sale;
----------
WHEREAS, the Company, (i) in accordance with Sections 2.15(b)
and 13.01 of the Original Indenture, desires to obtain the release of $ from
such proceeds of sale and to cause the application thereof in the manner
specified by such Section 2.15(b) and (ii) has requested the Trustee to enter
into this Supplemental Indenture of Pledge for the purpose, among others, of
meeting the condition to such release set forth in clause (a) of such Section
13.01; and
WHEREAS, all acts and things necessary to constitute these
presents a valid and binding supplemental indenture and agreement according to
its terms, have been done and performed, and the execution of this Supplemental
Indenture of Pledge has in all respects been duly authorized, and the Company,
in the exercise of legal right and power in it vested, executes this
Supplemental Indenture of Pledge;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE OF PLEDGE
WITNESSETH:
That in consideration of the premises and of the sum of one
dollar to it duly paid by the Trustee at the execution of these presents, the
receipt whereof is hereby acknowledged, the Company and PNM each covenants and
agrees with the Trustee, for the equal and proportionate benefit of the
respective Holders from time to time of the Securities, as follows:
ARTICLE I.
PLEDGE OF LESSOR NOTES
To secure the payment of the principal of, premium (if any)
and interest on all the Securities from time to time Outstanding under the
Original Indenture, and the performance of the covenants therein and herein
contained, the Company by these presents does grant, bargain, sell, release,
convey, assign, transfer, mortgage, hypothecate, pledge, confirm and create a
security interest in, unto the Trustee, the Lessor Notes identified on Schedule
1 hereto (herein referred to as the Pledged Lessor Notes).
#30122046.1
2
<PAGE>
TO HAVE AND TO HOLD the aforesaid Pledged Lessor Notes unto
the Trustee and its successors and assigns forever, in trust and for the uses
and purposes and subject to the covenants and conditions set forth in the
Original Indenture.
ARTICLE II.
MISCELLANEOUS
SECTION 1.021. Execution as Supplemental Indenture.
This Supplemental Indenture of Pledge is executed and shall be
construed as an indenture supplemental to the Original Indenture and, as
provided in the Original Indenture, this Supplemental Indenture of Pledge forms
a part thereof. Except as herein or in Schedule 1 hereto expressly otherwise
defined, the use of the terms and expressions herein is in accordance with the
definitions, uses and constructions contained in the Original Indenture.
SECTION 1.022. Responsibility for Recitals, Etc.
The recitals contained herein shall be taken as the statements
of the Company and PNM, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representation as to the validity
or sufficiency of this Supplemental Indenture of Pledge or the Series 1986B
Securities.
SECTION 1.023. Provisions Binding on Successors.
All the covenants, stipulations, promises and agreements in
this Supplemental Indenture of Pledge contained by or in behalf of the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 1.024. New York Contract.
This Supplemental Indenture of Pledge shall be deemed to be a
contract under the laws of the State of New York, and for all purposes shall be
construed in accordance with the laws of said state.
SECTION 1.025. Counterparts.
This Supplemental Indenture of Pledge may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
#30122046.1
3
<PAGE>
IN WITNESS WHEREOF, the Company, PNM and the Trustee have
caused this Supplemental Indenture of Pledge to be duly executed by their
respective officers thereunto duly authorized, as of the date and year first
above written.
FIRST PV FUNDING CORPORATION
[CORPORATE SEAL]
By
-------------------------
Title:
Attest:
- ----------------------
Secretary
PUBLIC SERVICE COMPANY
OF NEW MEXICO
[CORPORATE SEAL]
By
------------------------
Title:
Attest:
- ----------------------
Secretary
CHEMICAL BANK,
as Trustee
[CORPORATE SEAL]
By
-----------------------
Vice President
Attest:
- ----------------------
Trust Officer
#30122046.1
4
<PAGE>
SCHEDULE 1
to
SUPPLEMENTAL INDENTURE
OF PLEDGE
As used in this Supplemental Indenture of Pledge, the
following terms have the following meanings:
(1) Lease Indenture means the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents, dated as of December __, 1986,
between the Indenture Trustee and the Owner Trustee.
(2) Lessor Note means each of the Non-Recourse Promissory
Note, Fixed Rate Series (Due January 15, 1992), in the amount of $ , the
Non-Recourse Promissory Note, Fixed Rate Series (Due January 15, 1997), in the
amount of $ and the Non-Recourse Promissory Note, Fixed Rate Series (Due January
15, 201 ), in the amount of $ , each dated December , 1986, payable by the Owner
Trustee to the Company.
(3) Lessor or Owner Trustee means The First National Bank of
Boston, a national banking association (FNB), in its capacity as owner trustee
under the Trust Agreement, dated as of December , 1986, with the owner
participant named therein.
(4) Indenture Trustee means Chemical Bank, a New York banking
corporation, as Trustee.
(5) Lease means the Facility Lease, dated as of December __ ,
1986, between PNM, as lessee, and the Owner Trustee, as lessor.
(6) Participation Agreement means the Participation Agreement
dated as of December , 1986, among the Owner Participant party thereto, the
Company, FNB in its individual capacity and as Owner Trustee, Chemical Bank, in
its individual capacity and as Indenture Trustee, and PNM.
#30122046.1
1
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. THE BONDS....................................................... 2
SECTION 1.01. Terms of the Bonds................................ 2
SECTION 1.02. Mandatory Redemption of the Bonds................. 3
SECTION 1.03. Optional Redemption of Bonds...................... 4
SECTION 1.04. Sinking Fund...................................... 5
ARTICLE II. PLEDGE OF LESSOR NOTES......................................... 7
SECTION 2.01. Pledge of Lessor Notes............................ 7
ARTICLE III. AMENDMENT TO ORIGINAL INDENTURE................................ 8
SECTION 3.01. Amendment to Original Indenture................... 8
ARTICLE IV. MISCELLANEOUS.................................................. 8
SECTION 4.01. Execution as Supplemental Indenture............... 8
SECTION 4.02. Responsibility for Recitals, Etc.................. 9
SECTION 4.03. Provisions Binding on Successors.................. 9
SECTION 4.04. New York Contract................................. 9
SECTION 4.05. Counterparts...................................... 9
Schedule 1: FORM OF BOND
Schedule 2: CERTAIN DEFINITIONS
Schedule 3: CERTAIN LESSOR NOTES
Exhibit A: SUPPLEMENTAL INDENTURE OF PLEDGE
#30122046.1
-i-
<PAGE>
EXHIBIT D to
Conformed Collateral
Trust Indenture
================================================================================
FIRST PV FUNDING CORPORATION,
PUBLIC SERVICE COMPANY OF NEW MEXICO
and
CHEMICAL BANK,
as Trustee
----------
UNIT 1 SUPPLEMENTAL INDENTURE OF PLEDGE
(LEASE OBLIGATION BONDS, SERIES 1986B)
dated as of December 15, 1986
to
COLLATERAL TRUST INDENTURE
dated as of December 16, 1985
----------
Providing for the Pledge of
the Lessor Notes Specified
on Schedule 1 hereto
================================================================================
PALO VERDE NUCLEAR GENERATING STATION UNIT 1
#30122196.1
-ii-
<PAGE>
UNIT 1 SUPPLEMENTAL INDENTURE OF PLEDGE (LEASE OBLIGATION
BONDS, SERIES 1986B), dated as of December 15, 1986, among FIRST PV FUNDING
CORPORATION, a Delaware corporation (the Company), PUBLIC SERVICE COMPANY OF NEW
MEXICO, a New Mexico corporation (PNM), and CHEMICAL BANK, as trustee (the
Trustee)
WHEREAS, the Company and PNM have heretofore executed and
delivered to the Trustee an indenture dated as of December 16, 1985 (as
heretofore amended and supplemented, the Original Indenture);
WHEREAS, Section 11.01(4) of the Original Indenture provides,
among other things, that the Company and the Trustee may, without the consent of
the Holders of any Securities, enter into an indenture supplemental to the
Original Indenture to convey, transfer and assign to the Trustee, and to subject
to the Lien of the Original Indenture, additional Pledged Lessor Notes;
WHEREAS, PNM and the Company have heretofore executed and
delivered the Series 1986B Bond Supplemental Indenture, dated as of November 18,
1986 (the Series 1986B Bond Supplemental Indenture), to the Trustee, and the
Company issued thereunder a series of Securities designated "Lease Obligation
Bonds, Series 1986B" (the Series 1986B Securities) in the aggregate principal
amount of $460,000,000;
WHEREAS, the Company, in accordance with Section 2.15(a) of
the Original Indenture, deposited with the Trustee the proceeds of sale of the
Series 1986B Securities;
WHEREAS, the Company has heretofore obtained the release of
$372,000,000 from such proceeds of sale;
WHEREAS, the Company, (i) in accordance with Sections 2.15(b)
and 13.01 of the Original Indenture, desires to obtain the release of
$60,000,000 from such proceeds of sale and to cause the application thereof in
the manner specified by such Section 2.15(b) and (ii) has requested the Trustee
to enter into this Supplemental Indenture of Pledge for the purpose, among
others, of meeting the condition to such release set forth in clause (a) of such
Section 13.01; and
WHEREAS, all acts and things necessary to constitute these
presents a valid and binding supplemental indenture and agreement according to
its terms, have been done and performed, and the execution of this Supplemental
Indenture of Pledge has in all respects been duly authorized, and the Company,
in the exercise of legal right and power in it vested, executes this
Supplemental Indenture of Pledge;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE OF PLEDGE
WITNESSETH:
That in consideration of the premises and of the sum of one
dollar to it duly paid by the Trustee at the execution of these presents, the
receipt whereof is hereby acknowledged, the Company and PNM each covenants and
agrees with the Trustee, for the equal and proportionate benefit of the
respective Holders from time to time of the Securities, as follows:
ARTICLE ONE
PLEDGE OF LESSOR NOTES
To secure the payment of the principal of, premium (if any)
and interest on all the Securities from time to time Outstanding under the
Original Indenture, and the performance of the covenants therein and herein
contained, the Company by these presents does grant, bargain, sell, release,
convey, assign, transfer, mortgage, hypothecate, pledge, confirm and create a
security interest in, unto the Trustee, the Lessor Notes identified on Schedule
1 hereto (herein referred to as the Pledged Lessor Notes).
#30122196.1
-i-
<PAGE>
TO HAVE AND TO HOLD the aforesaid Pledged Lessor Notes unto
the Trustee and its successors and assigns forever, in trust and for the uses
and purposes and subject to the covenants and conditions set forth in the
Original Indenture.
ARTICLE TWO
MISCELLANEOUS
SECTION 1.026. Execution as Supplemental Indenture.
This Supplemental indenture of Pledge is executed and shall be
construed as an indenture supplemental to the Original Indenture and, as
provided in the Original Indenture, this Supplemental Indenture of Pledge forms
a part thereof. Except as herein or in Schedule l hereto expressly otherwise
defined, the use of the terms and expressions herein is in accordance with the
definitions, uses and constructions contained in the Original Indenture.
SECTION 1.027. Responsibility for Recitals, Etc.
The recitals contained herein shall be taken as the statements
of the Company and PNM, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representation as to the validity
or sufficiency of this Supplemental Indenture of Pledge or the Series 1986B
Securities.
SECTION 1.028. Provisions Binding on Successors.
All the covenants, stipulations, promises and agreements in
this Supplemental Indenture of Pledge contained by or in behalf of the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 1.029. New York Contract.
This Supplemental Indenture of Pledge shall be deemed to be a
contract under the laws of the State of New York, and for all purposes shall be
construed in accordance with the laws of said state.
SECTION 1.0210. Counterparts.
This Supplemental Indenture of Pledge may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
#30122196.1
-ii-
<PAGE>
IN WITNESS WHEREOF, the Company, PNM and the Trustee have
caused this Supplemental Indenture of Pledge to be duly executed by their
respective officers thereunto duly authorized, as of the date and year first
above written.
FIRST PV FUNDING CORPORATION
[CORPORATE SEAL]
By
-------------------------
Title:
Attest:
- -----------------------
Assistant Secretary
PUBLIC SERVICE COMPANY OF NEW
MEXICO
[CORPORATE SEAL]
By
--------------------------
Title:
Attest:
- -----------------------
Assistant Secretary
CHEMICAL BANK,
as Trustee
[CORPORATE SEAL]
By
--------------------------
Vice President
Attest:
- -----------------------
Trust Officer
#30122196.1
-iii-
<PAGE>
SCHEDULE 1
to
UNIT 1
SUPPLEMENTAL INDENTURE
OF PLEDGE
As used with reference to this Supplemental Indenture of
Pledge, the following terms have the following meanings:
(1) Lease Indenture means the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents, dated as of December 15, 1986,
between the Indenture Trustee and the Owner Trustee.
(2) Lessor Note means each of (i) the Non-Recourse Promissory
Note, Fixed Rate Series (Due January 15, 1992), in the amount of $3,300,000,
(ii) the Non-Recourse Promissory Note, Fixed Rate Series (Due January 15, 1997),
in the amount of $8,060,000 and (iii) the Non-Recourse Promissory Note, Fixed
Rate Series (Due January 15, 2015), in the amount of $48,640,000, each dated
December 17, 1986, payable by the Owner Trustee to the Company.
(3) Lessor or Owner Trustee means The First National Bank of
Boston, a national banking association (FNB), in its capacity as owner trustee
under the Trust Agreement, dated as of December 15, 1986, with the owner
participant named therein.
(4) Indenture Trustee means Chemical Bank, a New York banking
corporation, as Trustee.
(5) Lease means the Facility Lease, dated as of December 15,
1986, between PNM, as lessee, and the Owner Trustee, as lessor.
(6) Participation Agreement means the Participation Agreement
dated as of December 15, 1986, among the Owner Participant party thereto, the
Company, FNB in its individual capacity and as Owner Trustee, Chemical Bank, in
its individual capacity and as Indenture Trustee, and PNM.
#30122196.1
<PAGE>
EXHIBIT E to
Conformed Collateral
Trust Indenture
FIRST PV FUNDING CORPORATION,
PUBLIC SERVICE COMPANY OF NEW MEXICO
and
CHEMICAL BANK,
as Trustee
----------
UNIT 2 SUPPLEMENTAL INDENTURE OF PLEDGE
(LEASE OBLIGATION BONDS, SERIES 1986B)
dated as of December 15, 1986
to
COLLATERAL TRUST INDENTURE
dated as of December 16, 1985
----------
Providing for the Pledge of
the Lessor Notes Specified
on Schedule 1 hereto
================================================================================
PALO VERDE NUCLEAR GENERATING STATION UNIT 2
#30122195.1
-v-
<PAGE>
UNIT 2 SUPPLEMENTAL INDENTURE OF PLEDGE (LEASE OBLIGATION
BONDS, SERIES 1986B), dated as of December 15, 1986, among FIRST PV FUNDING
CORPORATION, a Delaware corporation (the Company), PUBLIC SERVICE COMPANY OF NEW
MEXICO, a New Mexico corporation (PNM), and CHEMICAL BANK, as trustee (the
Trustee).
WHEREAS, the Company and PNM have heretofore executed and
delivered to the Trustee an indenture dated as of December 16, 1985 (as
heretofore amended and supplemented, the Original Indenture);
WHEREAS, Section 11.01(4) of the Original Indenture provides,
among other things, that the Company and the Trustee may, without the consent of
the Holders of any Securities, enter into an indenture supplemental to the
Original Indenture to convey, transfer and assign to the Trustee, and to subject
to the Lien of the Original Indenture, additional Pledged Lessor Notes;
WHEREAS, PNM and the Company have heretofore executed and
delivered the Series 1986B Bond Supplemental Indenture, dated as of November 18,
1986 (the Series 1986B Bond Supplemental Indenture), to the Trustee, and the
Company issued thereunder a series of Securities designated "Lease Obligation
Bonds, Series 1986B" (the Series 1986B Securities) in the aggregate principal
amount of $460,000,000;
WHEREAS, the Company, in accordance with Section 2.15(a) of
the Original Indenture, deposited with the Trustee the proceeds of sale of the
Series 1986B Securities;
WHEREAS, the Company has heretofore obtained the release of
$372,000,000 from such proceeds of sale;
WHEREAS, the Company, (i) in accordance with Sections 2.15(b)
and 13.01 of the Original Indenture, desires to obtain the release of
$28,000,000 from such proceeds of sale and to cause the application thereof in
the manner specified by such Section 2.15(b) and (ii) has requested the Trustee
to enter into this Supplemental Indenture of Pledge for the purpose, among
others, of meeting the condition to such release set forth in clause (a) of such
Section 13.01; and
WHEREAS, all acts and things necessary to constitute these
presents a valid binding supplemental indenture and agreement according to its
terms, have been done and performed, and the execution of this Supplemental
Indenture of Pledge has in all respects been duly authorized, and the Company,
in the exercise of legal right and power in it vested, executes this
Supplemental Indenture of Pledge;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE OF PLEDGE
WITNESSETH:
That in consideration of the premises and of the sum of one
dollar to it duly paid by the Trustee at the execution of these presents, the
receipt whereof is hereby acknowledged, the Company and PNM each covenants and
agrees with the Trustee, for the equal and proportionate benefit of the
respective Holders from time to time of the Securities, as follows:
ARTICLE ONE
PLEDGE OF LESSOR NOTES
To secure the payment of the principal of, premium (if any)
and interest on all the Securities from time to time Outstanding under the
Original Indenture, and the performance of the covenants therein and herein
contained, the Company by these presents does grant, bargain, sell, release,
convey, assign, transfer, mortgage, hypothecate, pledge, confirm and create a
security interest in, unto the Trustee, the Lessor Notes identified on Schedule
1 hereto (herein referred to as the Pledged Lessor Notes).
#30122195.1
-vi-
<PAGE>
TO HAVE AND TO HOLD the aforesaid Pledged Lessor Notes unto
the Trustee and its successors and assigns forever, in trust and for the uses
and purposes and subject to the covenants and conditions set forth in the
Original Indenture.
ARTICLE TWO
MISCELLANEOUS
SECTION 1.0211. Execution as Supplemental Indenture.
This Supplemental Indenture of Pledge is executed and shall be
construed as an indenture supplemental to the Original Indenture and, as
provided in the Original Indenture, this Supplemental Indenture of Pledge forms
a part thereof. Except as herein or in Schedule 1 hereto expressly otherwise
defined, the use of the terms and expressions herein is in accordance with the
definitions, uses and constructions contained in the Original Indenture.
SECTION 1.0212. Responsibility for Recitals, Etc.
The recitals contained herein shall be taken as the statements
of the Company and PNM, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representation as to the validity
or sufficiency of this Supplemental Indenture of Pledge or the Series 1986B
Securities.
SECTION 1.0213. Provisions Binding on Successors.
All the covenants, stipulations, promises and agreements in
this Supplemental Indenture of Pledge contained by or in behalf of the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 1.0214. New York Contract.
This Supplemental Indenture of Pledge shall be deemed to be a
contract under the laws of the State of New York, and for all purposes shall be
construed in accordance with the laws of said state.
SECTION 1.0215. Counterparts.
This Supplemental Indenture of Pledge may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
#30122195.1
-vii-
<PAGE>
IN WITNESS WHEREOF, the Company, PNM and the Trustee have
caused this Supplemental Indenture of Pledge to be duly executed by their
respective officers thereunto duly authorized, as of the date and year first
above written.
FIRST PV FUNDING CORPORATION
[CORPORATE SEAL]
By
--------------------------
Title:
Attest:
- ----------------------
Assistant Secretary
PUBLIC SERVICE COMPANY
OF NEW MEXICO
[CORPORATE SEAL]
By
-------------------------
Title:
Attest:
- ----------------------
Assistant Secretary
CHEMICAL BANK,
as Trustee
[CORPORATE SEAL]
By
-------------------------
Vice President
Attest:
- ----------------------
Trust Officer
#30122195.1
-viii-
<PAGE>
SCHEDULE 1
TO
UNIT 2
SUPPLEMENTAL INDENTURE
OF PLEDGE
As used with reference to this Supplemental Indenture of
Pledge, the following terms have the following meanings:
(1) Lease Indenture means the Trust Indenture, Mortgage,
Security Agreement and Assignment of Rents, dated as of December 15, 1986,
between the Indenture Trustee and the Owner Trustee.
(2) Lessor Note means each of (1) the Non-Recourse Promissory
Note, Fixed Rate Series (Due January 15, 1992), in the amount of $1,270,000,
(ii) the Non-Recourse Promissory Note, Fixed Rate Series (Due January 15, 1997),
in the amount of $3,501,000 and (iii) the Non-Recourse Promissory Note, Fixed
Rate Series (Due January 15, 2016), in the amount of $23,229,000, each dated
December 17, 1986, payable by the Owner Trustee to the Company.
(3) Lessor or Owner Trustee means The First National Bank of
Boston, a national banking association (FNB), in its capacity as owner trustee
under the Trust Agreement, dated as of December 15, 1986, with the owner
participant named therein.
(4) Indenture Trustee means Chemical Bank, a New York banking
corporation, as Trustee.
(5) Lease means the Facility Lease, dated as of December 15,
1986, between PNM, as lessee, and the Owner Trustee, as lessor.
(6) Participation Agreement means the Participant Agreement
dated as of December 15, 1986, among the Owner Participant party thereto, the
Company, FNB in its individual capacity and as Owner Trustee, Chemical Bank, in
its individual capacity and as Indenture Trustee, and PNM.
#30122195.1
-ix-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary finanical information extracted from the
Company's Consolidated Statements of Earnings, Consolidated Balance Sheets and
Consolidated Statements of Cash Flows for the period ended December 31, 1995 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,574,434
<OTHER-PROPERTY-AND-INVEST> 33,433
<TOTAL-CURRENT-ASSETS> 289,911
<TOTAL-DEFERRED-CHARGES> 137,891
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,035,669
<COMMON> 208,870
<CAPITAL-SURPLUS-PAID-IN> 468,735
<RETAINED-EARNINGS> 25,243
<TOTAL-COMMON-STOCKHOLDERS-EQ> 702,848
0
12,800
<LONG-TERM-DEBT-NET> 728,843
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 146
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 591,032
<TOT-CAPITALIZATION-AND-LIAB> 2,035,669
<GROSS-OPERATING-REVENUE> 808,465
<INCOME-TAX-EXPENSE> 50,793
<OTHER-OPERATING-EXPENSES> 664,883
<TOTAL-OPERATING-EXPENSES> 695,077
<OPERATING-INCOME-LOSS> 113,388
<OTHER-INCOME-NET> 20,108
<INCOME-BEFORE-INTEREST-EXPEN> 133,496
<TOTAL-INTEREST-EXPENSE> 57,934
<NET-INCOME> 75,562
3,714
<EARNINGS-AVAILABLE-FOR-COMM> 71,848
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 38,422
<CASH-FLOW-OPERATIONS> 147,075
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
